The Federal Communications Commission will set the rules tomorrow governing the auction of $15 billion of public airwaves, a decision with stakes so high that the major U.S. cellular carriers and Google have spent millions of dollars on a lobbying campaign in an attempt to influence the outcome. The decision could dramatically alter the nation’s cellphone industry.
[...] Google, in its first serious foray into the Washington regulatory scene and, potentially, the wireless industry, has offered to spend at least $4.6 billion for the airwaves it would use to build the network it envisions if the FCC’s rules work in its favor. The move reflects Google’s growing ambitions to reach consumers in new ways while exerting its influence on policy it sees as critical to its future. But the company’s efforts to recast the wireless landscape have met fierce opposition from AT&T and Verizon, which worry Google’s open network would undermine their businesses.
My deepening concern this afternoon is that this auction might not end up being the stimulus to a third pipe, the right to attach devices, to run applications and to encourage the innovation and entrepreneurship that we all hope for because of some add-on provisions. The item now imposes reserve prices on each of the individual spectrum blocks, something without precedent in previous auctions and something, it seems to me, rather at odds with letting the market pick the auction block winners. The procedure in this Order carries chilling risk to the success of the auction. If some of these blocks do not fetch the bid prices stipulated, perhaps because of gaming of the worst sort, they will be re-auctioned with weaker build-out requirements. If the 22 MHz block, where we hope for Carterfone open access principles, fails to elicit a $4.6 billion bid, it will be re-auctioned without Carterfone open access. In the end, all of this micro-managing virtually hands industry the pen to write the auction rules and to constrict all the opportunities this spectrum held forth. The end result could be: same old, same old. What a pity that would be!
In closing, we came farther on some things than many thought likely a few months, or even a few weeks, ago. There is much to approve in this Order. I will concur in two parts because wholesale open access is not stipulated and also because of the concerns I have discussed regarding how the micro-managed reserve pricing scheme could subvert the higher goals of the auction.
The NYTimes has the APWire story: F.C.C. Approves Airwave Sale Rules (pdf). And in news from the future (dateline August 1, 2007), we have Google Wins Partial Victory in F.C.C. Ruling (which has become this: F.C.C. Hands Google a Partial Victory)