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DBS gets spectrum buddy

FCC authorizes auctions for new video distribution, data services in 12 GHz band 4/28/2002 08:00:00 PM Eastern

You can add MVDDS to the alphabet soup of media acronyms. After years of petitioning and lobbying from Northpoint, the FCC finally agreed last week to authorize new multichannel video distribution and/or
data service, which will share DBS's 12 GHz swath of satellite spectrum.

The and/or
was our addition because the FCC did not specify the types of services that may be provided. In some cases, the spectrum may be used for high-speed access rather than video, depending on who wins it.

Opening up the spectrum to potential new service, the FCC said, would promote competition and benefit consumers. Chairman Michael Powell, joined by Commissioner Kathleen Abernathy, said it "appropriately balances the competing interests while allowing an important new service to move forward." And both Northpoint and competitor MDS America said they are pleased that the FCC had officially acknowledged that DBS and terrestrial service could co-exist on the band.

Then, why so many long faces?

Northpoint was unhappy because, although the service it envisioned got the green light, its applications for that service got the heave-ho. As expected, it will be required to bid for spectrum along with everyone else, including incumbent DBS providers.

Northpoint felt it should have been granted the spectrum, and at no charge, pointing out by way of contrast that successful applicants for satellite spectrum, who filed the same day as Northpoint, had just the week before been granted their spectrum for free.

FCC Chairman Michael Powell conceded that Northpoint had laid the groundwork for the new service but said that its "equitable" claim did not trump Congress's expressed desire for auctions or the "value of allowing competitors to vie for a chance to offer service to the public."

"There is little question that, had it not been for Northpoint, the MVDDS service would not be ready to move forward today," Powell said. "Northpoint has put significant time and resources into developing its service model as well as its commission and congressional advocacy over a long period of time. We applaud these efforts. But the statute does not support exempting this spectrum from auction, nor does it grant Northpoint the exclusive privilege it seeks."

When asked whether Northpoint would bid, company President Sophia Collier said it will probably appeal that part of the decision to the D.C. Circuit. "We believe the auction is not a fair way to go ahead with this."

The Satellite Broadcasting & Communications Association isn't happy either, citing continuing concerns over possible interference to DBS service. "The decision does not appear to adequately reflect the results of a congressionally mandated independent test that conclusively demonstrated that allowing this type of sharing will cause a 'significant interference threat' to DBS subscribers," SBCA said. Chairman Powell, by contrast, called the interference restrictions in the new rules "reasonable but strict."

FCC Commissioners Kevin Martin and Michael Copps weren't entirely happy with the decision. Both dissented in part.

Martin shares the SBCA's concerns about interference, opining that the new rules permit "unlimited interference to some DBS subscribers and places too much of the burden of MVDDS deployment on the backs of DBS licensees and their customers. For example," he said, "the order falls short in justifying why half of the nation's population, and most of the nation's geography, is not considered in calculating the appropriate interference projection standards."

Copps took issue with the fact that incumbent DBS providers are allowed to bid and suggested that the provision works against the new service's goal of promoting competition. "We should have limited auction participation to entities that would provide new competition in the multichannel-video market," he said. "That would have meant excluding DBS licensees." The FCC did exclude cable companies from attributable interests in MVDDS licensees, which Copps took some comfort in.

Copps also dissented from the order's exemption of MVDDS licensees from mandatory carriage of broadcasters. Those obligations were put on DBS and cable "to advance the public interest," he said. "I see no reason jettisoning them here."

Although NAB wasn't commenting, Northpoint's Collier didn't expect it to be happy about either the lack of must-carry, which Northpoint had pledged if it got the spectrum, or the FCC's decision to divide up the spectrum by geographic regions that are not analogous to Nielsen markets. That, she said, will make it "difficult and impractical for those providing service to carry local TV stations."

One player that was celebrating was MDS America, which wanted the opportunity to bid on the spectrum for its own high-speed Internet access and—where it makes business sense—video service.

MDS America CEO Kirk Kirkpatrick says he is looking for an auction, best case, by June or July, although, given the progress of other auctions and the potential for court challenges, that could be wishful thinking.

The FCC has yet to release the official order, after which, Kirkpatrick assumes, there will be some petitions to reconsider. He says that, if his company won the spectrum, it could have video service up in three months and high-speed Internet in a month. In markets with DBS and high cable penetration, "we might just offer high-speed Internet. If you go where there is only analog cable, it would then make sense, businesswise," to do video.

While Northpoint has not yet decided how it will proceed with its appeal, if any, of the decision, it says it will continue to pursue its Compass "next-generation" DBS service, for which it has applications pending at the FCC for two vacant DBS slots.

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