Byline: CHRIS SEWELL
You’ve probably seen the ads for XM Satellite Radio, with popular artists such as David Bowie, Snoop Dogg and B.B. King falling out of the sky, crashing through ceilings and into the lives of unsuspecting consumers. The service’s appeal is obvious: nationwide coverage, crystal-clear sound and endless variety on 100 channels of music, news, talk and sports (some commercial-free) that would satisfy even the most demanding listener’s taste. And all for a mere $10 per month.
The TV spots are the linchpin of XM’s $100 million advertising blitz, and for the company and its direct competitor, Sirius Satellite Radio, this is a critical time. Satellite radio is the subject of considerable media buzz, and subscribers’ first impressions are taking shape.
But complicating their efforts, Sirius and XM are embroiled in two separate but related FCC disputes involving both in-band and out-of-band emissions that could seriously compromise their services if the rulings don’t go in their favor.
Since 1997, when digital audio radio service (DARS) crashed into the lives of its license-exempt and wireless communications services (WCS) radio frequency neighbors in the 2.3 GHz spectrum block, coexistence has been anything but civil. Controversy has stirred in both the 2.3 and 2.4 GHz spectrum bands, and unlicensed and WCS companies say that Sirius and XM are using their cachet and momentum to haughtily ask the FCC for the best of both worlds.
For unlicensed companies that operate in the 2.4 GHz band, Sirius and XM argue that there’s no problem just yet. But over the next few years, the cumulative out-of-band emissions caused by a projected increase in the number of unlicensed devices – including everything from microwave ovens to Bluetooth-enabled products – will be too much for their receivers to bear, the companies insist, and the FCC rules governing those devices should consequently be revised. With the anticipated emissions increase, Sirius and XM claim that the noise could jeopardize their $3 billion technology and spectrum investment.
Conversely, WCS companies – which include AT&T, BellSouth, Verizon and WorldCom – that are licensed to use a DARS-adjacent 2.3 GHz band are urging the FCC to force XM and Sirius to reduce the power levels of their terrestrial repeater networks. The carriers say that the noise created by DARS towers – some of which operate at 40 kw, compared with the FCC-mandated 2 kw power cap for WCS companies – will overload their systems and hinder their future plans.
On the surface, Sirius and XM appear to be unjustly asking unlicensed companies to keep the noise down before they’ve made a sound, while also insisting that WCS companies just deal with the noise levels generated by DARS’ repeater networks. Critics say Sirius and XM have taken an overly aggressive stance.
“There’s an arrogance to their position when you juxtapose WCS and the unlicensed bands,” said Paul Sinderbrand, counsel to the Wireless Communications Association International, a nonprofit group that represents the wireless broadband industry and lists among its members many of the largest carriers and vendors. “They want to operate at high powers because that allows them to spend less money on repeaters, and that cost gets shifted to WCS. On the flip side, they don’t want to spend a dime to filter out the unlicensed signals, and they want to impose the cost on the unlicensed guys.”
Sirius and XM, however, claim that they cannot filter out-of-band emissions from unlicensed companies because it is impossible to filter noise originating in another band. WCS companies, however, could solve their concerns with DARS’ high-power repeaters by using a filter called automatic gain control.
Sirius co-founder Rob Briskman said the arguments appear contradictory, but there is a distinct difference: “In the 2.4 band, nothing that we’ve proposed affects the operating characteristics. But in the 2.3 band, WCS is proposing we change our in-band characteristics.”
The FCC will decide both spectrum battles in the coming weeks, and although nothing has been made public yet, sources close to the matter who spoke on the condition of anonymity said the FCC fully recognizes the “have your cake and eat it too” position Sirius and XM have taken. The sources said FCC bureau staffers have delivered recommendations to the commissioners, and it is likely that a power limit compromise somewhere between 2 kw and 40 kw will resolve the 2.3 GHz dispute and that Sirius’ petition for rulemaking in the 2.4 GHz band will be dismissed without solicitation of comments.
Sources added the vast majority of FCC petitions do move on to the comments stage, with only a few dismissed outright. If the FCC follows its staff recommendations, the implication is that the requests for unlicensed companies have little merit.
At press time, nothing was finalized at the FCC, and the commissioners still had not announced a decision in either case. Only after their decision will the dispute’s losers know how to begin calculating the impact on their businesses.
Washington, D.C.-based XM launched in San Diego and Dallas/Fort Worth last September before taking its service throughout the 48 contiguous states two months later. New York City-based Sirius lost the first-to-market advantage to XM and remains less visible, marketing only in the 11 states where service is currently available, with service in the remaining states promised by July 1 of this year.
In January, just weeks before its official Feb. 13 launch, Sirius filed a petition for rulemaking that asked the FCC to revise its rules for the so-called Part 15 and Part 18 devices that operate in the 2.4 GHz spectrum band. (Part 15 rules govern the operation, manufacturing and marketing of unlicensed radio frequency devices; Part 18 rules regulate industrial, scientific and medical devices that emit RF energy.) XM filed reply comments soon after that essentially echoed the request.
