Wireless Utilities 2003 Chicago Special Regulatory Perspective Presented by: Christine M. Gill Telecommunications Practice Group McDermott, Will & Emery

Wireless Utilities 2003Chicago

Special Regulatory Perspective

Presented by:

Christine M. Gill

Telecommunications Practice GroupMcDermott, Will & Emery

Washington, DC202-756-8283/[email protected]

August 20, 2003

Wireless Utilities 2003Special Regulatory Perspective

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INTRODUCTION

WIRELESS/RF SPECTRUM

• Subject to FEDERAL Regulation by the Federal Communications Commission

• Viewed as Scarce Public Resource - Tightly Controlled by the Federal Government for Various Uses Based On “Public Interest” Standard


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OVERVIEW OF UTILITY USE OF WIRELESS SYSTEMS

Primarily Internal - Support of Operations

• Land mobile [voice and data]: – 25, 48, 150, 450, 470, and 800/900 MHz

• MAS/SCADA/Remote Meter Reading: – 150, 220, 900 MHz, 2 GHz

• Microwave - [point-to-point]: – 1, 2, 5, 6, 11, 18, 21 and 24 GHz

• Satellite - WANs/LANs/SCADA


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Common Carrier Services in Utility Operations

• Typically Used Only as an Adjunct to Internal Wireless Systems (For Example, Cellular)

• For-Profit Model at Odds with Utility Requirements– Coverage Often Insufficient – Reliability Not Up to Utility Standards– “Priority Access” Deemed Not Adequate

• Utilities Receive a Low Level of Priority Access [by law] on Commercial Systems


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Hybrid Wireless Utility Systems

• Shared Access to Land Mobile by Private Entities [Currently Non-Profit Only]

• Shared Access to Microwave Capacity by Private Entities/Carrier [For-Profit or Non-Profit]

• Leased Access to All Systems [coming soon?]

Commercial Utility Wireless Ventures

• Automated Meter Reading – Metricom

• Wireless Services – Southern LINC


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THE REGULATORY ENVIRONMENT

The Federal Communications Commission

• Under the Communications Act of 1934, Has Jurisdiction Over Virtually All Non-Government RadioFrequency Operations, Equipment and Structures

• There Is Virtually No State or Local Jurisdiction over Wireless Operations


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THE REGULATORY ENVIRONMENT

The Federal Communications Commission

• Historically Has Employed a Command and Control Approach to Wireless - Dedicated Allocations of Spectrum for Specific Uses

• Issues Licenses and Prescribes Technical Parameters, Geographic Restrictions, Permissible Communications

• Access to Spectrum Determined by the Priority Given to a Particular Group under Government Policy

Commercial/Common Carrier Private/Internal Use Unlicensed

Cellular Utilities Spread Spectrum

Microwave Oil Companies Ultra-Wideband

Transportation U-NII


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REGULATORY ENVIRONMENT

1996 Telecom Act

• Only Major Reform in the Nearly 70-Year History of the Communications Act

• Objective Was Deregulation of Telecommunications - Move to a Market-Driven Model Where Possible

– Increased Use of Auctions to Allocate Spectrum for New Uses

– Moving Away from Allocating Spectrum Based on “Public Interest” to Model Based on “Highest Bidder”


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1996 Telecom Act

Introduced “Exempt Telecommunications Company” [ETC]

Short-Cut for Public Utilities to Enter Telecommunications Service and Related Markets

Utilities Regulated Under “PUHCA” Can Create or Acquire ETCs Subject to Streamlined FCC Approval Process [no SEC Review]

Restriction: ETC Must Be Exclusively Engaged, Directly or Indirectly, in the Provision of:

• Telecommunications or Information Services

• Products, Services Within the FCC Jurisdiction; or

• Products, Services Related or Incidental to the Referenced Services


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Balanced Budget Act of 1997

• Expanded the FCC’s Spectrum Auction Authority

– Previously: FCC Could Auction Spectrum Where it Would Be Used to Provide a Commercial Service

– After BBA 1997: FCC Must Auction All Spectrum, Except for Public Safety Radio Service Licenses


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Balanced Budget Act of 1997 [continued]

• Impact of New Auction Authority

– Auctions Are Widely Used, With Approximately 40 Held to Date, Including:

• 800 MHz and 900 MHz Specialized Mobile Radio

• 2 GHz Personal Communications Service

• Lower 700 MHz [UHF TV Channels – Broadcasters to Exit]


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Balanced Budget Act of 1997 [continued]

– Under the FCC's Interpretation of 1997 BBA, Current Spectrum Used by Utilities Could Be Auctioned

– Access to Spectrum for New Uses Became Intensely Competitive/Prices Escalated

– Market Prices for Spectrum Have Recently Dropped, But Remain Volatile


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FCC Auctions

• The FCC Conducts Auctions Electronically, Allowing Bidders to Place Bids and Monitor Auction Results Round by Round via the Internet.

