Satellite Broadband Battles Continue
By Peter J. Brown
from the May 21, 2001 issue of Broadband Week
While Capitol Hill lawmakers fight over their agendas for spurring broadband service deployments, a side battle among vendors aiming to use satellite spectrum for offering terrestrial broadband is getting more complicated.
A new competitor has emerged to challenge Northpoint Technology Ltd. (not to be confused with the defunct digital CLEC NorthPoint Communications) in its efforts to gain broad support and FCC approval for its controversial plan to offer terrestrial services.
Northpoint would rely on the same frequencies in the 12.2 to 12.7 GHz band that are used by the direct broadcast satellite TV providers DirecTV Inc. and EchoStar Communications Corp. The satellite TV industry is adamantly opposed to this plan and the debate already has taken on a circus-like atmosphere over the last few months, with allegations of intense partisan and political maneuvering reaching all the way from the King Ranch in Texas to power brokers on Capitol Hill.
Now comes MDS America Inc., the U.S. licensee of a French company that has deployed a technology known as Hypercable in several sites overseas. MDS came knocking on the FCC's door in late March with a filing that hinges on two critical passages.
"MDS International has answered conclusively the main question that has been argued over for years and in excruciating detail in this proceeding: a terrestrial system can co-exist successfully with satellite systems in the 12.2 to 12.7 GHz frequency band. MDS International has demonstrated this through real world operational systems, not through an abstract paper war," the company states.
Also, "the existence and viability of MDS International's systems should strike a fatal blow at the same time to Northpoint's attempt to seize control of terrestrial use of the 12.2 to 12.7 GHz band without facing competition. Northpoint's essential argument is that only it has a technology capable of being used terrestrially at 12.2 to 12.7 GHz without causing interference ... this argument is simply not true, as Northpoint should know; the existence of MDS International's systems demonstrates that it lacks any basis."
Northpoint is counterattacking, questioning the credibility of MDS, among other things. "MDS made a lot of claims," says Northpoint president Sophia Collier. "We did not oppose them initially. We viewed ourselves as first in line."
"Our applications have been pending for over 28 months," she adds. "We want the FCC to act on our applications because we have met our burden of proof. We were the only company to participate in the MITRE testing which was mandated by law. No other company participated in the MITRE testing as required."
The FCC designated MITRE Corp. to independently test the technologies in question. MITRE concluded that while mitigation techniques would be necessary because interference could occur, the feasibility of spectrum sharing was alive and well.
But at least one observer on Wall Street is wondering how a business plan based on Ku-Band spectrum sharing is going to get off the ground, let alone attain any real traction in the U.S. market.
"All the low hanging fruit is rapidly disappearing, and in order to be successful, ventures like Northpoint must proceed with a cost structure substantially lower than DBS," says Jeffrey Wlodarczak, and analyst with New York-based CIBC World Markets Corp. "That is going to be extremely difficult at best."
The DBS industry says the above-mentioned MITRE test results demonstrate the exact opposite of Northpoint's conclusion, and that if the FCC issues licenses to Northpoint's affiliates nationwide, millions of DBS subscribers could be adversely impacted.
In early May, the FCC granted MDS an experimental license so that testing at a site in Florida could commence immediately. MDS America is retaining LCC International, a Virginia-based engineering consulting firm, to oversee the tests of its system.
"While this statutory process is unfolding, it is extremely inopportune and ill-advised to allow yet another private experiment by another company claiming to provide the same service," the Satellite Broadcasting and Communications Association (SBCA), the DBS industry association, stated on May 7.
"While we understand that the government has a vested interest to be balanced, we have already proven over the past 5 years of operation that our technology functions (without interfering with Ku-Band satellite services)," says Kirk Kirkpatrick, CEO of MDS America.
Northpoint is calling for a debate on Capitol Hill on the status of the spectrum sharing plan. It also is fighting a pitched battle at the FCC, contending that the facts spelled out by MDS in its filing constitute a serious misrepresentation, and "represent an apparent attempt to deceive" the FCC. Northpoint contends that after an extensive global investigation, it cannot identify a single instance where MDS has deployed its terrestrial service in a territory covered as part of a DBS footprint, despite the MDS's claims to the contrary. MDS America counters that it is Northpoint which is distorting the facts.
"Their central point appears to be that there are no "actual DBS operations in MDS operational area or frequency. This claim is obviously and demonstrably WRONG," Kirkpatrick stated in an e-mail to Broadband Week. "Their letter (to the FCC) is littered with flagrant errors and obvious omissions."
Congress and the FCC are coping with a growing list of other telecom, broadband access and digital TV transition-related issues at a time when all the talk about spectrum sharing is little more than background noise. Of course, if an incumbent telco sprang forth and suddenly embraced this technology, this situation might suddenly change, although CIBC's Wlodarczak sees this possible outcome as a long shot indeed.
"The best chance for success for these new ventures might be to partner with a large incumbent telco that already has a significant presence in consumer households, and is willing to incur the massive costs on the marketing side to get this into households," says Wlodarczak. "The problem with this idea is that telcos have been backing away from offering video to consumers, a situation that we believe is unlikely to change over the next few years."
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