Even in the midst of the biggest spectrum auction in U.S. history, the Federal Communications Commission is considering allocating a slew of additional frequency bands for new wireless services.
Although the move hasnt dampened enthusiasm for spectrum already being sold, critics say the FCCs rush to heap more airwaves on the auction block is adding hidden costs to the development of next-generation wireless services and may even endanger national security.
In an FCC draft Notice of Proposed Rulemaking, released last week, the commission suggests the use of various bands below 3GHz for "a wide range of voice, data and broadband services to the public over a variety of mobile and fixed networks."
Such notices often languish in the system for years, but FCC officials say that this one is based on a directive from President Clinton that requires rules for at least one of the bands to be finalized by July so that licenses can be granted by next year.
But as in the FCCs other big auctions, buyers of this new spectrum face the added burden of compensating broadcasters already using the airwaves. The band is currently used for government and commercial communications. Likewise, the much-hyped 700MHz band auction, set to begin in March, will sell spectrum occupied by cable TV providers.
The ongoing "C and F block" auction is selling PCS (Personal Communications Service) spectrum previously owned by NextWave Telecom Inc., which was unable to make its license fee payments but is suing to retain some rights to the band.
"The band [below 3GHz] doesnt face the TV problem or the default issues, but there are people who are using it who do need to be compensated," said one FCC official, who asked not to be named.
Those relocation costs will be borne by the carriers that bid the highest for the spectrum licenses, adding to the cost of turning those airwaves into real third-generation services for consumers.
On the government side, the Department of Defense has continually argued that taking spectrum away from the military and reallocating it for consumer use is a threat to U.S. national security.
"Theyre going to have to get rid of some military things," said Ken Dulaney, an analyst with Gartner Group Inc., in Stamford, Conn. As for relocating nongovernment band tenants, "its almost an eminent domain kind of thing. ... How thats paid for is a bit mysterious."
Still, the current PCS auction, which began Dec. 12, continues to gain momentum. At the end of the 45th round last week, the FCC had tallied over $15 billion in bids. Cellco Partnership, backed by Verizon Wireless, led the bidding. AT&T Wireless Services, which quit the auction last week, can use spectrum won by AT&T-backed Alaska Native Wireless LLC. ´