Wednesday, August 01, 2007

700 Mhz, FCC, Google, T-VZ, Jason and Om

Om Malik has been all over the 700 MHz story (here and 700 MHz explained here and here). Susan Crawford has some pre-meeting comments (here).

The FCC, Google, and the pair of Bells have all declared some kind of victory based on this Compromise. The big deal is that 700 MHz is about the last piece of good spectrum left [Specifically the 698-746, 747-762 and 777-792 MHz Bands (WT Docket No. 06-150)].

The gov't wants to make billions (>$10B) from the auction. Supposedly to help pay for DTV set-top boxes.

The Bell pair - VZW & at&t - want to buy that spectrum and either use it for more cellular walled gardens or sit on it so no one else can use it against them (like they did with most other spectrum vis a vis 2.x GHz). The Bell pair figure $10B to keep out competition is a deal - because they will make that back in no time.

At the FCC, Martin declared a victory:

  1. The FCC gave some spectrum for Public Safety. Duh! He had no choice. As Copps pointed out: You needed to do this in 2001 after 9/11; by Katrina in 2005, 4 years later, you still did nothing. Finally, by 2010, we will have a public safety net. 9 years. (pause... 9 years). We need a unified, inter-operable network and it has to be funded. As K-Mart stated: "We cannot keep licensing public safety spectrum in the same manner as before and expect a different result." It will be a Public-Private Partnership.
  2. Nokia applauded the next part: "In addition, the license winner for about one-third of the spectrum will be required to provide a platform that is more open to devices and apps. Consumers will be able to use the wireless device of their choice and download whatever software they want onto it." [source] This was the Carterphone piece. Take your device from network to network. We did not get that. But who thought we would.
    In the wake of the Carterfone decision, AT&T subscribers went from renting black rotary phones to purchasing competitively priced, innovative phones such as cordless phones with voice mail and caller ID. Investment in the market increased, new phones and calling features were developed and consumers benefited. Ultimately, these rules facilitated the development of the Internet, as consumers were able to attach modems to the network and go anywhere the Internet could take them without interference from the network owner.[source]
    Now, within just the last month, Carterfone and wireless open access have been on the front pages of USA Today, the New York Times, and the Washington Post. They have been the subject of Congressional hearings and industry and academic policy forums, as well thousands of emails and letters to the Commission from citizens across the country. What a striking reminder of just how powerful a good idea can be— especially when coupled with strong Congressional oversight and grass roots activism. I find it extremely heartening to see that an academic paper—in this case by Professor Timothy Wu of Columbia Law School—can have such an immediate and forceful influence on policy. Credit is due to Professor Wu as well as many tireless advocates in the public interest and high-tech communities for bringing this idea to the fore. [Copps]
  3. There were 3 speakers before the Commissioners spoke. The Police Chief from DC; the Fire Chief from Arlington County, MD; and Jason Devitt. Jason spoke about why Carterphone is significant: because you wouldn't be locked to one carrier and you wouldn't have to keep buying new devices (which would save disposal problems). Jason spoke before Congress on Wireless Innovation (and here). He mentioned that there is no innovation in cellular except by the handset manufacturers - no YouTube or Google because it is too hard to make a deal with the monopolies. He pointed out that it is not a technical or engineering issue - it is a business issue. "Why are ringtones $2 and the whole song only $1?" Walled Garden.
  4. Copps is very pro-safety, but he is also doggedly realistic: "I appreciate my colleagues’ willingness to work with me to build these many safeguards for public safety into today’s order. But I also want to emphasize my belief that our work has really just begun. At the end of the day, we need to ensure that this network actually works for public safety. To me, this cannot and will not happen without strong and ongoing FCC oversight. I have believed this for years." [source] And more: "Let’s get one more thing on the table. The requirements we announce today are very demanding. Building this network will involve costs above and beyond those required to build a typical commercial network. But I think that these are the minimum process requirements necessary to ensure that the network actually works for public safety. If the stringency of the requirements we announce today means that no one shows up to bid on the commercial license, or that the two parties ultimately cannot reach an agreement that ends up being in the public interest, then I am perfectly willing to go back to the drawing board. I won’t be happy if this happens, but I’m not about to cut corners if it means compromising public safety. Far better that public safety remains in control of its spectrum—and free to find another model for funding it—than for this Commission to bless a sharing arrangement that does not fully protect the nation’s citizens and its first responders."
  5. And finally the spectrum for Broadband left Copps upset: "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.” A 22 MHz block of 700 MHz spectrum is uniquely suited to provide a broadband alternative, with speeds and prices that 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..... Wholesale would have been good news for them—and for consumers."
  6. Yeah, no wholesale requirement. More Copps: "Moreover, due to the Commission’s short-sighted decision a few years ago to eliminate spectrum caps, we have seen a wave of consolidation among wireless incumbents that has substantially increased the hurdles facing potential new entrants. And now we live in a world where the two leading wireless companies are owned in whole or in part by the leading wireline telephone companies. It is no knock on these companies to say that they may be more than a little reluctant to employ their spectrum holdings to put price and quality pressure on their wireline broadband products. What else would we expect them to do? The solution is to encourage an additional wireless competitor that has no affiliation with a wireline provider. A wholesale requirement would have given unaffiliated companies the fighting chance they need...... Several sophisticated companies and financial institutions have concluded that wholesale is indeed a viable economic model.
  7. "Use-it-or-lose-it provisions, along with geography-based benchmarks in the lower band, will ensure that licensees have a reasonable period to make use of their spectrum rights, while also allowing third parties a chance to provide service in areas where the original licensees are not."
  8. On the details, Copps finds fault: "My deepening concern this afternoon is that this auction might not end up being the stimulus to a third pipe, the right to attach devices, to run applications and to encourage the innovation and entrepreneurship that we all hope for because of some addon provisions. The item now imposes reserve prices on each of the individual spectrum blocks, something without precedent in previous auctions and something, it seems to me, rather at odds with letting the market pick the auction block winners. The procedure in this Order carries chilling risk to the success of the auction. If some of these blocks do not fetch the bid prices stipulated, perhaps because of gaming of the worst sort, they will be re-auctioned with weaker build-out requirements. If the 22 MHz block, where we hope for Carterfone open access principles, fails to elicit a $4.6 billion bid, it will be reauctioned without Carterfone open access. In the end, all of this micro-managing virtually hands industry the pen to write the auction rules and to constrict all the opportunities this spectrum held forth. The end result could be: same old, same old. What a pity that would be!"

That's enough for now. I'll post the auction later.

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