Spectrum Snag Delays 3G Wireless

In a move that may signal trouble for the United States in the worldwide race to build next-generation wireless networks, the U.S. Federal Communications Commission this week delayed the forthcoming auctions of licenses for airwaves planned to accommodate advanced wireless services.

In putting off the auction from Sept. 6 to March 6, the FCC said it hopes to give additional time for bidder preparation and planning.

At issue is the claim to valuable spectrum in the 700MHz range that is considered optimal for transmitting 3G (third-generation) wireless services, plans for which include pushing high-speed voice, data, and video services through the airwaves. The 700MHz band is considered ideal for carrying 3G services, in part because of its ability to pass through buildings and around obstacles.

In a written statement, FCC Chairman William Kennard said a large number of potential bidders asked for the delay in order to develop business plans and bidding strategies. In addition, Kennard addressed the fact that UHF television broadcasters currently occupy the spectrum and are not required to move off until 2006.

"It is undisputed that factors surrounding this spectrum, including the incumbency of the UHF television broadcasters in this band, make bidder planning for this auction unusually complex," Kennard stated.

According to one analyst, the conflict with the television broadcasters puts the value of the spectrum at risk.

"There is a large concern that these licenses really won't be that valuable or useful if the broadcasters can stay around until 2006," said Elliott Hamilton, senior vice president of Strategis Group Inc., in Washington. "It is difficult for the carriers to place a bid on the license when they don't know if they can get the license immediately or in one to six years. It affects the value of the license significantly."

"The carriers can't work out a deal [with the broadcasters] ahead of time because they don't know who is going to win the auctions," Hamilton said. "I don't think it can be a nicely arranged handshake. It really has to be [determined via] mandatory arbitration or guidelines set up before the auctions."

Hamilton pointed out that the delay itself will not help resolve matters, but it does provide more time for the FCC to work out an agreement with the broadcasters.

Hamilton added that carriers can -- and should -- begin deployment of interim 2.5G and 3G networks over their existing spectrum, but that infrastructure likely will not be enough for the future.

"These auctions are critical to the long-term success of 3G. In the long term, if we don't clear this up, the growth of 3G will be negatively affected in the [United States]," he said.

Although AT&T Wireless said it has not announced any formal plans to participate in license bidding, the carrier expressed support for the FCC's decision.

"We applaud the FCC's action. Our lawyers wanted time to review and digest what this all means. Even though there was a mandate from Congress [for the auction] there was no authority to move the TV broadcasters off the spectrum. I think the major issue is that we did not have enough time," said Ken Woo, director of corporate communications at AT&T Wireless, in Seattle.

Bidding on 3G

3G wireless network architectures promise to deliver advanced, high-speed data services.

* Speech to text

* Graphics

* Video and multimedia

* Signal can pass through buildings and obstacles

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