700 MHz Aftermath: Verizon, AT&T & the $16 Billion Termites.

Imagine you just spent a fortune on some excellent beachfront property, only to discover some termites in the basement. Now imagine that the only way to get rid of the termites involves some toxic chemicals that may arouse the ire of the environmentally conscious locals. What do you do? Learn to live with the termites, or spray and tell your green neighbors to deal?

Oddly, Verizon and AT&T now find themselves in a similar mess — if we substitute “wireless microphones” for “termites.” Verizon and AT&T (As well as a bunch of other folks) just spent a boatload of cash on licenses in the reclaimed analog television spectrum. The FCC has rules in place to migrate the broadcasters — both full power and low power. But — as far as I can tell — no one has plans to migrate the wireless microphone folks, who operate on vacant channels in the band. While in theory wireless microphones are a secondary licensed service and notifying the licensees that channels 52-69 are off limits after the digital conversion, the situation is a little more complicated. As comments filed in white spaces proceeding confirm, wireless microphones are bloody everywhere — with huge numbers of users buying and operating them without licenses.

The NAB and the FCC have turned a blind eye to proliferation of unlicensed wireless microphone use (despite the NAB’s usually firm stand against unauthorized use of “their” spectrum), both because the wireless microphones don’t actually cause any interference with television and because the “unauthorized wireless microphone user community” (which sounds so much better than “pirates”) includes megachurches, Broadway groups, and other warm cuddly folks able to gather political support. Indeed, so great is the political protectzia for the unauthorized wireless microphone user community that the FCC is, apparently, requiring that unlicensed devices in the white spaces have the ability to sense and protect these illegal wireless microphone users. (Hence Google’s recent extension of an olive branch which NAB promptly grabbed and started thwaking Google over the head. D’oh!)

AT&T, Verizon, and the rest of the 700 MHZ auction winners therefore face a bit of a dilemma. They just dropped a bundle on the 700 MHZ, and damned if they want to set precedent by allowing a bunch of illegal squatters to use “their” spectrum. Heck, if they’d thought of it earlier, they’d probably have initiated a rulemaking to migrate the legal users.

In fact, under a fair reading of the rules, if the FCC does nothing, licensed wireless microphone systems may enjoy equal or superior rights to 700 MHz Auction winners. OTOH, no one involved is stupid about the politics, giving an incentive to maintain a low profile. If you don’t mind telling shareholders that the NFL may have superior rights in the spectrum you just paid $16 Billion for.

Meanwhile, for those of us happy to see the NAB and the wireless microphone folks get their comeuppance, while not weeping overmuch for the incumbent wireless winners, one word: SCHWEET.

More below . . . .

To take this from the top. The FCC authorizes “broadcast auxiliary devices” and “broadcast auxiliary services” under Part 74 of its rules. Specifically, wireless microphones fall under Subpart H. The key take aways here are (a) this requires a license, and (b) Under 47 C.F.R. 74.832, only a very small class of people can get a license. While certain non-profits can use wireless microphones that operate in a different part of the frequency band under Part 90 of the FCC’s rules, that doesn’t cover the broadcast bands and has no impact on white spaces.

Why the restrictions? Well, back in the dawn of time, television producers realized it would be very useful if you could have microphones and cameras and other equipment that could feed directly into program production without wires. Then cable programmers and the MPAA wanted to play too. So after much wrangling between these programmers and the broadcasters (who view any intrusion into “their” spectrum with the same warmth as Minutemen Militias watching a Cinqo de Mayo parade), the FCC agreed to authorize wireless peripherals at one-watt or less as a secondary service, but only to qualified applicants in the programming production business.

So how did it get out of hand? Rather than bugger about with maintaining strict control over the licenses for so many mobile little uses, the FCC delegated it to the industry to do its own frequency coordination. After all, reasoned the FCC, these are the guys who care about this stuff. If they can’t work it out and enforce it why should we care? The industry, in turn, left it up to licensed manufacturers. The manufacturers then sold to third parties, like Radio Shack and Circuit City and so forth, with stern warnings that they needed to obey FCC rules even if no one checked up on them Nudge, nudge, wink, wink. And before you could say “what would willing buyers and willing sellers do in an unregulated market,” everyone who wanted a good, cheep wireless microphone with decent range was buying a Part 74 microphone and using it without a license.

So while folks like the NFL, the MPAA, and a number of other people who have filed against allowing unlicensed use of the broadcast white spaces have a perfectly legal right to file, a lot of folks — like the Grand Olde Oprey, Broadway theaters, churches, convention centers, and countless others — do not. Yet the practice is so widespread and so blatant that folks boast of it in official filings, and members of Congress openly champion these illegal uses as deserving protection from regulated FCC Part 15 devices that would use the spectrum legally. And, as long as the devices didn’t cause any actual interference to television reception (and served as a useful tool to keep out unlicensed white space users), the NAB tacitly supported it.

As for the FCC, going after wireless microphones in the middle of the white spaces proceeding would raise all manner of hue and cry about silencing criticism and punishing people unfairly. Since Kevin Martin can’t breath these days without someone denouncing him for violating due process and unfairly favoring one industry over another, the FCC is extremely unlikely to start any enforcement proceedings — even in the face of rather blatant evidence that its rules were regarded as a joke by the companies it regulates.

