Subject: [NEXTEL-1] Debate on DBS Spectrum Reuse?

From: "marcel_rf1" <[email-masked]>
Date: Thu, 04 Mar 2004 18:46:34 -0000

FCC Completes MVDDS Auction--Is this the Final Chapter in the Six-
Year Debate on DBS Spectrum Reuse?

Mar 01, 2004 

By John Quale, Brian Weimer, and John Beahn

The Federal Communications Commission (FCC) recently completed the 
auction of 192 Multichannel Video Distribution and Data Service 
(MVDDS) licenses, raising a total of $119 million from 10 winning 
bidders. Consisting of 500 MHz blocks of unpaired spectrum in the 
12.2-12.7 GHz band, the MVDDS licenses reuse spectrum already 
allocated to direct broadcast satellite (DBS) operators. Instead of 
relying on satellites, however, MVDDS signals will be delivered 
terrestrially through ground-based transmitters to provide video or 
high-speed data services. The auction also brings some measure of 
closure to a contentious six-year proceeding at the FCC regarding 
MVDDS' reuse of DBS spectrum--though an appeal of the FCC's action is 
still pending. 

MVDDS was originally proposed by Northpoint Technology Ltd. in a 
March 1998 petition for rulemaking. Northpoint's service concept was 
relatively straightforward: given that all DBS dishes in the United 
States must face south to receive the satellite signal, Northpoint 
would transmit Ku-band signals into receive dishes pointed north, 
thereby avoiding interference with DBS operators according to 
Northpoint. In addition to its petition for rulemaking, Northpoint 
also filed applications at the FCC seeking MVDDS licenses in all 
designated market areas (DMAs) in the United States and free access 
to the spectrum to implement its proposed service. The consolidated 
proceedings continued for several years with MVDDS proponents and DBS 
operators engaged in a contentious debate over the interference 
potential that MVDDS operations would have on DBS operators' 
satellite-delivered services. In a November 2000 ruling, the FCC 
authorized MVDDS operations, concluding they would not pose a 
significant interference risk to incumbent DBS operations. Throughout 
the proceeding, DBS operators also vehemently opposed Northpoint's 
request for free access to the DBS spectrum. In April of 2002, the 
FCC denied Northpoint's request for such free access and set the 
spectrum for auction to the highest bidder. Throughout 2003, 
Northpoint unsuccessfully lobbied Congress to include an amendment to 
the Commerce, Justice and State appropriations bill granting it free 
access to the MVDDS spectrum. Northpoint has appealed the FCC's 2002 
denial of its applications for licenses in all DMAs nationwide and is 
asking the court to void the results of the auction--in which 
Northpoint declined to participate--claiming that the FCC lacked the 
authority to conduct the auction. Northpoint's appeal is currently 
pending before the U.S. Court of Appeals for the District of 
Columbia. 

The FCC originally had envisioned that MVDDS operations would compete 
against incumbent cable and DBS operators by providing an alternate 
multichannel video programming provider. A review of the successful 
bidders, however, indicates that existing DBS operators highly value 
the spectrum themselves. DTV Norwich, a joint venture between cable 
operator Cablevision and George Blumenthal, former chairman of U.K. 
cable operator NTL, was the highest bidder with $85 million pledged 
for 46 licenses, including licenses in eight of the top 20 markets. 
Through its Voom DBS affiliate, Cablevision provides more than 100 
channels of video programming to subscribers with a focus on high-
definition content. DBS giant Echostar also participated indirectly 
in the auction by providing financial backing for South.com, which 
bid $28 million for 37 licenses, including those covering Atlanta, 
Boston, Dallas, and Washington DC. Early MVDDS proponent MDS America 
won the most licenses, bidding $4 million for licenses in 60 rural 
markets. (Although the FCC had anticipated auctioning 214 MVDDS 
licenses, roughly one for each TV market in the country, there were 
no bids for 22 of the licenses after 49 rounds of bidding.) 

Despite previous assertions by DBS operators regarding the 
interference potential from MVDDS operations, industry observers have 
suggested that both Cablevision and Echostar could use the spectrum 
to supplement and expand their existing satellite-delivered DBS 
services. Indeed, some analysts have speculated that Echostar may be 
able to deliver local signals to all 210 TV markets with the addition 
of the MVDDS spectrum. (Echostar currently offers local channels in 
approximately 100 markets.) Others have opined that the DBS operators 
could use the MVDDS spectrum to offer broadband services to their 
subscribers.

While the MVDDS proceeding presented many challenging legal issues 
(some of which will not be finally resolved until Northpoint's appeal 
is acted upon), it represents another step forward in the FCC's new 
approach to spectrum management: permit companies to share spectrum 
whenever possible. Once implemented, the MVDDS service may help to 
answer the larger question of whether the FCC's new spectrum 
management policies are efficiency-enhancing or just a formula for 
harmful interference.

John Quale, Brian Weimer, and John Beahn are attorneys in the 
Washington, DC, office of Skadden, Arps, Slate, Meagher and Flom LLP. 
Quale's email address is [email-masked]; Weimer's email address 
is [email-masked]; and Beahn's email address is 
[email-masked].

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