Spectrum Sale May Open Market FCC Rules Could Be Boon For Technology Companies; Loosening Telecom's Grip
By AMOL SHARMA and COREY BOLES July 11, 2007; Page A2 - WSJ A coming government auction of valuable radio spectrum could hand Google Inc. and other technology companies their first significant victory in a battle to loosen the grip held by telecom operators on the wireless and broadband markets. Federal Communications Commission draft rules would set aside part of the available spectrum for creation of an "open" network free of the constraints that large telecom operators like AT&T Inc. and Verizon Communications Inc. normally impose. The spectrum being auctioned is estimated to bring in $15 billion to the Treasury. The new open-access rules would apply to a slice that is big enough to create a nationwide network. SLICING THE SPECTRUM . The News: The FCC's draft rules for a coming auction of radio spectrum would set aside part of it for creation of an "open" network big enough to be nationwide. . The Background: Big telecom operators have maintained a grip on wireless and broadband markets, controlling mobile devices, software and services subscribers can use and "locking" phones to carriers. . What's Next: The initial rules will be debated in coming weeks ahead of a vote Google, a satellite-TV provider, or another new entrant could now be enticed to bid in the auction and enter the wireless market as a competitor to the large carriers. In a number of filings at the agency and in a letter late Monday, Google has argued that some spectrum should be set aside for an open network. EBay Inc.'s Skype has also weighed in with filings to back such rules. Though Google has considered the idea of buying spectrum and outsourcing the building and operation of the network to a third party, according to one person familiar with the company's thinking, it remains unclear whether Google is ready to spend billions to build and operate a new wireless network. Another person familiar with the matter said that a direct bid by Google for spectrum is very unlikely at this point, because the Internet company views such a move as outside its core activities. Google, Skype and others in the high-tech industry say large telecom firms stifle innovation by controlling which mobile devices, software and services subscribers can use and "locking" phones to a particular carrier. For example, AT&T has exclusive carriage of Apple Inc.'s iPhone. Those Internet companies have had difficulty bringing services such as free Web calling to the mobile-phone market, while handset makers like Nokia Corp. have had trouble bringing popular European phones to the U.S., where the telecom operators control what phones are used on their networks. [Kevin Martin]The telecom carriers say the draft rules for the auction are unnecessary and have been engineered to fit Google's business model -- and to scare off Verizon and AT&T from bidding for that slice of spectrum. FCC Chairman Kevin Martin said in an interview that the draft rules would spur innovation by handset makers and other technology companies bringing out mobile phone products and services. He cited as an example Wi-Fi capable cellphones that have been slow to roll out in the U.S. "I think consumers would dramatically benefit from that kind of capability," he said. The initial FCC rules will be debated at the agency in coming weeks ahead of a vote, for which a date hasn't been set -- but they will likely form the basis of the final auction rules. Some mobile-phone entrepreneurs and consumer advocacy groups said the draft rules didn't go far enough to ensure that a new operator with an open network will enter the wireless market. Verizon has fiercely opposed any restrictions on how it operates its wireless and landline networks. Telecom companies have a sizable lobbying army in Washington and have gained clout through a recent round of mergers. Just last year, Verizon and AT&T lobbied successfully to quash legislative proposals to regulate their Internet services and prevent them from speeding up their own Internet traffic -- or that of preferred business partners -- while letting Web services from rivals travel at slower speeds. Backers of so-called "net neutrality" want to ban such preferential treatment. Net neutrality is the notion that owners of phone and cable networks can't dictate how a consumer uses the Internet or discriminate against any Internet content, regardless of the source of the content. The large carriers won another victory two weeks ago when the Federal Trade Commission said in a closely watched 170-page report that such "net neutrality" regulations were unnecessary. The coming auction has moved the debate over net neutrality to the wireless industry. U.S. wireless carriers exert multiple layers of control. "You can build a totally terrific product, but getting it distributed is a big issue," said Doug Garland, a mobile-industry veteran who once headed up Yahoo Inc.'s mobile group and has worked for telecom carriers. Wireless service providers must lease access to the public airwaves, or radio spectrum, through periodic FCC auctions so they can build networks to carry their voice and data traffic to customers. The spectrum on the block in the coming auction are the frequencies being vacated by television broadcasters, which are mandated by law to switch to new digital signals by February 2009. The auction is attracting heightened interest, because the frequencies at stake are especially suited for broadband communications. Technology companies such as Intel Corp., Yahoo and eBay would like to see a new entrant get a chunk of that spectrum. And, in fact, Google and some others have gone a step further to argue that the FCC should explicitly designate that the new entrant open up its network to a wider array of applications and mobile devices than do existing carriers. The draft FCC rules, which the agency hasn't released publicly, would apply those requirements to about one-third of the spectrum being auctioned. While AT&T, Verizon and other telecom providers would not be barred from bidding for the spectrum, the strings attached to it will likely make it much less palatable to them. "This is probably the best opening for this network neutrality issue for the next couple of years," says Paul Gallant, an analyst at Stanford Group who advises institutional investors on policy developments in the telecom industry. --Kevin J. Delaney contributed to this article. David T. Hughes Director, Corporate Communications Roadstar Internet 604 South King Street -Suite 200 Leesburg, VA 20175 Office - (703) 234-9969 Cell - (703) 587-3282 Corporate Offices - (703) 554-6621 Fax - (703) 258-0003 [EMAIL PROTECTED] AIM: dhughes248 - Video conference capable -------------------------------------------------------------------------------- Would you like to see your advertisement here? Let the WISPA Board know your feelings about allowing advertisements on the free WISPA lists. The current Board is taking this under consideration at this time. We want to know your thoughts. -------------------------------------------------------------------------------- -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
