An open proceeding before the FCC has split the industry between the haves and the have-nots, and touches on a range of contentious issues, including data roaming, a wireless network for first
An open proceeding before the FCC has split the industry between the haves and the have-nots, and touches on a range of contentious issues, including data roaming, a wireless network for first responders and standards for mobile networks. It's also an issue that, ultimately, will gauge how willing the FCC is to tinker with a market that, in general, has ferociously argued against virtually any kind of government oversight.
The FCC's rulemaking 11592 was filed a year ago by a group of Tier 2 and Tier 3 wireless carriers working under the "700 MHz Block A Good Faith Purchasers Alliance" banner. The alliance is a joint venture among Cellular South, Cavalier Wireless, Continuum 700 and U.S. Cellular, and has been endorsed by the likes of MetroPCS (NYSE:PCS) and Cox Communications. In the group's initial filing, it claims that smaller carriers are unable to purchase suitable network equipment for the 700 MHz spectrum they won via the FCC's 700 MHz spectrum auction in 2008.
Specifically, the group alleges that the two biggest winners of 700 MHz airwaves--Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T)--are actively working to block out smaller competitors by issuing requests for LTE equipment that can only work on the 700 MHz band classes they acquired at auction, and not the band classes held by smaller wireless players.
The issue dives into the somewhat complex and technical details of radio wave propagation and interference. The 3GPP standards group created four different band classes within 700 MHz: band class 12, 13, 14 and 17. Verizon acquired most of the FCC's 700 MHz C Block spectrum (which lies in band class 13), and many of AT&T's 700 MHz licenses sit in the lower C and B Blocks (which lie in band class 17).
A number of smaller operators acquired 700 MHz spectrum licenses in the Lower A, B and C Blocks, which lie in band class 12. The 700 MHz Block A Good Faith Purchasers Alliance argues that AT&T and Verizon are using their size and weight to encourage network equipment makers to build equipment that only supports the 700 MHz band classes that they own.
"As a result, consumers and smaller carriers that acquired lower band 700 MHz Block A spectrum are left without viable and widely useful equipment options," the association wrote in its initial FCC complaint.
To correct the situation, the alliance is urging the FCC to require network equipment suppliers to build gear that can work across all 700 MHz bands--so-called full-spectrum devices--thus leveling the playing field.
"The alliance hereby petitions the commission to act expeditiously and initiate a rulemaking to assure that consumers will have access to all 700 MHz spectrum that the commission licenses, permit the entire 700 MHz band to develop in a competitive fashion, and prohibit restrictive arrangements that are contrary to the public interest," the group wrote.
An FCC spokesman said the issue remains open before the agency, and that no decision has yet been made.
Current technologies 'not sufficiently refined'
Not surprisingly, this request has generated plenty of heated responses. In filings to the FCC, companies including Verizon, AT&T, Qualcomm (NASDAQ:QCOM), Motorola (NYSE:MOT) and LG argue that such a requirement by the FCC would dramatically slow the deployment of LTE technology in the 700 MHz band. Some even said such equipment would be technically impossible to build.
"The decision to identify band class 17 separately from band class 12 was based entirely on a desire to avoid harmful interference that would negatively affect the operation of 700 MHz mobile broadband devices, not on any anticompetitive or discriminatory agenda," Motorola wrote to the FCC in response to the alliance's filings. "By demanding that devices be capable of communicating with all 700 MHz mobile bands, the alliance's approach would require the use of wider duplex filters, which would exacerbate interference problems, or additional duplex filters. Current filter technologies are not sufficiently refined to be both wide enough to cover the entire 700 MHz band and selective enough to avoid interference from (and to) the other high-power services in the 700 MHz band."
Other commenters agreed with Motorola's stance. "It is correct that it is not possible to build equipment to work across these blocks," wrote Michael Thelander, founder and CEO of Signals Research Group. "There is a separate external/internal filter required to support each band's requirements."
"Ultimately, compromises have to be reached, which need to consider the technology and economic constraints which drive what can be supported in one terminal," wrote Martyn Roetter, an independent telecommunications consultant based in Boston. "There are critical choices that have to be made with respect to the capabilities that are to be 'crammed' into mobile terminals. These choices involve formidable engineering challenges to achieve goals of affordability, size, weight and battery life."
Strangely, neither of the two major U.S. LTE network equipment suppliers--Ericsson (NASDAQ:ERIC) and Alcatel-Lucent (NYSE:ALU)--has weighed in on the issue via FCC filings. When questioned about whether they plan to offer LTE equipment covering all the 700 MHz bands, Alcatel-Lucent declined to respond, while Ericsson said: "We have products for all 700 bands as they are being commercially deployed. Different frequencies can be combined in Ericsson's base stations."
It's worth noting that Alca-Lu and Ericsson are both pushing 700 MHz LTE equipment for the public-safety community, which according to the alliance's filings would sit in band class 14.
Verizon, AT&T blocking equipment for other band classes?
Perhaps the most explosive charge in the alliance's complaint to the FCC is that AT&T and Verizon are actively blocking the creation of equipment for the 700 MHz A Block. Little is made of this allegation in subsequent filings on the issue, though a number of filers acknowledge the buying power wielded by AT&T and Verizon.
"The sheer size of AT&T and Verizon Wireless--their customer base, their revenues, their share of the wireless market, the substantial scope of their integrated operations--is having the effect of skewing the manner in which band classes have been established for the 700 MHz spectrum and has affected the current production plans for mobile devices usable in the 700 MHz band," wrote the Rural Cellular Association in its FCC filing on the issue. "There is little likelihood that any bulk equipment orders will be placed for band class 12 (Lower A Block, Lower B Block, and Lower C Block), which threatens to deprive small rural and regional carriers of any viable options for utilizing the Lower A Block to deploy affordable, ubiquitous mobile broadband services to rural customers."
