Carrier 3G Plans Unclear Pending FCC HDTV Ruling
By Joseph Palenchar -- TWICE, 8/21/2000
It's not clear whether carriers will look to next year's auctions of 747-762MHz and 777-792MHz spectrum to implement 3G services. It's not only unclear to seasoned industry watchers, it's also unclear to some of the carriers themselves.
Depending on their success in the 1.9GHz auctions in November, some carriers might look to the 700MHz auctions to add spectrum in their existing 1.9GHz and 800MHz markets, or enter new markets, with the intent of offering 3G service.
"The upside [to 700MHz] includes huge regional coverage areas, six in all," one carrier said. "The downside is we'll need another multiband [700MHz/800MHz/1.9GHz] multimode phone, which makes them bigger and more expensive until economies of scale kick in."
Even without these issues, uncertainty over using 700MHz for 3G looms because the FCC hasn't yet developed rules for enticing the spectrum's current users to voluntarily relinquish the spectrum.
Those incumbent users consist of more than 100 UHF TV stations on channels 60-69, and under current HDTV-transition policy, these stations don't have to give up their spectrum until the end of 2006, at the earliest. They could even hold onto the spectrum for years after that unless 85 percent of households in their markets have digital TV sets.
Without FCC-mandated guidelines, wireless carriers fear the stations will hold the spectrum hostage for huge sums of money. To give it more time to develop rules, the FCC postponed the auctions for a third time until March 6, 2001.
Although the 700MHz band is appealing to many carriers, at least one carrier, Sprint PCS, thinks it already owns enough unused spectrum to add 3G services to its markets in the future. Other carriers, including AT&T, could potentially win enough spectrum in enough markets during November's 1.9GHz auctions to make it unnecessary to use the 700MHz band to implement 3G.
For other carriers, however, November's 1.9GHz auctions might not yield a potential 3G solution. Some carriers, particularly those with a large base of subscribers using less-spectrum-efficient analog phones, might need more 1.9GHz spectrum than allowed by the FCC's spectrum caps.
Unfortunately, the FCC has tentatively concluded that the caps are here to stay, and it's not certain if pending legislation to lift the caps will pass -- in time for the November auctions or ever.
"It might be very tight" for 800MHz cellular carriers, who are still loaded with analog subscribers, to implement 3G [in their 800MHz and hybrid 800MHz/1.9GHz networks] and stay within the spectrum caps," said Strategis senior VP Elliot Hamilton.
These and other spectrum-challenged carriers might then look to 700MHz for relief, given that the FCC decided that the 700MHz band won't fall under the cap.
Yankee Group analyst Mark Lowenstein agreed. "If they have all 45MHz, some carriers say they could implement 3G, and some say no, depending on their current load and the technology."
Even if a carrier must look to 700MHz for relief, "there's not necessarily enough spectrum available for all the carriers who might want it," said Yankee analyst Eugene Signorini. That's because the FCC will auction off only one 20MHz and one 10MHz license in each of six regions of the country, and an individual carrier will be allowed to win both licenses.
Nonetheless, the FCC has hinted at the potential for additional auctions in 2001 or 2002, he said.
Whatever the case, U.S. carriers are still several years away from rolling out 3G, given that many are just now testing 3G-like services such 1XRTT and EDGE, said analysts.
Unlike full 3G services, these technologies, dubbed by some as interim 3G technologies, don't require dedicated spectrum. W-CDMA technology, which would be used by TDMA and GSM carriers to implement 3G, requires 5MHz of spectrum to be set aside for its exclusive use, said Cahners In-Stat analyst Ken Hyers said. CDMA2000, intended for existing CDMA networks, requires only 2MHz to implement.
In the meantime, AT&T plans to implement various methods of expanding its TDMA-network voice capacity without installing 3G technology.
One way will be to use the 220 1.9GHz-band licenses that it previously planned to use for residential voice and data services. Although its residential services are operating in two markets at 1.9GHz, the carrier recently decided to use WCS-band spectrum that it won at a previous auction in future markets, a spokesman said.
