Two Bidders Hold Top Markets in FCC MVDDS Auction

When Northpoint Technologies fought to open the DBS spectrum at 12.2 GHz for terrestrial TV delivery, it was offered as a way to provide competition to cable and DBS. Now, as bidding in FCC Auction 53 for the Multichannel Video Distribution and Data Service (MVDDS) progresses, the two bidders that have emerged on top are backed in part by EchoStar and Cablevision Systems.

At the end of Round 38, DTV Norwich, LLC was the top bidder for licenses for the five TV markets -- New York, Los Angeles, Chicago, Philadelphia and San Francisco --Oakland-San Jose. LLC was the top bidder for the next five markets -- Boston through Detroit. In case these names aren't familiar to you, it was reported that a federal filing showed Cablevision Systems held a 49 percent interest in DTV Norwich LLC. reporter Chris Welch, in the article EchoStar-Linked Company Seeking to Widen Spectrum said EchoStar owns 49.9 percent of Chris Welch's article has comments from several industry experts on how EchoStar could use the investment.

One suggested use of the spectrum is to offer high-speed Internet access, although the FCC Fact Sheet on Auction 53 states the frequencies can only be used for one way video programming and data services. However, two-way services may be provided if other media or spectrum is used for the upstream (return) link. Although two-way satellite Internet service is available, the high latency created by the great distance to the geostationary satellite and back makes it unsuitable for many Internet applications, including Voice over IP (VoIP) telephone service. A terrestrial MVDDS station with a return link using other frequencies (MMDS, ITFS or dial-up, for example) would avoid the latency problem.

Another suggested use is to use the terrestrial spectrum for delivering local stations or HDTV programming. While this would work in the more densely populated areas, satellite or actual VHF/UHF over the air are likely to remain the preferred way for delivering local TV to rural audiences. The benefits to a cable operator like Cablevision Systems seem a little clearer. With 500 MHz of bandwidth between 12.2 and 12.7 GHz, a cable operator could use the all digital spectrum to deliver more digital specialty channels, HDTV programming and pay-per-view programming to selected areas without building the cable infrastructure.

One area where MVDDS would provide value for either a DBS operator like EchoStar or a cable operator like Cablevision Systems is video-on-demand. With the ability to segment the market using directional antennas and restricted range, a huge number of true video-on-demand channels could be provided.

What happened to Northpoint Technologies? Northpoint Chairwoman Sophia Collier and other Northpoint Technologies founders fought to open the 12.2-12.7 GHz spectrum five years ago, over the opposition of the DBS industry, which feared interference to their satellite dishes. Northpoint Technologies founded a company, Broadwave USA, Inc., along with 68 local affiliates to provide a nationwide video and data distribution system using Northpoint technology in the 12.2 GHz band. They filed applications with the FCC to provide video and high speed Internet "programming" in each of the 210 television markets.

As noted above, the FCC has initiated an auction to allocate this spectrum throughout the U.S. Broadwave USA is fighting the FCC and gained some support in Congress in 2001. However, the Broadwave page on the Northpoint Technologies Web site does not have any support letters or statements dated after 2001, so it appears unlikely they will be successful in prying the spectrum away from the auction winners.

The auction and eventual terrestrial use of this spectrum may still provide some business for Northpoint Technologies. It holds patents on a 12 GHz cellular-like technology that allows terrestrial use of 12.2-12.7 GHz without causing interference to satellites.

Round 39 of the MVDDS auction started Monday morning, Jan. 26. If you are interested in tracking the results or would like to see who the high bidder is in your market, go to the FCC FCC Auction 53 Web page and click on "Bidding and Results" either in the list above the summary in the main frame or in the column on the left. This will open the auction explorer, from which you can view the results of the latest round of bidding -- click on "Round Results." On the Round Results page, click on "Explore All High Bids" (at the bottom of the "Top Bids" column) to see the top bids in all markets.