FCC Auction Key for Wireless Broadband

By Katherine Reynolds Lewis
c.2007 Newhouse News Service
Illustration by Monica Seaberry

WASHINGTON — There's about to be a land rush in telecommunications as the U.S. government auctions the only remaining airwaves suitable for nationwide, high-speed wireless Web access.

Big telephone and cable companies are jostling alongside Internet and technology entrepreneurs to control the spectrum, estimated to be worth as much as $30 billion.

"It's the biggest chunk of spectrum to come back into the public administration in a generation and it's by far the most valuable piece,'' said Ben Scott, policy director at Free Press, a Washington-based nonprofit focused on communications policy.

And it's a hot topic in Washington: House Energy and Commerce Committee Chairman John Dingell, D-Mich., will explore the issues in a hearing Thursday, and the Federal Communications Commission, hoping to schedule the auction this fall, may vote on rules as early as April 25.

What's at stake? The auction winners will determine whether American homes, businesses and classrooms have access to a third "pipe'' for high-speed Internet, not to mention better reception and innovative services for mobile phones and other devices.

Currently, people can surf the Web in coffee shops or airport lounges, but once they leave the immediate area they disconnect — or have to pay a different service provider for access to a new network. Most existing wireless networks work on the high frequencies used by mobile phones, making them more expensive and geographically limited than the low frequencies coming up for auction.

The spectrum up for grabs currently is used by television broadcasters, which are scheduled to switch to digital transmissions at different frequencies in February 2009, freeing the airwaves for new uses.

The spectrum is ideally suited to wireless communications because the frequencies are high enough to carry large amounts of data, but low enough to penetrate walls and travel long distances — meaning fewer towers are required for a network.

"It's the finest spectrum that's out there and the last of the best spectrum,'' said Sharon Armbrust, a senior analyst for Kagan Research, a division of SNL Financial.

A nationwide network is seen as the Holy Grail of fast Internet service, or broadband, filling in the holes between the wireless networks that companies and local governments are starting to build.

Right now, most people choose between cable and telephone companies when buying high-speed Internet access. Critics say that near-monopoly lets broadband providers offer shoddy service at inflated prices.

"The commission has one chance to open the marketplace up, and if they get it wrong consumers will really lose out,'' said Jeannine Kenney, senior policy analyst at Consumers Union.

The U.S. has fallen behind Europe and Asia in broadband deployment, ranking 15th in an International Telecommunication Union study. Catching up is critical. As Rep. Fred Upton, R-Mich., remarked at a recent hearing, "Our economic growth is directly related to broadband deployment.''

In overseeing the auction, the FCC must consider the best interests of the American public — the ultimate owners of the airwaves. Companies that want to use spectrum lease it from the government, often for 10 years at a time. The commission has the power to impose public interest requirements as a condition of winning a license to use the frequencies.

One priority is a nationwide public safety network to avoid the communications problems that plagued emergency workers during the Sept. 11 and Hurricane Katrina disasters. Lawmakers designated portions of the airwaves for public safety, but provided no funding.

A company called Frontline Wireless, backed by Silicon Valley investors, has proposed building a national network with equipment that would serve both public safety and commercial needs. Public safety agencies would control their frequencies, and Frontline would control the commercial airwaves on a neighboring spectrum band.

In exchange for shouldering the build-out expense, Frontline could use the public safety airwaves during non-emergency conditions. In emergencies, public safety agencies could use Frontline spectrum, spokeswoman Mary Greczyn said.

Frontline would lease its network to Internet providers and others and use open standards allowing a variety of equipment, important features to consumer advocates. The FCC is considering its proposal.

A consortium of consumer groups has asked the FCC either to structure auction bidding so that incumbents can't shut out new competitors or to designate half the frequencies as wholesale broadband service, known as open access, said Harold Feld, one of the attorneys representing the consortium. Failing that, the FCC should require all auction winners to treat different Internet services equally — a practice known as net neutrality — said Feld, a senior vice president with the Media Access Project.

The concern is that companies controlling the broadband "pipe'' will discriminate against Internet content providers by causing their Web pages to load more slowly. They might do this to favor their own Web services, or because they want other companies to pay a premium for speedy connections to customers.

A coalition of EchoStar, Yahoo!, Google and other satellite and computer companies wants the FCC to offer nationwide licenses so a wireless network can be built to compete with existing broadband providers. The FCC has asked for input on the optimal mix of sizes for different licenses' geographic areas.

By law, the commission must start the auction by Jan. 28, 2008. FCC Chairman Kevin Martin has said he wants rules in place six months ahead of the sale.

Still, consumers will have to wait for new services until at least 2009, when TV signals are moved off the airwaves, said Stanford Group analyst Paul Glenchur. Even then, experts caution, it will take some time before costs drop and technological wrinkles are ironed out.

(Katherine Reynolds Lewis can be contacted at katherine.lewis(at)newhouse.com)

This story was originally published Friday, April 13, 2007.