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June - 2001 - issue > Wall Street View

FCC and Capitol Hill: Driving the Telecom's Future

Monday, November 17, 2008

Almost immediately following his inauguration, President Bush designated Michael Powell, a Republican commissioner of the Federal Communications Commission (FCC) named by President Clinton (and son of Secretary of State Colin Powell), to be the FCC’s chairman, replacing resigning Chairman William Kennard. Due to an unusual set of circumstances, three other commissionerships are now to be filled. A fourth vacancy is expected by year-end. Two new commissioners have already been nominated, with more soon to come.

In contrast to recent Chairmen Hundt and Kennard, who believed the FCC should foster conditions that would give new entrants a chance to compete, Chairman Powell believes that government should be less interventionist and should allow market forces to determine the outcome, a position some economists believe favors incumbents.

A major issue the FCC will wrestle with in the coming months is the allocation of spectrum to support the introduction of 3G wireless services. The Commission initiated a rulemaking in December 2000 to allocate spectrum for 3G use. At the end of March, the FCC issued a final report on the use of the 2500-2690 MHz band, and the National Telecommunications and Information Administration (NTIA) of the Department of Commerce issued a final report on use of the 1710-1850 MHz band. The schedule requires the FCC to issue an allocation order specifying the bands selected for 3G by July 30, 2001 and to auction and assign licenses for 3G spectrum by September 30, 2002.

The FCC and NTIA reports each concluded that using the spectrum it examined would seriously disrupt operations of existing users, that it would be impracticable for the existing users and 3G providers to share the examined spectrum, and that relocation of existing users would be problematic, costly and take many years.

The proceeding could have a significant impact on Silicon Valley and other tech hubs that rely on the telecom equipment market. Comments filed by most mobile wireless providers, indicate that for technical reasons most would prefer to use spectrum in the 1710-1850 MHz band. Nevertheless, the position of federal government users has forced an examination of the 2500-2690 MHz band.

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