WASHINGTON-Only weeks after luring Alex Mandl away from AT&T Corp. for a reported $20 million in a much celebrated coup, Associated Communications L.L.C. now finds itself mired in controversy over the suddenly popular 18 GHz spectrum for local broadband wireless multimedia services that Mandl was hired to grow.
The Federal Communications Commission late last month abruptly stopped accepting applications in that band after Teledesic Corp., a global satellite venture headed by cellular pioneer Craig McCaw, complained further licensing of digital electronic messaging services might interfere with downlink communications.
To complicate matters further, the Clinton administration wants to auction $500 million worth of the sparsely occupied 18 GHz band to help pay for a grab bag of new domestic programs announced during the Democratic National Convention last month.
Associated-a diversified communications company majority-owned by the Berkman family of Pittsburgh that sold off cellular holdings two years ago to SBC Communications Inc. for $700 million-said it finds the substance and timing of Teledesic’s filing suspicious.
“The Commission must see Teledesic’s request for what it is: a blatant attempt to undercut the due process rights of 18 GHz DEMS applications/licensees and to undermine local, facilities-based competition as contemplated in the 1996 [Telecommunications] Act,” Associated charged in response to Teledesic’s petition to freeze application processing.
Indeed, Teledesic’s pleading was filed with the FCC four days after the surprise announcement that Mandl, a likely successor to AT&T Corp. chairman Robert Allen, was leaving the long-distance telephone giant to head a startup that aspires to compete with local regional Bell telephone carriers, and even Teledesic, for business users with unproven wireless technology from the 1980s.
Associated said it will offer customers a menu of voice, high-speed data, Internet access and video conferencing.
While Teledesic’s low-earth-orbit satellite system-also based on an untested technology-is several years away from being operational, Associated plans to begin commercial service next year in 31 major markets and expand from there.
Associated said the 18 GHz band can be shared by DEMS and satellite services. Teledesic believes otherwise.
“There is absolutely no way the Commission can decide to allow services that are incompatible with the intended use of the spectrum,” said Scott Harris, a lawyer for Teledesic who resigned as chief of the FCC International Bureau in May.
Harris suggested moving DEMS to other frequencies if federal regulators conclude that coordination with satellite operations is unfeasible and that DEMS duplicates other terrestrial services.
Both DEMS and non-geostationary satellites are authorized at 18 GHz, with the latter gaining access to the band in July. The 1995 World Radiocommunication Conference made 18 GHz available for non-GEO satellite downlinks and 28 GHz for uplinks at the U.S.’ urging on behalf of Teledesic.
Toni Cook-Bush, an attorney for Associated and one-time lead candidate to succeed Alfred Sikes as chairman of the FCC, said the 18 GHz application freeze is narrow and will not immediately disrupt Associated’s business plans.
“We have a disagreement with them” that Bush said can be technically resolved. Though Associated got its current licensees for free, Bush said the firm is not thrown off by the White House’s desire to auction 18 GHz spectrum.
Associated and Digital Services Corp., partners in the wireless enterprise that Mandl will guide, account for most 18 GHz licenses.
“[A]ccepting and processing the DEMS applications received in the last few months or NGSO/FSS [non-geostationary fixed satellite service] earth station applications my affect ongoing sharing and coordination discussions between DEMS applicants/licensees and Teledesic, the NGSO/FSS applicant,” said the FCC.
“Processing might also affect a forthcoming Commission rulemaking because applications being filed and processed are not necessarily in conformance with application and technical requirements that may be developed for this band,” the FCC added.
Clinton and his GOP rival, Senator Bob Dole, are relying heavily on spectrum auction receipts to help underwrite their domestic agendas. Dole is counting on $34 billion from wireless auctions to offset revenue lost in his 15 percent tax cut proposal. Clinton has factored in roughly the same amount of auction proceeds in his plan to balance the budget by 2002.
In addition, the White House plans to pay for college tuition tax credits and public school renovation with billions of dollars anticipated from airwave sales.
A potential problem for both presidential candidates is their auction plans are based on highly speculative assumptions about the value and availability of radio frequencies.
