Free Broadband From Thin Air?

Will wireless carriers walk away with most of the spectrum being
vacated by broadcasters in a winner-take-all auction that could
give up to $10 billion to $15 billion to the U.S. Treasury?

House Democrats injected themselves into that public-policy
debate Thursday, providing a hearing for radically alternative
proposals backed by a number of Silicon Valley heavyweights. Under
a congressional mandate, the Federal Communications Commission
(FCC) must sell the spectrum by the end of the year.

“The threshold question is whether the auction structure will
produce greater competition in the broadband marketplace,” U.S.
Rep. John Dingell (D-Mich.), chairman of the House Energy and
Commerce Committee, said. Cable and telephone companies now control
95 percent of the U.S. broadband market.

Because the spectrum is ideal for delivering wireless broadband,
the airwaves for sale have alternately been described as beachfront
property, prime real estate and the deal of the century. The
available airwaves in the 700MHz band include a 60MHz block for
commercial broadband wireless use and 24MHz for public-safety

As originally envisioned by Congress, the commercial spectrum
will go the highest bidder. The FCC is expected next week to issue
its preliminary rules and guidelines for the spectrum auction.

“This auction presents an opportunity for a new entrant to
emerge as national broadband competitor,” Dingell said. “The FCC
should adopt rules that maximize the opportunity for new entrants
to obtain sufficient spectrum.”

Even outside ths spectrum in the 760 MHz band, there are new
idea about how to use the airspace. One is Menlo Park, Calif.-based
M2Z Networks, which is backed by venture capitalists Kleiner,
Perkins; Charles River Ventures; and Redpoint Ventures, three
longtime Silicon Valley players. John Muletta, the former head of
the FCC Wireless Bureau, and Milo Medin, the founder of @Home
Networks, lead the firm.

M2Z proposes that the FCC give the company a 15-year lease in
2155-2175 MHz band, which is an unpaired segment of spectrum
adjacent to the advanced wireless Services Band that was auctioned
off last summer. In return, M2Z promises to build a nationwide
wireless network offering free high-speed service to virtually all
Americans. M2Z would pay the government a 5 percent royalty for
premium services available on the network, such as faster-speed

“Today, perhaps the greatest impediment to our nation’s digital
future is the sad fact that the U.S. broadband market is a duopoly
that limits customer choice and discourages price competition,”
Muletta told lawmakers.

Under the M2Z proposal, its free basic tier of wireless
broadband service would provide speeds six times faster than
dial-up and offer filtering at the network level to make it family
friendly and accessible to children. Muletta said the company is
willing to commit to a build-out commitment that would cover 95
percent of the U.S. population within 10 years.

In addition, Muletta said M2Z would provide access to public
agencies in national emergencies.

And then there is Greensboro, N.C.-based Frontline Wireless,
which wants the FCC to set aside specific spectrum for auction that
would require the winning bidder to build a nationwide,
interoperable, wireless broadband network for the public-service
community at no cost to taxpayers or first responders.

In return, the winning bidder would receive 10MHz of the
commercial spectrum available to offer wholesale spectrum with
roaming and open access.

The wholesale pipe would be available to all wireless providers,
allowing them to sidestep negotiating deals with their retail
competitors. Roaming would allow local and regional carriers to
offer networks that could compete with the broadband networks of
the major carriers.

“Without robust competition, American wireless services will lag
behind other nations in terms of innovation, capabilities and
cost,” Janice Obuchowski, the former administrator of the National
Telecommunications and Information Administration, testified.
“Indeed, while we pioneered wireless technology, America has fallen
behind much the world in the deployment of new wireless services
and technology.”

Frontline was founded by Obuchowski, Haynes Griffin, the founder
of Vanguard Cellular, and Reed Hundt, the former FCC chairman.
Financial backers include Jim Barksdale, the former Netscape CEO;
venture capitalists John Doerr and Ram Shriram; and software radio
technology innovator Vanu Bose.

“Proposals such as Frontline appear to provide a
technology-efficient way to achieve worthwhile policy objectives
while preserving an open auction format,” Dingell said.

Rep. Fred Upton (R-Mich.), though, questioned the “11th hour
call” to divvy up the spectrum in a way that could lower the
overall value of the spectrum auction. “I am highly skeptical of
proposals to rig the auction for particular parties,” Upton said.
“The proposals are very complex, and the odds that the government
finds the right balance in advance on such a tight timeframe is not
necessarily good.”

CTIA, the trade association of incumbent wireless carriers, also
opposes the alternative plans of M2Z Networks and Frontline
Wireless. “[The FCC] should recognize that M2Z is a profit-driven
entity that the commission should not subsidize with free
spectrum,” CTIA stated in an FCC petition opposing the idea.

“Like the broadband licensees that CTIA represents, M2Z should
not have the right to sidestep the competitive bidding process in
order to compete in the broadband marketplace.”

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