Anticipating the proliferation of license-exempt RF devices operating in the 2.4 GHz band, Sirius and XM are urging the FCC to reduce the out-of-band emissions these unlicensed devices generate by 33%. As Sirius and XM correctly argue, according to FCC regulations, even if unlicensed devices fall within current emissions standards, unlicensed operators with devices that cause interference to licensed users must cease operation.
Devices such as garage door openers and microwave ovens were among the first users of the 2.4 GHz band, and although these devices still operate in that spectrum, commercial services such as Bluetooth, RF lighting, Ultrawideband and 802.11b – the networking protocol that enables Wi-Fi wireless LANs – now use the band as well.
No one contests that the number of unlicensed devices will soar in coming years: In-Stat/MDR predicts that 780 million Bluetooth-enabled devices will enter the market by 2005, and InfoTech estimates that 23.6 million wireless LAN units will be sold in 2005, compared with 3.3 million units in 2000.
Sirius and XM argue that because Part 15 and Part 18 rules date to the late 1980s, when fewer unlicensed devices existed and there was less chance of interference, the FCC should update its out-of-band rules to reflect the future license-exempt environment and the potential interference those devices could cause.
“Right now there really isn’t a problem,” Sirius’ Briskman said. “But when there are tens of millions of these devices, that’s when it gets bad, and our customers will get increased interference.”
Sirius and XM fear that because most of their receivers are in automobiles, wireless devices such as cell phones and PDAs that operate in close proximity to their sensitive receivers could give DARS’ image a black eye, causing service degradation and, ultimately, slowing DARS deployment.
But because Sirius and XM have based their interference conclusions upon tests and engineering models, sources said that the FCC needs more than just theoretical conclusions to change the Part 15 and Part 18 rules that have been a feather in the commission’s cap and helped boost the unlicensed industry. By allowing devices that use relatively low-level RF signals to operate as license-exempt, the rules have enabled technical innovation and a fast market introduction of many devices.
Due to widespread use of existing unlicensed devices, the headaches associated with establishing new emissions limits and the absence of any tangible harmful interference evidence to support Sirius and XM’s claims, sources said the FCC understands that it cannot justify disrupting license-exempt companies based on an uncertain future. The benefits of changing Part 15 and Part 18 rules, sources said, are simply not there.
“It’s a hornets’ nest, and the commission needs some justification and compelling public interest to go into that nest,” one source said. “If this was truly a problem they might be interested, but they probably feel it’s more trouble than it’s worth.”
Some DARS critics say that Sirius and XM understood that the potential for interference existed before going in, but that to keep manufacturing costs down, they designed their sensitive receivers marginally. Now that they’ve realized their systems are filtered improperly, critics say that Sirius and XM are taking a legal course of action rather than incurring the steeper costs associated with redesigning their entire systems.
“They haven’t come close to demonstrating that this is a serious problem for them,” said Bob Primosch, who also acts as legal counsel for the WCA. “They knew the rules. Our feeling is they’re basically asking the commission to protect them from flaws in their own system design. There’s no way they couldn’t have known those unlicensed devices existed.”
Briskman disagreed, saying that proliferation of unlicensed devices is something he and others did not foresee when Sirius and XM designed their satellite radio systems. He said that although Sirius launched its first satellite less than two years ago, the system design began several years earlier, when the future growth of unlicensed devices was not yet obvious.
“They’re half correct,” Briskman said. “The rules have been in place but were created for a different environment. When they were created, very sensitive satellite receivers did not exist.”
Although Sirius and XM say that unlicensed companies can simply install a low-cost notch filter to reduce their emissions and can do so over an 18-month period, license-exempt proponents say the process is not so easy. According to Patrick Leary, broadband wireless access evangelist at wireless broadband solutions provider Alvarion, when considering the number and variety of devices in the market that use the 2.4 GHz band, the fallout would be dramatic if emissions were reduced.
Leary said that if emission levels were reduced, overall power levels would be so low that wireless LANs could no longer function, and all existing systems would have to be rebuilt. And with millions of units now in the marketplace, existing Part 15 and Part 18 products would have to be recalled and retrofitted, future products would have to be redesigned, and all would have to be recertified by the FCC – in short, a logistical nightmare.
“It’s easy to say it just requires a filter, but things don’t happen overnight,” Leary said. “It’s a pretty massive undertaking.”
On the 2.3 GHz front, the FCC will soon decide the power levels at which the DARS companies’ high-power terrestrial repeater networks should be permitted to operate. WCS companies have argued to the FCC that if power levels are higher than 2 kw, blanketing interference would result, and their equipment could not operate effectively.
