* Military offers to rearrange systems, compress programs
* Wireless carriers eager to buy spectrum for mobile data
* Obama has urged federal agencies share valuable spectrum
* Pentagon's spectrum compromise welcomed as first step
July 23 (Reuters) - The U.S. Defense Department is proposing to share some of its radio airwaves with the private sector, a nod to growing pressure from the wireless industry and the Obama administration that federal agencies ease their control of valuable spectrum.
In a letter released by the Federal Communications Commission on Tuesday, the Department of Defense offers to share the airwaves it now dominates in the slice of frequencies from 1755 megahertz (MHz) to 1780 MHz with spectrum-hungry wireless and Internet companies.
The military would rearrange its systems within that slice of spectrum as well as the 2025-2110 MHz band and compress programs into the 1780-1850 MHz band that it would retain.
The Defense Department uses the airwaves for programs such as pilot training and drone systems and has faced criticism from some in the industry and in Congress for resisting efforts to open those airwaves for commercial use to satisfy growing demands posed by data-hungry gadgets and services.
The Pentagon had pointed to its own need for airwaves as its use of drones and other reliance on wireless technology grows. It also had estimated the process of moving its programs to new frequencies would cost more than $12 billion.
Under the new plan, the Defense Department drops the cost estimate to $3.5 billion by compromising on sharing slices of airwaves without completely clearing any of the spectrum bands.
In the letter, originally sent on July 17 to the National Telecommunications and Information Administration, which oversees federal airwaves, DOD Chief Information Officer Teresa Takai called the proposal "a workable balance to provide access to the 1755-1780 MHz band most desired by the commercial wireless industry while ensuring no loss of critical DoD capabilities."
The NTIA, in its own letter to the FCC, said it had not had enough time to review the proposal and could not yet endorse it.
The FCC, with NTIA's help, is preparing for several auctions of airwaves to take place in coming years, including one that would sell off chunks of federally controlled spectrum. They will be the first reshuffling of airwave ownership since 2008.
Congress has required the FCC to auction off the 2155-2180 MHz band by February 2015 and the industry has sought to pair up that slice of spectrum with the valuable 1755-1780 MHz band, arguing it would collect more money. Lawmakers in the House of Representatives have introduced a bill to ensure such pairing.
The FCC has been drafting a notice of proposed rulemaking that would seek public comments on how the FCC should auction those federally owned or already cleared airwaves to the wireless companies and an FCC official said the agency's notice will address the Pentagon's new proposal.
President Barack Obama last month directed federal agencies to look for ways eventually to give up or share more of their airwaves with the private sector. This followed his June 2010 call to open up 500 MHz of federal spectrum for commercial use.
Although the Defense Department's move marks the first big concession by the military for upcoming auctions, the proposal leaves a number of questions unaddressed, including how long the military's programs would remain in the current bands and how the plan may complicate future attempts to clear the spectrum now used by the government.
The DOD did not immediately have a comment.
"While there are many details that need to be resolved, this is a significant breakthrough toward meeting the goal of licensing this spectrum, paired with 2155-2180 MHz, by February 2015," said Steve Sharkey, director of government affairs for technology and engineering policy at T-Mobile USA.