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The Scuffle over Sharing Spectrum

The 15 employees of Austin-based Northpoint Technology are all set to let out an old-fashioned Texas "Yeehaw!" Any day now, regulators are expected to finally permit the upstart to go after the big satellite broadcasters. For eight long years, the tiny company -- not to be confused with bankrupt Northpoint Communications -- has waged battle at the Federal Communications Commission to make a go of a low-cost version of satellite TV. "We're like the Southwest Airlines of video," says Northpoint President Sophia Collier.

Why the controversy? To launch the service, Northpoint proposes sharing airwaves already licensed to big satellite broadcasters Echostar Communications and Hughes Electronics' DirecTV. And the two giants, now in the midst of merging, aren't eager to share, claiming that their signals will fade if Northpoint is operating in their space. "We don't have anything against competition," says David Goodfriend, Echostar's director of legal and business affairs. "We have a problem with the level of interference."

To a lot of people, it's news that regulators would ever allow companies to share the same airwaves. In fact, the laws allow this, and in at least some cases, it's perfectly feasible in technical terms. Regulators are "trying to squeeze as many new services into these limited bands as is humanly possible," says Rebecca Arbogast, a telecom analyst at Legg Mason Wood Walker.

OPEN DOOR. The Northpoint case is a harbinger of mounting tussles over scarce spectrum. Most commercially viable swaths of radio frequency have already been allocated to the likes of TV broadcasters, satellite broadcasters, and cell-phone operators. So newcomers must find creative ways to gain access to the airwaves.

On Apr. 18, the FCC opened the door for seven satellite operators, including startups Skybridge and Teledesic, to launch a global broadband Internet access service riding on airwaves occupied by the satellite-TV companies. Regulators gave the companies the green light to apply for airwave licenses if they can meet certain technical standards to avoid interference.

Within days, regulators are likely to O.K. Northpoint's request, too. That will be sweet vindication for Austin-based husband-and-wife engineers Saleem and Carmen Tawil, who developed the technology to deliver TV signals via ground-based transmitters -- but using spectrum reserved for satellite transmissions.

"FAIR TREATMENT." In effect, this is a "fixed wireless" scheme for transmitting digital microwave signals, with a creative twist. Since Echostar's and DirecTV's satellite-TV dishes face south to catch signals from birds stationed over the equator, Northpoint would have its subscribers place their dishes facing north, where they would pick up terrestrial signals from Northpoint's antennas. "It reuses a spectrum band that was thought to be fully used up," says Northpoint's Collier.

Northpoint may face one big disappointment: The FCC could well decide that the company must pay for use of its airwaves by auction. The big satellite-TV competitors insist on this, claiming that in at least some cases -- notably Echostar -- they paid for airwave licenses that were originally purchased by auction. "It comes down to fair treatment," says one satellite broadcasting exec. "You can't say we want to provide the same type of service in the same band under different rules."

A similar heated argument will arise in the case of New ICO, the global satellite-phone service launched by wireless entrepreneur Craig McCaw. ICO has requested to use the satellite spectrum it already occupies to provide limited, land-based wireless-phone service. The company says it needs to do this to fill in pockets of coverage that satellites can't reach, such as the urban canyons of Manhattan. A service without total reach, "would cripple us," says ICO senior vice-president Gerry Salemme, who has absorbed the lessons of other global satellite-phone services, such as Iridium and GlobalStar, both of which sputtered.

A "GIVEAWAY"? The wireless-phone operators are up in arms at this prospect. Why? Because they had to pay billions of dollars for the airwaves they now use for similar land-based services, while McCaw would get it for free. ICO is wheedling in on their turf through a legal loophole, they claim.

McCaw knows that by law, the U.S. government can't sell satellite spectrum at auction -- for a simple reason. Providers of global satellite-phone services (as opposed to direct broadcasters of satellite TV) need the same set of airwaves over all nations of the world, so the U.S. fears that if it auctions off satellite spectrum, U.S. companies will be subject to auctions in the rest of the world, too -- making their ventures prohibitively expensive.

"If the FCC enacts ICO's proposal, it will be a multibillion-dollar giveaway to Craig McCaw," complains Brian Fontes, vice-president of wireless-phone operator Cingular Wireless. Cingular, and other wireless carriers, want the FCC to auction off the satellite spectrum for land-based phone service.

"SO BIZARRE." Tiny startups Time Domain in Huntsville, Ala., and Xtreme Spectrum in Vienna, Va., have already been through this. The companies, which make ultrawideband gear, got FCC approval in February to launch products after a bloody three-year battle against giants ranging from Sprint PCS to the Pentagon. The issue: Ultrawideband is a low-power wireless technology that, according to its proponents, can coexist with other operators over a wide range of airwaves (see BW, 4/22/02, "The Ultrawideband Pulse of the Future"). But the military, airlines, and wireless-phone companies say the technology would interfere with their global positioning systems.

Taking these concerns to heart, the FCC limited ultrawideband's use to frequencies above that used by most commercial wireless and GPS services. "Spectrum politics today is so bizarre, you can't even imagine it," says Jeff Ross, a vice-president at Time Domain.

Given the scarcity in radio frequencies, the FCC will undoubtedly be refereeing more and more nasty skirmishes over spectrum rights. Sharing of the airwaves seems to offer a plausible mode for compromise, both technically and legally. But the road to such a peace accord is bound to be tortuous -- and fraught with pitfalls. By Catherine Yang in Washington

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