FCC REJECTS NORTHPOINT APPLICATION AND ORDERS AUCTION

Northpoint and others still can launch service in band, but must go through geographic licensing scheme that will result in competitive bidding, if mutually exclusive applications are filed. Commission stopped short of giving Northpoint license, but did potentially open up satellite spectrum for terrestrial service over objections of DBS industry, which expressed concerns about interference. Geographic licensing scheme is based on Component Economic Areas (CEAs) developed by NTIA, which are based on 172 counties, rather than 210 DMAs used by broadcasters. One spectrum block of 500 MHz will be available per CEA, under rules. Northpoint had based its business plan on providing service in 68 of 210 broadcast DMAs. FCC decision to use CEAs is “big loser for local broadcasters,” Northpoint Vp Toni Cook Bush told us: CEAs “are confusing.”

Decision probably will prompt Northpoint appeal. Bush said company hadn’t made final decision and would wait for text of order before making statement. Earlier, top officials told us they would take action that would include filing motion for reconsideration with FCC or appeal with U.S. Appeals Court, D.C. Northpoint said it would base appeal on fact that minorities, including women, didn’t fare well in auctions and ones that did ended up in bankruptcy.

If Northpoint mounts legal challenge, it’s expected to use case of public broadcasters, which successfully overturned in federal court similar decision by FCC that forced it into auction in July 2001. In that case, FCC issued order requiring public broadcasters to undergo competitive bidding for commercial spectrum. Citing Communications Act, court upheld public broadcasters’ contention that that Act “unambiguously” forbade FCC from requiring noncommercial educational broadcasters (NCEs) to participate in auction to obtain licenses for any channel, reserved or unreserved. Northpoint believes since it’s using satellite spectrum and has filed application to launch satellites, it’s exempt from auction under ORBIT Act. Rivals, however, argue Northpoint still is terrestrial company.

Ruling prohibits dominant cable companies from acquiring attributable interest in MVDDS licensee in service areas where “significant” overlap is present. However, DBS providers aren’t restricted from obtaining MVDDS licensees, meaning Pegasus, which has filed application to launch Northpoint-type service, also can enter auction or buy stake in company. Commission “left open the possibility” that DBS companies can find “common ground to work together,” industry source said: “It’s not likely, but stranger things have happened.”

Joint statement by FCC Chmn. Powell and Comr. Abernathy said Commission had “wisely chosen not to saddle MVDDS licensees with regulatory burdens” based on service model. They said “regulatory restraint” had been used to allow MVDDS to evolve marketplace. Commission was sensitive to pioneering efforts of Northpoint, but couldn’t justify giving company spectrum under current statute or “exclusive privilege” it was seeking. Statement also praised Northpoint efforts to develop new service. “There is little question had it not been for Northpoint, the MVDDS service would not be ready to move forward today.”

Comr. Copps said Commission could “reduce uncertainty and promote greater efficiency by establishing a more universal understanding of the meaning of harmful interference rather than establishing new standards each time a dispute arises.” He said “effort would reduce uncertainty and lead to fewer firefights” between new and incumbent spectrum users. Copps opposed proposal to exempt MVDDS operators from must-carry rules. He said new rules would allow new service to move forward.

Northpoint was “disappointed” with decision, CEO Sophia Collier said. She was pleased Commission decided Northpoint technology worked, but disappointed that after 40 months company didn’t get license. “We deserved approval just as much as the satellite companies who won’t be going to an auction,” Collier said: “Disparate treatment of applicants that share the same spectrum is a poor public policy.” She said FCC decision was “first time the FCC has ever found that terrestrial operations can co-exist ubiquitously with satellites, so it’s a real technical milestone.”

Industry reaction was mixed. Northpoint decision has “greater appearance of fairness than the reality of fairness,” Media Access Project Pres. Andrew Schwartzman told us: “The bottom line is a new technology has been validated, but a new competitor using the technology is being blocked, perhaps permanently from bringing it to market. It’s a bad outcome.” Decision sets “important precedent,” said CTIA Pres. Tom Wheeler: “By making this spectrum available for auction, the FCC has played its role as a good steward of a scarce public resource.” Skybridge attorney Phil Spector was pleased to see rules that protected NGSO FSS operators in band. “It was exactly what we expected.”

Commission also adopted equal power flux density (EPFD) limits for MVDDS operators. MVDDS operators must ensure EPFD limits aren’t exceeded at any DBS customer location. If EPFD limits are exceeded, MVDDS operator must suspend service until it can meet limits. To facilitate mutual sharing of 12 GHz band, Commission established MVDDS, NGSO FSS spacing rules and coordination requirement. Commission also adopted safety valve that allows individual DBS licensees or distributors to present evidence that appropriate EPFD for given service area should be different from EPFD applicable in that zone.

FCC approved fixed one-way operations, but mobile and aeronautical operations were excluded from service areas. Commission required non-public safety Private Operational Fixed Service (POFS) licensees to protect MVDDS and NGSO FSS operations and required MVDDS and NGSO FSS operations to protect incumbent POFS licensees. Commission also suspended acceptance of POFS applications for new licenses, amendment to applications for new and modified licenses, and applications for major modifications to existing licenses.