Questions Remain on C-Block Open Access Mandate’s Significance
With Verizon Wireless expected to emerge as top bidder for C-block spectrum in the 700 MHz auction, debate persists on a key question - how significant is a requirement that the winning bidder provide an “open platform” for applications and devices? Verizon has committed to open its networks. Critics say the carrier could get the spectrum on the cheap with only a requirement that lives up to commitments already made. The debate likely will intensify in coming weeks after the FCC names the 700 MHz auction winners.
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The 22-MHz C-block licenses offer some prime spectrum sold by the FCC this auction. The likely sale price is only 76 cents per MHz/POP, compared with $2.68 MHz/POP for B-block and $1.15 for A-block. Most onlookers think Verizon Wireless bid enough for a national license, buying all six regional licenses covering the continental U.S.
Critics of the open access mandate said in the auction’s aftermath that the FCC must ask questions. “Is Verizon getting [the spectrum] at a discount or is it going to be some other major company getting it at a discount?” a source said. “Did this work and did it work as Congress envisioned?” “Did the FCC chill opportunities for more diverse players?” another asked. “That will be worthy of study when this is done. Did the FCC overly tailor the rules and did that result in a positive end?”
Others at the FCC and in industry said it’s unclear that the open access requirement will promote more open networks. “The two main things to be looking for is whether there is a single C-block winner; if not, the open access may be diluted because there would not necessarily be the same platform on a nationwide basis,” said Rebecca Arbogast, analyst with Stifel Nicolaus. Carrier practices that “create significant disincentives to use third party handsets and third party applications, while still technically complying with the open access obligation,” could sap the requirement of meaning, she said.
Harold Feld, senior vice president of the Media Access Project, said the key question is the extent to which the FCC is willing to enforce open-access provisions if consumers file complaints. Feld noted that with bidding results secret, the identity of the C-block winner or winners remains unknown. “Verizon is making a big deal about their willingness to open their system and offer choice between subsidized and nonsubsidized handsets,” he said. “The real question is going to be will incumbents be allowed to get away with a show, as the FCC permits lip-service to openness, or is the FCC going to be willing to push hard.”
Verizon Wireless’s commitment to open its network is voluntary, a source noted. “They do not have the option to go backward if they win the C-block,” the source said. “Anybody who thinks that the C-block winner is discriminating can bring an appeal to the FCC… In essence, the FCC is going to be the ultimate arbiter of whether or not the network is truly open.”