The FCC has moved closer to auctioning four megahertz in the 800 MHz band for air-to-ground telecommunications and data: This auction is being closely watched as it will pave the way for domestic U.S. data and cell calls in the air being a much cheaper method of relaying than via satellite. The order released today [PDF] doesn't set a date, although May 2006 is likely based on conversations I had recently with four interested parties, two or three of which will be bidders on the spectrum.
The executive summary of today's order: Realistically, it pushes back the practical deployment of cell-based voice and any pure data in domestic aircraft to terrestrial stations from mid-2007 to mid-2008, and almost certainly no earlier, unless Verizon Airfone wins all the licenses and is able to complete a transition much faster than it now says is possible. One month ago, the four operators I spoke with (AirCell, Connexion by Boeing, OnAir, and Verizon) were expecting a mid-2007 launch based on a mid-2006 auction. (Verizon Airfone said Monday in a press release that they would be able to launch data services in 2007 if they win a license, but this doesn't conform with the below details.)
The 4 MHz will be auctioned in an odd way, with three potential configurations: two sets of 3 MHz overlapping across 2 MHz in the middle; a set of 1 MHz and 3 MHz; and a set of 3 MHz and 1 MHz. The logic is that two pairs of 1.5 MHz bands are needed to provide reasonable speed. The remaining 1 MHz is left over, and there's no provision for a winning bidder of 1 MHz to build out service. Companies can bid on all kinds of pieces, and the optimum dollars for a single configuration will win out.
Verizon Airfone currently occupies all 4 MHz for its underused phone service and will have two years following the auctions to move its service down to 1 MHz which may overlap with a winning bidder. They may win the bidding, and this order today requires more monitoring if they do so. They received a five-year license renewal running until 2010 for their phone service.
AirCell, a potential bidder and existing operator of a U.S.-wide network of ground stations used for general (non-commercial) aviation, filed several requests for changes to Airfone's incumbent terms. Among them were a request to reduce the transition from 4 to 1 MHz to six months (or even one year, they suggested later) instead of a full two years. This was denied, and it's a shame, because it means that any winner of 3 MHz in any of the three configuration options will be unable to deploy for as long as two years following the auction's completion unless Verizon chooses and is capable of migrating faster. The order notes that Verizon has to touch and test every ground station and about 3,000 commercial and government planes--there's no possibly of remote upgrades.
AirCell also wanted Verizon's license to use 1 MHz dropped from five years down to two, asserting that this gives them an extra benefit in operating in the 1 MHz longer to detriment of whichever winner bidder (if not Airfone) has to share that 1 MHz of spectrum in a non-interferring manner. This was denied, too.
Space Data, a stratospheric tethered balloon broadband firm, won a decision that allows it to use the air-to-ground frequencies on its balloons, but lost the rights to use the frequencies for secondary purposes unrelated to air-to-ground transmissions.
And yet another decision went against AirCell's desire, too. The FCC commonly offers bidding credits to what they define as "small" and "very small" businesses, based on the average three years' preceding revenues. AirCell and Space Data had fought for 35 percent credit for very small and 25 percent credit for small businesses. Boeing--which operates its satellite-based Connexion service internationally--thought 25 and 15 were enough; Airfone wanted none. The order specifies 25 and 15 percent credits for very small and small businesses they define as averaging $15 million over the previous three years and $40 million, respectively. It's unclear where AirCell and Space Data fall as both are privately held and don't appear to report revenue.
Interesting, two of the three sitting FCC commissioners--the temporarily majority-wielding Democrats Copps and Adelstein--both used the opportunity to concur (which means disagree with in this context) in part with the order because they dislike the monopoly it continues to grant Verizon Airfone by implication. Adelstein wrote [PDF], "Ultimately, we could have taken a number of more specific actions to support competition in the event Airfone wins the exclusive three megahertz license. But we fail to do so today." Copps wrote [PDF], "I remain concerned that America's aviation industry and its passengers will not have the full range of choices in air-to-ground broadband that they might otherwise have enjoyed."