WASHINGTON-In a move being watched closely by the wireless industry, the National Telecommunications and Information Administration proposed rules to reimburse the Pentagon and other federal agencies relocated to other frequencies to free up spectrum for third-generation mobile-phone systems.
The initiative, announced by NTIA chief Gregory Rohde last Wednesday, adds another layer of bureaucratic and financial complexity to the already challenging task of identifying additional 3G spectrum for mobile-phone carriers.
“It [relocation] has the potential to play a critical role in 3G,” said Rohde, a Clinton-appointed Democrat whose status at NTIA is unclear. Rohde, noting the relocation measure should speed the 3G spectrum process announced by former President Clinton last October, said he would like to see the financial burden of moving government licensees elsewhere “spread out equitably.”
Weeks before the new Bush administration took control, Rohde said NTIA briefed the transition team on the Clinton 3G plan. But Rohde said he did not know whether the Bush administration will carry the 3G licensing process forward.
However, Commerce Secretary-designate Donald Evans told lawmakers at his Senate confirmation hearing earlier this month that 3G was on his political radar screen.
NTIA is a unit of the Commerce Department that manages federal government spectrum.
The government bands subject to relocation compensation are 216 MHz-220 MHz, 1432 MHz-1435 MHz and 1710 MHz-1755 MHz. Comments on the NTIA initiative, which proposes definitions for eligible cost reimbursement and a dispute resolution mechanism that includes negotiation, mediation and arbitration, are due in 60 days. Replies must filed 30 days later.
Last year, the World Radiocommunication Conference identified the 698 MHz-960 MHz, 1710 MHz-1885 MHz and 2500 MHz-2690 MHz bands for 3G services. The 1700 MHz band is occupied by the Department of Defense and other federal agencies. The 2500 MHz band is home to fixed broadband wireless operators, like long-distance giants WorldCom Inc. and Sprint Corp. Each firm has invested $1 billion in licenses. Schools and churches also hold licenses in the 2500 MHz band.
Mobile-phone carriers also have an incumbency problem in the 698 MHz-960 MHz band, which is partially held by TV broadcasters that show no signs of relinquishing the spectrum as they limp through the analog-to-digital television transition.
Mobile-phone carriers, which already face massive upfront license acquisition and system buildout costs, are growing increasingly concerned about potential relocation expenditures and the impact on future 3G wireless business.
“It’s expensive. It’s time consuming,” said Donald Brittingham, director of wireless policy at Verizon Wireless.
The complaint is that wireless firms are being forced to pay the U.S. government twice: once to pay for wireless licenses and then again to relocate government-operated radio systems to other frequencies. The relocation reimbursement requirement was included in the 1998 defense authorization act.
Some in the mobile-phone industry have suggested that a portion of revenue from next year’s 3G license auction be used to pay to relocate government radio systems to other frequency bands. Such a change likely would require legislation in Congress, however.
More than 200 megahertz was transferred from the federal government to the private sector as part of 1993 and 1997 budget bills. The 1993 legislation authorized the Federal Communications Commission to auction wireless licenses.
Since 1993, the Pentagon has grown increasingly resentful about having to surrender spectrum seen as critical for a military that in the future will emphasize mobility and information-centric interconnectedness.
The 1998 defense bill, which includes the relocation mandate, was a response to what the Pentagon sees as a raid on its spectrum inventory.
Deja Vu
The relocation issue is not new to the wireless industry.
During the mid-1990s, after buying licenses from the FCC, new personal communications services operators had to pay to move utilities and other fixed microwave licensees from the 2 GHz band to other frequencies.
The process, new to the industry at that time, sparked heated controversy between mobile-phone carriers and then-incumbent private wireless licensees.
The U.S. government is concerned about the prospect of seeing Asia and Europe take global leadership of 3G, a technology that promises to deliver voice, high-speed data and video services over Internet-enabled wireless devices. Some observers predict 3G services could decide the future direction of the Internet.
Last October, President Clinton issued an executive memorandum requiring NTIA and the FCC to determine whether the 1700 MHz and 2500 MHz bands can be shared with 3G mobile-phone operators or whether the bands must be cleared for 3G services.
Initial studies concluded some 3G sharing of the 1700 MHz band may be possible, but not so on the 2500 MHz band.
Final reports on the two bands will be released by March 1. The FCC expects to issue final 3G service and auction rules by Dec. 15, and plans to conduct the auction in June 2002. License should be awarded later that year.
At last Wednesday’s NTIA meeting, mobile-phone carriers voiced frustration about getting access to technical data from DoD and other licensees insofar as 3G spectrum sharing.
