Addressing a chief concern from designated entities over upfront financing, the Federal Communications Commission has postponed the Local Multipoint Distribution Service auction until Feb. 18.
The FCC said it delayed the auction, previously scheduled for Dec. 10, in an effort to provide a greater opportunity for prospective applicants to bid in the 28 GHz-31 GHz band auction. The commission in September dropped installment payment options, a move DEs warned would bar them from participating in the auction because of a lack of upfront financing.
The commission said its decision will give businesses opportunities to access additional sources of capital, which could result in new competition in the nation’s cable TV and local telephone markets. In addition, the commission said applicants will be able to take advantage of the World Trade Organization agreement to pursue additional sources of financing and investment. The FCC has proposed amendments to its rules in response to the WTO agreement, and the Wireless Telecommunications Bureau will release a public notice explaining how these amendments will affect LMDS applicants once the FCC has adopted final rules on this proceeding.
Local exchange carriers, competitive LECs, cable companies and small entrepreneurial companies are interested in LMDS spectrum, which most plan to use to deliver two-way voice, data, video and Internet services. But the participation of telephone and cable companies may be limited in light of the FCC’s auction rules. These companies are not allowed to bid for spectrum in their own service areas.
The United States Telephone Association-which represents local telephone companies, Bell companies and GTE Corp.-and DEs recently petitioned the FCC for a 60- to 90-day extension of the auction. The DEs wanted more time to gather financing. The USTA needed an extension because it has an appeal pending over the service-area rule in federal appellate court. Oral arguments in the case are scheduled for Jan. 16.
“Without the court’s decision, our participation [in the auction] is hampered,” said Mary McDermott, USTA vice president for legal and regulatory affairs. “We don’t want to see the auction occur until we have a shot to participate.”
Manufacturers are gearing up for the emerging fixed broadband wireless market, of which LMDS carriers are expected to take the lead. Northern Telecom Ltd. recently offered to purchase all of the issued and outstanding common shares of Broadband Networks Inc., a manufacturer of broadband wireless networks, on a fully diluted basis. Nortel calls the fixed broadband wireless market “the fastest developing area in the marketplace.”
