A decision by the FCC that gives mobile satellite service (MSS) providers the right to use some of their spectrum to provide terrestrial wireless services has raised the hackles of the Cellular Telecommunications & Internet Association. At least one wireless carrier, though, doesn't think the order will have a major impact on a market already crowded with competitors.

The commission granted limited rights in three bands — 2 GHz, 1.6/2.4 GHz (known as Big LEO) and L-Band — reasoning that it would be more efficient and practical than granting terrestrial rights in each band to third parties.

“The record in this proceeding demonstrates that the shared usage of these bands by separate MSS operators and terrestrial operators would likely result in the inability for both systems to operate effectively,” FCC Commissioner Kathleen Abernathy said in a statement.

But a CTIA spokesman said the decision constitutes a “gigantic giveaway” to MSS operators, which can now use the previously restricted spectrum to enter the wireless space and challenge competitors that paid billions for spectrum in auctions. He added it also provides a bailout for satellite companies that largely have found it difficult to achieve profitability, as evidenced by the bankruptcy woes of Iridium and Globalstar.

“They readily admit that there is no successful business plan for a satellite-only venture,” the spokesman said. “That means, obviously, that they are looking at the wireless market to support their satellite ventures.”

Carson Agnew, president and chief operating officer of Mobile Satellite Ventures, which purchased Motient Services' satellite assets in late 2001, disagreed. He pointed to the fact that MSS operators have been plagued by signal blockage in urban areas because signals are too weak to break through the jumble of skyscrapers.

Weak signals have not only limited the commercial viability of satellite-based service, but have also saddled operators with MSS handsets much larger than their terrestrial cousins. Moreover, because MSS is still a relatively small niche, equipment vendors have little incentive to invest in next-gen handsets.

The FCC's decision to allow limited use for terrestrial wireless services solves these challenges, Agnew said. “We don't want to be the seventh wireless carrier,” he said. “The main thing this will do is allow us to offer state-of-the-art, lower-cost terminals, because we will be able to offer our service to a wider range of people and get the volume. Those kinds of economies of scale weren't available to us before.”

Indeed, wireless carriers need not worry that the already crowded market will be overrun by satellite interlopers, according to Doug Brandon, vice president of federal affairs for AT&T Wireless. The FCC recognized the potential for bait-and-switch tactics that satellite providers could use to enter the market, and consequently included a number of gating factors in its order (see figure).

“The FCC tried to walk the line between giving them some relief on their technical problems, but not allow them to get around the auction rules,” Brandon said.

The FCC set a precedent for such increased flexibility when it allowed wireless carriers to branch out beyond voice services, said Lon Levin, vice president for Mobile Satellite Ventures. “The wireless carriers for a time couldn't provide data services, and then the FCC gave them more flexibility. This is the same thing.”

However, a CTIA spokesman countered by accusing Levin of creating a “false parallel” with this analogy. He said a better comparison could be found in the relationship between wireless and wireline carriers.

“The wireless carriers never said they wanted free access to the wireline network,” he said. “The MSS providers have told the FCC they wanted to build a satellite business, but now they're saying they want to build a wireless network without paying for the licenses.”