The FCC’s 700 MHz spectrum auction got a little more interesting last week when Google told the world they would bid a minimum of $4.6 billion provided certain conditions were met. This is a very important move that could actually help the people who “lost” the spectrum in the first place – broadcasters.
Before I get into this, a disclaimer: I’m not a spectrum expert, but I have a pretty good bullshit detector. I’ve also commented for years about how Europe and Asia are beating the crap out of us in applications of third-generation cellphone technologies and broadband networks. You need to look no further than our beloved incumbents in the telecom industry to assign blame for that, and these are the same folks who want and need that spectrum to maintain their grip on certain forms of communication. Every claim by anyone in this debate, therefore, is self-serving, with the exception of the small group of voices pushing for open access.
As I reported a couple of weeks ago, FCC Chairman Kevin Martin’s idea of open access really isn’t open at all, but Google’s proposal is. In a truly open broadband network, anybody could play. In the incumbent’s view — and in that of several other entities involved in the auction — they would determine who could play based upon how much money would be involved. This is the same closed-network concept that has driven our wireless systems to the competitive basement worldwide.
If Google is successful, however, broadcast companies will have much more flexibility in creating business models that use spectrum that used to belong to them in the first place. The irony of this is stunning.
For the uneducated about the whole spectrum matter, here’s a nice primer from Om Malik a few months ago. Om provides a 10-step explanation, what he calls “a little cheat sheet.” It’s a good read.
And regarding the Google bid, Michael Arrington at TechCrunch has a terrific summary that includes the four conditions that Google is “recommending.”
- 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 licenseeâ€™s wireless network.
But the Arrington piece nails the BS in the incumbents’ response:
AT&Tâ€™s response to Googleâ€™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 Googleâ€™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&Tâ€™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.
As the leader in the open internet world, Google stands to benefit in a purely open wireless world, but so will we all. Big or small, a level field of play will mean an explosion of creativity and applications that we can’t even imagine today. Just look at what has taken place in the 802.11 spectrum (Wi-Fi) since the FCC made that truly open. From your cordless phone to your home wireless network to hotspots in various public and private locations, all are there using “free” spectrum.
This is an enormous political minefield for Washington with billions of dollars at stake. Thankfully, a lot of extremely well-informed people are paying attention on behalf of the (relatively) shallow pocket folks in the country.