The US Federal Communications Commission gave the go-ahead for the birth of a whole new Personal Communications Network industry with its decision to allocate substantial spectrum capacity to the proposed services (CI No 2,261) – four times as much as was allocated to traditional cellular telephiny. In total, it allocated 160MHz in the 2GHz band, with 120MHz going to licensed carriers and 40MHz going for unlicensed use.
Cape Cod
It also proposed rules that would govern the first-ever auctions of US bandwidths. The Commission is required by law to finalise the rules by March 8 1994, and is seeking public comment on its proposals. Under the plan, bidding would be limited to qualified participants, who would be required to make substantial up-front payments – when cellular franchises were let, it was done by ballot, and attracted a host of speculators, and legend has it that the winners of a Cape Cod, Massachusetts licence sold it 73 days later for a cool $30m. The FCC proposed the use of both oral and sealed bidding for licences of broadband spectrum for what the Americans are calling Personal Communications Services, and seeks comment on alternative approaches to traditional bidding methods, including electronic bids. The proposal would set aside one 20MHz block to be licensed on a Basic Trading Area Basis for minorities and small businesses. The Commission will allow up to seven licences – for four 10MHz bands, one 20MHz band and two 30MHz bands in each market that will be set up in smaller regions than existing cellular markets. Of those licences, two will be available for larger carriers and five will be available for smaller carriers, although all seven may not necessarily be awarded in each market. The seven blocks will be replicated in each of the 47 major trading areas, that comprise the US, and a single company will be allowed to buy as many licences as it wants until it reaches 40MHz within a single trading area. Commission officials said the bidding process will begin in less than a year, with the auctions starting in early May 1994; they will likely take several days or even weeks, but it expects to begin issuing licences to carriers by the end of next year. The auction process will apply both to the new service and to other traditional licensing done by the Commission. In the case of Personal Communications Services, it will require licensees to offer their services to at least one-third of their market population within five years of licensing, two-thirds within seven years and 90% service within 10 years. The Commission excluded cellular companies from bidding for 30MHz spectrum but said they could bid for 10MHz and participate in 20MHz bids with up to 49%. The Telecom Industry Group at Andersen Consulting reckons that the next generation of video-on-demand is about to be born with the help of the new ruling, and observes that Personal Communications Services will offer wireless data, voice and video, and while it may not turn out cheaper, it will offer more, better and faster. McCaw Cellular Communications Inc, gran’daddy of the US cellular industry, joined the cheering, saying that the decision to issue licences of varying size to both experienced service providers and new entrants into the market will ensure a wide variety of wireless services at competitive prices. Manufacturers of telephone equipment see the proposals as heralding a bonanza, with Motorola Inc, Qualcomm Inc, Broadband Technologies Inc and L M Ericsson Telefon AB identified as potential winners.
