WASHINGTON-The drama that took place during the Senate Commerce Committee’s markup of telecom reform measures paled compared to what happened behind the scenes.
In at least two instances, issues of importance to the wireless industry-small geographic licenses and special access-were decided in backroom deals and included in a manager’s package that has yet to be consolidated and publicly released.
In a bizarre series of events, Sen. Olympia Snowe (R-Maine) was able to get included in the bill an amendment that would require the Federal Communications Commission to change its plans for licensing the 700 MHz band commercial licenses and sell some of the spectrum in smaller slices. Today the FCC plans to auction blocks of spectrum in six regional chunks.
“Above all else, these changes to the FCC’s licensing will enable smaller service providers, who are more inclined to invest in remote areas, to offer wireless Internet access,” said Snowe.
RCR Wireless News obtained a copy of the notes of what has been accepted, but a final version was not available.
Without seeing the final text, rural wireless sources were grumbling that it only requires a 6-megahertz slice rather than using one of the 12-megahertz blocks.
The 12-megahertz block envisions a pair of 6-megahertz chunks, which is what is needed for broadband, according to sources.
“With 3 megahertz, you are squeezing the pipe too much. It reduces the number of customers that can be served at any one time. Even then you are degrading the experience for those customers so it doesn’t qualify as broadband,” said one rural wireless representative.
A 6-megahertz licensee would use 3 megahertz for the uplink and 3 megahertz for the downlink of wireless broadband services.
Snowe’s office said it is working to fix this before the bill is debated on the Senate floor.
The fact that an amendment dealing with small license areas was included surprised many who witnessed a heated exchange between Snowe and Sen. Ted Stevens (R-Alaska), chairman of the Senate Commerce Committee, at the end of day two of the markup.
As Snowe pushed hard for her amendment, Stevens got more and more agitated, finally ending the session without resolving the issue. The amendment seemed doomed-especially since Stevens mentioned it during his after-session discussion with the press.
“The Snowe amendment thing-I’m embarrassed. That was my amendment. It was in a bill, but it was changed by virtue of what we did last year. The date is set. I just think to try to put the date so close to the time-this bill probably can’t become law until September, that’s for sure-to put the date in February of 2007 would really put it into gear. They couldn’t comply with that. It takes too long to put these things together. As much as I would have liked to, I would have liked an earlier date, but we didn’t. The date was set later because of the problems of the digital TV transition which is set in 2009. If we put it in 2007, who’s going to bid on spectrum that they’re not going to be able to use for two years?” questioned Stevens.
A legislative aide to Snowe said Stevens’ comments to reporters showed the confusion about what she wanted. She did not want to change the date of the DTV transition, just the way the spectrum was allocated. Similar amendments were also filed by Sens. Bill Nelson (D-Fla.) and Conrad Burns (R-Mont.). As part of the backroom dealing, the three amendments were cobbled together.
In addition to requiring only 6 megahertz be made available in smaller licenses, the new language does not specifically require the spectrum to be split according to rural service areas or metropolitan trading areas.
“The wireless industry believes in diverse allocations of licensed spectrum, as indicated by our previous support of the RSA allocation of 700 MHz already made. While we are not clear on whether additional allocations are necessary, the wide array of service providers clearly illustrates the industry’s ability and desire to provide all consumers with its cutting-edge products and services,” said John Walls, vice president of public affairs for wireless industry trade association CTIA.
Special-access reform
Special access is a term to describe the dedicated lines used to carry traffic from a wireless base station to a mobile-switching center and/or onto the public switched telephone network. Sprint Nextel Corp. told the Senate Commerce Committee last month that 99 percent of the special-access lines it uses are controlled by Bell operating companies.
Sprint Nextel made a big push for special-access reform and was pleased when Sen. Daniel Inouye (D-Hawaii), ranking member of the Senate Commerce Committee, made it a part of draft bill. However, Stevens did not accept the addition and an Inouye amendment was watered down behind the scenes.
“In 2005, special access generated more than $16 billion in fees from wireless, long-distance, Internet and other communications carriers. Approximately 82 percent of the total fees for 2005 were paid to the three largest regional Bell operating companies-two if the AT&T Inc./BellSouth Corp. merger is approved. In that same year, according to their own FCC filings, the rates of return, after taxes, on special-access offerings for BellSouth and AT&T were 98 percent and 92 percent, respectively. In addition, Verizon Communications Inc., AT&T, and BellSouth have priced their special-access services 125 percent to 179 percent above cost in the last four years. The current anti-competitive structure for special-access services warrants a mechanism be put in place for the largest carriers to impose the pricing discipline that the marketplace has failed to provide,” said Vonya McCann, Sprint Nextel vice president of government affairs.
The new language directs the FCC to complete within nine months two stalled proceedings dealing with special-access pricing and special-access performance.
