By Jeffrey Krauss,
The key mobile satellite players are Iridium, Globalstar, ICO and Motient. Iridium launched its non-geostationary satellites, went bankrupt, and nearly de-orbited its satellites, but at the last minute, a buyer paid a few cents on the dollar and is trying to put the system back into operation. Globalstar launched its non-geo satellites, but has stopped paying creditors and is considering bankruptcy. ICO went bankrupt before it launched its satellites, and wireless mogul Craig McCaw bought it for a song. Motient, formerly called American Mobile Satellite Corp. (AMSC), launched a geostationary satellite in 1995, and has managed to stay in business only because it bought an 800 MHz land mobile data business called Ardis, and that has become profitable enough to subsidize the satellite business.
In contrast, the terrestrial mobile business has been wildly successful. First, cellular at 800 MHz; then, PCS at 1800 MHz; and now, the government is looking for more spectrum for next-generation 3G services. It is partly because of the widespread buildout of terrestrial networks, but also partly because of the technical limitations of satellite service and the technical superiority of terrestrial, that the mobile satellite business has flopped.
Both ICO and Motient have now asked the FCC to let them operate land mobile services on the frequencies allocated for mobile satellite service. The traditional land mobile operators of cellular and PCS services, such as Cingular and Verizon Wireless, have objected. ICO and Motient claim they will use the spectrum for terrestrial service only in locations where the satellite signal is blocked. But that includes urban canyons and all indoor locations. In other words, they would compete with cell phones in all the biggest markets.
Technically, the idea works just fine. Motient proposed a satellite design with about 200 spot beams covering North America. With spot beams, you divide up your frequencies so that adjacent beams use different frequencies. This is like the traditional map coloring problem, and is also the way terrestrial cellular systems are designed. Once the frequencies are divided up and assigned to spot beams, those frequencies not used by the satellite spot beam can be used for terrestrial service in that spot beam area.
We are talking about a significant amount of spectrum here. Motient wants to operate on 1525-1559 and 1626.5-1660.5 MHz, a total of 68 MHz. ICO wants to operate on 1990-2025 and 2165-2200 MHz, a total of 70 MHz. Either one of those is more than any cellular or PCS operator has in any city.
Iridium and Globalstar, which operate on 1610-1626.5 MHz and 2483.5-2500 MHz, have not yet asked for terrestrial authority, but it's only a matter of time.
Both ICO and Motient claim that their terrestrial services would be "ancillary" to the satellite service. A majority of their traffic would be carried by satellite. But no one believes them. The cellular operators view this as a grab for free spectrum, while they had to spend billions to buy spectrum in auctions. Craig McCaw, who controls ICO, is viewed as a master in the spectrum grab arena.
While we now know that a mobile satellite business cannot compete with terrestrial land mobile in urban areas, ICO claims there are rural areas that require satellite service because the population is too sparse to support land mobile networks. But as Iridium and Globalstar learned, the rural market is not big enough nor profitable enough to support satellite services. It requires subsidies. According to ICO's plan, the subsidies should come from an urban terrestrial mobile business using frequencies controlled by the satellite operator.
Whether rural subsidies are warranted or not, it seems clear that there is more spectrum allocated for mobile satellite service than is needed. Maybe what the FCC should do is take it away from the satellite interests, auction it off and allow the auction winners to use it for anything they want, satellite or terrestrial.
But that can't happen. These frequencies are allocated on a worldwide basis for satellite service. The U.S. can't make a unilateral decision–it must consult with other countries. But even apart from that complication, the FCC doesn't have legal authority to auction off these frequencies. That's because the law that Congress passed to give the FCC auctioning authority only covers frequencies allocated for terrestrial use. Congress never extended the authority to cover satellite spectrum auctions.
And finally, the FCC doesn't have the political will to do it. It would be too dramatic, too dynamic. Government agencies don't behave that way.
So what will happen? ICO and Motient lawyers will submit lots of arguments in favor, Cingular and Verizon lawyers will submit lots of arguments against, the FCC will defer a decision, and maybe in five years or so, Motient and ICO will either have lost interest or given up in despair. Or maybe by then, they'll be acquired by Cingular and Verizon.
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