United States: FCC Proposes To Grant DISH's Wish

In a striking move by the FCC, the Commission has proposed to eliminate the ancillary terrestrial component ("ATC") rules from the 2 GHz Mobile Satellite Service ("MSS") band and repurpose the spectrum for pure terrestrial use (while retaining the mobile satellite allocation in the band). While the proposal is a long way from being adopted, DISH Network Corporation stands to gain tremendously now that it has become the only 2 GHz licensee after acquiring both DBSD and TerreStar out of bankruptcy earlier this month. The FCC postponed for another day the question as to what to do about the ATC rules for Big LEO MSS (i.e., Globalstar) and L-band MSS (i.e., LightSquared).

Background

In 2003, the FCC adopted ATC rules that allowed MSS licensees to use their MSS spectrum to provide terrestrial services, provided that the licensees met certain "gating" criteria. The ATC gating criteria required each MSS licensee to provide "substantial satellite service" (i.e., by providing continuous satellite service in specified geographic areas, maintaining one or more spare satellites, and making MSS commercially available throughout the licensee's required coverage area) and to "integrate" its terrestrial services with its satellite services (e.g., through the use of a dual-mode handset).

DBSD and TerreStar were granted ATC authority in 2009 and 2010, respectively. However, both companies filed for bankruptcy after failing to successfully offer an MSS/ATC service. DISH acquired both DBSD and TerreStar out of bankruptcy earlier this month, but its plans for making use of the companies' ATC authority were temporarily halted when the FCC denied its request for a waiver of the ATC gating criteria. In denying DISH's waiver request, the FCC was doubtlessly seeking to avoid a debacle similar to what ensued after the Commission granted a similar waiver request to LightSquared in January 2011. In that case, the FCC was harshly criticized for granting the LightSquared waiver outside of the formal rulemaking context and was forced to recommend that the waiver be revoked after the National Telecommunications and Information Administration issued a letter concluding that LightSquared's terrestrial operations would cause insurmountable interference to GPS receivers and devices.

While the 2 GHz MSS spectrum has remained essentially unused since it was first allocated in 1997, the FCC has recently been under increasing pressure to make more spectrum available for broadband use. The National Broadband Plan recommended that the Commission make 500 MHz of spectrum available for broadband use within ten years, that 300 MHz of this spectrum be made available for mobile use within five years, and that the FCC should "accelerate terrestrial deployment" in 90 MHz of MSS spectrum, including in the 2 GHz band.

Notice of Proposed Rulemaking

On Wednesday, the FCC released a Notice of Proposed Rulemaking ("NPRM") and Notice of Inquiry ("NOI") proposing to rebrand the 2 GHz MSS spectrum as "AWS-4" spectrum and adopt terrestrial service rules that would largely follow the Commission's rules for miscellaneous wireless communications services. The ATC regulations in the 2 GHz band will be eliminated, and the Commission has signaled that it will address the ATC rules for Big LEO and L-band MSS in a future proceeding.

The uplink and downlink pairing designations for the AWS-4 spectrum will likely remain at 2000-2020 MHz and 2180-2200 MHz, respectively, though the Commission is also seeking comment on alternative plans in which the uplink band could be shifted up 5 MHz to 2005-2025 MHz or shifted up 10 MHz and compressed to 2010-2025 MHz. The AWS-4 spectrum would be licensed in 10-MHz blocks using a geographic area licensing approach, and the FCC would apply existing AWS power limits to the AWS-4 band. New licenses would be assigned on an Economic Area basis to provide spectrum access opportunities for smaller carriers. The licenses would likely have a ten-year term that could be renewed, though the Commission has requested comments on whether the license term should be matched to the 15-year term of the satellite licenses.

In an effort to preempt another LightSquared debacle, the Commission has also requested comments on whether any special interference rules protecting GPS are warranted for the AWS-4 band, whether there is any potential for receiver overload interference between AWS-4 operations and operations in any spectrum adjacent to AWS-4 spectrum, and whether any other interference-related issues should be considered. The FCC is also proposing to apply AWS-1 signal strength limits to AWS-4 to ensure that licensees do not cause interference to co-channel systems operating along common geographic borders, and AWS-4 licensees will be required to protect 2 GHz MSS licensees from harmful interference as well.

The NPRM proposes to assign all AWS-4 licenses in the 2 GHz band to the incumbent MSS licensee (i.e., DISH) by modifying DISH's MSS licenses to add terrestrial authority and obligations that would apply to all AWS-4 service areas. The Commission's rationale for this proposal is that current technology does not permit separate MSS and terrestrial mobile services to operate simultaneously in the band unless they are controlled by a single licensee.

In terms of build-out requirements, AWS-4 licensees would be required to provide signal coverage and offer service to at least 30% of their total AWS-4 population within three years (the "Interim Build-out Requirement") and to at least 70% of the population in each of their license authorization areas within seven years (the "Final Build-out Requirement"). If an AWS-4 licensee fails to meet the Interim Build-out Requirement, all of that licensee's AWS-4 license authorizations will automatically terminate, and in the event that an AWS-4 licensee fails to meet the Final Build-out Requirement in any of its license authorization areas, its AWS-4 license for each license authorization area in which it fails to meet the build-out requirement will automatically terminate as well. The failure to satisfy a build-out requirement would also trigger the automatic termination of the MSS authorization in any area in which the terrestrial authorizations are terminated. Competitive bidding would be used to resolve any mutually exclusive applications for any AWS-4 licenses that are automatically terminated or that otherwise become a part of the FCC's spectrum inventory.

The NPRM also seeks comment on whether AWS-4 licensees should be permitted to partition their service areas or disaggregate their spectrum into new licenses. The Commission has also proposed to allow AWS-4 licensees to enter into spectrum manager lease arrangements (in which the licensee retains both de jure and de facto control of the license) and to allow de facto transfer arrangements (in which the licensee retains de jure control but relinquishes de facto control of the license) to the extent that the Commission permits disaggregation and partitioning.

Notice of Inquiry

In addition to the proposals contained in the NPRM, the FCC is also seeking comment on an alternative band plan that would reallocate the 1695-1710 MHz band from Federal to commercial use and would create two new blocks of spectrum, the PCS-Extension block and the AWS-Extension block. This "2 GHz Extension Band Concept" would consist of the existing MSS downlink band at 2180-2200 MHz paired with an uplink band at 1695-1710 MHz and a 30-MHz PCS-Extension block (which could be subdivided into smaller blocks) consisting of the existing MSS uplink band at 2000-2020 MHz, the lower portion of the AWS-2 J block at 2020-2025 MHz, and the upper portion of the AWS-2 H block at 1995-2000 MHz, all of which would be converted to downlink use.

The 2 GHz Extension Band Concept would sever the current 2000-2020 MHz pairing from the 2180-2200 MHz band, which could require moving DISH's assigned uplink spectrum from 2000-2020 MHz to 1695-1710 MHz. This would likely result in DISH either forgoing the mobile uplink portion of its existing satellite spectrum and converting it to a one-way satellite transmit system or requiring it to launch another satellite to provide MSS using 1695-1710 MHz. The resulting 30-MHz PCS-Extension block would be auctioned as downlink spectrum and would either be paired with a matching uplink block or licensed as an unpaired downlink block. The FCC could also choose to conduct an incentive auction for the MSS uplink band. However, the legislation authorizing the FCC to conduct incentive auctions contemplated at least two "competing licensees." Having acquired both DBSD and TerreStar out of bankruptcy earlier this month, DISH is now the only licensee in the 2 GHz band and it is therefore unclear whether the FCC has the authority to conduct such an auction.

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