Network Neutrality Does Wireless

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

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.

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