US forced to make U-turn on 3G spectrum allocation – Government Activity
The United States will hold auctions of spectrum for third generation (3G) wireless services in September 2002, in a reversal of the U.S. government’s position at the World Radiocommunications Conference (WRC) in May. Back then the U.S. government was at odds with most of the rest of the world over how to provide more global spectrum for high speed wireless services.
“This initiative is light years beyond the U.S. position six months before the [WRC],” said Leslie Taylor, president of consulting firm Leslie Taylor Associates in Bethesda, Maryland. “That position was, ‘why is more spectrum needed for mobile communications?'”
The U.S. participated in the International Telecommunication Union’s WRC 2000 meeting in Istanbul that identified spectrum for 3G systems, but U.S. negotiators returned home with no commitment or plan to put any of the spectrum into use in the U.S. as the spectrum for the most part is already allocated to other users. Prior to the WRC, the U.S. position had been that it did not want any spectrum allocations for 3G, setting instead for the WRC decision to identify new 3G spectrum but to leave the decision up to each country whether to actually allocate it.
Analysts expect a big scramble in the U.S. to sort out the upcoming auctions. There will be two this year at 700 megahertz and 1900 MHz then the auction for the new 3G bands in 2002. The bidders have to develop plans for use of the new spectrum to expand voice cellular, implement data and messaging and other new services. They also have to factor in the cost of moving incumbent spectrum users out of the newly licensed spectrum, especially broadcasters who are in the 700 MHz region.
But that will leave U.S. wireless operators still far short of spectrum for 3G services.
“The rest of the world is at 1.9 [MHz] and 2.1 [MHz], and we’re not,” said Herschel Shosteck, director of Herschel Shosteck Associates Ltd., of Wheaton, Maryland. “The solution will still leave America as the odd person out in terms of frequencies available and how we’re approaching 3G,” he said.
Taylor said U.S. Ambassador Gale Schoettler, who headed the U.S. delegation in Istanbul, helped to shift the U.S. position after hearing from industry that it was a “nonstarter.” Now, the White House has recognized how critical it is for the U.S. to fully compete in 3G wireless.
“They realize that the current U.S. dominance in the Internet will continue only if access technologies keep up with the rest of the world. The commitment to make available additional spectrum for 3G is very positive,” Taylor said. “Now we will see a big struggle, on the part of [the Department of Defence] and the private operators in the bands available for 3G, to hang on to the spectrum they have.”
A new auction also will increase the cost of 3G networks and services in the U.S. Without having to pay the high auction fees that their counterparts in Germany and the U.K. face, wireless operators in the U.S. would have much lower buildout costs for 3G networks than their European counterparts. But the scarcity of spectrum to be shared among the multiple networks and standards used in the U.S. leaves operators with insufficient capacity to deploy 3G networks and services.
Prior to the White House announcement, wireless experts were raising the alarm that lack of a spectrum plan or policy for 3G services would result in a 3G disaster for the U.S.
“There won’t be enough spectrum to meet needs,” said Carl Northrup, a lawyer with Paul Hastings Janofsky & Walker in Washington DC, who represents NTT, Verizon and the Personal Communications Industry Association. “As we move from 2G to 3G, things may get worse before they get better… Operators will be forced to offer new services by using already overtaxed spectrum.”
So far, U.S. operators have not had to face the huge auction fees for licensing that European operators have been set.
Operators like AT&T Wireless claimed that they did not need new spectrum to deploy 3G, and that costly European-style auctions would only harm new services.
AT&T Wireless officials estimate that U.S. operators would spend $6-$10 for every potential customer served in its footprint, compared to $95-125 per potential customer that operators in countries in Europe are paying for spectrum costs.
That does not include the money needed for infrastructure and to develop the service.
“AT&T has sufficient spectrum for services and customers for the next few years,” said Jim Grams, vice president of technology development at AT&T Wireless Services Group, of Redmond, Washington. “But we have to look beyond that.”
Consolidation among cellular service providers in the U.S. means that the big companies are aggregating larger chunks of bandwidth to come up with bands that are used for national service. But the U.S. operators still have nothing to compare to the 15-25 MHz chunks of bandwidth that U.K. and German operators have acquired in their 3G auctions, analysts said.
“Eventually everybody in the U.S. serving the top 100 markets will build 3G systems,” said Chris Pearson, executive vice president of the Universal Wireless Communications Consortium, of Bellevue, Washington. “The spectrum today is not enough.”
In the near term, two upcoming auctions of spectrum for unspecified services are of intense interest to current U.S. wireless operators and other companies, like Internet operators, who may want to launch a wireless service. However, in neither auction is the spectrum freely and clearly available. An auction scheduled for late March, 2001, will put spectrum at 700 megahertz up for bid, but that spectrum is currently occupied by broadcasters who are not likely to move out as required in 2006.
Another auction, set for December, will sell off spectrum at 1900 MHz. This too is overshadowed by legal problems stemming from claims by the previous holder of the spectrum. But the 1900 MHz spectrum would be immediately usable and easier to occupy, and AT&T Wireless should be among the bidders.
UWCC’s Pearson said time division multiplexing access (TDMA) operators AT&T, SBC and Bell South have enough spectrum to deploy 3G now, because their enhanced data for global evolution (EDGE) technology requires only 2.4 MHz to deploy. But CDMA operators, who face a requirement for 5 MHz to go to the full broadband CDMA solution, are in greater need of the additional spectrum.
While that may be true, Qualcomm Inc., the CDMA developer, claims intermediate steps can give the CDMA networks higher data rates with less bandwidth.
And Hastings Janofsky & Walker’s Northrup suggested that operators like SBC and Bellsouth, which have no wireless spectrum in New York city, are likely to fill out their 2G footprint through the auctions instead of putting it to use for 3G needs.
“Both CDMA and TDMA operators are going to run out of spectrum for 3G in the U.S.,” said Bill Davidson, corporate vice president of Aether Systems Inc, Owings Mills, Maryland, a wireless applications service provider. Aether resells carrier network minutes to its customers and designs software to allow them to connect into the various standards and technologies.
AT&T’s Grams said the 1900 MHz spectrum was desirable, but there are undefined costs associated with clearing the broadcasters off 700 MHz. The spectrum at 1900 MHz “fits with the spectrum we already own. It makes creation of devices easier, It is encumbered by legal claims but these could get cleared up.”
Qualcomm Inc., on the other hand, finds the 700 MHz part of the spectrum attractive, according to Kevin Kelly, Qualcomm senior vice president for external affairs. Qualcomm is the developer of CDMA and would support its operator customers who would be bidding in the auctions.
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