The FCC’s 700 MHz Auction: “A Highly-Tailored Garment That May Fit No One”

by on July 31, 2007 · 0 comments

After weeks of intense lobbying, the FCC today set rules for the auction of former UHF TV channels 60-69 (in the prime 700 MHz range of frequencies). The full details are not yet out, but the decision seems to be largely what was expected: a “public-private partnership” for newly-allocated public safety spectrum, and — for commercial spectrum — new regulations that impose “open access” rules on 22 megahertz of the allocated frequencies.

No one was completely satisfied. Google and other wireless net neutrality proponents notably failed in their bid for more expansive regulation — with the Commission rejecting their calls for mandated interconnection and wholesale leasing of spectrum.

This loss — in part — may be due to a tactical fumble by Google itself. Its pledge last week to bid a minimun of $4.6 billion if the Commission adopted four proposed rules for these frequencies was perceived (rightly or wrongly) as an ultimatum to the FCC. Had the Commission then adopted the Google’s proposed rules, the agency’s own credibility and independence would have been put at risk.

Even so, the rules that were adopted — a ban on licensees of the 22 megahertz “C’ block of frequencies from imposing limits on the “devices or applications” used by consumers — are unnecessary and potentially harmful.

The reasons why were explained in a spirited and articulate dissent penned by Commissioner Robert McDowell, who cautioned against a rush to regulation in an industry as competitive as wireless. Pointing out the the rules were apparently meant to help one potential bidder (whom he did not mention, but whose name begins with “google”) he argued that: “Large wealthy corporations interested in a particular business plan do not need the government’s help in this auction.”

At the same time, he pointed out, the rules as written may still fail to attract a bid even from Google. As McDowell put it:

“ an effort to favor a specific business plan, the majority has fashioned a highly-tailored garment that may fit no one. It’s not what Silicon Valley wants; it’s not what smaller players have told me they want; and it’s not what rural companies want. To date, the Commission has received no assurances that any company is actually interested in bidding on the encumbered spectrum. Not one”.

The result may be a failed auction, the costs of which are unknown. (The decision does provide for a minimum auction reserve requirement, but the added uncertainly and delay could still be costly.)

It’s a fitting warning. McDowell may be overly pessimistic. But the FCC may want to keep its scissors and chalk handy just in case.

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