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FCC: Get Your Spectrum Paddles Ready

It once all seemed so inevitable, so cut and dried, so business as usual in Washington.

By the end of January, the Federal Communications Commission (FCC) plans to auction off a large swath of spectrum ideal for delivering wireless broadband and other advanced wireless services. Less than a year ago, it was considered a foregone conclusion that those airwaves would be bought by wireless incumbents like AT&T and Verizon.

Then Mr. Google came to Washington, giving voice, money and power to what consumer and public policy advocates had said all along: The country needs a third broadband rival to telephone and cable companies. The best way to ensure that, they said, was to limit incumbent wireless companies' ability or willingness to buy the spectrum.

In a move that startled many, the Federal Communications Commission (FCC) in July agreed, at least to some degree, thereby setting the stage for the most compelling spectrum auction in years that could, just maybe, open a third broadband pipe into American homes.

In the first of a three-part series, Internetnews.com examines the upcoming 700 MHz spectrum auction.

Open networks: FCC scrambles the bidding

It's fairly easy to say in 2007 that it is the unquestioned Deal of the Century. Within the next five months, the FCC will auction off enough spectrum to build a nationwide wireless network to compete against entrenched incumbents like AT&T and Verizon, if Google, Yahoo, Microsoft or some other deep-pocketed company -- or some combination -- has the billions to make it happen.

But the incumbents view the spectrum as bonus airwaves to fatten their pipes for the delivery of advanced services to their customers. The incumbents are also more likely to roll out new services much faster since they already have an infrastructure in place.

The bidding for this prime spectrum begins at $4.6 billion. Just who will bid and for how much is still an open question. The FCC guaranteed that in July when it announced the rules for the auction.

Heeding the pleas of Google, other tech companies and consumer and public advocacy groups, the FCC reserved a portion of the best spectrum for a bidder willing to commit to an open network where consumers can connect any legal device or run any legal application on the network.

"This auction provides an opportunity to have a significant impact on the next phase of wireless broadband innovation. A network that is more open to devices and applications can help foster innovation on the edges of the network," said FCC Chairman Kevin Martin.

"As important, it will give consumers greater freedom to use the wireless devices and applications of their choice when they purchase service from the new network owner."

That didn't please the incumbents, who currently strictly limit what devices and software run on their networks.

"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," Steve Largent, president and CEO of CTIA, the incumbents' trade association, said of the auction rules. "We remain committed to the principle that wireless consumers and American taxpayers are best served when such a valuable commodity is auctioned in a fair and competitive manner with no strings attached."

The incumbents are studying their options.

The FCC equally disappointed Google when it ignored the search giant's request for further mandates, including a requirement that the winner of the spectrum offer wholesale services. Google went so far as to say it would bid on the spectrum and make a run at the incumbents if the FCC met its conditions.

So, will Google play or not? Richard Whitt, Google's Washington telecom and media counsel, now says Google never said it wouldn't participate in the auction if its conditions weren't met, only that it would if the FCC met its preferred terms.

Next page: The FCC's grand open-access experiment.