700 MHz Interoperability Issue Reaches Primetime

FCC tackles key questions about the future of the band.

In response to years of increasingly urgent agitation about the need for interoperability in the 700 MHz band, the FCC has issued a Notice of Proposed Rulemaking to look into the basic questions of whether there are any interference issues raised by interoperability and whether there is a need for regulatory intervention to ensure that users of all licenses in the band have roaming access to each other’s spectrum and can get affordable handsets.

The problem arises because AT&T and Verizon have significant holdings in the 700 MHz band. Verizon has many licenses in the Lower A and B Blocks and the entire Upper C Block, while AT&T has Lower B and C Block licenses and all or most of the Lower D and E Blocks.   The 3GPP (i.e., 3rd Generation Partnership Project) standards setting body has established Band Class 12 to cover operation over the entire lower 700 MHz band and Band Class 17 to cover operation in only lower B and C Blocks. This means that user devices manufactured for Band Class 17 will not be able to operate on the A Block where the licenses are held mostly by smaller entities, though the A Block licensees will be able to operate on the B and C Blocks.

You might think that it would be the Verizon and AT&T customers who would have the most to lose from this situation, since they would have Class 17 handsets and would not be able to roam in many of the smaller rural areas where A Block licensees will be building out.   To be sure, AT&T and Verizon customers will find that they are unable to get 700 MHz service in places where only A Block service is available. But the thing that gives A Block licensees nightmares is not so much the loss of that significant roaming revenue, but the inability to get handsets at all.

It seems that handset manufacturers know very well where their bread is buttered. If they can get orders in the millions from Verizon and AT&T, why should they bother designing, testing and producing a different handset for the limited market represented by A Block licensees? That market segment is simply not attractive enough to justify major investment from the big equipment vendors. Even a firm the size of C-Spire had difficulty getting A Block handsets at economically reasonable levels.  One question left unanswered by the FCC or the comments to date is “what about Verizon’s A Block licenses?”  Since Verizon is also a large A Block licensee, it will presumably have to place orders for units using Band Class 12, which would break the ice for other carriers to buy similar equipment from the same manufacturers. (This assumes, of course, that exclusive manufacturing arrangements have not been entered into by Verizon that preclude A Block sales to independent carriers – not always a safe assumption.)

The interference claims raised by Verizon and AT&T in support of the separate Band Class arise from the proximity of TV Channel 51 to the A Block.    Recall that the 700 MHz block was created out of the old UHF TV Channels 52 to 69 that were vacated by the Digital Transition in 2009. TV Channel 51 continues to sit adjacent to the A Block, and digital TV licensees can operate at up to a million watts in power. There is therefore theoretically the potential for adjacent channel interference from that high power source in many parts of the U.S. Since the B and C Blocks don’t need to worry about such interference, they can be designed without that issue in mind. AT&T says that if the interference concern can be resolved, it has no problem going with Band Class 12.

So this all leaves the FCC with a few basic questions. Is there really potential interference from Channel 51 that cannot be safely avoided by appropriate filters in 700 MHz handsets? Is the market really not functioning to permit independent licensees to buy Class 12 handsets at a reasonable cost?   Does the FCC even have the power to do anything about this since it has limited direct authority over equipment manufacturers?   This proceeding must be wrapped up quickly since Verizon and AT&T are already rolling out LTE service on their 700 MHz bands using Class 17. The more that such units get out into the marketplace, the harder it will be to impose a consistent policy across the whole user community.

The FCC candidly admits that it is hoping that the industry itself will work out a solution to this problem without regulatory intervention.   So far it has been loath to impose interoperability conditions on AT&T and Verizon in the context of their spectrum acquisitions, but the need for a global solution is becoming increasingly urgent for all parties as the initial build-out deadline for 700 MHz licensees approaches and the need for broadband spectrum becomes more intense.  Both of the new Commissioners whose confirmations have been languishing in the Senate for many months are well aware of the interoperability issue and seem to have expressed some sympathy for A Block position, so their entry onto the scene may also help to sweep the FCC to action.

The deadlines for comments and reply comments in response to the Notice of Proposed Rulemaking will be established when the Notice is published in the Federal Register. Check back here for updates.

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