Another spectrum fight, another auction?
Around the time that you read this, the FCC will be considering the issuance of a Notice of Proposed Rule Making, which seeks to change the rules for assigning 900 MHz Business and Industrial/Land Transportation, or B/ILT frequencies.
By way of background, these 12.5 kHz bandwidth channels have been available to non-specialized mobile radio (SMR) licensees for more than a decade. While most of the channels are used in the Top 20 major urban areas, there are many channels available in smaller markets. The original 800 MHz Consensus Plan called for Nextel to give back its 900 MHz SMR channels, which are interspersed with these B/ILT channels, and an incentive (in the form of doubling of spectrum) was to be given to 800 MHz B/ILT licensees to move to 900 MHz.
The 900 MHz B/ILT channels also were to be available for conversion to commercial (i.e. SMR) operation. However, conversions were only to be permitted after a “holding period,” similar to what the FCC had done at 800 MHz, where licensees granted after the date of the order must hold their authorizations for five years before converting to commercial operation. In other words, conceptually, this was to be a home for traditional private radio and SMR systems to flourish anew, unfettered by pressures of spectrum consolidations and cellular operation.
The FCC decided to go a different route. They refused the Consensus Plan’s offer of this spectrum (instead making Nextel give up the 861 MHz band) and permitted commercial conversions of B/ILT channels without a holding period. The commission’s action caused a feeding frenzy, as Nextel (through its subsidiary ACI 900) and others filed hundreds of applications for B/ILT frequencies nationwide, with what would appear to some to be the intention of converting those licenses to SMR operation as soon as the new rules took effect.
Seeing virtually all of the previously vacant 900 MHz spectrum being grabbed, the FCC placed a freeze on the filing of new applications (modifications and requests to add frequencies still being permitted) while it took time to figure things out. The commission also started asking Nextel (and others) some tough questions regarding their eligibility for these authorizations for internal use. Nextel has agreed to withdraw about one half of those applications and is reviewing the rest to see how many additional applications may be withdrawn. Once the withdrawal has been completed, the commission has vowed to give the remaining applications some significant scrutiny.
From a spectrum management standpoint, the land mobile industry is in a tough position. Here is a swath of valuable and useable spectrum, which the industry has demonstrated that (with limited exceptions) it does not covet even when free. At the same time, the FCC sees commercial operators (or at least one) ready to step up to the plate and use it, and those operators are probably willing to pay for it.
To believe that the FCC of 2005 will not take action to assign this spectrum differently is unrealistic. And, for the land mobile industry to claim a continuing birthright to free spectrum held “in trust” for decades is to be naive about the commission’s resolve to let the marketplace rule. The commission believes that it took care of public-safety needs in the 800 MHz band, and there doesn’t seem to be a similar concern for future B/ILT needs — unless you’re willing to pay for it.
Thus, the question for the land mobile industry is, can it develop a proposal, which recognizes all of these factors and still preserves some spectrum? Or will the industry stick its head in the sand, say “no, no, no” and wind up with nothing?
I think there is a 75% chance we’ll wind up with an auction, perhaps similar to the overlay auctions held for the Part 22 150 MHz and 450 MHz bands. It would seem prudent to find a means by which incumbent rights can be maximized and perhaps ensure that another band doesn’t wind up being totally commercialized.
Alan Tilles is counsel to numerous entities in the private radio, Internet and entertainment industries. He is a partner in the law firm of Shulman Rogers Gandal Pordy & Ecker and can be reached at [email protected].
