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[] WSJ 24.07.02 Frequenzspektrum II / Plan Would Shift Spectrum To The Wireless Industry,

Wall Street Journal
July 24, 2002

Plan Would Shift Spectrum To The Wireless Industry

By Yochi J. Dreazen, Staff Reporter of The Wall Street Journal

WASHINGTON -- The government agreed to relinquish two large swaths of
valuable airwaves that would be used for next-generation wireless phones
and hand-held devices, potentially resolving a years-long fight with the
wireless industry.

Under the plan crafted by the Commerce Department's National
Telecommunications and Information Administration, 90 megahertz of
spectrum would be shifted from government to commercial use.

At least half of the spectrum would come from the military, with the
remainder coming from airwaves controlled by the Federal Communications
Commission, which will be the final arbiter of the plan.

Wireless companies could begin bidding for use of the new spectrum as
early as 2004, but they wouldn't be able to use the airwaves until 2008,
the earliest the military was willing to give up the spectrum.

The Pentagon had long refused to relinquish any of its spectrum unless
comparable airwaves were found elsewhere and its transition costs were

Lawmakers are expected to introduce legislation, similar or identical to
a bill crafted by the White House, that would transfer the revenue from
government-spectrum auctions to the military to cover the costs of
buying new equipment and moving to different airwaves.

Balanced Concerns

Pentagon officials said the deal balances private-sector and
national-security concerns. "Military capabilities will not be degraded
because [the Pentagon] is gaining access to comparable spectrum where
needed, receiving cost reimbursement and being afforded time to adjust
to our operations," said Steven Price, the Pentagon's top official on
the issue.

The administration proposal also won high marks from the wireless
industry, which is desperate for more spectrum to build so-called
third-generation wireless networks capable of providing full-range video
and high-speed data access. The deal would boost the industry's supply
of spectrum by almost 50%.

The industry, which earlier claimed a need for as much as 200 megahertz
for third-generation networks, praised the deal for calming financial
markets by laying out a timetable for making more airwaves available for

"For too long, spectrum decisions have been an unstable dynamic driven
by ad hoc budget determinations, " said Tom Wheeler, president of the
Cellular Telecommunications & Internet Association, a trade group. "This
decision eliminates that instability."

Several analysts were less sanguine. Not only is the new spectrum less
than half what the industry and the FCC had estimated would be necessary
for third-generation service, analysts also said the two swaths of
spectrum are not contiguous. As a result, it would be more expensive for
wireless companies to use them.

Tenuous Deadline

Finally, they cautioned the 2008 deadline might prove tenuous if the
Pentagon argues it needs the spectrum longer for national-security

"This is a very negative decision for the wireless industry," said Rudy
Baca, an analyst at the Precursor Group here. "Wall Street needed a
reason to believe in wireless again.

The last thing it needed to hear was 'By the way, we're going to have a
spend a lot of money for relatively poor spectrum,' but that's what this
proposal will mean."

Analysts also said the plan won't be finalized until the FCC rules on
whether the spectrum can be cleared and whether Defense Department needs
can be accommodated without interference. "The ball moves to the FCC's
court," said Michael Gallagher, a top NTIA official.

Olivier Minkwitz___________________________________________
Dipl. Pol.
HSFK Hessische Stiftung für Friedens- und Konfliktforschung
PRIF Peace Research Institute Frankfurt
Leimenrode 29 60322 Frankfurt a/M Germany
Tel +49 (0)69 9591 0422  Fax +49 (0)69 5584 81                         pgpKey:0xAD48A592
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