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FCC splits the difference on auction rules - August 1, 2007

Considering they didn't get the biggest part of what they were after, the folks at Google took the FCC's decision on the wireless spectrum auction rules pretty well.

"The Federal Communications Commission made real, if incomplete, progress for consumers this afternoon, as it set the rules for an upcoming auction of the publicly owned spectrum in the 700 MHz band," the company said on its public policy blog.

Google was hoping the feds would require the winner of the auction to offer a portion of its new bandwidth on a wholesale basis to resellers and application developers looking to provide competitive broadband services.

Instead, the agency voted 5-0 to adopt a watered-down version of "open access," requiring only that a portion of any new wireless network be open to any device or application consumers want to use.

Google said it has not yet decided whether to bid on the new spectrum.

Few, in fact, were completely happy with the ruling.

Public interest group Public Knowledge called the half-way measure "a tremendous missed-opportunity that will have repercussions in the broadband market for years to come."

The group blamed Congress for not giving FCC chairman Kevin Martin, "the political cover he needed to propose a decision that would have made the telephone companies apoplectic and guaranteed years and years of litigation." 

And who wouldn't want that?

Not that it stopped the big wireless providers from getting apopleptic. 

"We are disappointed that a significant portion of this valuable spectrum will be encumbered with mandates that could significantly reduce the number of interested bidders," the industry's lobbying group said in a statement. "We remain committed to the principle that wireless consumers and American taxpayers are best served when such a valuable commodity is auctioned in a fair and competitive manner with no strings attached, and we commend Commissioner Robert McDowell for his belief in flexible auction rules and the free-market system."

Only in Washington, DC could extending an unconditional monopoly over public resources to private interests be considered an example of a "free-market system."

About the only group completely happy with the decision was the Consumer Electronics Assn., whose members make the devices that can now be freely attached to new wireless networks.

For content owners and distributors, the ruling is a mixed bag.

In the long run, having an open, broadband pipe into wireless devices is clearly in the commercial interests of content owners.

Instead, the auction rules guarantee that the likely winners--the incumbent wireless carriers like AT&T and Verizon--will continue to exercise extensive control over the content that flows over their network.

On the other hand, having only a few monopoly gatekeepers to deal with makes it easier to implement network-level content filtering--assuming the operators can be persuaded to go along.

If I had to guess, I'd say content owners will take that deal.


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