Network Neutrality Does Wireless
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Network neutrality is working its way back into the Washington public-policy debate. This time wirelessly. And, as usual, the Federal Communications Commission (FCC) is dead in the crosshairs.
Network neutrality is an annoying thorn in the sides of the incumbent telephone and cable broadband providers, who would like to charge Internet companies by bandwidth consumption. Critics say that amounts to discrimination against the little guys who might not be able to afford to deliver the next innovative idea over the Internet.
In the Republican-controlled 109th Congress, the issue was swatted away, albeit at the expense of a telecom reform bill that would have given the Baby Bells a national license to roll out their new television services. Better that, they reasoned, than a law mandating non-discriminatory handling of Internet traffic.
Under the Democrats in the new Congress, the FCC conveniently bought lawmakers more time to avoid the issue by ordering yet another study. But what the FCC can't delay any longer is the sale of the spectrum being vacated by broadcasters as part of the digital television transition.
By law, the FCC must auction off those airwaves, primarily to wireless broadband carriers, by the end of the year. Many Democrats, consumer groups and, certainly, many in the tech sector hope that a new rival to the incumbent wireless carriers will emerge from the auction. A third pipe, the economic reasoning goes, will drive down the price of broadband.
And with a new pipe, why not new rules?
Regulations, for instance, that might include requiring the FCC to impose network-neutrality rules for anyone buying the spectrum. Perhaps even new rules that might bar incumbent carriers from bidding on the spectrum to clear the way for a third rival to DSL and cable modems.
"Big phone and cable companies don't want this new competition to their Internet services; they want to cement their market dominance in place," stated a recent letter to the FCC signed by more than 40 individuals, companies and organizations, including Stanford law professor Larry Lessig and Craigslist founder Craig Newmark.
There's even talk of something called "open access" that would mandate winners of the auction to allow consumers to connect devices of their choice to their wireless networks. Currently, wireless carriers strictly limit what devices and what content will use their networks.
The thrust of all these proposals is open, accessible wireless Internet networks. The ideas are pouring in to the FCC, more than 25,000 as of the latest tally. The FCC is expected to announce the rules for the auction within the next few weeks.
Those with the deepest pockets and the most entrenched special interests in the upcoming auction, i.e. incumbent wireless carriers, are, not surprisingly, the most vocal critics of alternative ideas to the highest bidder wins the auction.
"The commission should set auction rules that allow for full and fair competition by qualified bidders, without artificial and unwarranted constraints," Richard J. Lynch, Verizon Wireless' executive vice president and CTO, told the Senate Commerce Committee Thursday. "Such discriminatory eligibility restrictions are aimed at the companies most ready to deploy next-generation broadband networks."
Michael Small, CEO of New Jersey-based Centennial Communications and a member of the executive board of CTIA, the wireless industry's trade association, told the panel the various proposals are "deeply misguided" and amount to nothing less than "poison pills" for incumbent carriers.
"There is no economic basis to impose open access or other intrusive forms of regulatory intervention on the wireless industry," he said. "Indeed, the auction should proceed with few, if any, encumbrances, and the market should determine which business plans and competitors will prevail."
Lost in all the testimony was a simple idea by Amol Sarva, one of the founders of Virgin Mobile. His proposal calls for the FCC to set aside an "open access" block of spectrum that would enable "innovation at Internet speed." Let the incumbents, he suggested, buy the big chunks of spectrum but keep some for bidders with different ideas on how to use the airwaves.
Sarva noted that Virgin Mobile struggled to get a network deal with incumbent carriers and "who knows how many other ventures have failed to pass through the 'star chamber' of the wireless incumbents' technical and business requirements processes?"
What Sarva wants is a little slice of spectrum for innovators.
"We think it is eminently reasonable for the FCC to designate a single 10MHz block -- a small fraction of the 700MHz spectrum allocated to commercial use -- as a sandbox for entrepreneurs or an incubation tank where young, fragile ideas have a chance to live," he said.
Clearly, the FCC has many options to choose from. Given its track history, it's hard to believe the FCC will impose network-neutrality mandates on the spectrum auction. It's even harder to conceive it would block the incumbent carriers from bidding on the available spectrum. But, just maybe, the FCC will set rules that keep the incumbents from grabbing all the best spectrum.
If it does, the auction will go down as a historic one where the fabled third pipe might emerge. If it doesn't, it will simply be business as usual for the FCC and the incumbents.