On Monday I attended the fall kick-off meeting of the Massachusetts Network Communications (MassNetComms) Council. This event featured an amazing collection of speakers, including local congressman Ed Markey, arguably the most powerful influence on telecommunications policy on Capitol Hill, and Reed Hundt, former Chairman of the FCC and now Vice-Chairman of startup/upstart Frontline Wireless. Other speakers, in a panel discussion, included an SEVP from AT&T, an SVP from Clearwire, a Policy Counsel from Google, and a “Director of Wireless Incubation”, whatever that means, from Microsoft. I’m not sure why anyone cares what Microsoft thinks about wireless, especially a guy with a bizarre title like that, but all of the other speakers had some interesting thoughts to share.
The core of the argument (and there was a lot of argument) was around the public policy central to spectrum allocations, most notably the upcoming auctions of the 700 MHz. bands. Spectrum is, of course, critical, because it’s the place we drive our little wireless cars, and because 700 MHz. in particular holds what are likely the last big chunks of spectrum to be auction off. And this is prime airwave real estate, with excellent propagation characteristics, including good in-building penetration.
But it’s not just about technology; in fact, little of it is about technology. The key issues noted by the speakers were as follows:
- Congressman Markey noted that FCC policy today is centered on the rapid deployment of new and appropriate technologies for the public good, promoting economic opportunity and competition, using auctions to efficiently allocate spectrum and raise funds for the treasury, and to promote efficient and intensive use of the spectrum. All of this sounds great to me except the part about auctions; see below. Note also not just efficient but intensive; spectrum allocated but unused at any given time is a perishable commodity, just like an empty airplane seat (although anyone who travels al lot knows we could use a few more of those). Sharing spectrum among applications and users, including between the commercial and public-safety communities, is key here. Competition is the primary mechanism policy makers use to encourage innovation, more employment in the sector, and lower consumer prices.
- Open access, which will be used for the first time in the auction of the “C Block” spectrum, was analogized by Congressman Markey as a “wireless Carterfone” mechanism, opening the possibility that there will be future decoupling between the handset/subscriber unit and the network/operator. This is a positive step forward, you can tell so because the incumbents hate it and Verizon Wireless has even filed a lawsuit over the issue. Reed Hundt expressed hope that this suit would be tossed in the dumper quickly. I agree.
- Google continued on the theme of openness, stating their belief in open applications, content, devices, services, and networks. Very refreshing, and this coming from a company whose core business is in supporting irritating advertisers. The question remains, BTW, as to why Google would be interested in owning spectrum. This company has a strange yet wonderful business model, so it’s best for now not to second-guess them.
- AT&T protested that the government has no business dictating business models to the bidders. Their representative noted that we already have sufficient competition and among the lowest end-user prices in the world. Such requirements as open access, requiring the wholesaling of spectrum by licensees (Frontline Wireless and Google favor this, but it’s not in the regulations), and open devices should be optional, and such regulations might even devalue the spectrum meaning that the treasury might raise less money through the auction. Given the number of bidders, though, as well as the intrinsic value of the spectrum as noted above, there’s not much chance of that.
- Google countered that there’s clearly not enough competition, and that incumbents might bid high just to lock out future competitors, like Frontline and Google. Regardless, it’s not just about money for the treasury; it’s about serving the public. How refreshing. And being an incumbent is not a license to print money; a little creative destruction, as Reed Hundt put it, is essential to serving the customer. There’s no need for public policy, he said, to assist in the rebuilding of pre-breakup AT&T.
I might add to this discussion a question over whether the government can in fact auction spectrum at all. While it’s clear, due to one steamboat case from 100 years ago or another, that the feds can regulate the spectrum, it’s not at all clear under the ninth and tenth amendments to the US Constitution that they in fact have ownership of it and thus can auction it off. But, then, I’m not a lawyer, just an engineer with moderately libertarian tendencies. But if we’re going to make spectrum available, policy needs to favor, above all, we, the people/customers. We’re the ones ultimately paying for everything. If it takes a little regulatory reminder of this fact to the carriers now and then, so be it.
