'Open Access' Wireless Auction Could Be All for Naught

Commissioner Michael Copps generally supported this plan, although with certain reservations.

"What we're doing here today is setting the ground rules for how some of the most valuable spectrum on Earth will be used," Copps opened his comments. "As I've many times said, my first preference - by a long country mile - would have been a fully, federally funded public safety-grade network reserved solely for first responders, and built to the specifications they deem essential for their job of protecting you and me. At this late date, that is apparently not to be. In light of the options before us today, I believe that pursuing a shared public/private model, and trying to make it work, is the next best thing. There are no guaranteed outcomes here. We have to find a way, finally, to get this done."

Copps reiterated the oft-stated need for first responders to have a single, reliable public safety communications network, not just so they can communicate with one another in a smoke-filled building, but also so manufacturers can finally build radios and electronic equipment that conform to a single specification - thus hopefully driving down costs.

About the commercial part of the auction, Copps later said, "There's a lot in this part of the order in which we can be proud. But here, too, there are no guarantees, and some last minute changes give me some pause." He commended FCC Chairman Kevin Martin's drive on behalf of what's being called the "Cart-a-Phone" provision, enabling customers to choose their own devices - which six months ago did not even appear to be an option.

"The device and application openness principles that today's order implements for 22 MHz of the commercial spectrum," Copps went on, "will mean more choices, better services, and lower prices. They will permit entrepreneurs to innovate without asking somebody else for permission, just as the developers of the fax machine, dial-up modem, and Wi-Fi router did."

Even so, however, "the order does not go far enough in one important respect: We all know that America's broadband performance leaves a lot to be desired. To me, the culprit is clear: A stultifying lack of competition in the broadband market, which in the words of the Congressional Research Service is a plain old 'cable and telephone duopoly.' The 22 MHz block of the 700 MHz spectrum is uniquely suited to providing a broadband alternative, with speeds and prices to beat current DSL and cable modem offerings. Maybe this can happen yet in this spectrum, but by declining to impose a wholesale requirement on the 22 MHz C-block, the Commission misses an important opportunity to bring a robust and badly needed third broadband pipe into American homes."

Later, Commissioner Jonathan Adelstein echoed that sentiment: "We've had to strike compromises here, and while the measures are less than I would have proposed, they're significant. At the end of the day, though, I'm afraid we may have missed a golden opportunity to open that elusive third channel into the home."

That third channel is the possibility of wireless broadband Internet, which would theoretically be less expensive for carriers to roll out than CATV-based or DSL broadband, especially to rural areas. Carriers with an interest in this service may not be interested in funding that rollout through wholesale sublicenses to subcarriers - which is why that provision is out. Their business models for wireless broadband may also be predicated upon being able to resell selected brands of premise equipment, where that selection is not made by the customer.

Which leads to the "Plan B" part of the auction rules to which Comm. McDowell referred. Commissioner Deborah Taylor Tate explained it like this: "We also provide safeguards regarding the auction proceeds and the potential winning bids, pursuant to the Deficit Reduction Act of 2005, by setting a reasonable reserve price for spectrum blocks in this auction. Thus, if we are wrong about the open access conditions, and a reserve price is not met, then the spectrum block...will immediately be re-auctioned without the conditions." In other words, if no one wants to play by these rules, then the rules will literally be thrown out.

This was a key reason why McDowell dissented.

"The problem with setting reserve prices," he said, "is that it puts the Commission, rather than the market, in the precarious position of identifying the right value for the spectrum."

By not compensating for the potentially reduced revenue stream resulting from customers choosing their own premise equipment, with a reduction in the minimum bids for spectrum blocks, the FCC may have given major carriers an incentive - if not a gold-plated invitation - to wait this one out. Which is perhaps why both AT&T and Verizon Wireless, who so vehemently opposed any open access restrictions two weeks ago, appeared to have a sudden change of heart after "Plan B" was devised.