A mammoth federal auction of the airwaves is under way in Washington, D.C., and it will have a major impact on how your schools receive wireless telephone, data, and video transmissions during the next 10 years.
In a process that could last until June involving hundreds of millions of dollars, the Federal Communications Commission (FCC) began auctioning licenses late in February for a new technology called local multipoint distribution service (LMDS).
At least one bidder, Virginia Tech, is planning on using the airwaves to provide internet services to K-12 schools. Erv Blythe, Tech’s vice president for information systems, told eSchool News that area K-12 schools would be among the first users of an advanced network made possible by the wireless technology.
The FCC hopes companies using the new wireless technology will provide services that compete with local phone and cable companies.
The new service’s delivery is akin to cellular phone service. But to receive phone, television, or data transmissions, customers need a small receiver dish in or near a window.
On the block are 986 licenses. Half would give an owner the right to occupy a large swath of airwaves ‹ 1,150 megahertz ‹ letting a company simultaneously provide 16,000 phone calls and 200 video channels. That represents the biggest slice of airwaves ever auctioned by the government.
A typical FCC bandwidth auction is enough for one radio station; 1,150 megahertz is enough for 13,000 radio stations, Blythe said. In fact, the FCC is auctioning off an information-carrying capacity that exceeds the capacity currently being used by all television, radio, and cellular services in nation‹”everything that’s out there,” Blythe said.
Wireless advanced networking
With the spectrum, Blythe said, Virginia Tech could allow wireless video, voice, and data transmission for businesses, schools, hospitals‹a regional version of the Blacksburg Electronic Village (BEV). The BEV is a pioneering project that began offering online access to the entire Blacksburg community at a time when the internet was little known outside academic settings.
Wireless technology could drive down costs for schools in three ways, said Blythe: by reducing the amount schools spend on costly infrastructure, by increasing competition for services such as access to the internet, and by developing what Blythe calls “a next generation advanced network” much more quickly than would otherwise be possible.
Advanced networking consists of multiple data and voice applications, such as two-way video conferencing and internet capabilities, running simultaneously off the same high-speed “pipe,” Blythe said. This kind of network would be round-the-clock and very inexpensive.
One big license and one small license will be auctioned in each of 493 separate markets, every one roughly the size of a metropolitan area.
Participating companies range from established telecommunications players such as Southwestern Bell and U.S. West to upstarts such as Teligent Inc. and WinStar.
Before the auction, all companies were required to give the FCC up-front payments. The more money a company put down, the more markets it can bid on.
By this measure, the biggest potential bidder is WNP Communications Inc., which gave the FCC a $100 million down payment. Backers include venture capital funds Norwest Capital and Chase Manhattan Venture Fund.
To help companies attract financing and to compensate them for the FCC’s decision not to let companies pay off winning bids in installments, the FCC is offering discounts for smaller companies. The discounts, ranging from 25 percent to 45 percent, are taken off a company’s total winning bids after the auction closes. The company pays the balance to the government.
The lower a bidder’s gross revenue, the larger the discount. Companies with $15 million or less in gross revenues get 45 percent off, companies with $16 million to $39 million get 35 percent off, and companies with from $40 million to $75 million get 25 percent off.
A recent analysis by The Washington Post showed these bidding discounts will benefit mainly wealthy venture capitalists and those already in the business, rather than newcomers.
The Post also reported that the FCC denied Virginia Tech’s request to be classified as a bidder with no revenue. The designation would have allowed the school to get a 45 percent discount on the price of its license.
The FCC found that the nonprofit Virginia Tech Foundation, which is financing and carrying out the project, has endowments totaling roughly $78 million, $3 million over the limit required for the “small business ” designation. The foundation’s money should be counted as revenue, said the commission, which has never before considered a bidding application from a nonprofit university project. The $500 million the university gets annually from tuition, state aid, and other sources also was taken into account by the FCC.
There will be no on-site bidding in the auction. Bids will be placed by phone or by computer. The auction ends when there are no new bids on any licenses.
Federal Communications Commission
FCC LMDS Rules
Blacksburg Electronic Village