FCC Nears Vote on Free Internet Plan for U.S.

FCC and wireless broadband

WASHINGTON — Free, nationwide wireless broadband may be closer to becoming a reality.

At least, that’s the hope of the chairman of the Federal Communications Commission, Kevin Martin, who today said the FCC would move ahead with a controversial plan to build out a national broadband network. As a result, the commission will vote on the plan at its next meeting, scheduled for Dec. 18.

But the move comes over strenuous opposition from many wireless operators, who claim the plan — and the technology underlying it — are detrimental to competition and their own cellular networks.

Under the plan, the FCC would auction off a portion of the wireless spectrum, known as AWS-3, with the condition that that the winning bidder provide service to 95 percent of the country within 10 years. The auction rules would mandate that one quarter of the spectrum be applied to a free network that offers connection speeds similar to basic DSL service.

“I think it’s important that the commission move forward to try to make maximum use of this spectrum — to try to provide it as an opportunity for additional broadband service,” Martin told reporters at a press conference here at the FCC this morning.

He added that it’s likewise important “to have someone try to utilize it in a way that provides — or at least reserves a percentage of the capacity you’d be able to utilize — for a free broadband service.”

Supporters see the AWS-3 plan as the latest initiative to expand broadband access throughout the country. Several recent studies have indicated that foreign competitors are moving ahead of the United States in broadband adoption. In response, many technology firms and advocacy groups are pressing the new administration to enact policies that would spur deployment and adoption of high-speed Internet service.

The free network would contain a filter to restrict access to pornographic or other inappropriate content. The filtering requirement would not apply to the remaining 75 percent of the spectrum, which would offer faster speeds and be available at a fee.

“The idea is that … anyone would be able to access the free service if they bought their own equipment,” Martin said. “Anyone would be able to access it in the same sense as you’d be able to access broadcast television if you buy a television.

“I thought there should be some kind of component to make sure that children were appropriately protected,” he added.

The spectrum would also carry the requirement that the provider make the network interoperable with all devices and applications.

The FCC’s plan mirrors a proposal from M2Z Networks, a Silicon Valley startup headed by John Muleta, who previously led the Wireless Telecommunications Bureau at the FCC.

[cob:Special_Report]M2Z first proposed its plan in 2006, originally asking the commission to make the spectrum available for free. The FCC rejected that idea, which M2Z is challenging in court, but an affirmative vote at the December meeting would pave the way for the airwaves to be sold at auction next year.

The price of failure

Wireless carrier T-Mobile has emerged as the most vocal opponent of the plans, warning that the proposed network would interfere with cell phone calls on its own airwaves, located on an adjacent band of spectrum.

But in September, FCC engineers conducted a series of tests and determined that the interference concerns would be mitigated with proper filtering while designating a sliver of the spectrum as a buffer.

“T-Mobile and others have fought this proposal for two and a half years and now they are claiming that the service it has fought against cannot be successful,” Muleta told InternetNews.com. “M2Z’s planned network will make use of technology advances in spectrum access.”

Muleta added, “The truth is that T-Mobile doesn’t want M2Z to deploy a better mousetrap.”

Page 2: “Fanciful” plans?

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However, T-Mobile and M2Z interpret the FCC’s September testing differently. The carrier is adamant that interference will remain a significant issue at times of peak call volume, and that the filtering mechanism required to maintain signal integrity is an insurmountable technical challenge.

T-Mobile also is skeptical that a startup like M2Z could deliver a nationwide network in 10 years, given that incumbent carriers have yet to achieve that.

“That is an incredibly aggressive build-out requirement,” Kathleen Ham, T-Mobile’s vice president of federal regulatory affairs, told InternetNews.com. “I find it fanciful to believe that M2Z can really do what it says it wants to do.”

There is a provision in the FCC’s draft order to address that issue. The order states that the winner must deploy coverage to 50 percent of the population within five years — and if they fail, they forfeit their claim to remaining spectrum.

“If you fail to meet the interim benchmark, then you would also lose any of the spectrum that you failed to build out,” Martin said.

The forfeited spectrum would then either become available for unlicensed use, or be returned to the FCC, which could then reallocated it. Martin circulated two versions of the draft order to include both contingencies. Before the meeting, the commission will select one version to vote on.

But to T-Mobile’s Ham, the free Internet plan raises a deeper concern about the commission kowtowing to one company’s business model. If the spectrum was to be auctioned off without conditions, more companies — including T-Mobile — would be likely to bid, which would put more money in the government’s coffers.

“What they [M2Z] want is the government to actually create their business plan as part of the rules, so that other people who have other business plans would be deterred from bidding against them,” said Ham, herself a former, 14-year veteran of the FCC. “It ends up being about a plan to keep others out of bidding rather than a very pro-competitive, pro-market approach.”

“I’m doubtful that this is anything more than a spectrum ploy,” she added.

T-Mobile and M2Z also differ significantly on the market value of the spectrum. Based on the value that similar spectrum fetched in previous auctions, Muleta said that the AWS-3 airwaves would be worth about $50 million.

“The $50 million figure does not represent any discount based on license conditions but simply what the market rate was for unencumbered spectrum bands,” he said. “The market will determine the cost of the AWS-3 spectrum, not M2Z. Whatever figure the market agrees on, M2Z plans to bid aggressively.”

Citing a study by the Brattle Group, T-Mobile pegs the spectrum’s value at around $3 billion.

Patrick Welsh, T-Mobile’s senior corporate counsel, said that the difference between the two valuations would amount to a “$2.95 billion that the taxpayers would be paying to subsidize the M2Z plan.”

Ham, who called the $50 million valuation “ludicrous,” said that T-Mobile will continue the fight to derail the plan.

“I think we will likely file for either what they call reconsideration or … a court appeal.”

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