Globalstar's Christmas Present

On December 22, the Federal Communications Commission gave a satellite operator named Globalstar a Christmas present of sorts, along with a lump of coal. The events leading up to this action present a case study that offers insights into the physical, economic, legal, and political forces that shape telecommunications policy. (Readers well-versed in these matters will recognize that some oversimplification is necessary to address the larger questions discussed here.)

Background

There are essentially two kinds of communications satellites. There are large satellites parked in “geostationary orbits” which, of necessity, must be at an altitude of about 22,000 miles. Because they are positioned in the same place relative to the earth’s surface, earth-based transmitters and receivers can be easily aimed at them. These satellites handle most of the world’s international radio and television signals and a large amount of data traffic. Although technology has increased the capacity of these satellites, there is a limited number of available “orbital slots” and usable spectrum for them.

The second kind of satellite is placed in “low Earth orbit” (“LEO”) several hundred miles above the Earth. Since they are constantly rotating around the Earth, to use them for communications it is necessary to have a large “constellation” of satellites that transfer signals back and forth and so that one is within the reach of a transmitter or receiver (hopefully) at all times. LEO communications satellites are used for military, scientific and international corporations to reach remote areas. For example, the satellite phone service sometimes seen on cable news reports from the Middle East is provided by LEO satellites.

The LEO satellite business has not been very successful. It has proven to be very expensive to build and maintain a large number of satellites and hard to convince customers to pay a lot of money to use the awkwardly large devices needed for reaching them. This has resulted in a trail of bankruptcies and projects that have never come to fruition. This track record has not stopped tech entrepreneurs from proposing new LEO ventures; SpaceX, owned by technology entrepreneur Elon Musk, wants to launch more than 4,000 LEO satellites to provide broadband service, something that geostationary satellites cannot do effectively because of the time lag in transmitting signals 22,000 miles up and 22,000 miles down. The majority owner of Japanese tech giant SoftBank has promoted a similar initiative called OneWeb, OneWeb founder Greg Wyler says promising President-elect Donald Trump that it will create some 3,000 jobs.

Faced with a bleak outlook for their satellite business, existing LEO operators have attempted to get the FCC to allow them to repurpose their spectrum holdings for terrestrial use for cell phones and other land-based mobile needs. Ventures such as Skybridge, Northpoint, LightSquared, Open Range (in partnership with Globalstar) have all tried, and failed, to get FCC permission to use or reuse satellite spectrum for terrestrial communications.

Globalstar’s “Terrestrial Low-Power Service”

About four years ago, Globalstar applied to the FCC to allow it to operate a terrestrial service. One part of the plan was to offer a land-based service (not described with great specificity) on the spectrum it is licensed to use. The second, and much more controversial, part was devised to take advantage of the fact that Globalstar holds the license for spectrum which is located adjacent to the 2.4 GHz WiFi band. Even though newer WiFi devices have been built to use a different spectrum band (5 GHz) with superior capacity, the demand for WiFi and similar unlicensed uses is insatiable. Globalstar sought to create an additional WiFi “channel,” which would be technologically similar, but unlike the current WiFi spectrum, would be exclusively licensed to Globalstar. Significantly, Globalstar would then charge customers to access the system. To sweeten the offer, Globalstar promised to provide free access for some schools and libraries and some public service uses.

The Opposition

Just about every time a party seeks FCC permission to use spectrum in a new way, the occupants of nearby spectrum object because they say that the new use will cause “harmful interference.” Although that is sometimes true, assessing those claims is difficult because the affected parties hire engineers and technologists who present conflicting studies and projections for the FCC to assess.

A year after Globalstar unveiled its plan, the FCC solicited public comment on it. Globalstar faced opposition from two directions. In addition to Sprint, which uses the spectrum just above Globalstar’s, the very large number of companies and users who employ the unlicensed Wi-Fi band just below Globalstar’s frequencies raised vociferous objections. These parties included Google, Microsoft, cable companies seeking to offer Wi-Fi-based phone service, and many other industry groups that employ Wi-Fi technology. Perhaps the most vociferous pushback came from the trade association of manufacturers of increasingly popular Bluetooth devices and, in particular, users of wireless hearing aids and the hearing aid industry’s Hearing Industries Association.

Public interest groups also raised numerous technical and policy concerns. Having fought for years to expand the availability of unlicensed spectrum, including WiFi, they shared misgivings about interference that could degrade the existing WiFi band. They were also concerned about the precedent of allowing a licensee to charge customers for access to spectrum (which was sometimes obtained free of charge) for a different purpose. However, facing the possibility that the FCC might approve the Globalstar plan, two groups (Public Knowledge and New America’s Open Technology Institute) also argued for attaching additional conditions if the FCC were to allow Globalstar to proceed. Their “opportunistic use” plan was based on the notion that it would take several years, at the least, for Globalstar to develop its planned business and that, in any event, there would be large portions of the country where Globalstar would not be offering its service or did not have many customers. Accordingly, they wanted the FCC to require Globalstar to allow anyone to use the spectrum for free unless and until Globalstar actually needed it, thereby increasing the amount of spectrum available for WiFi-type uses.

FCC Consideration

To respond to some of the objections, Globalstar scaled back its proposed operating power to address interference concerns. Even so, the opposition remained strong. In the summer of 2016, FCC Chairman Tom Wheeler instructed his staff to prepare a decision granting the scaled-back proposal and (reportedly) including “opportunistic use” conditions.

Intense lobbying for and against Globalstar’s application proceeded over the summer. It was widely reported that FCC Commissioners Ajit Pai, a Republican, and Jessica Rosenworcel, a Democrat who was attempting to obtain Senate confirmation for a second term, voted no on the matter. Commissioner Pai later said that he was opposed to allowing special access to unlicensed spectrum. The swing vote was said to be Commissioner Michael O’Reilly, a Republican who ordinarily opposes Chairman Wheeler. The deadlock persisted over the summer and throughout the fall.

Ultimately, Globalstar gave up on its effort to utilize the Wi-Fi spectrum. In mid-November, after intense negotiations with some of the opponents, Globalstar asked for approval of a plan that allowed it to use only its licensed spectrum at a significantly reduced power level. Over the next few weeks, it scaled back the proposal even more. By mid-December, only the Bluetooth and hearing aid groups expressed opposition. On December 22, the FCC unanimously approved the revised scheme. However, many observers believe that it will be very difficult for Globalstar to build its new network successfully and even harder to make money with it.

What This All Means

Globalstar encountered numerous obstacles. Companies licensed to use adjacent spectrum seek to protect their systems. Advocates of unlicensed use do not want unlicensed spectrum to be degraded and are opposed to allowing exclusive use of previously-unlicensed spectrum. Policymakers have different and often conflicting views of the value of licensed and unlicensed spectrum.

Globalstar’s inability to effectuate its new venture is an object lesson for incumbent and would-be LEO operators. It is an economic, political and technological challenge to use satellite spectrum for broadband, and investors will be wary of similar proposals in the future.