Drawback

NEW ORLEANS -- Beltway perceptions of new media technologies may be out of step with cable industry reality, Robert Pepper, chief of FCC Office of Plans & Policy, said on NCTA convention bureau chiefs panel. Pepper said walking convention floor offered new perspectives: “In D.C., there’s a lot of hand wringing about broadband. But when you talk to suppliers and others in the industry, they are thrilled. Broadband seems to be being adopted more rapidly than expected.”

House Commerce Committee approved indefinite delay of 700 MHz auctions Thurs., although Chmn. Tauzin acknowledged that Sen. Stevens (R-Alaska) continued to have concerns about any postponement. Tauzin’s bill (HR-4560) would direct FCC to delay upper and lower 700 MHz band auctions now set for June 19 without setting new deadline. But he told reporters after brief markup that he had talked with FCC Chmn. Powell about possibility of one-year delay and indicated he would consider request. That would be enough time for both House and Senate to take legislative action, Tauzin said. Powell has indicated in recent congressional testimony that without new legislation, he was reluctant to flout existing statutory mandates, including requirement to deposit proceeds from Ch. 52-59 auction in U.S. Treasury by Sept. 30. Some of most strident arguments for delaying bidding came from ranking committee Democrat Dingell (Mich.), who repeatedly called previous decisions to hold auctions to raise revenue “asinine” and said keeping June 19 date would result in “another auction debacle.”

Research firm In-Stat/MDR forecast business wireless data users would top 39 million in 2006, up from 6.6 million at end of 2001. Throughout period, firm said it expected business users to be largest customer base for wireless data, with revenue soaring to more than $16 billion by end of 2006 from $4 billion in 2001. Trends expected to drive growth include increase in telecommuting, said Becky Diercks, dir.- wireless research for In-Stat/MDR. Citing recent survey, she said potential drawbacks included geographic coverage and reliability of connections.

Wireless carriers, equipment manufacturers and several incumbents that may have to be relocated to make way for 3G largely agreed with govt. effort to examine 1710-1770 MHz and 2110-2170 for advanced wireless services. But in comment period that closed this week at FCC, diverse group of stakeholders in 3G proceeding differed on details. Importance of global harmonization for 3G services and adequate replacement spectrum for incumbents that may be moved to make way for advanced wireless services were among themes running throughout feedback received by FCC. CTIA reiterated that as much as possible of bands allocated for mobile satellite service (MSS) should be reallocated for services “with more clearly demonstrated needs.” Comments marked latest round in positioning on 3G spectrum among MSS providers, MMDS licensees, wireless carriers and others at FCC. Latest 3G feedback also was first that FCC had received since govt. released new plan for advanced spectrum earlier this month that would take bulk of 1755-1850 MHz band occupied by Defense Dept. off table for now. Among concerns raised by incumbents was filing by New ICO that cautioned that reallocation of 2 GHz MSS spectrum for 3G would “represent an arbitrary, unprecedented departure from a reasonable allocation policy that has been under development for almost a decade.”

Finding effective stimulus for mass broadband deployment will require “inspiring vision” on level of what was envisioned during U.S. efforts to put first man on moon, 3Com Chmn. Eric Benhamou said. At New America Foundation broadband and spectrum reform discussion Mon., he said creation of “compelling content” and development of technology-neutral govt. policy was needed to “re-energize broadband.” He said more than $100 billion in U.S. fiber deployment investments and “sufficient advances” optical equipment development made it possible to strive for eventual offering of 100 Mbps interactive broadband services. Although he also warned against creation of “artificial competition” as primary policy goal, he said govt. subsidies were required to ensure “sufficient penetration and coverage” throughout country. He acknowledged sympathy for concerns of CLECs, whom he described as “dying breed.” However, he said both CLECs and ILECs had legitimate complaints about impediments to broadband deployment. He said ILECs had “done a good job of stalling” competitors who sought lawfully required access to ILEC facilities in order to provide services. However, he said ILEC argument against investing billions of dollars for infrastructure that would have to be provided below cost to CLECs wasn’t without merit: “There’s not enough incentive to adopt the behavior we would like them to adopt.” NCTA spokesman said in response to Benhamou’s comments on need for govt. subsidies that cable industry was “example of marketplace success” in broadband deployment and delivery: “We share Mr. Benhamou’s enthusiasm, that’s why the cable industry has invested more than $52 billion in private risk capital to bring broadband to more than 60 million households in a few short years. The cable industry has found that private market solutions are not only preferable but are effective.” As for role of spectrum auctions in hastening 3rd generation wireless broadband deployment, Benhamou suggested that U.S. regulators learn from “mistiming of the auctions” in Europe. He said one of drawbacks to “open and democratic” auction process was “incredible levels” of spectrum prices often paid by entities that had significant cash flow but lacked responsible business plans. He said if and when such companies suffered financial problems because of lack of swift return on their investments, European govts. would have to subsidize them to keep them afloat. That will result in “huge loss of credibility of government,” Benhamou said. He also said current economic downturn predated Sept. 11 terrorist attacks: “Frankly speaking, the ‘New Economy’ has been flat on its ass, and has been for months.”

