dailywireless.org » Small Ops Squeezed Out of 700MHz?

Small Ops Squeezed Out of 700MHz?

A coalition of 21 small- and medium-sized carriers and state regulatory agencies are worried the FCC is leaning toward a 700 MH band plan largely favoring large geographic licenses over small ones for auction later this year, reports RCR News.

Proponents of the Balanced Consensus Plan include Alltel, Aloha Partners, Dobson Communications, Leap Wireless, MetroPCS Communications, U.S. Cellular Corp. and the Rural Cellular Association.

“If the FCC does not have multiple small and medium blocks with paired spectrum, all small and regional carriers will be forced to compete against each other in one or two blocks of spectrum, while the large carriers will have the very large spectrum blocks to themselves because smaller carriers cannot compete in the auction for those licenses,” said Victor Meena, president of Cellular South, in testimony before the House telecom subcommittee.

T-Mobile USA Inc., the No. 4 wireless carrier, and Spectrum Co., a consortium of four leading cable TV carriers, embrace the coalition’s push for a mix of 700 MHz licenses.
Verizon Wireless, the second-largest cellular operator, submitted to the FCC an economic study indicating large wireless service areas lead to efficiencies because they avoid the cost and delays associated with aggregating smaller licenses and, thus, benefit consumers.

The FCC is set vote on some 700 MHz rules and to call for public comment on Frontline Wireless’s public-safety plan at its April 25 open meeting. Many parties fear the FCC will veer from the band plan developed for the advanced wireless services auction, where more than half of the licensed spectrum was based on cellular market areas and economic areas.
Questions have arisen over whether Frontline’s plan, in which 10 megahertz of commercial spectrum adjacent to public safety’s 24 megahertz at 700 MHz, would be available to commercial and priority first-responder use. DE status, which provides license discounts up to 25 percent, is denied any entity that leases or resells more than 50 percent of its capacity to another party.
“Frontline’s proposal is quite the opposite of the type of agreement the rules were aimed at preventing, as the ‘E’ block licensee would both build and operate a radio-frequency network and offer not spectrum, but rather network capacity on a wholesale basis to the public-safety community and other customers and would not engage in leasing or reselling,” stated Frontline in an FCC filing.

“Designated Entity” (DE) status gives points to small and minority owned business and entrepreneurs. Because the 700MHz band has greater range (but less capacity), some observers say the smaller geographic areas would be more difficult to manage effectively.

The future of the Frontline proposal, could be decided this week. Frontline proposes to create an “E” block from the double-size “D” block, and share access between public service and commercial users.

Frontline’s proposal is opposed by large incumbent wireless carriers, says MRT magazine, which have considerable lobbying power. Cellular operators want all 60 MHz of spectrum to be auctioned to any commercial bidder, without any restrictions. Or competition.

Currently the FCC is looking at essentially four nation-wide licenses in the 700 Mhz band. Each of these license segments (A & B blocks in the Lower band and C & D blocks in the Upper band) enable a license holder to cover a vast area, nearly the size of a time zone. By owning all 6 licenses in one block, one operator could cover the entire country.

If someone paid, say, $5 Billion for nationwide 700 MHz licenses, then another $2-3 Billion to build out the 700 MHz infrastructure, would “free” ad-supported broadband throughout the U.S. pencil out?

Let’s do the numbers:

FULL YEAR 2006 Television Ad Revenue

	Full Year 2006	Full Year 2005	% Change
LOCAL BROADCAST TV*	18,679,072.5	16,755,544.5	11.5
NETWORK TV**	25,438,400.6	24,938,878.8	2.0
SYNDICATED TV	4,233,423.4	4,222,481.0	0.3
TOTAL BROADCAST TV	48,350,896.5	45,916,904.3	5.3

* Includes both local and national spot activity in the top 100 markets.
**Network figures include WB, UPN and Spanish Language networks.

Source: Television Bureau of Advertising (TVB) from estimates supplied by TNS Media Intelligence

Let’s get Chuck on this.

In related news, TV broadcast spectrum could be used to create new community networks that dramatically expand the availability of broadband service, says market research firm Pike & Fischer. They propose (pdf) a policy model by the FCC designed to maximize the amount of unlicensed “white space” to be made available in early 2009. However, this “Public Interest IP (PIIP)” network could have adverse effects on incumbent service providers such as cable.

The United States now ranks 15th out of the 30 member nations in per capita broadband use — down from 12th place just six months ago, say the Organization for Economic Cooperation and Development (OECD).

The good news is it’s better than 20th place. Cable lobbyists at the NCTA say those stats are misleading, and with more tax breaks they could do even more to bridge the “digital divide”.

The FCC has finally agreed to look into the state of broadband deployment in the United States, says Telephony. Perhaps telecom issues will be pushed higher up the national agenda — after Verizon wins the lion’s share of 700 MHz spectrum this fall.