Auction of US Defense Department spectrum delayed

The U.S. federal government has postponed for three years any plans to auction spectrum used by the U.S. Department of Defense to the cellular telecommunication industry for commercial, high-speed mobile data services.

Analysts said the decision recognizes the political difficulty of trying to wrest spectrum from the Pentagon while it is on a war-footing after the Sept. 11 terrorist attacks. The analysts also pointed to the slowdown in the economy, which has diminished interest by the cash-strapped cellular industry in multibillion-dollar spectrum auctions.

The decision also removed from consideration for commercial use the 1770Mhz to1850Mhz frequency bands used by Defense Department satellite systems but did leave the department’s 1710MHz to 1770MHz bands up for grabs. It also added another federal band, 2110MHz-2170MHz, which is already allocated for commercial use, to support high-speed, third-generation (3G) wireless services.

The National Telecommunications and Information Administration (NTIA), an arm of the U.S. Commerce Department, said in a statement Friday that the decision to delay action on the spectrum issue was reached through mutual agreement between Michael Powell, chairman of the Federal Communications Commission, and Commerce Secretary Donald Evans.

Besides looking at the federal bands for new 3G spectrum, the NTIA statement said the FCC will spend the next three years studying other bands for new high-speed data services, including the 2500-2690 MHz UHF television band.

Jim Lewis, director for technology policy at the Center for Strategic and International Studies in Washington, said that while the cellular industry had done well in advancing its case for transferring Pentagon spectrum to industry for the past year, the situation was altered with the attacks on the World Trade Center and the Pentagon.

“Politically, the equation has changed. No one has figured out a way to gracefully move (the Defense Department) from its spectrum, and now is not the time to even start thinking about it,” Lewis said, referring to the start of air strikes in Afghanistan by U.S. forces.

But Lewis added, the Defense Department “could probably do a better job” with the wide swath of spectrum it occupies.

Emory Winship, who helped launch wireless data services at Charles Schwab & Co. five years ago and is currently a partner in the Conversus Group of New York, an investment banking firm, said the delay makes sense because many U.S. carriers don’t have the billions of dollars needed to spend on new spectrum auctions now that the U.S. has entered what he called a recession.

Delaying spectrum auctions is a smart financial move by the government, Winship said, because right now “spectrum has a discounted value,” which could rebound in three years.