By Kim Hart
Washington Post Staff Writer
Wednesday, August 1, 2007
Consumers will be able to use any cellphone and software they want on a network built on airwaves to be auctioned early next year, according to rules approved yesterday by the Federal Communications Commission.
The vote sets the stage for the auction of public airwaves that will change hands from television broadcasters to a fast-growing wireless industry. The auction, scheduled for January, is expected to raise about $15 billion for the U.S. Treasury.
The vote was a partial victory for consumer advocacy groups and Internet companies such as Google, which wanted rules that would allow consumers to use a variety of devices on a network. But those groups also sought more-ambitious rules that would open the network to third-party companies. That measure did not pass. Creating an open network would mean companies like Google would not have to arrange with wireless carriers to make services like Web search and online video available, as they do now.
The rules approved yesterday also was a victory for AT&T, which successfully sought to block the stronger rules that would require the winning bidder to resell part of the spectrum to third parties. Verizon Wireless opposed any rules granting access to any new network.
The airwaves, which are ideal for transmitting high-speed wireless signals, are highly valuable to large wireless carriers, which need more capacity to introduce services to customers.
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.
The proposed requirement to resell the network to third parties, a concept backed by the Democratic commissioners, was not included in the rules. That provision had been proposed by public-interest groups including Public Knowledge and Free Press, which said it would help create more competition in the wireless industry. Google last month said it would bid at least $4.6 billion on the airwaves if the provision were included.
Without the requirement, Google said it was less likely to bid, though Richard S. Whitt, Google's senior policy counsel, said the company had not ruled out participating in the auction.
AT&T and Verizon fought the Google-backed provision, saying the rules would reduce the value of the spectrum.
Martin set a reserve price on the airwaves. If the minimum bid of $4.6 billion is not met, the airwaves will be re-auctioned without the open-access requirements.
The rules also paved the way for the creation of a shared public-safety network that will help first responders communicate during disasters.
Under the rules, a wireless-network operator is to help build the public-safety network and sell the excess capacity to customers. Public-safety agencies, such as police and fire departments, will have priority use of the network during emergencies.
Frontline Wireless, a company backed by several Silicon Valley investors and former FCC chairman Reed Hundt, plans to participate in the auction and hopes to help construct the new public-safety network. It had also sought rules requiring the reselling of the airwaves to third parties so it could build a national wireless network.
While McDowell expressed concern that the open-access rules would create a "highly tailored garment that may fit no one," Martin said the rules balanced the interests of various potential bidders.
"Our rules shouldn't be designed to fit any particular company," Martin said in an interview after the meeting. "We've allowed a piece of the spectrum to let consumers have more choices and greater flexibility in the devices and software they use."
Consumer-advocacy groups criticized the FCC for wasting a "golden opportunity" to promote lower prices, better service and innovation.
"Sure it's great to take handsets from one network to another, but that's small potatoes," said Ben Scott, policy director for Free Press. "Our competition problems are not solved."
The rules do not apply to existing wireless networks. It will be several years before consumers see the impact of the new network, as the airwaves will not be abandoned by broadcasters until early 2009.