When the FCC auctioned satellite spectrum in 1997, it granted XM and Sirius temporary approval to supplement satellite signals with terrestrial transmitters. The commission proposed technical rules for DARS but did not set power limits for transmitters. DARS companies filed letters around the time they purchased their spectrum, saying they could use up to 50 kw of power for their transmitters, and – even though the FCC had not finalized its power cap rules – designed their terrestrial networks based on power levels between 2 kw and 40 kw.
WCS spectrum was also auctioned and licensed in 1997 but, unlike Sirius and XM, it had a 2 kw power limit placed on its service. The FCC set the power cap, ironically enough, to prevent WCS from interfering with the DARS signals. Assuming DARS companies would be subject to similar power limits, WCS companies – right or wrong – designed their equipment and business cases around 2 kw of anticipated interference.
“The unstated assumption was that these were going to be relatively low-powered,” WCA counsel Sinderbrand said. “Not that they were going to blanket cities operating at 40 kw.”
XM argues that it was made clear in filed documents that its repeaters could operate at up to 50 kw and that no regulations prohibited them from designing systems to operate at that power level. XM’s senior vice president of regulation, Lon Levin, said that had WCS looked at the record closely, they would have known better than to design systems that could only handle 2 kw of power. As far as Levin is concerned, the 2.3 GHz fight with WCS is a “non-issue.”
“It’s our position that there isn’t a problem,” he said. “Why not just allow us to go forward any way we wish?”
For the sake of posturing, both sides have taken extreme positions in terms of the negative impact should the FCC rule against them. If DARS is forced to reduce power levels in 2.3 GHz to 2 kw, Briskman said the financial impact to Sirius would be substantial. In addition to the cost of closing gaps in the network by building additional terrestrial repeater towers that operate at 2 kw, Briskman said WCS would in fact experience greater interference should the number of towers increase.
But Neale Hightower, executive director of BellSouth’s science and technology wireless and exploratory development laboratory, disagrees with Briskman’s additional interference claim. He said companies can design around 2 kw of interference, but not 40 kw.
“When you’re competing at the same power level with a nearby transmitter, you can usually engineer around these things,” Hightower said. “But when one operator is 10 or 20 times higher than you, it’s almost impossible to work around it.”
There is an almost comedic confusion between the players in terms of filters, economics and the others’ true technological capabilities. Take these quotes from interviews with Telephony:
XM’s Levin: “We can operate at 40 kw or we can operate at 2 kw – it doesn’t make a difference. We’re not operating in their band.” BellSouth’s Hightower: “40 kw would have a huge impact.” Levin: “Just put in automatic gain control.” WCA counsel Sinderbrand: “They can’t seem to get it through their heads – we use [automatic gain control], but the same function that filters out their signal would filter out ours.” Briskman: “That’s a new argument – I haven’t heard that.” Briskman: “WCS could design their equipment to operate properly using [automatic gain control] and filters.” Hightower: “That’s already in there, but it doesn’t fix the problem. The primary problem is the cost of the additional filtering in customer equipment.”
Meanwhile, WCS proponents said that Sirius and XM’s high-power repeaters have slowed its service deployment – the vendor community won’t spend money on research and development, and licensees won’t invest in a service that is not guaranteed to work.
“Especially in this economic climate, nobody wants to spend money to deploy a service and buy equipment when the spectrum is under a cloud,” said Steve Stroh, an independent technology writer who specializes in broadband wireless access. “WCS is absolutely petrified to deploy anything other than small, inexpensive test systems.”
BellSouth’s Hightower agreed. “Right now, there’s a lot of uncertainty about how effective the deployment would be, so it’s hard to make commitments when we don’t know what kind of interference we’re going to face,” he said. “At some point, the FCC will make rules, and we’ll have to make a business judgment on whether we can afford the extra load on the business case.”
Equipment manufacturers are also concerned that if new levels were ultimately adopted, meeting new standards and the increased cost to certify products would overwhelm their business plans. Anything above 2 kw would be an expensive problem to fix and would blow their profit margins.
“These are low-cost devices,” said Brian Sutton, regulatory engineer at equipment manufacturer Navini Networks. “We could make an excellent filter that would cost $2000 to put on the front end of our $200 [customer premises equipment], but then you’ve got a $2200 CPE.”
So with the FCC’s final rulings potentially days away, all sides must continue to play the waiting game. For WCS, that means deployment cannot begin in earnest until noise pollution expectations are resolved and business cases can be built around a specific set of power limits. Sirius and XM, on the other hand, will continue rolling out their services and signing up subscribers, all the while operating their terrestrial repeaters at inflated power levels and living with the anticipation of more out-of-band emissions from unlicensed devices.
Although many observers are predicting defeat for the satellite companies in the unlicensed case, XM’s Levin said he so firmly believes that the FCC will rule in his firm’s favor that XM does not even have a contingent plan in place should either ruling go against them. “We’re confident that the FCC is going to resolve things favorably,” Levin said. “We’re not concerned.”
Don’t touch that dial.
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