When the FCC in late July voted to adopt its spectrum band plan and license conditions for the upcoming 700 MHz auction, it was natural to assume that was the end of the regulatory story. To the contrary, it seems that a "final" vote by a federal government agency is merely the beginning of a new phase in the process.
Just three weeks ago, Verizon filed a lawsuit against the FCC, seeking to overturn the FCC's attempt to bring Internet-style consumer choice via the 700 MHz auction. In a recent court filing, the company has also threatened to have next January's auction itself halted unless the consumer choice provisions are eliminated. Now come various news reports suggesting that Verizon is lobbying behind the scenes (and in apparent violation of FCC rules) to once again convince the FCC to water down key aspects of the pro-consumer rule provisions.
As far as we can tell, Verizon appears to be arguing that two of the key provisions in the auction rules designed to spur competition -- the requirements for open devices and open applications -- should not apply to a licensee's own devices that use this block of 700 MHz spectrum. Their theory is that so long as "unlocked" devices (those that can be configured to work with any network) are theoretically available to consumers through other means, the winning bidder in the auction shouldn't be required to make its devices open as well.
From our perspective, this view ignores the realities of the U.S. wireless market, where some 95 percent of handsets are sold in retail stores run by the large carriers. More to the point, it is simply contrary to what the FCC's new rules actually say. Specifically, Rule 27.16(b) states that licensees
“shall not deny, limit, or restrict the ability of their customers to use the devices and applications of their choice…”
Similarly, the “handset locking prohibited rule” states explicitly that
“no licensee may disable features on handsets it provides to customers….”
Needless to say, any attempt to change the reading of this rules language would seriously undermine the promise of consumers seeking more choices of wireless providers and services. Earlier this week, we sent a letter to the FCC urging the agency to resist this late-proposed rule change.
We are still carefully analyzing whether and how we might participate in the upcoming auction. However, if we do end up bidding and ultimately win the spectrum in question, we would ensure that consumers have the right to decide which devices and applications they want to use on our network. We would also encourage third party software applications -- even those that compete directly with our own services -- on the theory that users deserve the right to pick and choose the programs they want to use online.
We think the Internet offers the optimal model for what best serves the interests of all consumers. To that end, we hope the FCC sticks to its guns as it tries to introduce the open ethos of the 'Net to a small segment of the closed wireless world.