I was very pleased to see Google publicly wade into the upcoming FCC auctions for the 700MHz spectrum that will occur early next year. Should all go well, the new spectrum could be used to create a new open-access wireless broadband “pipe” into people’s homes and devices. If things go less well, the existing wireless giants would buy the spectrum and impose similar usage restrictions that exist on cellular networks in the U.S. today, putting us further behind Europe and Asia.
CEO Eric Schmidt sent a letter to FCC Chairman Kevin Martin stating that they would commit to bid at least $4.6 billion in the auctions if four key platform rules are adopted. These rules will define what types of services the winner could offer, and would require third party access to the bandwidth:
- Open applications: Consumers should be able to download and utilize any software applications, content, or services they desire;
Open devices: Consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
- Open services: Third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
- Open networks: Third parties (like internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee’s wireless network.
Given the sorry state of the mobile landscape in the U.S., I’d expect the FCC to adopt these pro-consumer rules without any fuss. But the incumbent players, including AT&T and Verizon, are saying they are opposed to open access and may not participate if these rules are adopted. Google’s public move was made to let the FCC (and the public) know that there are companies very happy to bid in an open-access world.
AT&T’s response to Google’s letter was breathtaking in its audacity:
Not satisfied with a compromise proposal from Chairman Martin that meets most of its conditions, Google has now delivered an all or nothing ultimatum to the U.S. Government, insisting that every single one of their conditions “must” be met or they will not participate in the spectrum auction. Google is demanding the Government stack the deck in its favor, limit competing bids, and effectively force wireless carriers to alter their business models to Google’s liking. We would repeat that Google should put up or shut up— they can bid and enter the wireless market with any business model they prefer, then let consumers decide which model they like best.
For anyone who doesn’t look too closely at the issue, AT&T’s response seems very reasonable: keep government regulation out of the spectrum let the market decide which services win. But that isn’t really what would happen at all. If fewer government restrictions are placed on the bandwidth the auction winners will be able to extract more profits at the expense of competitors and consumers. So naturally they don’t want to see open access rules like those recommended by Google. The incumbents also don’t want to see Google play in their sandbox and bidding against them - so they have yet another reason to oppose their proposal.
The FCC has competing goals of maximizing revenue from the auction (suggesting less regulation) and protecting the public (suggesting more rules to force competition). Having open access requirements like those suggested by Google will spur competition and grow an economy around this spectrum. It will also put commercial pressure on mobile operators and broadband companies to reduce the restrictions they have on current broadband and mobile services.
Google isn’t always not evil, but in this case they are going to bat for all of us against some players with pretty bad history when it comes to offering consumer products. I’m behind them on this. And to the FCC: please learn from past mistakes, ignore the lobbyists this time, and do what is in the best interests of the public.