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FCC Splits Decision On Spectrum

7/31/2007 05:55:00 AM Eastern

The FCC Commissioners voted Tuesday to approve rules that would impose open access conditions on bidders on the largest block of reclaimed analog TV spectrum to be auctioned, but would not require that spectrum to be resold wholesale to competitors.

 

That decision opens the door to a new national wireless network that could deliver voice, data and video in competition to established networks, and to consumers able to use whatever device or software they want, a major selling point for FCC Chairman Kevin Martin.

The decision drew praise from Ed Markey, Chairman of the House Energy & Commerce Committee, who called it a historic vote that "begins to untangle the stranglehold wireless companies have exerted over a consumer’s ability to use any device and application chosen by the consumer, not the service provider."

 

John Dingell (D-Mich.), chairman of the House Energy & Commerce Committee, also praised the decision, and the release of the rules with the six-month lead time (almost, anyway) that Martin had promised the bidders. "As I have repeatedly stated, ensuring a smooth DTV transition should be the Commission's number one priority," he said.  "The FCC, in issuing these rules in a timely fashion, has taken another small step in the right direction." 

 

The money from the auction will be used for, among other things, the subsidize digital-to-analog converter boxes so that primarily poorer, minority or elderly analog-only viewers will still get a picture after the switch to digital on Feb. 18, 2009.

 

On the other side was Joe Barton (R-Tex.), former chair of the House Energy & Commerce Committee, who was harshly critical of the decision. "The FCC's decision to rig the 700 MHz auction at the suggestion of companies such as Google will harm wireless service and rob taxpayers."

 

Also on the other side, but for different reasons, was network neutrality-backer Free Press. While calling the open access provision a step in the right direction, it nonetheless concluded that the step "does nothing to address the failing broadband marketplace that has left too many Americans on the wrong side of the digital divide. The FCC's failure to place a wholesale condition on licenses in this auction means the chance for truly robust wireless broadband competition has been squandered. History will record today as an opportunity lost.

The victory was a partial one for Google, which had pledged to bid on the spectrum if it contained both open access and wholesaling provisions. The computer companies united to lobby for open access and wholesaling on the block were looking at the bright side. ""DIRECTV, EchoStar, Google, Intel, Skype, Yahoo! and Access Spectrum, the members of The Coalition for 4G in America, applaud the Federal Communications Commission’s decision today to adopt rules for the upcoming 700 MHz auction that will benefit American consumers and bolster broadband deployment," the companies said Tuesday. "By combining a large 22 MHz spectrum block with the ability to aggregate a national footprint, today’s Order paves the way for the possibility of facilities-based competition."

 

The vote was four to one, with Commissioner Robert McDowell supporting the public safety network (see below) and other parts of the decision, but opposing the open access provisions, saying he favored an open bidding process where the winner would be free to provide open access.

 

Public Knowledge saw it as a split decision too, but because it did not include the wholesaling as well as open access conditions it had been pushing for.

 

The FCC also introduced rules that pave the way for a nationwide interoperable communications network for public safety by 1) modifying the public and 2) creating a single license for a single, noncommercial, nonprofit licensee; and 3) establishing a public-private partnership conditioned on operating that interoperable emergency network.

 

The commercial licensees will have access to both the noncommercial spectrum and commercial spectrum adjacent to it. The rules require that 99.3% of the population be covered by the network by a date certain.

 

Frontline Wireless, which had pushed for the public-private partnership approach, wanting to be the private partner, said it was preparing to make its bid, but also might be preparing to ask the FCC to reconsider not including wholesaling, which it had also pushed hard for. “In the wake of the FCC’s decision, we can roll up our sleeves and get to work building the business of our dreams,” said Frontline Wireless CEO Haynes Griffin in a statement "But without commitments to ensuring competition – such as wholesale obligations – we are disappointed. The risk is that this spectrum will simply be warehoused by the largest carriers rather than turned loose to meet public safety’s needs,” he said. [W]e will be reviewing the FCC’s decision closely and considering petitioning for reconsideration.” 

 

The spectrum auction is expected to collect about $12 billion--government estimates--to as much as $15 billion-$20 billion, which is going to reduce the federal deficit as well as fund emergency communications and the digital-to-analog converter box so that viewers with analog-only TV's will still get a picture after the February 17, 2009, cut-off of analog broadcasting.

 

One of the reasons the auction needs to get going is that the benefactors of the auction money, including the National Telecommunications & Information Administration, which is overseeing the converter box program and the allocation for emergency communications, have already spent some of the money--it was allowed to borrow against the expected revenues. NTIA chief John Kneuer has pointed out that his name is on the promissory note, so he is eager to get the money in the bank, as it were.

 

Google had been pushing for open access and wholesaling conditions on the spectrum to make it available to a range of devices and potential services, not least of which its own. Frontline Wireless, a company headed by former policymakers including ex-FCC Chairman Reed Hundt, had been pushing for similar conditions on spectrum it would use to create a public-private interoperable communications network.

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