Parties Begin 700 MHz Comment Party Early
With tonight (Wed.) the deadline for comments for the 700 MHz band, many got a jump by filing in the docket, commenting on proposals at a spectrum forum and previewing their comments. Google led the parade with a filing Mon. asking the FCC to endorse the concept of a real-time dynamic auction. The Small Business Administration (SBA) submitted a letter asking the Commission to return to the “original” designated entity (DE) rules. Cyren Call, Access Spectrum, Frontline and the National Public Safety Telecommunications Council had delegates on a 700 MHz panel at the Spectrum Management 2007 conference sponsored by the National Spectrum Managers Assn. Frontline held a news conference on a study by 2 academics from Stanford calling for banning incumbents from the E-block.
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Govt. “command & control” spectrum policies “too often have a tendency to lock in incumbent users and uses, while shutting out new entrants and innovative new uses of spectrum,” said Richard Whitt, Google’s Washington telecom & media counsel, in a filing in the 700 MHz band docket. Google proposes allowing auction winners to use a dynamic auction mechanism in which spectrum would be available and paid for as needed, Whitt said. Payments would be made “in perpetuity as the spectrum is being used,” he said.
Google’s plan would encourage infrastructure buildouts, remove barriers to entry and “leave money in the private sector,” Whitt said. Licensees would designate the amount of power that a dynamic auction winner could use in a slice of spectrum and the duration of that use. The auction could be run the way Google runs its search ad auctions, he said.
There’s no conflict with the current auction model, in which a licensee pays the govt. for spectrum, because the licensee would use the dynamic auction to recoup its costs, Whitt said: “The chief difference is that in the real-time auction model, uses and users of the spectrum can change dynamically in response to ever-shifting market conditions.”
Many problems must be solved before a dynamic auction can succeed, an economist hired by Frontline Wireless told reporters Tues. “We think it is 5 or 10 years away,” said Robert Wilson, a Stanford management prof. Frontline instead will propose that 25% of capacity be available for an open auction mechanism, said former FCC Chmn. Reed Hundt. “We are going to endorse an open and active auction,” said Hundt, Frontline vice chmn.
The FCC hasn’t addressed issues important to small business “and has not accepted public comment on these important concerns,” wrote Thomas Sullivan, SBA chief counsel-advocacy. The FCC made 2 changes to its designated entity (DE) rules that make it hard for small businesses to gain access to capital, Sullivan said: “The newer DE rules have exceeded their goal of protecting the program from abuse, and have severely burdened the small entities who wish to take part in the 700 MHz auction.” With curbs on wholesale leasing arrangements, small businesses can’t make deals with mobile virtual network operators, he said. The 2nd issue is doubling the amount of time a DE must hold its spectrum to 10 years.
Public safety is concerned the FCC will listen more to commercial interests than to it, said John Logan, outside counsel for the National Public Safety Telecom Counsel. The Commission needs to “make a commitment to public safety,” Logan said at the Spectrum 2007 conference.
The FCC should create a nationwide license in the upper 700 MHz band big enough for commercial interests, said Andrew Rein of Access Spectrum. “We are concerned the band plan will be entirely set up for small and rural new entrants,” Rein said at spectrum conference. Access Spectrum belongs to the 4G Coalition, along with DBS and Silicon Valley heavyweights.
Cyren Call doesn’t want to run the commercial network it proposes be built -- it wants to act as an agent to ensure that the network is built to public safety’s specifications, Cyren Call Chmn. Morgan O'Brien told the spectrum conference. If the FCC doesn’t set rules making this possible, Cyren Call may enter the 700 MHz auction, O'Brien said: “While it is our primary goal to be this agent, we may not get that goal so we would move toward participating in the auction.” Having an E-block as proposed by Frontline to enable a shared network with public safety is the “2nd best option” after Cyren Call’s original idea of allocating 30 MHz for a public safety broadband trust, he said.
Wireless and broadband industry consolidation has created a situation almost as bad as in the days of Ma Bell, Wilson said. He and Andrzej Skrzypacz, Stanford assoc. prof.-economics, wrote a report analyzing the generic concept of Frontline’s original proposal. The Frontline-commissioned report will be filed with Frontline’s comments. The FCC should write rules that allow competition to flourish in the wireless broadband market, according to the report.
“We can’t have sham bidders,” Wilson said: “We can’t have front companies for other entities.” Nationwide wireless and broadband providers must be kept out of the E- block, he said. As for the entire band, he said the economists had “misgivings about this.” Verizon and AT&T should have no reason to participate in the 700 MHz auction unless it’s to “foreclose competition rather than serve their consumers,” Hundt said at the same event. The economists suggested several rules to promote competition including an open access requirement, a ban on direct ownership or leasing to a direct affiliate, anonymous bidding and encouraging package bidding.
Comments to be filed will be a “literal orgy of rhetoric,” said O'Brien. Frontline’s outside counsel Gerald Waldron agreed. The avalanche will be overwhelming -- but the policy debate will be a short race, Waldron said, noting that replies are due in 7 days.