AT&T Retreats on Spectrum Auction Gripe

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AT&T Inc. has backed away from earlier complaints about proposed open-access rules on parts of the 700MHz spectrum to be auctioned by the U.S. Federal Communications Commission by early next year.

Draft auction rules floated by FCC Chairman Kevin Martin have "struck an interesting and creative balance between the competing interests" that are lobbying the commission, AT&T said of its understanding of those rules in a statement Wednesday.

Just last Thursday, AT&T Vice President Robert Quinn had written the FCC saying the so-called Google plan for open-access rules for part of the auctioned spectrum "would turn the clock back on a decade of bipartisan consensus on the proper approach to wireless deregulation."

In addition, open-access rules could expose the FCC "to a reversal in the courts," with lawsuits delaying the auction winner from using the spectrum, Quinn wrote on July 12. The open-access proposals would diminish the value of the spectrum and amount to "corporate welfare," AT&T said.

Since then, AT&T has gained a better understanding of Martin's draft auction rules proposal, AT&T said Wednesday. Martin's proposal, as AT&T now understands it, would "allow" the auction winner to experiment with some open access rules, Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs, said in a statement.

"The plan would enable the introduction of an alternative wireless business model without requiring changes in the business models of AT&T and others in what is a highly competitive wireless industry," Cicconi added.

Google Inc. and several consumer groups have called for open-access rules on a portion of the 60MHz of spectrum to be auctioned. Under open-access rules, auction winners would be prohibited from blocking or slowing Web content from competitors, and they would have to connect to any wireless devices customers wanted. In addition, under open-access rules proposed by Public Knowledge and other groups, the auction winner would have to sell spectrum access to competitors at wholesale prices.

Open-access rules are needed to encourage a third national broadband competitor to the large cable and telecom carriers, the groups have said.

"We urged the commission not to rely on a status quo approach to the upcoming auction," wrote Richard Whitt, Google's telecom and media counsel, in a letter to the FCC July 9. "Rather, the agency must do what is necessary to bring about robust forms of ... broadband competition."

Public Knowledge, a digital rights group, has said Martin's draft rules don't go far enough. While Martin wants device portability and no blocking of Web applications, he hasn't called for wholesale access to the spectrum. Without wholesale access, it's unlikely a third broadband service could challenge cable and telecom services, Public Knowledge has said.

Art Brodsky, communications director for Public Knowledge, called the new AT&T position a "remarkable turnaround."

But Randolph May, president of the conservative think tank, The Free State Foundation, said he disagrees with AT&T's interpretation of what the auction rules would allow.

"My impression (perhaps erroneously) had been that Chairman Martin's proposal would mandate an open access ... regime in the one block [of the spectrum]," May wrote in an e-mail. "There is a significant difference between 'allowing' and 'mandating.' My understanding is that absent a mandate, nothing at all in any existing or proposed FCC rule would prevent the winning bidder from voluntarily adopting an open access business model."

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