Wholesale Open Access Not Part of FCC 700 MHz Wireless Auction

A regretful comment made by Federal Communications Commissioner Michael J. Copps during his opening remarks this afternoon, served as the first public indication that the text of the 700 MHz spectrum auction order currently under consideration does not contain a stipulation that 22 MHz in the so-called "C-block" must be made available for wholesale access.

A wholesale access provision was one of the terms that Google was lobbying for, in its petition to the FCC in which it said it would be willing to bid $4.6 billion. However, certain so-called "open access provisions" are on the table, as a means for establishing a business model for funding a single, nationwide public safety communications network.

Smaller bandwidths are being set aside in a revised 700 MHz allocation table, so there will be some spectrum available, presumably to smaller companies and entrepreneurs.

But Commissioners Copps and Jonathan Adelstein noted that too few rules governing the terms of the auction could still enable "gaming" - deals made among players to team with one another and lock out opposing bids. Copps noted that typically the market decides who gets to win an auction, and the absence of controls against such gaming may prevent the market from doing so in this case.

This revelation points to the unlikelihood of a major bid from Google for wireless spectrum.

Update ribbon (small)


3:50 pm ET July 31, 2007 - Judging from commissioners’ comments today, the vote will likely be 4 - 1 in favor of a plan to rework the 700 MHz spectrum band plan. This plan would increase the amount of commercially available spectrum in the lower A and B paired blocks by 10 MHz.

Bidders for that space would have to abide by a promise to make wireless services available to their customers in such a way that they’re able to choose their own devices and their own applications. This is being called the “cart-a-phone” plan, after a similar regulatory effort by the FCC in the 1980s to enable customers to choose and purchase their own landline phone independently of their service provider. Proceeds from the auction would benefit a new, single, nationwide licensee for public safety communications, which is already slated to receive a sizable chunk of the upper 700 MHz spectrum – the portion not being auctioned.

But the auction rules on the table would not encumber the bidder to resell wireless access on a wholesale level. That omission drew comments of regret and disappointment from Commissioners Copps, Adelstein, and Deborah Taylor Tate.

The dissenting vote, however, will come from Commissioner Robert McDowell, not because it does too little to regulate the openness of markets and competition, but because he believes it does too much. Why, asked McDowell, must the Commission assume that smaller Silicon Valley players are less likely to be able to bid for small parts of the 10 MHz spectrum up for auction, as the larger players? By placing too many rules and regulations on the auction, he said, “the majority has fashioned a highly tailored garment that may fit no one.”

The word “Google” was not even mentioned by commissioners during their remarks this afternoon (or at least during those portions which weren’t affected by transmission problems). Had Google's request been agreed to, ownership of the so-called “C-block” would only have been sold to a bidder or bidders who agreed to offer wholesale access to that space to the open market. That provision, Comm. Copps commented, would have been an “enormous shot in the arm for entrepreneurs.”

Comm. Adelstein may have rendered the most emotional regret of the day, saying, “We may have missed a golden opportunity to open that third channel into the home.”

But FCC Chairman Kevin Martin sounded a positive note in favor of the proposed rules, saying they meet the primary goal: “We have no greater responsibility than meeting the needs of public safety.” Entrepreneurs and small wireless providers will still have an opportunity, Martin added, to “foster innovation on the edges of the network.”

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