700 MHz Redux

700 MHz Redux

Imposing open access conditions on spectrum licenses has never been done to the extent that it’s being proposed for the 700 MHz DTV band. The proposal has generated an unprecedented departure of political support as well, with the two Democratic commissioners at the FCC aligning with Republican Chairman Kevin Martin.

Fellow Republican Deborah Taylor Tate, who has always been in lockstep with the chairman, was overtly noncomittal at a July 24 House Telecom subcommittee oversight hearing. Commissioner Robert McDowell, the FCC’s third Republican, was a wild card from day one and remains one, but his comments at the hearing suggested he would vote against the 700 MHz proposal.

Lawmakers on the subcommittee had similar leanings. The lion’s share of the support for open access came from the Democrats, with the exception of Gene Green of Texas, who also parted ways with his party on network neutrality. Conversely, most of the opposition to open access was expressed by Republicans, with the exception of Chip Pickering of Mississippi, who said it would stimulate investment in innovation.

An FCC vote on the proposal is scheduled for Tuesday, July 31 at 10 a.m.

Proposed Rules for the Upcoming 700 MHz Auctions

(based on FCC Chairman Martin’s remarks at the House oversight hearing)

* Build-out requirements: Most stringent yet for wireless broadband rural coverage.
* Minority participation: Various sizes of spectrum blocks to encourage bidding by minorities and women.
* Public Safety: Provides for public-private partnership on national 1st responder communications network, giving 1st responder entities first right of refusal if partnership fails.
* Open access: 22 MHz of the 60 MHz of spectrum up for auction, would be subject to open access rules, meaning wireless service providers would have to accommodate all wireless devices.
* $4.6 billion: The 22 MHz minimum reserve bid, based on the winning bids in the previous auction.
* Re-auction: The entire 60 MHz will be re-auctioned without conditions if reserves aren’t met.
* $10 billion to $15 billion: Congressional Budget Office’s estimate of the value of the 60 MHz.
* $20 billion: Estimated value circulated on Capitol Hill.
* $12.5 billion: FCC Chairman Kevin Martin’s estimate, based on CBO numbers.
* Wholesale requirements: None. Martin expressed conern they would inhibit infrastructure investment.
* Bidding Credit: Up to 25 percent for small enterprises.
* Google: Said it wouldn’t bid if all its conditions weren’t met. Martin said the proposed rules were not designed for one company.

“I believe consumers will like it,” he said of the open access scheme. “Thirty-two million people changed carriers when we imposed [wireless number] portability.”

* Blind bidding: Reportedly not in the draft, but supported by Martin,Copps, Adelsten; opposed by Tate and McDowell.

Commissioners’ Comments on the Proposed Rules

FCC Chairman Kevin Martin:

* This is not designed for any one bidder.

FCC Commissioner Michael Copps

* Public safety is the most important factor.
* Preferred a government-funded public safety netowrk rather than a public-private partnership, which he said was the “second best” option.
* FCC should reserve the right to revoke the public-private license if the arrangement doesn’t work properly.
* “It’s time to try a new model with one-thrid of this spectrum. These auctions have been so much stacked for the incumbents and the resources they have.”

FCC Commissioner Jonathan Adelstein

* Third broadband channel into home.
* Public safety.
* Supports a wholesale requirement.

FCC Commissioner Deborah Taylor Tate

* Undecided, but as a consumer, would want to have open access.

FCC Commissioner Robert McDowell

On 700 MHz

* Conditions will push large entities into lower band, which is divided to target smaller entities.
* Providers may not support, would trigger waiver process.

Lawmakers’ Comments

(This is not a complete list of subcommitte members, just those who addressed the 700 MHz spectrum auction proposal directly. Those whose names are preceded by the word “FOR” expressed support for the proposal; those preceded by “AGAINST,” opposition; those with neither were noncommittal.)

DEMOCRATS

FOR: Subcommittee Chairman Ed Markey, D-Mass: “Martin’s plan is quite modest. It does not propose requiring existing wireless licensees, who serve over 200 million consumers today, to permit openness for wireless applications or allow consumers to switch from carrier to carrier and take their phone with them.”

FOR: Jane Harmon, D-Calif.: Public-private partnership for 1st responder network is a good idea.

FOR: Anna Eshoo, D-Calif.: “It’s curious that open access is being described as “restrictions.”

FOR: Hilda Solis, D-Calif.: “Widespread bband can’t be achieved with typical corporate control.”

FOR: Lois Capps, D-Calif.: Supports Martin’s Carterfone rules on a portion of the spectrum. Encouraged commissioners to prevent anonymous bidding.

AGAINST: Gene Green, D-Texas: Open access shouldn’t be supported by government process.

Bart Stupak, D-Mich.: Urged FCC to finalize band plan compatible with Mexico and Canada, and to give small carriers a change to compete in upper and lower band auctions. Expressed concern that open access conditions would push large entities into lower band, which is divided to accommodate smaller bidders.

John Dingell, D-Mich.: Concerned about costs to consumers.

Mike Doyle, D-Pa.: “Auctions will be one of the most important things the FCC will do in decades.”

Bobby Rush, D-Ill.: “I’m tired of seeing the same faces plaing all the big roles and getting all the goodies from these auctions.”

Charles Gonzalex, D-Texas: Asked about impact of open access on manufacterers, software makers and the overall value of the spectrum. “Congress has already spent the auction proceeds.”

REPUBLICANS

AGAINST: Ranking Member Fred Upton, R-Mich: “The proposal now circulating sounds like an experiment. It sounds to me as though the commission is asking the question “Is there a business model to support a so called ‘open access’ approach to wireless?” But I see it as a gamble. And at stake is the success of the DTV transition, billions of dollars in taxpayer funds, and public safety. This seems like far too much to put on the line.”

AGAINST: Joe Barton, R-Texas: “I am very disappointed that Chairman Martin has come up with this plan. It’s not quite as bad as the Frontline plan, but I don’t think it’s nearly as good as an absolute, no-condition auction.”

AGAINST: Mike Ferguson, R-N.J.: The 700 MHz auctoin should proceed without conditions or restrictoins to get as much revenue as possible.

AGAINST: Dennis Hastert, R-Ill.: “Without onerous service conditions, auctions can raise billions of dollars. Conditions will crowd out small carriers.”

AGAINST: Marsha Blackburn, R-Tenn. (not a member of the subcom, allowed by unanimous consent to speak): “Auctions have worked for over a decade. We did not saddle licensees wiwth burdensome regulation.”

FOR: Chip Pickering, R-Miss.: Only Republican to part ways with colleagues and favor open access; produces investment for free market capitalization to work.

John Shimkus, R-Ill.: “My concern is that they will shift small carriers away from lower band allocations.”

Vito Fosella, R-N.Y.: To Martin: “Has anyone ever bought spectrum and parket it?” Martin: “Yes.”