FCC Leans Toward One-Third Plan for Open Access

During a congressional hearing Tuesday before the House Subcommittee on Telecommunications and the Internet, members of the Federal Communications Commission (FCC) came out in favor of a plan that would bring open access to one-third of the airwaves set for auction in January.

The 700 MHz band spectrum used by broadcast television stations will be available to the highest bidder once the switch to digital broadcasts takes place in February 2009. The FCC will auction off those soon-to-be-vacant airwaves in January 2008.

It was the first public indication of how the commissioners viewed the proposal put forth by FCC Chairman Kevin Martin two weeks ago.

“A network more open to devices and applications can help ensure that the fruits of innovation on the edges of the network swiftly pass into the hands of consumers,” Martin told the House Energy and Commerce subcommittee. “Consumers would be able to use the wireless device of their choice and download whatever software they want.”

Three out of the five commissioners told congressional members they supported the proposal to require the license winner to make a portion of the airwaves accessible to any wireless device, application and service. Martin has set the minimum bid for this block of the airwaves spectrum at US$4.6 billion. If bidders do not make the minimum bid, the auction will be held again without the open-access requirements.

Opening the Airwaves

Mobile phone users in the U.S., Martin said, are too often asked to discard old phones and purchase new phones in order to switch cell phone carriers. It is the wireless provider who determines what applications are loaded on that new phone, not the consumer.

“Wireless consumers in many other countries face fewer restraints: for example, they can take their cell phones with them when they change carriers, and they can use widely available WiFi networks — available in their homes, at the airport or at other hotspots — to access the Internet,” he continued.

The upcoming auction “provides a rare chance to promote a more open platform without disrupting existing networks or business plans,” Martin said.

The FCC’s two Democrat members, Jonathan Adelstein and Michael Copps, said they supported the plan, while Republican commissioners Deborah Tate and Robert McDowell said they had not come to a final decision; although McDowell said he was more inclined to oppose the plan.

In the House subcommittee, support for Martin’s plan fell along party lines, with most Democrats voicing praise for the plan while Republicans felt no conditions should be applied to the auction lest the panel risk reducing the value of the airwaves and a smaller take for taxpayers from the auction. Estimates put revenues from the auction at as much as US$15 billion, of which the government has marked $10 billion for federal coffers.

A majority of commissioners must sign off on the plan, otherwise it could be stricken from the FCC’s agenda.

The challenge for the FCC, Neil Strother, an analyst at JupiterResearch told TechNewsWorld, is how to balance consumer needs and the capitalistic needs of businesses that want to make a fair profit.

“They have a really hard balancing act to not undercut the existing wireless industry,” he said.

“It looks like open access is going to be put forth [in the auction],” Strother said. “It looks like [Martin] has the three he needs.”

However, he added, January is a long time away, and things could change before the auction next year.

A Simple Plan?

Martin’s one-third plan is far short of demands made by Google last week. The search giant is pushing the FCC to adopt auction rules that would require four types of open platforms, including open applications, open devices, open services and open networks as a condition of the license.

Google said it is willing to bid US$4.6 billion or more in the auction, but only if the FCC meets its conditions.

“Google has made a very public announcement,” Strother noted. “It is hard to read all the tea leaves with Google because it could be they’re saying ‘we’ll do it if and only.’ If they’re adamant that it has to be their way, then I’m not sure what they will do.”

AT&T, on the other hand, announced its support for Martin’s plan last Thursday, in contrast to its previous statements in which the company had stridently opposed any open access requirements.

While the FCC rounds up support for the Martin plan and ponders the impact of open access mandates, one of the things David Chamberlain, a principal analyst at In-Stat, wondered was whether the agency has the “stomach for requiring the type of service” that an open access network should offer. The FCC, he noted, usually looks to market forces to determine the specifics. Doing so in this instance could mean the effort is dead before it gets off the ground.

“GSM (Global System for Mobile Communication)? CDMA (Code Division Multiple Access)? 3G? WiMax? For the past dozen years, the Commission has had a track record of ‘letting the market decide’ which has led to some notable failures — such as AM Stereo and the lengthy delays in high-definition television,” he told TechNewsWorld.

“If you don’t start there, then there may as well not be anything called ‘open access’ at all,” he concluded.

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