This speech, like youth, wasted on the young…

Posted in Financials, Globalstar, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 1:23 pm by timfarrar

FCC Chairman Genachowski took a trip to Wharton today, to tell a bunch of students about “the incredible world of mobile communications”. However, he also gave away an enormous amount of information about the FCC’s spectrum agenda, which so far has gone almost completely unreported. As first sight one might be distracted by such nonsense as “U.S. mobile data traffic grew almost 300% last year, and mobile traffic is projected to grow an additional 16-fold by 2016″ and the boast that he alone knew “that something was up”, “did the math” (wrongly) and “sounded the alarms…about the looming spectrum crunch”. Incredibly Chairman Genachowski even makes the ludicrous claim that:

“There were many skeptics [in 2009] about whether we faced a spectrum crunch. Today virtually every expert confirms it.”

Of course this comes just at the time when journalists are starting to ask “What happened to the spectrum crunch?

Once you’ve stopped laughing at all of this, the meat of the speech is in fact very useful, as the Chairman indicates just how he hopes the “audacious” target in the National Broadband Plan of freeing up 300MHz of spectrum by 2015 will be “exceeded” by a combination of auctions, removal of regulatory barriers, clearing the TV bands and spectrum sharing. First of all, 75MHz of AWS spectrum will be auctioned, including, in 2013, the 10MHz of H-block spectrum desired by Sprint. This confirms that DISH has lost the battle to avoid a 5MHz shift in its uplinks, but in compensation DISH will at least be authorized to use the full 40MHz of spectrum (2005-2025MHz up and 2180-2200MHz down) for a terrestrial network “later this year”.

Secondly, an additional 50MHz of AWS-3 spectrum (desired by T-Mobile) will be auctioned, based on spectrum sharing with the DoD in the 1755-1780MHz uplink band. Finally, AT&T will get its rebanding of the WCS spectrum approved. The Chairman even indicates that the FCC is “working with stakeholders to enable use of the portions of the mobile satellite spectrum in the L- and Big LEO bands [i.e. LightSquared and Globalstar] for terrestrial service” although notably this spectrum is not included in the 2015 total, indicating that these efforts may not be concluded quickly.

The most obscure reference is in the unstated 15MHz balance of AWS spectrum planned for auction before 2015. Given the short timeframe, this can only be the 1695-1710MHz spectrum being reclaimed from NOAA. Presumably this block will be made available as uplink spectrum (because it is adjacent to AWS-1 uplinks at 1710-1755MHz) and as such it will be attractive for AT&T to pair with the WCS spectrum (which will probably all be converted to downlinks). However, this leaves LightSquared in a bind over the spectrum “swap” it proposed last Friday, because LightSquared does not want more uplink spectrum (let alone having to buy it in an auction), and after giving up the 1695-1710MHz block, NOAA will need to use the 1675-80MHz band even more intensively for weather balloons.

Looking at the bigger picture, the situation may be made more difficult not just for LightSquared, but for DISH and Clearwire as well, because the FCC’s actions appear designed to give all of the major wireless operators the spectrum they are hoping for in the near term. Specifically, the FCC intends to free up the H block for Sprint, the AWS-3 block for T-Mobile and 1695-1710+WCS for AT&T, while Verizon has already had its SpectrumCo purchase approved. Especially in the wake of yesterday’s T-Mobile/MetroPCS merger, this makes me wonder just how many attractive alternatives Charlie Ergen still has to a deal with Clearwire for buildout of his 2GHz spectrum?


  1. tmfsite said,

    October 4, 2012 at 3:06 pm

    Tim – you are a bit over your skis on this one. The speech doesn’t really confirm anything (beyond the politics of the administration and FCC).

    The mandate from the Middle Class Tax Relief Act says to auction the “H” block. It doesn’t say to Sprint. Please note the following for your readers to improve the accuracy of this post.


    “During the meetings, DISH urged the Commission to complete the above-referenced rulemaking as expeditiously as possible, and maintain the existing band plan, consistent with the AWS-4 NPRM.
    1 DISH reiterated that a 5 MHz upward shift of the AWS-4 uplink spectrum at 2000-2020 MHz would needlessly inject serious delay and risk to DISH’s planned deployment.
    2 In addition, DISH explained that deploying high-power terrestrial mobile broadband services in the lower and upper H Block (1915-1920 MHz/1995-2000 MHz) could also create significant
    interference to PCS and AWS-4.
    3 For AWS-4 alone, high-power H Block operations would render, at least, 25 percent of the AWS-4 uplink band unusable. Consistent with other stakeholders in this proceeding, DISH provided the Commission with a number of alternative uses for the H Block that would make it viable for auction,4 without jeopardizing the ability to deploy mobile broadband services in the AWS-4 band (2000-2020 MHz and 2180-2200 MHz), and without requiring a reduction in emissions or power levels of AWS-
    4. Specifically, these options include small cell LTE broadband deployment in both the HBlock uplink (1915-1920 MHz) and downlink (1995-2000 MHz); Air-to-Ground service in the H Block uplink and Ground-to-Air service in the H Block downlink; as well as a combination of
    these two services within the band. In addition, DISH committed to reasonably cooperate with FCC efforts to establish service rules for the H Block in the future that allow for productive use of the H Block while providing protection for other bands and services, including AWS-4.