In its filing, Verizon offered a stark counterargument: "Verizon Wireless holds A Block licenses for markets that cover over half the U.S. population. Verizon Wireless purchased 25 licenses in the 700 MHz A Block during Auction 73 at a cost of nearly $2.57 billion. ... If the alliance's assertion were correct, Verizon Wireless would be taking steps to block development of equipment that is essential to capitalize on the company's $2.57 billion investment. This makes no sense, and the alliance offers no plausible suggestion for why such a state of affairs would be true."
Implications, ramifications and handsets
What is interesting about the 700 MHz Block A Good Faith Purchasers Alliance request before the FCC is how it plays into the agency's efforts on the data roaming and public-safety front, as well as how it could apply to Verizon's planned rural licensing scheme for LTE.
On data roaming, the FCC in April modified roaming rules to abolish the home roaming exclusion for voice services. At the same meeting, the FCC voted to investigate whether to apply automatic roaming to mobile data. Data roaming among LTE networks could get even more complex in light of the complaints raised by the 700 MHz Block A Good Faith Purchasers Alliance.
"As the commission noted, the goal of roaming is to 'foster investment and innovation in the use of spectrum and the development and deployment of data network facilities and services, competition for mobile broadband business by multiple providers, and consumer benefit from the availability of advanced and innovative mobile services with seamless nationwide coverage,'" wrote public-interest group Public Knowledge. "Balkanizing the 700 MHz band would undermine each of those goals, making it harder to innovate, harder for multiple providers to compete, and harder to build the seamless nationwide coverage that will benefit consumers."
Data roaming remains an open issue before the FCC.
As for Verizon's rural licensing play, the carrier is in discussions with a number of rural carriers to license them its 700 MHz LTE spectrum as part of an effort to build out the network. Verizon hopes the ploy will help spread LTE across rural America more quickly than if it handled the buildout itself--but an added benefit is that rural operators that license Verizon's spectrum likely can be assured that it will interoperate with Verizon's own LTE rollouts.
A final issue that could impact the FCC's evaluation of the alliance's complaints is MetroPCS' LTE buildout. Though the carrier appears to be deploying LTE in its AWS spectrum holdings--not its 700 MHz spectrum holdings--the carrier doesn't seem to have been tripped up by its larger LTE rivals. Indeed, MetroPCS looks poised to offer an LTE-capable handset--the Samsung Craft--long before Verizon begins releasing LTE phones.
As for Kyocera, which has made a niche supplying handsets to Tier 2 and Tier 3 U.S. wireless carriers, the company declined to discuss its LTE handset plans.
Full-spectrum 700 MHz for public safety
But the FCC's actions on the public-safety front are where things really get interesting. The agency continues to push for the creation of a nationwide, interoperable wireless broadband network for first responders. And, in an attempt to foster the creation of this network, the agency's national broadband plan recommends that "the FCC should explore other ways to encourage the deployment of public-safety devices that transmit across the entire broadband portion of the 700 MHz band (i.e., band 12, band 13, band 14 and band 17)." The recommendation seems to dovetail exactly with the 700 MHz Block A Good Faith Purchasers Alliance's proceeding 11592.
"The (national broadband) plan is clear," MetroPCS wrote in its filing, urging the FCC to implement the alliance's requests. "Unless the commission requires all 700 MHz equipment to be interoperable across the entire 700 MHz band, the only system on which public-safety users will have a meaningful opportunity to roam or receive priority access will be the D Block--exactly the opposite of the result the plan is seeking to serve the public interest."
Interestingly, the Public Safety Spectrum Trust took a somewhat neutral stance on the issue. The group--a non-profit, comprised of public-safety officials, that was selected by the FCC as the licensee for the 700 MHz public-safety nationwide broadband spectrum--outlined the benefits of full-spectrum 700 MHz devices, noting that such gadgets would aid public-safety roaming and lower equipment costs through economies of scale. But the group also said the FCC should take technical limitations into account in its decision.
"The PSST notes that the technical issues involved in providing devices that cover all paired 700 MHz bands need to be well understood to make a determination whether to impose a requirement that devices include all paired 700 MHz bands," the group wrote in filings to the FCC. "If there are significant technical challenges, then the petitioners' recommendation to freeze equipment authorizations for devices that do not include all paired 700 MHz bands could be counterproductive and delay the availability of LTE devices to public safety."
A full plate at the FCC
So the question remains: What will the FCC do? The fact that the 700 MHz Block A Good Faith Purchasers Alliance has been waiting for a full year for the agency to "act expeditiously and initiate a rulemaking" could indicate the FCC is willing to see where things land before wading into such a complex issue.
However, there is precedent for the FCC to require 700 MHz LTE gear suppliers to build equipment that supports all bands, from 12 to 17. As the alliance pointed out in its initial filing with the agency, the FCC in the early 1980s ruled that "with respect to mobile stations, all units must be capable of operating at least over the entire 40 MHz of spectrum (i.e., 666 channels). This is necessary in order to insure full coverage in all markets and capability on a nationwide basis."
But that was a good 30 years ago, and in the current climate--with net neutrality sucking up everyone's attention, November mid-term elections looming and LTE deployments on the horizon--a controversial decision by the FCC on the issue would come as a major surprise.