Subject: [NEXTEL-1] More Spectrum Available, But Not Everyone's Happy

From: Marcel <[email-masked]>
Date: Sat, 22 Feb 2003 23:00:10 -0500

More Spectrum Available, But Not Everyone's Happy

After years of additional spectrum for U.S. wireless operations being made
available at a slow drip, a comparative fountain has flowed recently with new
bandwidth either being allocated or proposed for wireless uses. However, portions
of the wireless industry are resisting some of the increased current. Additionally,
part of the tide must clear international waters before it reaches the U.S.
regulatory shoreline.

Regardless of each party's perspective, however, virtually all of the changes will
create additional room for wireless service and technology providers to grow their
businesses.

In the 2 GHz band for U.S. markets, the Federal Communications Commission
allocated more bandwidth for fixed and mobile services, but also changed its rule
covering the part of that spectrum used by mobile satellite service providers.
Satellite telecom operators retain 40 MHz in the 2000-2020 MHz and 2180-2200
MHz bands to offer terrestrial wireless services, called "ancillary terrestrial
component" (ATC).

The way the cellular and PCS players see it, they're getting much-needed
additional real estate in the valuable 2 GHz band--30 MHz in the 1990-2000 MHz,
2020-2025 MHz, and 2165-2180 MHz bands. That spectrum is part of the
additional bandwidth that U.S. mobile operators need to expand their footprints
with high-speed data technology supporting advanced services.

However, U.S. mobile operators also are getting new competition. That's because
satellite players, after meeting numerous qualifications aimed at establishing
business for satellite-based services, are allowed to offer mobile services in the
2000- 2020 MHz and 2180-2200 MHz bands. It's not merely a question of new
competition. The market will see competition from companies that didn't have to
pay for the spectrum they will use to provide the same services that cellular and
PCS companies spent millions to acquire.

The Cellular Telecommunications & Internet Association (CTIA) is likely to ask the
FCC to reconsider the order. CTIA also expects other legal challenges to allowing
satellite companies to offer mobile services in spectrum for which the satellite
companies paid nothing. Allowing "satellite companies new technical rights is a
gigantic giveaway that will cost taxpayers billions of dollars," the CTIA says,
adding that the FCC "should refund the billions it took from wireless carriers" for
spectrum licenses.

The FCC in 2001 granted bandwidth in 2 GHz spectrum at no cost to satellite
telecom companies. The ORBIT Act prohibits the FCC from selling spectrum that
will be used for international satellite services.

Regardless of that regulatory reality, U.S. cellular and PCS players should not
worry, says Lon Levin, vice president of Mobile Satellite Ventures, a Reston,
Va.-based mobile- satellite company. "This is a mobile satellite business," he
says. "We simply want to do our business that much better."

Satellite telecom operators have been hamstrung in offering terrestrial mobile
services in U.S. markets along with their satellite-facilitated services. They have
had to pay cellular or PCS partners to provide terrestrial coverage for their
customers. Their fees to their terrestrial partners frequently exceeded revenues
they collected from their customers. The failure of the initial Iridium and the
ongoing struggles of Globalstar attest to problems with those arrangements.

"It's a failed business model," Levin says.

The ATC model will have satellite operators providing terrestrial service directly to
their customers. Most ATC usage is expected in urban markets, where satellite
signals don't reach. But ATC also will be utilized in areas where cellular and PCS
providers have little or no coverage, and where satellite telecom operators could
provide terrestrial rather than satellite service. Mobile Satellite Ventures expects to
have offer ATC service beginning in 2005.

The new model also will enable satellite players to offer less expensive handsets
and airtime. Mobile satellite phone prices today start at $500 and often exceed
$1,000, and the devices are large, boxy items compared to the small, sleek
design of cellular and PCS handsets. The ATC rule means satellite phones will be
smaller, and the phones and airtime will cost less--with both items expected to
rival cellular and PCS providers' prices.

The CTIA also objects to the interference it expects satellite players' ATC
operations to cause with PCS networks operating in nearby spectrum. That
objection surprised the satellite community as well as an economist who consults
with companies on spectrum usage strategies. "The interference can't be anything
worse than the interference [mobile operators are] causing for themselves," says
Peter Cramton, president of the Market Design consulting firm and an economics
professor at the University of Maryland.

In addition, while cellular and PCS operators will likely object to competition from
companies that are not paying for spectrum, the FCC is getting more out of the
spectrum available for consumer services. "I think it's good that the FCC is
focusing on efficiency," Cramton says, adding that the ATC rule "is a very positive
thing for consumers."

Another positive for consumers in the United States and around the world would be
opening up an additional 255 MHz of spectrum for Wi-Fi and other license-exempt
operations in the 5 GHz band. Indeed, the FCC, the National Telecommunications
and Information Administration and the Department of Defense (DoD) have
proposed as much. The proposal would change the upper band of the U.S.
allocation for un-licensed 5 GHz operations from 5.725-5.825 MHz to 5.470-5.275
MHz. The lower un-licensed swath in the 5 GHz band would remain at 5.150-5.350
GHz.

The change would bring the U.S. 5 GHz allocation in line with the worldwide
license-exempt 5 GHz allocation proposed by the World Radiocommunication
Conference. However, the U.S. proposal came only after the industry agreed with
DoD's demand to incorporate "dynamic frequency selection" (DFS) technology in
devices that would be used in the 5.470-5.725 MHz band. DoD wants DFS in
consumer devices to prevent interference with military radar operations also
operating in the 5 GHz band, both in the United States and foreign markets.

The WRC, a function of the United Nations-affiliated International
Telecommunication Union, is scheduled to consider the allocation at its June
meeting in Geneva. The proposal would nearly double the North American
allocation for license-exempt 5 GHz operations, and nearly triple the spectrum
available in other parts of the world. But while U.S. backing helps the proposal's
chances, some opposition or obstacles are likely.

"The path to world frequency allocation through WRC is not necessarily a short
path," Tom Freeburg, Motorola's [NYSE: MT] corporate vice president and director
of its Canopy wireless broadband technology, tells Wireless Data News. Freeburg
participated in the 5 GHz discussions with federal agencies.

The most likely obstacle will come from countries or industry segments attempting
to tie certain swaths of spectrum to particular technologies. Those requirements
not only limit the variety of uses possible in different spectrum blocks, they also
limit the development of new technologies. However, requiring DFS technology in
consumer devices to be used in the 5.470-5.275 MHz band is important not only
the U.S. military, but to other countries' interests.

"From everything I have been able to see, there is substantial support for this sort
of protection to entrenched systems that the DFS offers," Freeburg says.

http://www.telecomweb.com/wirelessdata/feature.htm

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