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Compromises Lead To New Wireless Rules

By David Hatch

(Tuesday, July 31) Rules designed to increase innovation and competition in the wireless telecommunications industry were adopted by the FCC, the result of a delicate compromise brokered by FCC Chairman Kevin Martin.

The agency voted 5-0 to create a nationwide wireless network for first responders, and 4-1 to impose "open access" conditions on airwaves to be vacated by television broadcasters as they transition to digital signals. The auction will begin in December or January.

Under open access, devices and software unaffiliated with license holders could be used on a third of the frequencies to be auctioned. This would allow consumers to retain their handsets while switching carriers and enable competitors to market devices for spectrum controlled by the auction winners.

The conditions were adopted despite complaints from Democratic commissioners that they do not go far enough and grumbling from Republicans that they are too regulatory.

House Energy and Commerce Chairman John Dingell, D-Mich., was pleased with the FCC's decision, as was Energy and Commerce Telecommunications and the Internet Subcommittee Chairman Edward Markey, D-Mass., though he wanted to require licensees to lease access to smaller entities at wholesale rates.

Sen. John Kerry, D-Mass., dubbed the vote a "halfway solution," while Energy and Commerce ranking member Joe Barton, R-Texas, said only FCC Commissioner Robert McDowell, a Republican and the lone dissenter, got it right.

The FCC's decision to "rig" the auction for "companies such as Google will harm wireless service and rob taxpayers," Barton said.

The open-access requirements meet two of four conditions Google said it needed to bid at least $4.6 billion on frequencies. It is contemplating offering nationwide high-speed Internet access.

"The FCC took some concrete steps on the road to bringing greater choice and competition to all Americans," wrote Richard Whitt, Washington telecom and media counsel for Google, on the company's policy blog. Google will review the final FCC rules, to be issued in a few weeks, before deciding whether to bid.

For months, industry critics such as CTIA, the wireless association, and Verizon have cried foul, arguing that conditions favorable to one player should not be adopted.

"The FCC's considerable deliberation over the ... auction rules has left us pleased in a number of respects and still concerned in others," wrote CTIA President Steve Largent in a statement.

"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," Largent added.

"We have nothing to say until we review the order," said Verizon spokesman David Fish. AT&T said the FCC "struck a reasonable balance" between competing interests.

"They did nothing to change the competitive landscape," responded Art Brodsky, spokesman for Public Knowledge, an advocacy group that backed Google's four proposals. But he was encouraged by the restrictions imposed.

Brodsky warned that those conditions would disappear if the auction does not generate a predetermined "reserve price" for the affected block.

"This auction has the potential to unleash a new era in wireless technology," Martin said at the FCC's public meeting, which was delayed 3 1/2 hours by negotiations. "The public interest is not about what any company wants. It's about serving the people," he said.

McDowell, one of three Republican members, was pleased with the decision to create a nationwide wireless network for emergency responders to communicate across jurisdictions.

"I am disappointed that the majority didn't try to work with industry to forge a consensus solution [on open access] rather than rushing to regulate without thinking through possible unintended consequences," he said.

FCC Commissioner Michael Copps, one of two Democratic FCC members, praised aspects of the rules, but lamented the lack of mandatory leased access. "This action might not be the stimulus" to create a "third" nationwide high-speed Internet service to compete with dominant telecom and cable providers, he complained.

"While this item doesn't deliver everything that consumers and innovators wanted," it is a "positive step for consumers," said FCC Commissioner Jonathan Adelstein, another Democrat.

Nevertheless, he said the lack of wholesale access is problematic. "At the end of the day, we may have missed an elusive opportunity to open that third channel into the home," he said.

Republican FCC Commissioner Deborah Taylor Tate backed the public-safety components but was "lukewarm" about the open platform requirements. Tate hopes the FCC's decision will not result in less innovation and fewer consumer options.


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