The upcoming FCC 700 MHz spectrum auction certainly has spurred both lively debate and, at times, heated rhetoric. With the FCC set to vote tomorrow on the rules for the auction, I thought it would be useful to summarize briefly where things stand at this point.
FCC Chairman Kevin Martin has stated from the beginning that his number one priority is to make broadband available to all Americans through a “third pipe” to the home (in addition to telephone and cable company broadband service). In support of that viewpoint, the Chairman has taken a bold stand for consumer choice by proposing that licensees must allow the use of any device or application on a specified portion of the 700 MHz spectrum. This approach -- if crafted with appropriately effective and enforceable provisions -- would free consumers from burdensome and artificial constraints on what they can do with their phones and software. These license conditions for the first time will enable device and applications competition at the "edges" of the wireless network.
Unfortunately, these same conditions fall well short of Chairman Martin's own goal of fostering the creation of a third pipe competitor. As long as incumbents are motivated by a desire to protect their current business models, and can continue to use a “blocking premium” to thwart fair market rates, they have every incentive to outbid would-be rivals. Such an auction outcome will constitute business as usual -- with no new broadband options in sight for consumers.
Google has joined numerous public interest groups and other Web companies in seeking more fundamental “wholesale open access” conditions. We believe these additional conditions would ensure that, no matter who wins the auction, consumers, along with service providers of all shapes and sizes, will have a seat at the table. We even committed to invest at least $4.6 billion in such a scenario, despite the fact that we have not traditionally been a communications company. Some have criticized us for, in their view, rigging the auction to our own benefit. We think quite the reverse is true: only by imposing certain openness conditions will potential new market entrants have a fair shot at successfully bidding in the auction.
Openness, user choice, and innovation have been elements fundamental to the rise and success of the Internet. We believe those same elements are critical for even the possibility of new broadband competition in the wireless space. If the FCC ultimately decides not to adopt "wholesale open access" license conditions, we do not see how significant new competition can emerge from this auction.
The time for debate is drawing to a close. The five FCC commissioners are this moment contemplating the relative merits of the parties' arguments, and are set to make a final decision on Tuesday morning. The prospects for fostering robust competition in this slender but valuable slice of spectrum hangs in the balance.