    For Motorola’s & AT&Ts comments suggesting a shift for Dish but no auction of the “H” block just for “Sprint” see this filing
    4 See e.g., Motorola Mobility Comments, WT Dkt. Nos. 12-70 and 04-356 and ET Dkt. No. 10-142, at 4 n.8 (May
    17, 2012); AT&T Comments, WT Dkt. Nos. 12-70 and 04-356 and ET Dkt. No. 10-142, at 5-7 (May 17, 2012).

  2. timfarrar said,

    October 4, 2012 at 3:31 pm

    Thanks for the comment. Of course an H-block auction would not be “to Sprint”, but the rules that it would be auctioned under (with power limits in 1917-20MHz) make it far more useful to Sprint, to combine with the G block for 10×10 LTE, than to anyone else. Sprint will have to pay up, probably to the tune of a couple of billion dollars, but it wouldn’t be very (politically) smart for AT&T or Verizon to try and outbid them, and the spectrum would be less useful to a smaller player (and vulnerable to a 700 A block reprise of no compatible devices being available).

    With regard to DISH’s submission to the FCC, the FCC is not allowed to decline to auction the H block because of AWS-4 interference, only because of potential PCS interference (which at least according to Sprint can be addressed through imposing power limits in 1917-20MHz, and is therefore nothing whatsoever to do with DISH).

    As I’ve noted previously, an H block auction raising a couple of billion dollars (a reasonable benchmark for what Sprint would have to pay) is also a good way to mitigate windfall concerns (despite Public Knowledge et al rowing back on their original comments). It is inconceivable that any reasonable amount of money could be raised by the auction restrictions DISH suggests – remember that the last auction of Air-To-Ground spectrum only raised $40M and small cell spectrum is exactly what future sharing efforts are supposed to deliver. I’d guess auction proceeds under these restrictions could well be less than $100M. How would that go down in Congress when Genachowski is promising that “the revenue generated will serve as a down-payment on funding a nationwide Public Safety Network and to reduce the deficit”?

    Finally, I don’t think most people really believe that there would be major delays, or significant BAS interference concerns due to a 5MHz uplink shift.

  3. tmfsite said,

    October 4, 2012 at 7:13 pm

    Tim, Its your site so you get to say what you want. I get these fools in DC need to raise some funds to pay for all their money burning but there are real interference issues highlight by industry and Julius doesn’t hold ANY CARDs. For instance, the first time that Charlie tried to take a run at Loral was back in 2003. He’s been watching it ever since, plotting, planning with friends to take another run. What this administration simply doesn’t understand is that investors (the kinds that actually build businesses and hire people) don’t have to invest when they don’t see the returns that they want. Charlie doesn’t have to play ball with Julius if he doesn’t like the game he sees and if you really understood the scope of what was going on and the types of dollars that are at play across the telecom industry right now than you would realize that he can take his ball and go home for a while and these “Sound Bites” in DC will be left flailing in front of the camera very much Presidentially.

  4. telcominvestor said,

    October 5, 2012 at 2:04 pm

    You have made a good case for Dish’s interest in Clearwire. I was wondering what your thoughts were for Sprint to make a move to purchase the remaining interest in Clearwire or do so jointly with Dish. Could this be the reason Dish has been purchasing the debt? If they have been buying the debt at a material discount to par, wouldn’t this be the most efficient way of working themselves into the equation? Or would Dish be interested in swapping the debt for spectrum? Another way to efficiently use capital versus an outright cash deal?

  5. timfarrar said,

    October 5, 2012 at 2:31 pm

    It’s possible Sprint has been backed sufficiently into a corner (assuming the TMO/MetroPCS deal goes through) that they would have to do a joint deal with Ergen for Clearwire. But this wouldn’t look anything like the Sprint-LightSquared arrangement, which Sprint was hoping to establish as a model for a future public safety D block hosting deal. There are also complications in that all Sprint really needs from Clearwire is a portion of their spectrum, but not the tower leases and Dish probably doesn’t need much 2.5GHz spectrum (except on an interim basis for a WiMAX network). Indeed Ergen suggested that if anything he needs lower frequency spectrum (Incentive auction? LightSquared? 700 E block? Partner?). So why do a full buyout of Clearwire?

  6. TMF Associates MSS blog » The emperor has no clothes… said,

    October 13, 2012 at 7:11 am

    [...] I pointed out last week, despite growing skepticism over “What happened to the spectrum crunch?“, the FCC [...]

  7. FCC Limits Dish on LTE Terrestrial Spectrum said,

    November 23, 2012 at 4:00 pm

    [...] AWS-3 spectrum, desired by T-Mobile, may also be auctioned in the 1755-1780MHz and 2155-2180 MHz band. [...]

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