NCTA Wants Access to LMDS Spectrum

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Washington -- The cable industry is trying to get access to
spectrum that regulators said three years ago should go to companies that intend to
compete against cable- and phone-industry incumbents.

Cable lobbyists have the support of two members of the
Federal Communications Commission -- Michael Powell and Harold Furchtgott-Roth -- but it
takes three votes to effect a change in policy.

The spectrum in question was set aside for local multipoint
distribution service, a fixed service that contains enough bandwidth for the provision of
video programming, voice telephony and high-speed data.

The FCC auctioned the licenses, but so far, no one has
deployed an LMDS service to compete with cable operators and direct-broadcast satellite
carriers.

When the FCC established LMDS rules in 1997, the agency
said incumbent cable and phone companies could not obtain LMDS licenses covering service
areas that overlapped with their existing cable and phone markets.

But the commission said it would evaluate the need to
continue the common-ownership ban no later than June 30, 2000.

In recently filed comments, the National Cable Television
Association told the FCC cable operators should be permitted to obtain LMDS licenses
because there is no danger that incumbent cable operators would acquire the licenses to
advance anti-competitive business strategies.

The FCC is concerned that cable operators might obtain LMDS
licenses merely to keep valuable resources out of the hands of competitors -- an action
commonly called warehousing.

The NCTA said cable operators that engaged in LMDS
warehousing would suffer in the marketplace for deliberate underuse of an important
resource.

"It would be most foolish for a cable company to
divert scarce resources to a nonperforming asset and, thereby, give financial markets
reason to doubt the seriousness with which it takes its various endeavors," the NCTA
said.

Another reason for lifting the ban, the trade group said,
was the fact that the FCC's goal of promoting LMDS as a cable competitor has not been
realized. And with the explosive growth in DBS, that potential may never be realized.

"Despite the entry restriction, LMDS has not developed
as a multichannel-video medium. Indeed, so far, as we are aware, no customer is receiving
[cable] service through LMDS frequencies, and this situation is not about to change,"
the association said.

The FCC raised $578.7 million from the LMDS auctions, which
ended in February 1998. The agency gave winning bidders 10 years to offer substantial
amounts of service.

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