Divided FCC sets auction rules


The FCC approved a set of auction rules Tuesday that some hope will end the stranglehold the cable and telephone companies have on broadband.

In a divided opinion, the FCC ratified a plan pushed by chairman Kevin Martin for the so-called "700 MHz" auction that is expected to raise $15 billion for the U.S. Treasury.

Martin said the plan won't please everybody or even one entity but noted that he attempted to "strike an appropriate balance."

The frequencies that will go on the block in 2010 are those that broadcasters are scheduled to abandon as they switch from analog to digital TV. The channels are prized real estate because signals that use them can travel long distances and penetrate walls like TV signals.

"I am committed to ensuring that the fruits of wireless innovation swiftly pass into the hand of consumers," Martin said. "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."

Although the most immediate benefit consumers are likely to see is more choice in the cell phone market, the robust nature of the frequencies holds out the hope that such a network can unleash a new wave of broadband innovation.

"It is critical that we bring the benefits of the Internet to the wireless world, and I believe our actions today take us in that direction," commissioner Jonathan Adelstein said in his opinion. "Instead of the third 'pipe,' this holds promise as the third 'channel.' Or, if we can wax truly optimistic, perhaps we have an opportunity for a fourth or fifth channel through the innovative use of spectrum."

While Adelstein and Michael Copps, both Democrats, supported the rules, GOP commissioner Robert McDowell voted against one section of the order.

McDowell said an "open access" provision pushed by Martin — also a Republican — that will allow customers to use whatever phone and software they want on about one-third of the network to be auctioned went too far.

"Curiously, in an effort to favor a specific business plan, the majority has fashioned a highly tailored garment that may fit no one," McDowell said. "It's not what Silicon Valley wants, it's not what smaller players have told me they want and it's not what rural companies want. To date, the commission has received no assurances that any company is actually interested in bidding on the encumbered spectrum. Not one."

Republican commissioner Deborah Taylor Tate also expressed concerns about the provision but did not oppose it.

Both Adelstein and Copps approved the provision but said they would have liked to have seen more aggressive language.

"Requiring licensees to offer network capacity on nondiscriminatory terms would have been an enormous shot in the arm for smaller companies — including those owned by women and minorities — that aren't interested in or capable of raising the huge sums necessary to build a full-scale network," Copps wrote.

While consumer groups and some high-tech firms like Google wanted a stronger open-access provision that would have required airwaves winners to wholesale portions of their frequencies to competitors, Rep. Ed Markey, D-Mass., applauded the commission.

"My hope is that when these frequencies come to market after the auction, they will spur innovation so that consumers will be able to purchase the 21st century equivalent of Dick Tracy's two-way wrist radios of comic book fame: broadband-savvy devices capable of full motion video, enhanced applications and other information services," said Markey, chairman of the House telecommunications subcommittee and a leader on technology issues.

The concerns expressed by Google and other firms appeared to be ameliorated somewhat as the 4G Coalition made up of DirecTV, EchoStar, Google, Intel, Skype, Yahoo and Access Spectrum said they were pleased.

Rep. Joe Barton, R-Texas, the Commerce Committee's senior Republican, said that McDowell was the only commissioner to get it right.

"I commend commissioner McDowell for sticking to free-market principles and dissenting from chairman Martin's wireless network neutrality mandate," he said. "Unencumbered auctions have raised tens of billions of dollars and resulted in the vigorously competitive and innovative wireless industry we have today."

While the auction is known as the 700 MHz for the band in which the frequencies lie, a total of 62 MHz will be sold under the new plan; 22 MHz will be subjected to Martin's "open access" rules, and another 10 will be dedicated to the national public safety network, which will be shared between a commercial operator and public safety agencies.

The Associated Press contributed to this report.