FCC to encourage leasing of airwaves

The Federal Communications Commission is expected on Thursday to relax its rules on how wireless license holders can control the airwaves they operate in, allowing companies to lease unused space to others on a short- or long-term basis.

This secondary market for airwaves could go a long way toward relieving the overcrowding many companies are experiencing, FCC officials believe. A wireless company experiencing greater-than-expected growth could lease extra space on a long lease, or a number of companies could lease additional airwaves during major events, such as the Superbowl or a large trade show.

FCC Chairman William Kennard has expressed concerns about a wireless spectrum drought. At a May public forum, he called for a commission action to relax agency rules and policies to "allow a secondary market for spectrum so that it flows as freely in the marketplace as any commodity."

At its monthly meeting Thursday the FCC will unveil a policy statement on a secondary spectrum market, agency officials said Monday. It also will announce a new list of rules to make it easier for license holders to transfer control of their airwaves. Industry and others will have the opportunity to comment on those proposed rules before they are enacted.

Several communications companies have been working with the commission to craft new rules. Among the companies represented at the May forum hosted by the FCC were Motorola, Nextel Communications, PanAmSat and Williams Communications.

Currently there is a spectrum cap, a limit of how much of the airwaves any one company can own in a market. This has led to concerns that companies won't be able to launch next-generation services such as high-speed Internet access and video streaming on wireless phones because they won't be allowed to have enough spectrum.

The issue has drawn the attention of the White House, with President Clinton signing an executive order instructing the FCC to act quickly in freeing up more spectrum for advanced services.

In theory, a major provider could use a shell company to lease spectrum in a secondary market, thus gaining the airwaves needed but evading the cap.

"We're very mindful of that," one high-ranking FCC official said Monday. However, that official said, the commission is pursuing other methods to free up spectrum, including asking the Defense Department to turn over some of its airwaves and looking for more efficient ways to use existing spectrum.

In addition, officials pointed out, the spectrum cap itself is under review at the commission and could be modified or even repealed. Some members of Congress have been urging the latter.

What's less likely to occur is that an entrepreneur could purchase some spectrum at an auction run by the FCC, then sit back and lease it out rather than building a consumer service. Agency officials said that to be eligible to participate in an auction you have to demonstrate you will be a legitimate wireless entrant in that market.

One agency official said that most of the debate has centered on licenses held by commercial companies. However, the official said, it's possible the FCC could include other licenses, such as noncommercial (public broadcasters and educators, for example) and government.