As just about everybody predicted, the U.S. Federal Communications Commission recently decided that only giant telephone companies are smart enough to manage wireless spectrum.
The FCC included a minuscule favor that it claimed might help the rest of us, but whether it actually will is far from clear. In making its decision, the FCC ignored the basic lesson that it should have learned from Wi-Fi and rejected the most important part of a forward-looking proposal from Google.
In 2005, Congress passed the Digital Television Transition and Public Safety Act, which mandated that all analog TV broadcasting be discontinued on Feb. 17, 2009, and that the freed-up spectrum be split among public safety and other communications uses.
The act requires that the FCC run an auction of the commercial part of the spectrum by Jan. 28, 2008. On July 31 the FCC announced a revised set of rules for that auction.
The FCC has decided on a public-private partnership to run the public safety part of the spectrum. The other option was a government-run, national public safety network.
I’m not sure the path the FCC wants to take will change the overall result.
Considering the unblemished history of such projects, I fully expect any useful network will be decades off – if it ever shows up – and will produce vast windfalls for a few selected vendors at the taxpayer’s expense.
The FCC’s decision about the public safety network was quite predictable and, sadly, so were its decisions about the rest of the spectrum.
Anyone who has been paying attention at all knows that the most dynamic explosion in the uses of wireless has come in the unlicensed, small chunks of spectrum where such technologies as Wi-Fi prosper.
It would seem obvious that if the FCC’s goal in deciding what to do with the to-be-released spectrum was – as the FCC press release states – “serving the public interest and the American people,” at least part of the spectrum would have been added to these unlicensed bands.
Communications companies, however, do not spend billions of dollars (the FCC’s minimum bid for a part of the spectrum is US$4.6 billion) to open up spectrum for everyone to use, for free. FCC Chairman Kevin Martin noted in his statement accompanying the news release that the FCC had to produce “a fair return on this asset for the American people.”
In focusing on the auction return, the FCC ignores the proven value – far more than $4.6B – that more unlicensed spectrum would have returned to the U.S. economy.
Google suggested a middle ground to the FCC, arguing that a chunk of the spectrum should be sold to companies that would provide open-access, wholesale service to customers. Google also recommended that the same chunk of spectrum support open applications, devices and services.
The FCC decided to support – mostly – the requirement for the winning bidder to support open devices, applications and services, but it did not agree to the most important of Google’s suggestions: that providing wholesale services be required. The FCC also said that if it could not find a buyer at its minimum price, it would drop its requirements and rerun the auction.
Google has not said that it will not pony up the money and provide wholesale services. It might, but there is little chance that the other major bidders – mostly telephone companies, considering the FCC rules – will do so.
If the telephone companies win, innovation in the wireless world will run at the speed of cell-phone data (very slow, very expensive or both) rather than 802.11 (ever faster and cheaper).
Disclaimer: Harvard, at 371 years old, is unlikely to be faster, more flexible or cheaper, and it has expressed no formal opinion on the FCC’s ability not to learn from history.