New player in DBS band

A victory for Northpoint may also be a win for Pegasus, but established satellite providers want a fight with FCC

A controversial new TV service received FCC approval last week, setting up a politically charged battle over which company will control the new channels.

The service's creation has pitted entrepreneurial companies against each other as well as against direct broadcast satellite carriers, the one-time upstarts that will be forced to share their frequencies with the new service.

The FCC said it would allocate spectrum for a new land-based direct-broadcast system that will transmit multichannel programming via terrestrial microwave transmitters. In part, the agency is eager to start a new service because the FCC is required by the 1996 Telecommunication Act to find new ways to bring multichannel offerings to rural and other underserved markets.

The decision is a victory for Northpoint Technology, which six years ago applied to set up the service. How big a victory remains to be seen. Although company officials say they are entitled to the spectrum at no charge, the FCC said it might auction the frequencies instead.

If so, that would be a win for Pegasus Communications, a reseller of DirecTV service in rural areas that applied to launch a terrestrial service after Northpoint made its request. "We are pleased the FCC established a new service that will give Pegasus an opportunity," said company Chairman Mark Pagon. "The FCC appears to have done the right thing."

Pegasus is eager to refute Northpoint's contention that it is the sole legitimate applicant for the TV service.

"Pegasus and the other applicants are Johnny-come-latelys," said Northpoint Executive Vice President Toni Cook Bush."

The prospect of an auction is particularly distressing to Northpoint, because the FCC also will add non-geostationary satellite operators such as Skybridge and Boeing to the band. "There are already nine companies seeking to share the spectrum with DBS operators," Bush said. "We're not getting clear spectrum."

The DBS operators, however, say they are the biggest losers. They say adding a terrestrial service will create unacceptable interference for the country's 15 million satellite subscribers. "Congress and the FCC have worked hard to establish a competitor to cable, and DBS has emerged as a true rival," said Marc Lumpkin, spokesman for DBS provider EchoStar. "This ruling may jeopardize that."

Many Capitol Hill Republicans warn that Northpoint is trying to use its Democratic ties (B & C, Aug. 7) to curry favor with the FCC's Democratic majority rather than compete for the frequencies at auction.

Still, the DBS companies say the battle is just beginning. The FCC must still establish interference rules, and neither Northpoint nor any other company has proven that they can launch without hurting DBS, critics assert.

"We're disappointed to see that the commission concluded that we can share our spectrum," said Pantelis Michalopoulos, counsel for DirecTV. "We intend to forcefully argue the Northpoint system doesn't meet any conceivable interference standards."

To decide who controls the new service, the FCC is asking for comment on several critical issues, including technical rules for spectrum sharing on the band, carving out service areas and frequency assignments and the merits of the three competing TV applications. The third application is from Satellite Receivers Ltd.

Capitol Hill Republicans are insisting that the FCC put the spectrum up for bid. They say that Northpoint officials are attempting a "spectrum grab" through Clinton-administration largess.

"The law requires spectrum auctions in those circumstances where mutually exclusive applications are filed," House and Budget Committee Chairman John Kasich (R-Ohio) wrote in a Nov. 27 letter to FCC Chairman William Kennard. "It would be my assumption that multiple applicants could not practically share this spectrum."

"There's a lot of frustrated people on a lot of different sides right now, but hopefully innovative technologies will make it into the marketplace," Commissioner Harold Furchtgott-Roth told attendees of the cable industry's Western Show in Los Angeles.

"It is not so simple as letting everyone out there do what they want," Commissioner Susan Ness added. "We have to make sure there's no interference."

Northpoint officials say interference with DBS is not created. Their plan is to transmit signals from the north, so their signals bounce harmlessly off the back of DBS dishes, which receive their signals from satellites in the southern sky.