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from: Muniwireless.com

The 700 MHz Auction, Open Access and Municipal Wireless Networks

From MuniWireless, May 2, 2007
By Harold Feld

It seems counterintuitive that the FCC’s consideration of rules for the upcoming 700 MHz auction will have much impact on the future of municipal wireless. But two proposals under consideration could make significant new spectrum available for both licensed and unlicensed wireless system operators. These proposals would require winners of certain licenses to offer their 700 MHz spectrum on an affordable wholesale basis. If the FCC approves these proposals, municipal systems could lease “beachfront” spectrum to expand the reach and power of their own wireless networks.

For those interested, I have previously published on my blog a lengthy background piece on the 700 MHz auction. To summarize, Congress in 2005 mandated that television broadcasters switch from analog broadcasting to digital by February 2009. This transition will free a large block of spectrum occupied by channels 51-69 (located in various portions of the 700 MHz band). The physical characteristics of this band make it uniquely valuable for wireless broadband and “fourth generation” (or “4G”) advanced wireless mobile services. Signals in this band travel significantly further at lower power. They penetrate foliage and other solid material. Where they do not penetrate, they shape themselves more easily around terrain. As a consequence, availability of the 700 MHz spectrum will make it possible to deploy more powerful wireless systems, able to serve hard to reach end users cheaper than wireless systems using any of the currently available unlicensed bands.

Congress directed the FCC to auction 60 MHz of this returned “analog broadcast spectrum” and allocate 24 MHz to public safety. Of the 24 MHz allocated to public safety, the FCC has allocated 12 MHz to new public safety voice systems, and 12 MHz to new public safety “data” systems. Recently, the FCC has proposed to make the 12 MHz public safety data allocation a single national license operating a wireless broadband systems for the benefit of all public safety entities and licensed to a public safety trust (PST) representative of the public safety community.

Because Congress ordered the FCC to auction the licenses, few municipal operators have thought much about what this proceeding could mean to municipal wireless systems beyond the possible public safety applications or the possibility that new WiMax vendors may become available. But two proposals, one by a Silicon Valley start up called Frontline and another by a coalition of public interest groups, would make this spectrum available directly to municipal wireless operators for lease at affordable prices.

Frontline Wireless, a Silicon Valley-backed start up organized for this one purpose, has proposed that the FCC create a 10 MHz “E Block” license on spectrum compatible with shared use by the proposed Public Safety Trust licensee. The winner of the E Block would agree to build the proposed national broadband network for the PST. In addition, the PST would have access to the E Block spectrum on an as needed basis – taking priority over any commercial traffic using the E Block spectrum. In exchange, Frontline (assuming it won the E Block at auction) would have the right to negotiate with the Public Safety Trust licensee for access to the PST spectrum when not in use by public safety entities. This would give public safety access to 22 MHz of spectrum when needed, while allowing Frontline to use idle public safety spectrum when available.

What makes Frontline potentially valuable to municipal operators (beyond the public safety applications), is that Frontline has urged the FCC to prohibit the E Block licensee from selling retail wireless services. Instead, Frontline would lease access to the E Block (and available PST) spectrum on a non-discriminatory wholesale basis, a condition known as “open access.” While the FCC already allows most licensees to lease spectrum on a voluntary basis under its “secondary market rules,” few holders of valuable licenses have elected to make spectrum available in this way – particularly not to rival operators. Under Frontline’s proposed open access rule, the E Block winner would have no choice. As a result, up to 22 MHz of extremely valuable spectrum – already interoperable with public safety systems – would become available for lease for wireless operators everywhere.

“Open access” — which had previously been the rule in the wireline world before the FCC deregulated in 2005 — would require the licensee to make spectrum available on an affordable and non-discriminatory basis. Frontline or any other E-Block winner could not cut exclusive deals with large incumbents. Its business model depends on leasing supplementary spectrum to as many customers as possible, such as municipal operators. While not enough spectrum to construct a system, Frontline hopes that operators will use the unique characteristics of the band to fill in holes created by geography or urban topography, and facilitate mobile and nomadic uses on point-to-point networks.

For municipal operators, this potentially creates huge opportunities to cover large rural areas or difficult to reach inner city neighborhoods. It potentially also allows operators to offer a new area of complimentary mobile services such as high-bandwidth video – particularly for public safety users who would also have access to the 12 MHz of PST spectrum. This supplementary spectrum would be available to system operators that have already contracted with third parties to build and operate their networks, since it would not displace the existing system operator.

The Public Interest Spectrum Coalition (which includes my employer, Media Access Project), supports the Frontline proposal as a means of bringing spectrum to possible broadband competitors, such as municipal operators and commercial WISPs. Because the Frontline proposal does not provide enough spectrum for a possible competitor to offer a genuine “third pipe” to the home that can compete with cable or DSL speeds, the PISC has asked the FCC to go further. PISC proposed that the FCC make 30 MHz of the commercial spectrum available on an open access basis, and auction the remaining 30 MHz of spectrum under terms that allow licensees to exclude others. Making 30 MHz of returned broadcast spectrum available in every market in the United States would make it possible for new entrants, such as municipal operators, to construct high quality wireless networks that equal cable or DSL in terms of speed and performance for residential subscribers.

In the face of fierce resistance from incumbent wireless operators, the FCC has solicited comment on both the Frontline E Block proposal and the PISC 30 MHz open access proposal as part of its pending rulemaking on the 700 MHz auction. You can find a copy of the full Order and Further Notice of Proposed Rulemaking the FCC adopted at its April 25 meeting here (170 page PDF file). You can find the FCC’s much shorter official press release here. Because the statute requires the auction to begin by January 2008, and because the FCC must give potential bidders sufficient time before the auction begins to determine their level of interest and find financing, the FCC has set a very narrow window for taking comments.

For those who wish to participate, the FCC will take comments until May 23, and reply comments until May 30. Although the FCC will take late comments, the FCC must decide on the final rules soon after May 30 to meet the timeline imposed by the statute. Those who plan to file should therefore do so sooner rather than later. You can filed a comment with the FCC through the FCC’s electronic comment filing system. The docket number for this proceeding is 06-150.

In addition to the open access proposals, the FCC solicits comment on PISC proposals to prevent incumbents from again winning the vast majority of licenses. Those interested in multiple potential providers of licensed services may wish to comment on these issues as well. These proposals include barring incumbents from the auction or providing bidding credits for new entrants. PISC has also proposed changes in the auction rules, notably a switch from the current open system to “anonymous bidding,” to prevent incumbents from targeting and blocking new entrants.

The 700 MHz auction has tremendous potential to reshape our wireless future. If the FCC adopts these proposals, it will foster a new era of vibrant wireless competition by making prime spectrum widely available. If it rejects these proposals and maintains the status quo, as urged by the incumbents, we can expect our wireless future to look a pretty much the same as it does today.