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FCC Passes Compromise Rules For Wireless Spectrum Auction

By Martin H. Bosworth
ConsumerAffairs.com

July 31, 2007

The FCC today released rules for its upcoming wireless spectrum auction that would enable consumers to use any device they choose on any network, but which still fall short of the complete "open access" proposal supported by Google, tech policy advocates, and consumer groups, while also irking major telecoms who wanted the spectrum auctioned off -- presumably to them -- without any conditions.

The FCC voted 4-1 to adopt the new rules, which will carve up new spectrum space for use by police, fire and other emergency responders across the nation.

In a statement, the FCC said its ruling would also "provide for a more open wireless platform that will facilitate innovation and investment, and facilitate the emergence of next generation wireless broadband services in both urban and rural areas."

Voting in favor of the plan were FCC chairman and Republican Kevin Martin, Republican Deborah Tate, and Democrats Jonathan Adelstein and Michael Copps. New commissioner Robert McDowell, a Republican, opposed the plan.

Ben Scott, policy director of Free Press, a consumer group, said that the ruling was a small step forward for consumer rights, "but a large step back for genuine broadband competition that could bring the benefits of the Internet to all Americans."

Groups such as Free Press were pushing for the spectrum to be freed up so that new companies could utilize it for wireless broadband Internet networks--a \"third pipe\" to compete with cable and telecom Internet offerings.

"We're very disappointed that the FCC didn't listen to the public and seize this last, best opportunity to use the public airwaves to bring a true, third competitor to challenge DSL and cable modems' domination of the broadband market," Scott said.

But the promise to enforce the right to use open devices on networks brought a barely lukewarm response from incumbent telecom goliaths such as Verizon and AT&T. They want no conditions set on the auction in hopes of buying up the spectrum for themselves. The Cable and Telecommunications Industry Association (CTIA), a telco-funded lobbying group, released a statement saying it was pleased with the decision in some respects, and "concerned" in others.

"Ware disappointed that a significant portion of this valuable spectrum will be encumbered with mandates that could significantly reduce the number of interested bidders," CTIA said in a press release.

The spectrum is becoming available for auction as a result of the Congressional mandate to shift television signals from the analog to the digital spectrum by 2009.

Members of the Commission emphasized the need for building a public safety network for first responders from the spectrum as critical, citing communication failures during the September 11, 2001 terrorist attacks and Hurricane Katrina as examples of the need for interoperability.

"Our nation’s first responders have struggled for too long without finding the capital necessary to build out a broadband network with the configuration and the features they so desperately need and deserve," Commissioner Copps said in his statement. "Today’s item creates a framework for building a national broadband network, based on a common technical standard, that will allow universal interoperability among every jurisdiction in the country."

Commissioner Adelstein, in his own statement, supported the new rules as a step forward, but lamented that the potential benefits were still several years away from completion, while consumers suffered from lack of broadband competition in America right here and now.

"We have had to strike a compromise – and while the measures we take here today are less than what I would have proposed, they are significant and will serve consumers well," Adelstein said. "At the end of the day, though, I am afraid we may have missed a golden opportunity to open that elusive third channel into the home."

Epic Struggle?

Of course, it still may. There is plenty of wiggle room in today's action and many Congressional and courtroom hallways not yet trod.

Google had promised to front $4.6 billion dollars to bid in the auction if the FCC agreed to commit to principles supporting open access and connectivity for all Americans, regardless of what device they use.

It may be the first time a U.S. company has put its money where its mouth is and actually supported open markets instead of just pretending to do so.

"Guaranteeing open services and open networks would ensure that entrepreneurs starting new networks and services will have a fair shot at success, in turn giving consumers a wider choice of broadband providers," wrote Google's Chris Sacca on the company's public policy blog. "This is one of the best opportunities we will have to bring the Internet to all Americans. Let's seize that opportunity."

Google's move prompted a furious rebuke from AT&T, which also plans to be a major bidder in the auction.

AT&T senior executive vice-president Jim Cicconi, in a statement to technology blog GigaOm, said that "Google is demanding the government stack the deck in its favor, limit competing bids, and effectively force wireless carriers to alter their business models to Google’s liking."

AT&T has a long and storied history, of course. It was AT&T that, for years, prohibited consumers from connecting such outlandish devices as fax machines to its circuits. It defines consumer choice as consumers doing as AT&T chooses.

Google telecom counsel Richard Whitt said that its move was specifically designed to facilitate consumer choice and greater competition through creating a true third-party broadband platform.

"[Incumbent] carriers, quite rationally, seek to extend and protect their legacy business models, and in particular not take any actions that would jeopardize existing and future revenue streams," he wrote in the filing. "For this reason, the appropriate public policy stance is not simply to facilitate an additional spectrum-based broadband platform, but rather to facilitate independent broadband platforms."

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