FCC Approves Spectrum Auction Rules

UPDATED: WASHINGTON — The Federal Communications Commission (FCC) backed the concept
of open access networks today in approving rules for the upcoming 700 MHz
spectrum auction. The auction rules closely follow a draft proposal issued by FCC
Chairman Kevin Martin earlier this month.

After months of deliberations, the FCC decided to dedicate almost a third of
the spectrum available to some open access conditions, including allowing
consumers to attach legal devices and run legal software on the network.

The agency also agreed to rules creating a public-private network for an
interoperable, national first responder network.

The landmark sale of the spectrum being deserted by television broadcasters as
part of the digital TV transition is considered ideal for delivering advanced
wireless services, including broadband that meets or exceeds the speeds of DSL
or cable modems. The auction is expected to generate $15 billion to $20 billion for the

While the auction rules favor open access for consumers, the FCC stopped short
of requiring the winner of the spectrum to make it available on a wholesale
basis, a condition Google contends is essential if the search and
advertising giant is to participate in the auction.

Dominant incumbent carriers like AT&T and Verizon have equally stressed that
open access and wholesale requirements would rig the auction in Google’s
favor. AT&T said Tuesday afternoon the FCC’s plan strikes a “reasonable
balance” between the positions of Google and the incumbents.

“As we’ve previously noted, if Google is serious about introducing a competing
business model into the wireless industry, Chairman Martin’s compromise plan
allows them to bid in the auction, win the spectrum and then implement every
one of the conditions they seek,” Jim Cicconi, AT&T’s senior executive vice
president, said in a statement.

Cicconi added that AT&T would reserve any decision on participating in the
spectrum auction until it had an opportunity to review the final rules. Google
was not immediately available for comment.

Martin stressed that the open access requirements apply only to a portion of
the spectrum that will go sale late this year or in January, and they do not
apply to any existing wireless networks. Incumbent wireless carriers currently
limit the devices and software that run on their networks.

The lack of wholesale provisions also drew criticism for FCC Commissioners
Michael Copps and Jonathan Adelstein, the two Democrats on the commission.

“Requiring licensees to offer network capacity on non-discriminatory terms
would have been an enormous shot in the arm for smaller companies…that
aren’t interested in or capable of raising the huge sums necessary to build a
full-scale network,” Copps said. “Smaller entrepreneurs deserve an alternative
path to wireless access.”

In addition, Copps said, wholesale access would “level the playing field for
companies that want to get into the network business but cannot break through
the defenses erected by the massive incumbents who dominate the industry.”

Adelstein said compromise was necessary to strike a deal, but he feared
without wholesale access, “I am afraid we may have missed a golden opportunity
to open that elusive third channel into the home.”

Commissioner Robert McDowell, on the other hand, expressed discontent over the
fact that there was any open access requirements imposed on the auction.
“Large wealthy corporations interested in a particular business plan do not
need the government’s help in this auction,” he said.

McDowell’s fellow Republican, Deborah Tate Taylor, said she was “lukewarm” on
the issue of open access and called it a “less than perfect” experiment.

Martin said the auction rules hold great promise.

“This auction provides an opportunity to have a significant impact on the next
phase of wireless broadband innovation. A network that is more open to devices
and applications can help foster innovation on the edges of the network,” he

“As important, it will give consumers greater freedom to use the
wireless devices and applications of their choice when they purchase service
from the new network owner.”

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