Technology start-up tests new FCC

ArrayComm Chief Executive Martin Cooper oversaw the development of a brick-shaped device that has morphed into handsets held by more than 100 million U.S. wireless consumers while he was an executive at Motorola. Now his latest venture, backed by Sony and Marconi Mobile, aims to deliver wireless high-speed service to consumer devices such as laptops and Walkman-style music devices via a wireless spectrum-efficient technology known as "i-Burst."

The company has already begun testing i-Burst under an experimental license from the Federal Communications Commission. But in order for ArrayComm to build its network in communities and provide service in partnership with carriers, it will need regulatory clearance and access to unused wireless spectrum, which is controlled by the FCC.

What is significant about the technology is it fits perfectly into a newfound deregulatory environment at the FCC and hints at the potential for wireless technology to deliver much more than simply voice calls. Cooper's company is one of many--large and small--looking to capture a slice of still-elusive broadband wireless success. If ArrayComm feels all systems are go after a field trial in San Diego ends, they would be free to move forward in a partnership with a carrier holding wireless spectrum.

"We are the poster child for the FCC" in bringing new technologies to market through better spectrum policy, said Bradley Holmes, ArrayComm's senior vice president for regulatory and government affairs.

FCC Chairman Michael Powell has said that his commission will encourage new technologies.

"I am a big believer that competition is going to come from the ability to offer consumers technologically differentiated services," he said.

Powell has also said that spectrum is being wasted because too much of it is dedicated to a particular technology, leaving portions of bandwidth across the spectrum fallow. That kind of talk is music to ArrayComm's ears and could provide an early test of Powell's resolve in this area of policy.

ArrayComm comes to Washington
Holmes, a former ambassador for the State Department, was back in Washington last week shopping for an ArrayComm Washington office, a sign of how serious the company takes the FCC's role in its future.

"Right now the FCC's approval process" for new technologies in existing spectrum "is a bureaucratic nightmare," said Strategis Group Executive Vice President Elliott Hamilton.

But ArrayComm executives remain optimistic that the Powell era could be beneficial to its cause.

"The regulatory environment has changed a lot in the last few months," said ArrayComm Executive Vice President Nitin Shah, referring to the arrival of a new chairman at the FCC.

Shah is hopeful that the change will allow his company to move past its trial in San Diego--where paying customers are receiving wireless broadband via an experimental 2.3-GHz license--to a full commercial launch nationwide.

ArrayComm's business plan involves working with third parties that own or can acquire spectrum, and then using its compression technology to offer broadband. Unlike so-called 3G technology under development for wireless phones, Shah says ArrayComm only needs a single spectrum band to provide service, giving it far more flexibility as to where in the spectrum band it can operate.

Spectrum is allocated by technology, however, and i-Burst is not recognized in any of the FCC's categories. Shah knows the company can't move forward without FCC clearance, however.

Shah argues that there's no reason ArrayComm should be limited to certain bands of the spectrum where wireless providers are permitted to operate.

"Their whole angle is that their technology makes spectrum use more efficient," said Jane Zweig, executive vice president for Herschel Shosteck Associates, a wireless analysis firm in Maryland. That efficiency applies to spectrum dedicated to wireless use or other uses.

In its recent deal with Marconi in the U.K., Zweig said, ArrayComm is expected to launch its service in Marconi's 700MHz 3G spectrum recently bought at auction there, allowing Marconi to offer high-speed broadband service well before 3G actually arrives, for example.

Where ArrayComm can use help after its experimental license expires in April is receiving permission to partner with or lease spectrum from license holders in bands of the spectrum not reserved for wireless use.

The FCC just began enforcement action against Internet service provider Darwin Networks, of which Paul Allen is a major investor. The company has been offering a service similar to ArrayComm's in the 2.4GHz band without permission.

"I do expect the FCC to open up a secondary market (for spectrum) by lifting restrictions," said Hamilton. He said the rationale for how spectrum is assigned to various technologies "is sometimes kind of tough to figure out."

Regulatory role
The agency had already taken some steps to make it easier to lease spectrum prior to Powell's ascension, but that action was targeted more specifically at wireless phone carriers.

Powell's language has certainly suggested that he'll offer more flexibility to technological innovators. When outlining his agenda as chairman recently, he said he would advocate a "rationalization of the regulatory construct, recognizing that a bit is just a bit."

The new chairman will have the opportunity to put that philosophy to the test when ArrayComm's experimental license expires in April and it seeks permission to partner with carriers for nationwide service.

Shah is eager to show that i-Burst can offer more flexibility than 3G with less spectrum, and could be available far sooner. That may be a not-so-difficult task when wireless leaders said at a GSM conference in Europe last week that true 3G is years away, if the wireless carriers that are spending billions on spectrum can even afford to launch it.

But Shah needs access to spectrum now.

"The market will decide" the best technology, he said. "But if you can't go in and deploy a technology you can't win."

In the short term, Shah said the regulatory roadblocks the company faces in the United States may mean that ArrayComm will find more success abroad. "The FCC is talking a good story," he said. "But let's see what it does."