Grounded: FCC Gives Satellite Phone Firms a Break
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The Federal Communications Commission (FCC) gave a boost to the struggling mobile satellite service provider (MSS) industry Thursday, issuing new rules allowing satellite phone companies to build land-based towers to fill in coverage gaps. At the same time, the FCC reallocated 30 MHz of wireless spectrum previously reserved for satellite use.
Crippled by weak signals in dense urban areas where buildings obstruct service, the FCC decision paves the way for satellite phone providers to offer a product competitive with cellular phone companies by letting MSS operators to use some of their allocated spectrum for land-based networks.
MSS companies that wish to take advantage of the rules cannot offer a service entirely based on a terrestrial network. The rules are also restricted to those companies that launch and operate their own satellite facilities and provide "substantial" satellite service to the public.
In its other Thursday decision, The FCC expects the reallocated spectrum to be used for a variety of new wireless services, including third generation (3G) cell phone products and offerings.
"I believe that the highest-valued use of this spectrum is no longer for satellite service, and it is more prudent to explore other uses," FCC Chairman Michael Powell said.
The Cellular Telecommunications and Internet Association (CTIA), the principle trade group of the cell phone industry, gave the FCC decisions a mixed review, hailing the reallocated spectrum but hammering the satellite phone provider rules as "bewitched." The cellular industry has long opposed letting MSS operators use land-based towers since, in its view, satellite phone providers should have to buy the spectrum they use.
The satellite phone industry, on the other hand, contends it should not have to pay for spectrum as compensation for providing service to thinly populated or remote areas deemed unprofitable by the cell phone industry.
"This is a split decision for consumers," said Tom Wheeler, president and CEO of CTIA. "Consumers should welcome the FCC's decision to take spectrum away from satellite licensees who could not even make it over the first hurdle of deploying their satellites. But, the FCC's decision to give failing satellite companies new technical rights is a gigantic giveaway that will cost taxpayers billions of dollars."
Wheeler added, "In filings at the FCC, satellite companies have claimed they need land-based cell towers in order to compete because consumers have not found satellite-only offerings attractive. In the same breath they claim these new technical rights will not help subsidize their satellite operations. The FCC seems bewitched by this twisted logic. If free spectrum is the FCC's answer, then the Commission should refund the billions it took from wireless carriers who played by the rules, instead of using pretzel logic to twist the rules."