• Utilities Often Have Access to Auctioned Spectrum Before and After the Auction Because of:– Permissive Eligibility Standards– Availability of Spectrum in Nationwide, Regional,

and Subregional Blocks– Rules Allowing the Partitioning or Disaggregation of

Spectrum by Winning Bidders


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FCC Auctions:

• Auction Prices Vary Depending on the Spectrum Band, Timing and Market

– Over $2 Billion for a Single Broadband PCS License in New York City (2001)

– Total of Approximately $3.2 million for 2,832 Paging Licenses Located Across the Nation (2003)

• The Average Bid During Recent Auctions:

– $11,428 for a 220 MHz License

– $1,713 for a Multiple Address System License

– $1,130 for an Upper or Lower Paging Band License


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ONGOING FCC INITIATIVES THAT WILL AFFECT ACCESS TO WIRELESS SPECTRUM

• Currently - The FCC is Seeking to Advance Several Objectives:

– Make More Spectrum Available to More Users

– Address Public Safety/Homeland Security Needs

– Facilitate Technological Developments

– Ensure Efficient Spectrum Use


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ONGOING FCC INITIATIVES

Spectrum Refarming

• Initiated More than 10 Years Ago as a Way to Increase Efficiency in Spectrum Usage

• Refarms Existing Spectrum - Creating a Greater Number of Narrower Channels


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Spectrum Refarming [continued]

• Originally Equipment Driven [Increasingly Narrow Channel Capacity Required for Equipment Over Time]

• Now - Mandatory Licensee Migration to 12.5 kHz Channelization Below 512 MHz

• Under Consideration - Mandatory 6.25 kHz Migration


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Unlicensed Devices

• FCC Promotion of Unlicensed Operations Is Consistent with Deregulatory Approach

• June 2003 – White Paper from FCC Staff

– Preliminary Exploration of Unlicensed Operations

– Authors Showed Strong Interest in Granting Access to Currently Licensed Spectrum


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Spectrum Leasing/Secondary Markets

In an Ongoing Rulemaking, the FCC Is Seeking to Promote the Development of Secondary Markets in Spectrum

• Relaxed Restrictions on Transferring Licensee Control - Allows Spectrum Leasing in a Wide Variety of Radio Services

• Streamlined Approval of Requests to Lease

• Further Measures to Facilitate [NPRM]?

• More Evidence of Market-Based, Deregulatory Policy - Away from Command and Control.


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Interference Resolution Issues

• Increased Spectrum Demand/Use Has Led to More Interference

• For Example, 2001 Nextel White Paper Detailed Interference to 800 MHz High Power, High-Site Public Safety Systems by Nextel's Low-Power, Low-Site Commercial System


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Interference Resolution Issues [continued]

• Nextel et al. Have Proposed Band Reconfiguration

– All Public Safety Moved to Lower Part of Band [851-854 MHz] and Nextel Moves to Upper Part [861-864 MHz]

• FCC Has Given No Indication of Views/Anticipated Approach

• Initial Decision Expected Late 2003/Early 2004


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Enforcement/Compliance

• Historically

– Enforcement Responsibility Divided Up Among Various FCC Bureaus

– Private Radio Licensees, Such as Utilities, Were Not Aggressively Targeted


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Enforcement/Compliance [continued]

• 1999 - FCC Creates a Distinct Enforcement Bureau

– Bureau’s Full Time, Attention and Resources Are Devoted to Identifying and Addressing Rule Violations/Unused Spectrum

– Across-the-Board Enforcement of Rules Becomes an FCC Priority


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• Currently

– Areas of Particular Focus Include:

• Antenna Towers/Sites (painting, lighting, signage, RF Radiation Exposure)

• Unauthorized Operations (expirations and otherwise)

• Unauthorized Transfers of Control (mergers, asset sales)


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• Bottom Line on Enforcement/Compliance:

– Compliance and License Renewal Programs Are Vital to Avoiding Enforcement Consequences and Protecting Spectrum Assets

Documents

Wireless Utilities 2003 Chicago Special Regulatory Perspective Presented by: Christine M. Gill Telecommunications Practice Group McDermott, Will & Emery