Fed's Fancy Footwork for Wireless Auctions

FCC's latest rules invite smaller wireless firms to the big dance but still enforce spectrum caps.

by Patricia Fusco ISP-Planet Managing Editor [August 30, 2000]

The Federal Communications Commission Friday went courting new wireless firms to bid in forthcoming wireless spectrum auctions.

Federal regulators concluded that it is in the "public interest" to remove the financial eligibility restrictions that kept smaller firms from participating in the bidding process.

However, the FCC failed to go all the way and fully unleash the potential of broadband wireless services in the U.S. by maintaining its current spectrum cap restrictions. Under rules adopted in 1994, each company is limited to 45 megahertz of bandwidth in each market.

The cap acts like a prophylactic restricting larger firms from conceiving localized monopolies. But it also works to prohibit the wireless industry from fully propagating wire-free services.

Chariman's perspective
In a statement about the policy shift, FCC Chairman William Kennard said the revised rules would preserve opportunities for small businesses and promote the rapid deployment of wireless services across the nation.

"These rules carefully balance the needs of both small and larger entrepreneurs to acquire spectrum at a time when the Internet is moving to portable wireless devices," Kennard said. "The upcoming C and F block auction presents a tremendous opportunity for companies to put previously unused spectrum to these new, cutting edge uses for consumers."

Companies like Verizon Corp., Nextel Communications Inc., and WorldCom, Inc. laud nearly any regulatory move to utilize available wireless spectrum, even though they are not completely free to play in the market.

World(Com) perspective
WorldCom just completed its first round of filing applications for licensing authority to offer broadband fixed wireless services in more than 60 U.S. markets after it failed to acquire Sprint Corp.'s expansive wire-free network.

John Stupka, WorldCom Wireless Solutions president said that its applications moves the firm closer to fulfilling the Commission's vision of using available wireless spectrum for broadband services.

"Our applications move us one step closer to market launch," Stupka said. "We'll work with the FCC and other spectrum holders to make this a speedy and smooth licensing process."

Beyond the blue Verizon
Verizon's wireless business division issued a statement applauding the Commission's revised rulemaking, noting that the changes are an important first step capable of unleashing wireless broadband access in the U.S.

"We applaud the FCC's decision, to the extent that it removes the eligibility restrictions on bidding for some of the PCS licenses," the statement read. "The FCC should not be discriminating among companies who want to acquire spectrum by allowing some but not all into the auction room."

Verizon also said that the FCC should have gone farther by opening up all of the licenses to interested parties, and by removing the arbitrary and outdated spectrum cap.

The FCC rejected Nextel's proposal to allow wireless operators to apply for available licenses through bulk bidding. The Commission will continue to evaluate satisfaction of construction requirements on a license-by-license, rather than on a system-wide basis.

Go to page 2: Reversing course