FCC Auction Could Mean More Flexible Wireless Broadband
A provision that seems likely to find its way into the FCC rules for auctioning off the 700MHz range would require that providers allow any device to attach to the network, not just devices sanctioned by the service provider.
That means business customers could run their own VOIP or video over the service, says Dave Passmore, an analyst with Burton Group. "The service becomes just a bit pipe that is delivered to customers. If they want to run Skype or Asterisk, they can do it," he says.
This is in contrast to what wireless providers allow today. For instance, Verizon Wireless allows only Verizon approved phones on its network, and it restricts the use of VOIP on its broadband services, Passmore says.
So far much of the analysis of what use might be made of the spectrum is speculative because the FCC sets unique sets of rules for each auction of RF bandwidth. In the case of the 700MHz auction - scheduled for early next year - the rules have not been released. However, a draft of the rules is circulating within the FCC, and reports say that it calls for dedicating at least some of the bandwidth for attaching any kind of device.
The rules are expected to be set within a week or two.
Politics is likely to play a big part in the rules governing the auction, and that could affect the enthusiasm with which interested bidders participate. The big wireless carriers - AT&T, Verizon, Sprint, T-Mobile, AllTel - seem to be natural bidders.
But if chunks of the spectrum that they bid on come with restrictions on what they can do with them, they might not be so interested. "You could look at it as the FCC gaming the auctions so certain buyers will get the spectrum," Passmore says.
FCC Chairman Kevin Martin has acknowledged that his intent is to write rules that help develop more competition among wireless carriers.
But some potential bidders, notably Google, want rules promoting even more openness. Specifically, they want a requirement that the winners of the auction must wholesale bandwidth to other providers. They say this would give competitors with small bank accounts the chance to offer new wireless services.
But the established wireless carriers say this is just a ploy to make the spectrum less valuable to them, and thereby knock down the winning price. They say Google is behind the effort as a way to buy up the spectrum at a bargain price. If other deep-pocket bidders walk away, Google could pick up the frequencies for much less than if it had to bid against them. "Corporate welfare for Google is bad public policy," Verizon says in a statement.
A coalition that includes Google, Skype, Frontline Wireless, the Consumers Union and Media Access Project and other nonprofit groups, urge the FCC to require the winner to wholesale. "Without the license conditions proposed here, the advantages enjoyed by incumbents in spectrum auctions allow them to freeze out new entrants [and] eliminate rival business models," the group says in a letter to Martin.
The coalition says it wants the auction to follow four principles: open devices, open applications, open services and open networks. The draft being circulated around the FCC lacks the open networks provision, according to news reports.
AT&T, which opposes the open network proposal, says it supports the current draft rules as it understands them.
What's on the block
When the auctions start, the FCC will likely be auctioning off two packages of bandwidth, one containing a total of 10MHz bandwidth and one containing a total of 20MHz. Licenses for these spectrum bundles will be sold for six regions of the United States. So, if a buyer wants rights to a nationwide network in one of the bundles, it will have to win the bidding for that bundle in each of the six regions.
Other proposals call for selling off smaller chunks as a way to encourage competitors with less financial clout.
This bandwidth range is up for grabs because federal broadcast laws mandating digital TV mean UHF frequencies will be turned back to the government. Because these frequencies are unassigned for the entire country, the auction is regarded as the last chance for a carrier to establish a national footprint all at once.
Congress has set a goal of raising US$10 billion from the auction.
Public safety, too
According to one FCC proposal for divvying up the spectrum, a separate 12MHz slice would be set aside for public safety networks, something sought by the Department of Homeland Security since its formation after the Sept. 11 terrorist attacks.
Current bandwidth for police, fire and ambulances is fragmented so departments in adjoining towns often can't talk directly to each other on the same frequency, says John Black, owner of Spectrum License Consultants, which advises public agencies on how to carve out channels they need.
"One of the problems is that public safety was never granted enough spectrum for their needs vs. industrial and business users," Black says. Fifteen years ago, towns in suburban Dallas didn't have a common frequency for their first responders to use when they answered mutual aid calls from each other. "9/11 brought it to the attention of everyone," he says.
Even if the bandwidth is set aside for public safety, many police and fire departments may not be able to take advantage of it because of budget restrictions. Swapping out radio gear would bump up against other more pressing needs as basic as fuel for vehicles, he says.
"I worked with a volunteer fire department in West Texas that ran bake sales to raise money," Black says. "These are Mayberry RFDs."