- The Washington Times - Monday, December 22, 2008

For the past three years, a start-up called M2Z Networks Inc. has been figuring out a way to blanket the nation with a free wireless broadband network to ensure all Americans have access to basic high-speed Internet connections.

Along the way, the company has found support in powerful corners of Silicon Valley and Washington. It has attracted funding from several of the Valley’s top venture-capital firms. In addition, it has captured the interest of Kevin J. Martin, the chairman of Federal Communications Commission, who is backing a plan essentially mirroring the M2Z proposal as a way to promote universal broadband.

Finally, this month, the company was nearing a breakthrough. Mr. Martin pushed for a full FCC vote on his plan, which would set the rules for auctioning off the slice of wireless spectrum that M2Z wants to put its ideas into action.

However, opposition forces gathered steam, deferring M2Z’s dreams for now.

Led by T-Mobile USA Inc., the nation’s wireless carriers have been lobbying to defeat Mr. Martin’s proposal, which they say would interfere with their own services. The Bush administration wasn’t happy either: It urged the FCC not to proceed with an auction that would favor one company’s business model. Finally, some key Democrats on Capitol Hill called on the agency to hold off on controversial items - which would include the M2Z plan - until the Obama administration takes over.

Facing such objections, Mr. Martin canceled the Dec. 18 vote on the free-broadband idea. The proposal remains in circulation at the FCC, and M2Z is suing the agency to gain access to the slices of the airwaves that it needs. Now, however, it looks like the company will have to wait until next year to know its fate.

Although Mr. Obama has not taken an official position on M2Z, he has said that wireless services could be one important channel for bringing broadband to all corners of the country. That could yet be good news for M2Z.

What’s at stake, insists M2Z co-founder Milo Medin, is a “lifeline” wireless broadband network that would provide basic connections for people who cannot afford the premium services offered by the big phone and cable companies or live in places where those services are unavailable.

“We Americans are creating a two-tier digital society,” Mr. Medin said. “If you’re not connected today, you’re really at a disadvantage. But we can remove barriers that isolate people from the digital domain.”

It’s not clear exactly how many Americans have no access to broadband. According to a survey conducted in August by the Pew Internet & American Life Project, 57 percent of Americans subscribe to broadband at home. More people could get it, but choose not to buy it or can’t afford it.

One major advantage of wireless technology is that it could bring broadband to rural areas that the big phone and cable companies have abandoned as too sparsely populated to justify the necessary network investments. That’s because it costs less to blanket large areas with a wireless signal than to lay down wires.

Mr. Martin has proposed that the FCC auction a large chunk of airwaves to a company that would set aside 25 percent of the capacity for a free broadband service. Under his plan, the winning bidder would have to make that service available to 50 percent of the population within four years and 95 percent of the population within 10 years - or risk losing any remaining spectrum not yet being used.

The concept, explained John Muleta, M2Z’s other co-founder, is modeled after over-the-air television, which is available for free to anyone with a TV set whether or not they subscribe to cable or another premium video service.

Mr. Muleta estimates that it would cost $2 billion to $3 billion over a decade - plus the cost of the spectrum to be auctioned off - to build that network using new “spectrally efficient” technologies. Skeptics have questioned whether M2Z will be able to raise the money it needs - particularly in the current credit environment. The company has the backing of several prominent venture-capital firms, including Kleiner Perkins Caufield & Byers, although it won’t say how much funding it has amassed.

M2Z plans to deliver free wireless access with downstream speeds of 768 kilobits per second - roughly on par with a basic digital subscriber line (DSL) connection. To make money, M2Z would also offer a premium service with downstream speeds of 3 to 6 megabits per second for about $25 per month.

In addition, because the company’s wireless base stations will know where its users are located, M2Z hopes to partner with search engines, Web portals and online advertising networks to target local ads.

One contentious component of M2Z’s plan is its intention to offer a family-friendly network that would filter Web sites inappropriate for children - a proposal that has raised concerns among free speech advocates.

M2Z has also run into fierce resistance from the wireless industry. As Mr. Medin sees it, the industry is “really nervous about an outsider coming in and wrecking the place” - upending a lucrative market for mobile services with free broadband.

Mr. Martin said the goal of the spectrum auction should not be just to raise as much money as possible for the government, but also to bring broadband to all Americans.

Despite falling just short of an FCC vote on the plan, Mr. Muleta insists M2Z will continue its campaign to gain access to the spectrum it needs - before and after the Obama administration takes over.

“I’m optimistic,” he said, “because this idea that we need to change the way the broadband market is structured has received serious consideration.”


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