Consumer advocates painted bleak picture for customers seeking better service and more competitive rates for cable, phone and Internet access at Consumer Federation of America conference in Washington. One advocate said deregulatory atmosphere at FCC and in Congress meant large companies such as AOL Time Warner (AOL-TW) would continue to dominate country’s telecom service sector. “We think there’s going to be more relaxation with this Bush-led FCC,” said Gene Kimmelman of Consumers Union. “There’s no real engine to produce a major overhaul at this time.” He said FCC under Clinton administration “put blinders on,” allowing companies to acquire bigger footprints without competition. Unless public “rises up” and forces govt. to “deliver on what was promised,” it will continue to pay higher prices for fewer choices, Kimmelman contended. Every govt. effort to deregulate has resulted in higher bills, he said, and strict regulation and oversight, along with true competition, are only ways to resolve problem of monopolies. “We want not just many [cable TV] channels, but many channels from many sources, owned by many people,” he said. Kimmelman acknowledged that with Sept. 11 attacks, telecom services weren’t top priorities for many people and that safety, security, education and health care were much bigger issues for most Americans.

BOSTON -- Despite overall economic downturn in telecom sector, international cross-section of fixed wireless industry at preliminary session of Wireless Communications Assn. (WCA) conference here said networks in Latin America and Europe were moving forward, with some changes. Regulators in some cases aren’t immediately seizing licenses if terms aren’t met and govts. are turning more frequently to so-called beauty contests rather than auctions, participants said Sun. Biggest change may be that both regulators and financial backers are expecting realistic business plans with controlled buildout, they said. Among challenges in Europe are that unbundled local loop regulations in some cases can make it easier for competitors to lease network elements from incumbents for DSL, making wireless network buildout less compelling, said Arturas Medeisis, radiocommunications expert with European Radiocommunications Office. “So far, we haven’t seen true success stories yet,” he said of Western European markets.

House Commerce Committee will introduce new bill “in next month or so” to replace last session’s HR-2420 that would give Bells more regulatory freedom for data transmission and expects easy passage in House but harder job in Senate, Ken Johnson, spokesman for Committee Chmn. Tauzin (R-La.), said Thurs. Johnson, who participated in panel discussion at Precursor Group conference in Washington, urged audience not to “mistake inaction with indecision” on part of Committee because it still was committed to basic HR-2420 concept. Bill probably will be same as last year’s version although it could change during legislative process, Johnson said. Tauzin looks at current version of bill as setting tone for discussion, he said.

While differing on some details, wireless carriers and equipment makers in comments last week urged FCC to make additional spectrum available for 3rd generation and advanced services. Among most pointed recommendations were those of equipment vendors such as Ericsson, Motorola and Qualcomm, which pointed FCC toward spectrum now occupied by federal govt. users in 1.7 GHz band as ideal for 3G. Motorola urged Commission to alter auction process so that part of proceeds could be used to help pay for relocating incumbents. In move that may require legislative change, Motorola said that would avoid pitfall of current system “where the true costs of relocating incumbents only becomes known to successful bidders after the auction.” Several commenters stressed need for FCC to make more spectrum available on faster timeline than that laid out under several agency proposals.