The Fat Lady's Singing 3G

date: 19th January 2001, source: teledotcom.com

Clinton administration officials, working up until their last day, proposed new rules to reimburse federal agencies that are evicted from airwaves to make way for third-generation (3G) wireless Internet.

Last October, President Clinton ordered that federal agencies uncover more spectrum for development of 3G, which will deliver high-speed, quality multimedia, data and voice to any wireless device.

"Payment is going to have to be spread among all players to be fair," said Assistant Commerce Secretary Greg Rohde, who is also head of the National Telecommunications and Information Administration (NTIA). "This also is to ensure that taxpayers are not left with the bill."

The rules for repayment were not part of Clinton's order in October, but a fair process will play a critical role for reallocation to succeed, Rohde said. "We have to address the incumbents' needs," he said.

The proposals give the industry an opportunity to participate in how to reimburse those evicted from their spectrum, Rohde said.

Congress in 1999 said the Defense Department must be compensated for the cost of relocating when it was moved off spectrum. The NTIA has taken 255 MHz for the Federal Communications Commission (FCC) to auction in the last several years, he said.

The notice of proposed rulemaking sets up the procedures and asks questions to help estimate what costs are reimbursable as the spectrum moves from government use to the private sector, where its value has escalated. It also proposes a dispute resolution system to settle disagreements over which costs can be reimbursed.

The FCC can move forward and auction off the airwaves to advanced wireless providers, such as AT&T (stock: T) and Verizon Communications (stock: VZ), only after reallocation costs are settled.

The United States suffers from a scarcity of available spectrum, the valuable real estate over which advanced wireless communications and Internet will be delivered. Most spectrum is occupied by the Defense Department or licensed from the FCC. The NTIA and the FCC are charged with solving the spectrum scarcity by finding unused or inefficiently used spectrum and reallocating it for private industry use. Spectrum could be shared, sliced and diced among wireless players to fill the need for bandwidth, Rohde has said.

Uncovering more spectrum is critical because 3G wireless will be the dominant form of communications in the future, Rohde said. "The Europeans and Asians have been moving very aggressively on 3G," he said. "And if we don't, it will impact U.S. leadership in the Internet and communications."

Rohde has discussed the importance of the spectrum issue with the Bush-Cheney transition team. "I can't predict what's going to happen in the Bush administration," he said.

Rohde said the insufficient spectrum is a "vexing communications problem" and that President Clinton and Vice President Al Gore understood spectrum's importance and made it a major issue from the top down.

"That's what has gotten us where we are so far," he said.

The NTIA seeks comment on the proposal for 60 days at their site at www.ntia.doc.gov. Rohde said he expects a final ruling this summer. The FCC will identify spectrum for auction by July and conduct that sale June 15, 2002.

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