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FCC: Ignoring the lesson of WiFi

By: Scott Bradner

As just about everybody predicted, the FCC recently decided that only giant telephone companies are smart enough to manage wireless spectrum. They included a miniscule favor that they claimed might help the rest of us, but it is far from clear that it actually will. In making their decision the FCC ignored the basic lesson that they should have learned from WiFi and rejected the most important part of a forward looking proposal from Google.

In 2005 the US Congress passed the Digital Television and Public Safety Act (http://www.ntia.doc.gov/otiahome/dtv/PL_109_171_TitleIII.pdf) which mandated that all analogue TV broadcasting be discontinued on February 17, 2009 and that the spectrum that will be freed up be split between public safety and other communications uses. The Act requires that the FCC run an auction of the commercial part of the spectrum by January 28, 2008. The FCC announced a revised set of rules for that auction on July 31st. ( http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-275669A1.pdf and http://www.fcc.gov/073107/700mhz_band_plan_chart_073107.pdf)

The FCC has decided on a public/private partnership to run the public safety part of the spectrum. The other option was a government run national public safety network. I'm not sure that the path the FCC wants to take will change the overall result. Considering the unblemished history of such projects, I fully expect any useful network will be decades off, if it ever shows up, and will produce vast windfalls for a few selected vendors at the taxpayer's expense.

The FCC's decision on the public safety network was quite predictable and, sadly, so was their decisions about the rest of the spectrum. Anyone who been paying attention at all knows that the most dynamic explosion in the uses of wireless has come in the unlicensed small chunks of spectrum where technologies such as WiFi prosper. It would seem obvious that if the actual goal for the FCC in deciding what to do with the to be released spectrum were, as the FCC press release states, "serving the public interest and the American people" at least part of the spectrum would have been added to the unlicensed bands. But communications companies do not spend billions of dollars (the FCC's minimum bid for a part of the spectrum is $4.6 B) to get open up spectrum for everyone to use for free. FCC Chair Kevin Martin noted in his statement accompanying the news release that the FCC had to produce "a fair return on this asset for the American people." (http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-275669A2.pdf) In focusing on the auction return, the FCC ignores the proven value, far more than $4.6 B, that more unlicensed spectrum would have returned to the US economy.

Google suggested a middle ground to the FCC. (http://www.google.com/intl/en/press/pressrel/20070720_wireless.html) They suggested that a chunk of the spectrum be sold to companies that would provide open access wholesale service to customers. Google also suggested that the same chunk of spectrum support open applications, devices and services. Open, in the sense that the service provider would not limit them.

The FCC decided to mostly support the requirement for the winning bidder to support open devices, applications and services but they did not agree to the most important of Goggle's suggestions - that of a requirement to provide wholesale services. The FCC also said that if they could not find a buyer at their minimum price they would drop the requirements and rerun the auction. Even this minimal requirement for openness was too much for Commissioner McDowell. (http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-275669A6.pdf)

Google has not said that they will not pony up the money and provide wholesale services. They might, but there is little chance that the other major bidders, mostly telephone companies considering the FCC rules, will do so. If the telephone companies win, innovation in the wireless world will run at the speed of cell phone data (very slow and/or very expensive) rather than 802.11 (ever faster, more flexible and cheaper).

disclaimer: Harvard, at 371, is unlikely to be faster, more flexible or cheaper and has expressed no formal opinion on the FCC's ability to not learn from history.