CTIA: FCC Chairman Hails Openness in Wireless Industry

Speaking at the CTIA Wireless conference yesterday in Las Vegas, Federal Communications Commission Chairman Kevin Martin gave the industry a smart salute for healthy competition among the carriers and their increasing move toward network openness.

“Importantly, competition in the wireless industry has also led to lower prices, higher usage and adoption rates and technological innovation,” Martin told the audience. “And many of you in this room have been instrumental in bringing the benefits of competition to American consumers.”

Calling the wireless industry the “poster child for competition,” Martin said that his agency estimated that 95 percent of Americans can choose from at least three different wireless service providers; 90 percent have the run of at least four providers.

Martin said that at the end of 2006, 242 million people subscribed to U.S. wireless services, 29 million more than in the previous year, marking the largest increase ever. That’s up from 28 million subscribers in 1995, Martin said.

With more people using mobile devices as mini-computers, music players and TVs, Martin praised the carriers for investing in the network infrastructure to boost data-transfer speeds and said that he looked forward to the “development of true mobile broadband.”

Of course the major part of that investment came in the recent spectrum auction, in which Martin’s agency sold off a coveted swath of the airwaves for $19.6 billion, the largest auction in FCC history.

While Verizon Wireless and AT&T (NYSE: T) did most of the spending, Martin said that a local or regional bidder won at least one license in every market, with 35 percent of licenses being awarded to bidders the FCC designated as small businesses.

Turning to one of the most controversial aspects of the wireless spectrum — the issue of open-access networks — Martin took a hands-off position. He said that he would recommend to his fellow commissioners that they reject Skype’s petition asking the FCC to mandate that carriers configure their networks to support all devices and software.

“In light of the industry’s embrace of a more open wireless platform, it would be premature to adopt any other requirements across the industry,” Martin said.

Thanks largely to Google’s (NASDAQ: GOOG) entry into the auction, the bidding for the most valuable piece of spectrum reached a preset floor, triggering the requirement that the winner make that spectrum open.

Verizon, which was the big winner of the C Block licenses that carried the openness provision, had fought doggedly against the measure but ultimately backed down following a rebuke from the FCC.

Martin acknowledged Verizon’s recent commitment to open networks and cited the increasing participation of major carriers such as T-Mobile and Sprint in Google’s Open Handset Alliance as evidence that the industry was working toward openness as a natural progression of the market.

“In less than a year, many of you have evolved from vocal opponents to vocal proponents, embracing the open platform concept for your entire networks,” Martin told the audience.

Rick Whitt, Google’s telecom and media counsel in Washington, is less optimistic about the intentions of the carriers.

“While the recent trend toward greater openness for consumers is encouraging, one could argue that the incumbent carriers are taking these steps partly under the threat that the FCC will act on the Skype petition,” Whitt said in an e-mail to InternetNews.com. “In order to protect consumers, the FCC should keep the Skype petition in place as an effective deterrent against bad behavior.”

Interestingly, rumors have emerged once again that eBay (NASDAQ: EBAY), which purchased Skype in September 2005, may be in discussions with Google about selling the Voice over Internet Protocol unit. Skype has been seen by many as a financial millstone around eBay’s neck and an illogical business line for the e-commerce giant to pursue.

[cob:Special_Report]Those concerns won credence last October, when eBay incurred a $1.4 billion write-down to close the deal.

A Google spokesman declined to comment on “rumor or speculation”; Skype did not respond to a request for comment for this story.

Martin had no answers to the great unresolved issue of the auction — how to handle the D Block portion of the spectrum that failed to meet its minimum reserve price. The winning bidders of the D Block licenses would have been required to make some of the spectrum available for public safety communications. The need for interoperable public safety communications was painfully highlighted by the emergency response to the Sept. 11 attacks and Hurricane Katrina, Martin said.

“Because the reserve price for the D Block was not met in the 700MHz auction, the FCC is now evaluating its options for this spectrum.”

Congress is keeping a close eye on how the FCC proceeds with the D Block spectrum, and Rep. John Dingell (D-Mich.) has promised to hold hearings on the matter.

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