But now comes AT&T and Verizon — along with the other licensees. Unlike broadcasters who got their licenses for free (and can therefore afford the hypocrisy of aligning themselves with unauthorized users of the broadcast white spaces to keep out authorized users of white spaces), these guys just paid $19 billion for licenses. That’s a lot of money. And they want that spectrum free and clear of any other previous users — authorized or otherwise. If nothing else, it would set a bad precedent to allow squatters to remain unchallenged and unmolested in the band. For another thing WE WANTS IT! WE WANTS IT PRECIOUS! HSSSSSS!!!!!! OUR LICENSES!!! THIEF!!! WE HATES SQUATTERS AND BAGINSESS FOREVER!!!

Now the wireless microphone guys, given ten years warning that the digital transition was coming, and four years warning of the hard date for the transition, have not stayed completely useless. But — as near as I can determine — neither the wireless microphone guys or the FCC has any plan to deal with equipment manufacturers, sale of legacy equipment, or users of legacy equipment. So while Shure wants to reassure its customers that it has a cunning plan and that “there will still be unoccupied channels in every market” (for themselves anyway — that’s not what they and the NAB say about white spaces when they talk about unlicensed uses), there’s nothing official. Manufacturers are still making equipment that works on channels 52-69, merchants are still selling them, and unauthorized users are still buying them and using them.

But in fact, the situation is potentially much, much worse for the 700 MHz Auction winners. Under the FCC’s Part 74 rules, use of these channels remains technically legal, since the only restriction is that allocations be “removed from existing co-channel TV broadcast stations” (47 CFR 74.802). When last I checked, Verizon, AT&T and the other licensees are not “TV broadcast stations” within the meaning of Part 73.

As a result of the way the rule is written, licensed BAS users and 700 MHz auction winners are co-equal licensees. The rules do NOT establish whether licensed BAS users are primary or secondary to licensed users in the 700 MHZ band who are not broadcasters. Indeed, as the senior licensees, a strong argument can be made that licensed BAS users cannot be ejected or moved and enjoy protection from any interference from the new service until such time as the FCC gives 30 days notice and provides some kind of due process right. (That’s 47 U.S.C. 316, if you are checking my work.)

So not only is it completely legal for Shure, other manufacturers, and the (legally licensed) users to treat Channels 52-69 as utterly free of any pesky licensed users and keep manufacturing equipment and using the channels. If the services deployed by the 700 MHz auction winners interfere with the operation of licensed BAS systems, the licensed BAS systems can demand that the 700 MHz Auction winners cease operation and stop interfering. (That’s Section 309(h) for those of you following with your Communications Act of 1934 Home Edition.) Yes, the original basis for allocation is gone (the frequencies are no longer used for broadcasting) and the service is “secondary” — but only to TV broadcasting. As senior users, existing licensees should have the right to protection from any new licensee — even if that new licensee paid over $19 Billion dollars and the senior licensee got the license for free.

Happily for the auction winners, licenses are not property — despite the nonstop efforts of folks who should know better to make it so. In fact, the FCC has already invoked its Section 316 powers to smooth the way for 700 MHZ winners. So all Verizon and AT&T need to do is get the FCC to hold a proceeding, amend the rules to eliminate the allocation above Channel 51, order a recall of the legacy equipment (at least the stuff that hasn’t sold), and clear both the licensed users and the squatters out of Channels 52-69. Easy — as a legal matter.

At this point, readers may actually be able to feel the schadenfreude oozing off their screens. Because while the legal solution is easy and obvious, the application is not. The NAB could afford to ignore unauthorized uses of the broadcast bands as long as they remained under the table. Manufacturers could afford to do the same, as could retailers and the FCC. But once an official proceeding starts it all comes out into the open. If the auction winners make an official matter of it, the FCC will have to take notice and the NAB and the wireless manufacturers will have to decide whether to openly support an enormous population of illegal (if politically useful) users.

Alternatively, the NAB and the equipment manufacturers could go begging to AT&T and Verizon to lay low – at least until the white spaces proceeding is over. (Rather a pity Google didn’t actually win some licenses so it could raise the matter itself.) Given the political pull of the NAB and the wireless microphone guys, AT&T and Verizon might well decide that there is no risk of real interference and allow themselves to be persuaded/bribed into letting the matter go (at least for now). Except that the longer the auction winners delay and fail to take action, the more such devices get manufactured, sold and distributed to unauthorized users who are impossible to track.

Of course such a solution cries out for a compromise. And how lucky for everyone that I happen to have one in mind. It not only solves the problems for auction winners, but it provides a convenient way to deal with the illegal user population and, if done properly, also provides more than adequate protection for wireless microphones and white spaces devices to coexist. NAB will loath it, of course, because they like using the wireless microphone people as a shield against the engineering data that shows no interference to broadcast stations. But that’s their problem, and I can’t say that seeing NAB get its just desserts for its rank hypocrisy in this proceeding would displease me.

What is my clever solution? Oh come now, you don’t expect me to share it out here in public do you? If someone gets the ball rolling at the FCC or in Congress I’ll certainly file my proposal. But until then –

Stay tuned . . . .