July 31, 2007 4:56 PM PDT

FCC approves some open wireless requirements

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If these subscribers wanted to make calls or use a non-Verizon application on the rest of Verizon's nationwide network, they'd still need to use a Verizon-certified phone. Why? Verizon is not required to adhere to the open device and application access rule for any other spectrum licenses that have been used to build its existing network.

"The rules adopted today do nothing for the 250 million current cell phone subscribers," said Ben Scott, Washington policy director for the advocacy group Free Press. "In 2010, when these networks get built, the incumbents could freeze consumers out of their no-locking and blocking rights. We have a long way to go to truly realize these principles."

Devil in the details
As is typical, the text of FCC rules was not released at the meeting, which started nearly four hours later than its originally scheduled time due to last-minute negotiations among commissioners. But a press release (PDF) distributed afterward outlines the main provisions.

The order establishes that, of the spectrum being auctioned, 62MHz will be up for grabs by commercial operators. About one-third of those airwaves will be subject to the open-access rules and would allow bidders to purchase a single, regional license covering a large geographic footprint. The remaining portion, which will not be forced to comply with the unfettered devices mandate, will be divided into licenses of various sizes covering small and midsize geographic markets.

Another primary motive for the spectrum auction is improving communications among public safety workers. The adopted order sets aside 24MHz of spectrum to be dedicated to that purpose and licensed to a single noncommercial, nonprofit group that represents the public safety community.

It also sets up a framework for a public-private partnership to build a nationwide, interoperable public safety broadband network on a shared 10MHz of the spectrum. It would be up to the commercial licensee to build out the network for use by emergency workers, and the public safety licensees would also have priority access to the commercial spectrum in times of emergency.

The public-private partnership concept has been championed by a company called Frontline Wireless, headed by former FCC Chairman Reed Hundt. But in its proposal to the FCC, Frontline also wanted a wholesale provision added to the rules to help promote competition in the market, and it wanted the open device and application rules also added to this sliver of spectrum licenses.

But the public safety community, which is worried about network security and other issues, did not like the idea of an open network or allowing any type of device to connect to the network. The FCC also did not accept Frontline's request to offer discounted pricing to encourage smaller new entrants.

"The policy debate has come a long way in a short period toward open networks and a public-private partnership, and we commend the FCC for advancing these important public interests," Frontline Chairman Janice Obuchowski said in a statement. "But in areas where the commission did not go far enough, such as including wholesale in open-access requirements and in the scope of the designated entity definition, we will be reviewing the FCC's decision closely and considering petitioning for reconsideration."

The FCC also agreed to employ "anonymous" bidding procedures, which means the agency will withhold information about specific applicants' license selections and bidding activity until the auction ends.

Some commissioners also expressed misgivings about a decision in the rules to set "reserve" prices for each block up for sale in the auction. The idea behind that move, Martin said, is to "ensure that a fair price is paid." The projected $10 billion to $15 billion raised by the auction, according to Congressional Budget Office estimates, is scheduled to be deposited into the federal treasury to pay down the deficit.

McDowell said he believed the prices are best left to market forces, arguing that "reserve prices have the effect of skewing the auction and hindering the efficient allocation of spectrum."

Consumer advocacy groups were also troubled by the reserve pricing provision. Harold Feld, senior vice president of the Media Access Project, argued that reserve pricing could scare off new entrants from bidding. He said it could also encourage incumbent phone companies to hold back early in the auction and force the spectrum to be reauctioned without the rules.

No particular start date for the auction was set on Tuesday, but by congressional mandate, it must begin no later than January 28, 2008.

Speaking to reporters after the meeting, Martin predicted the auction would not occur until December or January so that potential bidders can have time to secure the capital to participate.

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8 comments

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Oops, they did it again...
"His position drew support from Rep. Joe Barton (R-Texas), the ranking member of the House of Representatives Energy and Commerce Committee..."

I vaguely recall the Democrats retaking Congress, so the ranking member of any House Committee would be a Democrat. Joe Barton and his party were thrown out by voters because they are corrupt and incompetent: they're not the ranking members on any committees right now.

Of course, this is a "news" organization that employees Declan "Da Liah" McCullagh. Given that I guess accuracy isn't a criteria in news gathering. Rather they're just hoping Joe Barton exclaims something akin to "Al Gore says he invented the Internet" (which, of course, he didn't say) so they can broadcast the misquote widely and gain...? OK: I have no idea what they hope to gain.
Posted by michaelo1966 (159 comments )
Reply Link Flag
criticizing the criticism
The term ?ranking member? is often used refer to the senior member from either party. Technically it should have been ?ranking minority member? but its well understood either way. See <a class="jive-link-external" href="http://en.wikipedia.org/wiki/Ranking_member" target="_newWindow">http://en.wikipedia.org/wiki/Ranking_member</a> for more information on this topic.

This was a well written, balanced article. Your criticism of Declan and company seem to be a bit ?off balanced?. Consider centering-exercising or deep breathing. Aroma therapy might help as well.
Posted by p.shearer (60 comments )
Link Flag
Rep. Joe Barton
According to the Republican Web site for the House Energy and Commerce Committee, Rep. Barton is designated the ranking member. Please see the committee's Web site for more information: <a class="jive-link-external" href="http://republicans.energycommerce.house.gov" target="_newWindow">http://republicans.energycommerce.house.gov</a>.
Posted by Zoe Slocum (42 comments )
Link Flag
Air waves belong to the public
This is only 22 MHz of spectrum. No serious threat to the imcumbent can be launched in such a small block. Besides all the airwaves are owned by the American public, and the public should have access to a small part for innovation and open source applications. The imcumbents will only provide apps that ensure their continued dominance.
Posted by kenwilli (7 comments )
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FCC should measure ROI, not just short-term auction proceeds!
You are absolutely right. This Business Week article describes what happened when France unbundled its access to ensure that France Telecom (the incumbent) couldn?t lock out other vendors from wholesaling offerings.

<a class="jive-link-external" href="http://www.businessweek.com/globalbiz/content/jul2007/gb20070718_387052.htm?chan=rss_topStories_ssi_5" target="_newWindow">http://www.businessweek.com/globalbiz/content/jul2007/gb20070718_387052.htm?chan=rss_topStories_ssi_5</a>

The result? An unprecedented wave of innovation that has touched off deployment of new fiber (unsubsidized by taxpayers, by the way) and amazing new services.

Rather than evaluate the short-term gains from the auction, the FCC should have been concerned with long-term ROI (return-on-investment) to the American economy. That only comes about by preventing the telcos, their lawyers and lobbyists from hamstringing competition.

Instead, we get more of the same, with a couple of giant telcos protecting their turf. The result is that America will become a technological backwater for mobile development.

Thanks, FCC!
Posted by directorblue (148 comments )
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Not Open Enough
It's clear that the FCC should support the MOST open access possible. Full open access provisions are appropriate because there is no public benefit from allowing exclusive and restrictive use of the public airwaves; but there are great benefits from open access.
The decision not to support more open access is inappropriate and could even suggest undue influence. The lack of open access will stifle choice, competition, innovation and growth. Congress should intervene by passing legislation requiring open access (including open wholesale access) in new allocations of the public airwaves. Hopefully someone like Google will win a good chunk of these licenses and provide access in an open wholesale manner. This auction is a very important allocation of prime radio spectrum which belongs to everyone; allowing exclusive and restrictive use of it might increase the perceived value of the licenses, but is a disservice to the public.
Posted by Dale Sundstrom (21 comments )
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michaelo1966
Ranking member is the congressman with the most seniority on the commitee that is a member of the minority party
Posted by jeffro5 (1 comment )
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