Rivals Blast FCC Over Handling of Teligent

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The latest flare-up over FCC handling of spectrumallocations in the convoluted proceedings surrounding fixed wireless broadband technologyhas gone beyond second-guessing policy decisions to raising questions about the integrityof the process.

Critics, many of them rivals, contend the granting of afourfold increase in spectrum to Teligent Inc. last March in a shift of its licenses fromthe 18 gigahertz to the 24 GHz tier without an auction or public proceedings of any kindviolated procedural rules. Recent letters of explanation from Federal CommunicationsCommission and Commerce Department officials to the heads of the Senate and House CommerceCommittees have done little to quell the anger.

The FCC contends the process, which gave Teligent 320 to400 megahertz in 31 of the largest markets and 80 MHz or more in 43 others, was a legallyappropriate response to the urgent needs of the military.

'The unanswered question is how an originalaccumulation of up to 100 MHz in various markets under waivers granted without theknowledge or approval of FCC headquarters got traded up to as much as 400 MHz,' saidDavid Mallof, president of Webcel Communications, Inc.

Webcel is a Washington-based start-up intending to bid inthe local multipoint distribution service (LMDS) auction scheduled for mid-February.

'Government policy must be consistent and executedpublicly, not behind closed doors,' Mallof said.

LMDS operators and Teligent are all pursuing deployment ofpoint-to-multipoint fixed service networks that will offer broadband data and voiceservices to business customers. In giving spectrum away to Teligent, the FCC's actionthreatens to undermine the LMDS auction process, Mallof said.

Teligent, through affiliated predecessor companies,obtained the original 100 MHz of spectrum through waivers granted by the FCC'sGettysburg, Pa., office under rules that set aside 20 MHz segments in the 18 GHz tier forDEMS (digital electronic messaging services) -- a category created in 1981 that hadgenerated little interest prior to Teligent's involvement. The waivers were grantedwithout the knowledge of then FCC chairman Reed Hundt, who said he stopped the processonce he learned of it.

In mid-1996 Teledesic Corp., which intended to use the DEMSspectrum for uplink connections in its NGSO/FSS (non-geostationary orbit fixed satelliteservice) network, told the commission the terrestrial DEMS service would interfere withits uplinks. That set off a battle over spectrum between Teledesic and Teligent at amoment when the military was expressing concern over potential interference between theDEMS operations and its own satellite communications links in Denver and Washington, D.C.

The commission resolved the dispute by ordering thatTeligent be moved to spectrum freed up by the Department of Commerce, justifying thefourfold increase on grounds that more spectrum was needed at 24 GHz to provide servicecoverage equal to what was possible at 18 GHz.

Both House Commerce Committee chairman Thomas Bliley Jr.(R-Va.) and Senate Commerce Committee chairman John McCain (R-Ariz) questioned the move inthree separate letters sent to federal officials in late November, several months afterseveral entities, including Webcel and BellSouth Corp., petitioned the FCC to reconsiderthe allocation.

In their responses in early December, FCC chairman WilliamKennard and assistant secretary of commerce Larry Irving defended their agency'sactions because of national security concerns.

'The commission unanimously concluded that thisapproach was consistent with previous actions the Commission had taken to resolve sharingproblems, and served the public interest by enabling a wider variiety of technologies tocompete in the provision of services,' the pair wrote.

But critics of the commission's handling of the mattercontend the military's need for protection from interference at two sites did notcreate a national security justification for giving Teligent 400 MHz of spectrum withoutany public proceeding.

'The military needs for secrecy pertain only to thedecision to move Teligent, not to the decision as to where to relocate it and certainlynot to the decision that it needed four times as much spectrum to compensate for what itlost at 18 GHz,' said an attorney for one of the petitioners, asking not to be named.

'The lengthy transition period [four years forrelocation of holders of the 20 MHz DEMS licenses at 18 GHz] that the commission adoptedmakes clear that there was no immediacy warranting departure from notice and commentrulemaking,' said BellSouth in its filing for reconsideration of the Teligent ruling.'In fact, the commission's decision appears to have been reached in order to aidprivate parties -- Teledesic and Associated (Communications L.L.P., which is nowTeligent).'

Mallof argued that the FCC only had a collection ofhandwritten notes by staff members to offer as backup to the decision to expandTeligent's allocation to 400 MHz.

Bliley questioned whether the FCC had obtained any studies'purporting to justify the need for more than four times the amount of spectrum inthe 24 GHz band.'

Kennard replied that the only such study was'submitted by the DEMS licensee,' which suggested a range of two-to-eight timesas much spectrum would be required at 24 GHz, depending on 'key variables' suchas 'the reliability of the network and the channel occupancy.'

Teligent spokesman Robert Steward said the fourfoldincrease in spectrum was a fair allocation based on the more limited propogationproperties at 24 GHz. Moreover, he added, petitioners are ignoring that the yearlongdispute over the 18 GHz tier and the subsequent switch to 24 GHz 'set us back'in efforts to get service under way.

Commission officials declined to go beyond Kennard'sletters in commenting on the specific issues raised, but a spokeswoman at theInternational Bureau made clear the agency intends to respond quickly to the petitions forreconsideration. A decision could be reached 'maybe by the end of January,' shesaid.

Bliley is still weighing the responses from Kennard andIrving, said Pete Sheffield, a spokesman for the Commerce Committee.

'It's premature to say whether there will be ahearing on this issue,' he said.

But a number of sources in Washington suggested thepolitical issues that prompted Bliley and McCain to raise questions were too strong to beignored at this point.

'The answers from Kennard and Irving attempted to putthe best possible face on this, but it's clear there were political influences inplay that make it hard to swallow the claim that all these decisions were justified onmilitary grounds,' said one Capitol Hill source, who did not want to be identified.

Teligent and Teledesic both hired lobbyists who hadrecently left positions at the FCC and the White House to represent their interests.

For example, former International Bureau chief ScottHarris, soon after leaving his post, was back lobbying his former colleagues at the bureauon behalf of Teledesic, and former White House aide Greg Simon was working for Teligentsoon after leaving his job.

Sources said petitioners were considering a number ofoptions, including court appeals, in the event their request for reconsideration is deniedand Congress doesn't intervene.