By David Murray
Revising history is often a last resort for troubled companies. Readers of Northpoint Technology chair Sophia Collier's "Outside the Box" column in SkyREPORT (http://www.skyreport.com/viewskyreport.cfm?ReleaseID=1230) were firsthand witnesses to such revisionist history when they read Northpoint's plea that it deserves a government gift of $100 million in free spectrum, even if it - literally - takes an act of Congress.
In its commentary, Northpoint portrayed itself as a burdened upstart trying to compete in the market, yet nobody but Northpoint would label them as such. With political operatives and Hollywood celebrities at their disposal, and a war chest they've boasted exceeds $10 million, the company is running a lobbying and public relations campaign second to none - dwarfing the spending and energies of the satellite TV industry on this one issue - all in an effort to exempt themselves from the legally-mandated auction process and acquire $100 million worth of free spectrum.
And why must Northpoint spend so much money to convince Congress to give them spectrum to provide services they claim the American public needs? It's not because of the satellite TV industry. Rather it's that Northpoint's request flies in the face of 10 years of sound public policy that has benefited American taxpayers by generating billions of dollars in revenue for the U.S. Treasury. Northpoint's biggest problem is not the satellite TV industry, but convincing Congress that abandoning its common sense approach for allocating spectrum, and handing over $100 million in spectrum to a handful of politically-connected individuals (many of whom they've so far refused to identify publicly), can pass the smell test.
Congress intended that the spectrum sought by Northpoint would be auctioned. In 1993, Congress passed the current auction law, which mandated that the FCC conduct auctions for spectrum when it is sought by more than one party. It was recognized that giving away spectrum for free was depriving the taxpayers of payment for use of the publicly-owned spectrum. It was under this law that the U.S. Treasury received more than $735 million from satellite TV companies in two separate auctions for spectrum in 1996. It's unlikely that Northpoint will acknowledge either of these auctions because it flies in the face of their claims that the satellite TV companies got their spectrum for free. The truth is that since auctions were deemed to be in the public interest in 1993, satellite TV operators have participated in auctions, and paid the American public for their spectrum. The American public would expect the same from Northpoint.
Northpoint mischaracterizes the DBS providers as not wanting to work with the company. Several years ago, the DBS operators did look at Northpoint's proposed terrestrial wireless service as a means by which local broadcast channels could be delivered to DBS subscribers. Unfortunately, engineering tests proved that interference from the terrestrial service would be too disruptive to DBS signals and cause an unacceptable amount of interference to DBS consumers, so much so that many DBS customers would lose television service altogether. This was reaffirmed in 2001, when the results of a Congressionally-mandated independent test found a "significant threat of interference" to existing and future DBS subscribers if terrestrial users, such as Northpoint, were allowed to share the DBS spectrum band.
The fear of competition from Northpoint has never been an issue for DBS providers. They compete every day against the market dominant cable operators. The DBS operators' main concern is the likelihood that their subscribers will suffer interference and even loss of their television service. The DBS industry has publicly offered several alternative spectrum bands with similar propagation characteristics in which there is ample space for Northpoint to operate its proposed service. Increased competition by means of additional players in the market is a benefit to consumers. It is not beneficial to consumers to introduce a new competitor by harming the superior technical quality of existing providers.
Lobbying remains Northpoint's principal business, yet its proposed system might already be in operation had it been willing to work "outside the box," adapted its system to work in an alternative spectrum band, and been willing to play by the rules. Instead, it continues to ask the American taxpayers for the gift of $100 million worth of spectrum when other parties, such as MDS America, are willing to participate in an auction and pay for the spectrum.
Now, Northpoint faces growing resistance from the Administration, the Federal Communication Commission, key members of the Senate and House, the National Taxpayers Union, Citizens Against Government Waste, and others who see through the PR and lobbying efforts of Northpoint to revise history in an attempt to convince Congress to make a radical change in public policy.
David Murray is vice president, government affairs, at the Satellite Broadcasting and Communications Association.
More on the MVDDS issue can be found in past editions of "Outside the Box": http://www.skyreport.com/viewskyreport.cfm?ReleaseID=1230 - http://www.skyreport.com/viewskyreport.cfm?ReleaseID=1235.
(Please note, the opinions expressed in this column are that of the author and not of SkyREPORT. To e-mail the editor: editor@skyreport.com.)
