Half a loaf from the FCC

By Calvin Ross, Napa Valley Register

The Federal Communications Commission, though charged with regulating our airwaves in an open, even-handed way, rarely does so. Its recent ruling on the upcoming public airwaves auction, precipitated by the release of the 700-megahertz bandwidth as broadcast television moves from analog to digital transmission, does little to encourage competition.

This 700-megahertz bandwidth, often referred to as the “last beachfront property” in the radio spectrum, offered the FCC an opportunity to level the playing field in the wireless world, which includes the cell phone among other wireless devices.

The chief proponent of the open-competition model was Google, which had pushed the FCC to mandate that the newly available bandwidth owners be permitted to offer portions of the spectrum wholesale. This would force the current wireless carriers, such as Verizon Wireless and AT&T, to compete with newcomers. Not surprisingly, Google hopes to be one of these newcomers.

This is coming to the fore now because the new bandwidth will become available in February 2009, which means the bandwidth must by law be auctioned off no later than January 2008. This new FCC action sets the rules for that auction.

Past rulings by both the Supreme Court and the FCC reflect a retreat from any notion that the U.S. would benefit from creating fair and open competitive telecommunications markets, which have spurred innovation in Europe and Asia. The new FCC auction ruling represents another glass-half-empty disdain for competition and innovation.

Consumers did get something, as the FCC cautiously moved to open up one third of the newly available spectrum a bit, allowing consumers to choose their own cell-phone products and software. Before now, consumers had little choice but to accept cellular companies’ hand-picked equipment and interface.

Users now will be able to choose their own equipment and software, which had been strictly governed before, with Internet services limited by the software choices. The new ruling may lead to better cell-phone Web browsing in the limited new space.

Where the FCC failed consumers was in refusing to allow wholesale distribution of the spectrum as well as in setting the auction bid limit for portions of this spectrum above $4.6 billion. This will no doubt discourage new competitors from attempting to enter the market.

It will also encourage the big players like Verizon and AT&T to outbid everyone simply to maintain their hegemony in the cellular and wireless arena. Google, discouraged by the ruling, said that with the $4.6 billion floor it may still make an offer. Otherwise, the current providers will buy up the spectrum if only to prevent new competition.

It wouldn’t be the first time. Cable operators secured a big win a couple of years back when the Supreme Court, in a case ironically named FCC v. Brand X, ruled that cable network owners needn’t be forced to share their networks, exempting cable providers from many rules governing the telephone industry.

This allowed cable companies control of “the last mile of copper” to homes, severely limiting competition in broadband Internet services.

In some good news for consumers, an FCC ruling that took effect July 1 mandated that cable television providers produce set-top boxes with removable CableCards, opening up access to high-end video services in a number of competing devices.

article originally published at http://www.napavalleyregister.com/articles/2007/08/07/columnists/calvin_ross/doc....

The media's job is to interest the public in the public interest. -John Dewey