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Verizon Gives Thumbs Down on Open Access Platforms

WASHINGTON – Verizon Wireless told Congress today consumers would suffer if open access requirements are imposed on the January spectrum auction that is expected to open a new era in wireless broadband services.

The nation's second largest wireless carrier hopes to be a major bidder for the spectrum being vacated by television broadcasters converting to digital signals.

Open access requirements, however, could leave Verizon Wireless, AT&T , and other incumbent carriers on the sidelines come January since their business models are built on closed networks.

"The one-size-fits-all mentality that characterizes open access regimes for the wireless industry would begin the process of stifling innovation and creativity in our industry," Steven Zipperstein, Verizon Wireless' general counsel, told the House Subcommittee on Telecommunications and the Internet.

Zipperstein's comments came just one day after Federal Communications Commission (FCC) Chairman Kevin Martin proposed setting aside the lion's share of the commercial spectrum available in the auction for an open access platform.

"Congress and the FCC have been barraged with requests that they regulate broadband wireless services by imposing so-called open access requirements," Zipperstein said. "But we believe these requests have not identified how the wireless market has failed consumers."

Martin's draft rules for the auction call for two spectrum blocks of 11 MHz each that could be combined to create a new national wireless broadband network. Bidding for the spectrum would be limited to those who agree to allow consumers to connect any device or application to the new network.

The wireless incumbents favor a high bidder wins, no-string-attached approach to the auction that will allows them to continue to dictate what devices and applications can be used in their networks. If they pass on bidding for the new spectrum, the incumbents will be left bidding for spectrum dedicated to a national, interoperable first responder network and smaller blocks to fill out gaps in their national footprints.

That could open the door for Silicon Valley giants like Google , eBay , Intel  and Yahoo to bid on the spectrum. The four teamed with satellite providers EchoStar  and DirectTV to lobby the FCC to make spectrum available for an open access platform. Monday, Google said it was considering participating in the auction.

Martin's proposal, which has not been circulated among other FCC commissioners or made publicly available, drew praise from Rep. Ed Markey (D-Mass.), chairman of the subcommittee, who is a frequent critic of the FCC.

"Recent comments by Chairman Martin that he is poised to embrace these policies in a proposal for auction rules is a step forward and welcome news," Markey said. "I encourage the FCC chairman and his colleagues to maximize the benefits these policies can bring to consumers and the high tech economy in their upcoming decision."

Mississippi Republican Chip Pickering called the plan, "Open, innovative and competitive. I really commend Chairman Martin."

Other Republicans, though, were less receptive. Rep. Fred Upton (R-Mich.), the former chairman of the subcommittee, said open access requirements on the most lucrative slices of the spectrum would reduce the overall revenues generated by the auction.

As originally drafted by the 109th Congress under Republican control, the spectrum would go to the highest bidder. With projections of $10-$20 billion for the spectrum, proceeds are dedicated to underwriting digital TV converter boxes for consumers and the national public safety wireless network. Excess proceeds will go to the federal treasury to help reduce the deficit.

Upton said under the original proposal, "Anyone can bid on the spectrum and if they pay fair market price they are free to follow an open access model."

Markey countered that the incumbent wireless carriers are "exerting far too much control over the features, functions and applications that wireless gadget makers and content entrepreneurs can offer directly to consumers. I believe this is stultifying innovation and unquestionably diminishes consumer choice."

After the rest of the FCC commissioners vets the proposal, the agency is expected to vote on the auction rules later this summer.



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