By Brandon Matthews
Things are really getting interesting at FCC headquarters in the fight over spectrum that lies adjacent to the Satellite Radio band. The public comment period has ended, yet now some of the WCS licensees are complaining about the lack of proper public notice that was given. Sirius XM had been asking for the Commission to seek public comment on the matter, over the objections of the WCS coalition for some time. It is not surprising, based on some of the comments that have been submitted as to why they had objected.
It seems that Sirius XM Radio (NASDAQ: SIRI) has resolved itself to the fact that the FCC will push through its own agenda at the expense of Satellite Radio subscribers, which will no doubt be challenged in Federal Court. Yet quite unexpectedly, the WCS Coalition now takes issue with the proposed “duty cycle requirements” which it suggests will render the spectrum useless for their proposed services. On the eve of the case being closed, it appears the WCS tactic has become one of further delay and Sirius XM Radio has chosen a different legal argument. It now appears that many of the WCS licensees do not intend to employ any services, but will instead seek to sell off their licenses for very large profits as new technologies become available.
This is in stark contrast to the FCC’s mandate that the WCS licensees not warehouse spectrum and buildout their respective infrastructures. Initially, the FCC had mandated that the licensees buildout their services within ten years of being awarded the spectrum. That ten years expired in 2007, at which time the FCC granted another extension that is set to expire on July 21, 2010. The WCS now seeks another extension.
The WCS argues that a lack of interference rules have stood in the way of its progress. Yet a filing by Sirius XM Radio states that Satellite Radio repeaters cover only 1% of the United States, and that using the issue at hand as a stall tactic is unreasonable. At its own expense, Sirius XM designed interference filters that it made available to all of the licensees at Sirius XM’s own expense. To date, not a single applicant has taken advantage of the technology. The FCC itself has rejected the argument:
“we reject the WCS Coalition’s argument that the timing of relief should be based on the resolution of the pending SDARS repeaters rulemaking. We believe that a lack of certainty regarding the construction deadline could act as a disincentive for WCS licensees to expeditiously develop technological solutions for the band and construct systems. This would undermine one of the purposes of the onstruction requirement—to prevent spectrum warehousing.”
Sirius XM has now taken it a step further, by suggesting that the WCS coalition has been deceitful to the Commission in its intent. Sirius XM provided contradictory statements by NextWave (NASDAQ:WAVE) to its shareholders that it intends to sell its licenses as it delays the preceedings. This supports Sirius XM’s argument that the licensees have been warehousing the spectrum and that it should be revoked and the spectrum re-auctioned. I would venture a guess that Sirius XM itself would be an active bidder of this spectrum. Sirius XM states:
By failing to construct and then coming back and asking for another extension based on the pending rulemaking, the WCS license holders did precisely what the Commission told them not to do – further delay construction – for precisely the reasons the Commission would not grant an indefinite extension – it would be a disincentive for them to develop technological solutions and build-out the band.
It is hard to see how a further extension is warranted in this circumstance. For these reasons, the staff should hold each of the requests for further extension of the WCS buildout requirements to a high degree of scrutiny and determine what good faith efforts the WCS licensees have made to deploy systems. If WCS licensees have taken few, if any, steps to acquire or develop technology, the Commission should not grant further extensions but, should instead cancel the licenses and reauction the spectrum.
Many of the licensees now face a drop dead date in less than 90 days, at which time their licenses could be revoked. The comments submitted by the WCS Coalition make it clear that it is simply seeking to add the most value to the spectrum it intends to sell in the face of the FCC’s directive.
Position: Long SIRI
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