FCC auction could mean more flexible broadband wireless services

Auction rules could influence who wins the licenses

Business customers can expect broadband wireless services more akin to private networks seen in the wired world after the FCC auctions off prime radio-frequency spectrum next year.

Read our auction FAQ.

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Business customers can expect broadband wireless services more akin to private networks seen in the wired world after the FCC auctions off prime radio-frequency spectrum next year.

Read our auction FAQ.

A provision that seems likely to find its way into the FCC rules for auctioning off the 700MHz range would require that providers allow any device to attach to the network, not just devices sanctioned by the service provider.

That means business customers could run their own VoIP or video over the service, says Dave Passmore, an analyst with Burton Group. “The service becomes just a bit pipe that is delivered to customers. If they want to run Skype or Asterisk, they can do it,” he says.

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This is in contrast to what wireless providers allow today. For instance, Verizon Wireless allows only Verizon approved phones on its network, and it restricts the use of VoIP on its broadband services, Passmore says.

So far much of the analysis of what use might be made of the spectrum is speculative because the FCC sets unique sets of rules for each auction of RF bandwidth. In the case of the 700MHz auction - scheduled for early next year - the rules have not been released. However, a draft of the rules is circulating within the FCC, and reports say that it calls for dedicating at least some of the bandwidth for attaching any kind of device.

The rules are expected to be set within a week or two.

Politics is likely to play a big part in the rules governing the auction, and that could affect the enthusiasm with which interested bidders participate. The big wireless carriers - AT&T, Verizon, Sprint, T-Mobile, AllTel - seem to be natural bidders.

But if chunks of the spectrum that they bid on come with restrictions on what they can do with them, they might not be so interested. “You could look at it as the FCC gaming the auctions so certain buyers will get the spectrum,” Passmore says.

FCC Chairman Kevin Martin has acknowledged that his intent is to write rules that help develop more competition among wireless carriers.

But some potential bidders, notably Google, want rules promoting even more openness. Specifically, they want a requirement that the winners of the auction must wholesale bandwidth to other providers. They say this would give competitors with small bank accounts the chance to offer new wireless services.

But the established wireless carriers say this is just a ploy to make the spectrum less valuable to them, and thereby knock down the winning price. They say Google is behind the effort as a way to buy up the spectrum at a bargain price. If other deep-pocket bidders walk away, Google could pick up the frequencies for much less than if it had to bid against them. “Corporate welfare for Google is bad public policy," Verizon says in a statement.

A coalition that includes Google, Skype, Frontline Wireless, the Consumers Union and Media Access Project and other nonprofit groups, urge the FCC to require the winner to wholesale. “Without the license conditions proposed here, the advantages enjoyed by incumbents in spectrum auctions allow them to freeze out new entrants [and] eliminate rival business models," the group says in a letter to Martin.