The Federal Communications Commission’s next spectrum auction will go a long way toward defining the future of wireless communications. The 700 Mhz spectrum, which will become available because television broadcasters are required to make the switch from analog to digital, is not only the last significant spectrum holding for sale, but also one of the most prime. The low frequency is ideal for high-speed wireless broadband: It penetrates walls, and, because it requires fewer towers, it can provide better coverage for rural areas.
Spectrum auctions are not new for the FCC, and are generally a good way for the government to maximize the revenue it takes from selling the airwaves. This auction, however, is particularly significant. Consolidation among wireless providers is fast turning the oligopolistic industry into a duopoly, controlled by Verizon Wireless and AT&T — the only national carriers to currently have low-frequency holdings. If the same rules that governed previous auctions are kept in place, these large, established providers will be able to dominate the auction, further insulating themselves from competition and stymying innovation by making it difficult for innovative start-up companies to secure access to wireless bandwidth. The FCC will announce the rules for the auction on Monday.
Several companies, including Google and a group called Frontline Wireless that is comprised of former FCC chairmen, venture capitalists and technology entrepreneurs, have stepped forward with a proposed open access model that would assure greater competition and prevent the incumbents from locking in the status quo, perhaps permanently. The proposal would require some of the auction winners to sell spectrum access to third parties at wholesale rates. Fundamentally, the principle of the auction remains the same, and any company can bid. Given the value of the spectrum, the proposed regulation shouldn’t depress the auction price too much.
Building on the open access proposal, Frontline suggests the FCC sell off the 10 MHz that is adjacent to the frequency already allocated for public safety as a nationwide block and then require whoever purchases that block to build a national broadband network for public safety on its designated frequency. The auction winner could use the frequency for commercial purposes in order to finance the buildout, which, by conservative estimates, will cost between $8 billion and $12 billion. In an emergency, public safety could appropriate as much bandwidth as needed. Frontline’s proposal is a promising public-private partnership that would provide first responders with an advanced, interoperable national network — a substantial public benefit — funded by the private sector.
In setting the rules for this spectrum auction, the FCC should take the opportunity to open the future of wireless to greater competition, innovation and a beneficial public-private partnership.
By Elaine Donnelly
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