FCC’s Martin Wireless Auction Plan

rmm.jpg The Post has some interesting analysis of which FCC commissioners said what when they approved Chairman Kevin Martin’s 700Mhz wireless auction plan:
The “open-access” provision was endorsed last month by FCC Chairman Kevin J. Martin, a Republican, and gained support from the two Democratic commissioners, Jonathan S. Adelstein and Michael J. Copps. Deborah Taylor Tate, a Republican commissioner, also voted in favor of the deal. Martin said he hoped the proposal would encourage a new entrant to compete with the cable and phone companies that provide broadband service.

Republican Commissioner Robert M. McDowell voted against the proposal, arguing that placing any conditions on the sale of airwaves would hurt smaller carriers by making smaller licenses without any requirements appealing to larger bidders.

“Smaller players, especially rural companies, will be unable to match the higher bids of the well-funded giants,” he said.

FCC Approves Airwave Use For All Phones, Wireless Network Opened To Options if Not Firms, By Kim Hart, Washington Post Staff Writer, Wednesday, August 1, 2007; Page D01

It’s not clear to me where the bigger players will find enough smaller licenses without any requirements to be worth their while. Unless those licenses are also attractive because of the Universal Service Fund.

What did the corporate players say?

Cisco already weighed in for Martin’s rules and against Google’s:

Google seems to have a very different view of the wireless market than Cisco does. It apparently believes, contrary to the FCC and Federal Trade Commission, that there is insufficient competition to ensure that consumers will be treated fairly. It wants new rules that would prohibit the licensee from bundling the price of handsets and service. It wants the federal government to mandate that service providers allow access to other wireless networks. It wants the FCC to impose requirements that dictate the terms under which the winner will sell network capacity to others, as well as the terms by which the winner will interconnect with other networks.

Kevin Martin is Right about DTV Spectrum Auction: Put Consumer Interests First, by Mary Brown, Cisco High Tech Policy Blog, July 27, 2007 06:23 AM

Well, yes, Google seems to think wireless telephones should have the same kind of flexibility as the Internet. Shocking! I do love the framing: “impose requirements”, “dictate the terms”. As Krugman has pointed out, “…sometimes you can’t have effective market competition without effective regulation.”.

Let’s get into the heavy breathing part:

To understand just how breathtaking Google’s request is, consider this — the FCC has for many years performed extensive annual reviews of the wireless industry, and under administrations both Republican and Democrat, found the sector to be competitive. And consider this — just a few weeks ago, the Federal Trade Commission advised in an exhaustive report that there is no evidence of market failure that would warrant regulation, and no reason why existing enforcement mechanisms could not be engaged in the event a network provider engaged in future bad acts.
I wonder did any of those reviews go beyond the traditional terms of telephones? That is, did they consider that a telephone handset might not have to be tied to a particular carrier’s network? Or that the software on it might not have to be supplied by or approved by that carrier? That’s the sort of condition Google was after. And did any of those reviews compare the U.S. wireless telephone market to such markets in other countries? Meanwhile, we’ve already discussed that it’s hardly surprising that the FTC found no “market failure”, considering that that’s what its political directive was. It is sad to see Cisco parrotting that line, too.

Verizon was for even less than Martin proposed:

“Verizon’s position is that the Federal Communications Commission should not impose ‘open access’ conditions on the 700 MHz spectrum. The record compiled at the FCC does not justify these conditions. Imposing any such requirements in the competitive wireless market would reduce the revenue the government will receive from the spectrum auction and limit the introduction of new and innovative wireless services.

“If the FCC persists in imposing open access requirements on the “C” block of spectrum to be auctioned, Verizon urges that the rules should be constructed to give the customer the ability to choose to have the same kind of relationship with a carrier that the customer enjoys today. In other words, the customer should be able to purchase a handset from a carrier and enter into a service agreement with that carrier, thereby giving the carrier responsibility for optimizing all aspects of the customer experience.”

700MHz statement, by David Fish, Verizon Policy Blog, in Wireless, on July 26, 2007, 08:59 AM EST

At least they phrased it as “responsibility”, even though in this case that means responsibility to make a lot of money on services the customer could otherwise get from an open market, probably cheaper and with more variety, plus the responsibility to disconnect the customer whenever the carrier doesn’t like what’s on their phone. It’s good to be the carrier king!

I’m looking at policy blogs here, and if AT&T has one, I haven’t found it yet, nor do Cisco’s, Verizon’s, or Google’s link to it. If AT&T has one, somebody please let me know.

Google is the only one of these blogs that has already posted about the FCC decision after it was made. The Google blogger calls it real progress, and says 2 out of 4 ain’t bad:

None of us like how the current system locks you into wireless service plans that limit the kind of phone or PDA you can use, prevent you from downloading and using the software of your choice, and charge you hefty termination fees if you try to get out. And it’s hard to ignore how the existing wireless carriers talk a good game about the virtues of the free market, but prefer to keep us stuck in their closed market. Today the FCC took some concrete steps on the road to bringing greater choice and competition to all Americans.

In essence, the FCC embraced two of the four openness conditions that we suggested several weeks ago: (1) open applications, the right of consumers to download and utilize any software applications or content they desire; and (2) open devices, the right of consumers to utilize their handheld communications device with whatever wireless network they prefer. We understand that the Commission also may have added real teeth to these two requirements, by plugging some of the more obvious loopholes and giving consumers a tangible remedy for any carrier violations.

Signs of real progress at the FCC, by Richard Whitt, Google Policy Blog, Tuesday, July 31, 2007 at 3:29 PM

The two points the FCC didn’t adopt were wholesale reselling and open interconnection. And since the FCC hasn’t released the text of its interpretation of the two points it did adopt, we don’t know what it really decided. And then there’s the matter of how well the telcos will stick to them. Remember how they as ILECs were supposed to make local loops available to CLECs and produce a diverse Internet market, and they delayed and had technical problems and the like until most of the CLECs went belly-up.

And all this is still phrased in terms of “consumers”. In other words, the telcos are still king, and the “consumers” are serfs, not participants.

Meanwhile, although Google said it would bid at least the floor price if the FCC adopted all four of its proposed rules, it didn’t say it wouldn’t bid if the FCC adopted only some of them. This could get interesting.

Finally, I started posting about the 700Mhz auction because of Reed Hundt’s company’s Frontline’s proposal to use it to get public safety bandwidth. Frontline doesn’t have a blog Hundt doesn’t seem to have blogged about this FCC decision yet, but Frontline has already put out a press release:

Frontline Wireless today complimented the FCC for putting in place two ground-breaking ideas in today’s 700 MHz spectrum policy decisions: (1) The nation’s first public safety-private partnership; (2) Clear implementation of an open access paradigm for wireless broadband.

Frontline Moving Ahead with 700 MHz Spectrum Plans, Press Release, Frontline Wireless, 31 July 2007

And Frontline is still going for a nationwide interoperable 4G network. With the public safety angle, this could make for interesting politics.