I'm Watching the FCC on the 700MHz Auction

bumped - Matt

{crossposted from savetheinternet.com}

I'm writing to let you know directly my thoughts on the "700" auction; I posted this over at savetheinternet, but I know how much the readers of MyDD care about this, as well. This is a very important issue, and I really commend the work done by everyone involved in the effort to get so much activism built up around what can be an arcane discussion. There are a lot of powerful forces working to get the same-old/same-old, big-money auction; I've already gotten a letter from an industry group challenging my stance.

So it's great to know that there are so many activists committed to working together for a better telecommunications infrastructure for the country. Our country has always pushed the curve and led the way in technological advances, and yet we are falling behind in broadband deployment to an alarming degree. That's unacceptable.

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Democratic FCC Commissioner Adelstein: No IPhone For You! Step Up, 4G

Guess which FCC Commissioner is holding up a universal national wireless network?  It's not a Republican, it's Jonathan Adelstein, who doubts that a national wireless business will bid for spectrum.

Communications Commission member Jonathan Adelstein voiced doubts about the potential for a new national wireless broadband provider to enter the market to take on the incumbent telephone and cable broadband providers.

The Democratic commissioner said he was reluctant to structure the rules of the upcoming radio spectrum auction to encourage the entry of a new player unless there was a commitment that there would be a serious bidder at the auction.

"We don't want to set the table unless we know someone's going to come to dinner," Mr. Adelstein said.

He was speaking at a conference in Washington hosted by the Wireless Communications Association International, a lobby group for broadband service and infrastructure providers.

Speaking to reporters after his formal remarks, Mr. Adelstein said the FCC risked excluding smaller bidders from getting access to the valuable spectrum coming available for no reason if it designates a large block of it to be auctioned off but no large bidder comes forward.

A group calling itself the Coalition for 4G America has been aggressively lobbying for a 22 megahertz block of spectrum with a national license to be auctioned off. The coalition includes the likes of Google Inc., Intel Corp., EBay Inc. unit Skype Inc., and satellite television companies EchoStar Communications Corp. and DirecTV Group Inc.

It argues that such a chunk of spectrum would be necessary in order for a bidder to launch a significant challenge to the dominant cable and phone company broadband providers.

Great.  So Adelstein speaks at a lobbying event for the wireless industry in favor of a position supported by incumbent telcos.  I don't want to knock Adelstein, who has generally been a friend, and imply bad faith when it's not warranted.  I just don't really get his position and why he's reluctant to help create genuine competition for the wireless industry.  There are hundreds of billions on the line for various tech companies, so it's pretty clear there will be some business interest in this chunk of spectrum.  Lobbying is fast and furious, with calls flooding into Senate Commerce Committee offices.  

Meanwhile, John McCain sent a letter to the FCC as well on the 700 auction, and I'm trying to get a sense of what he means - he's calling for spectrum for public safety, which could help in terms of supporting a national wireless network, though I'm not entirely sure.  So far, no other Presidential candidates aside from John Edwards and John McCain have moved on this.

Update [2007-6-16 12:21:17 by Matt Stoller]: Obsidian Wings has a useful corrective on this post.

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FCC '700': Why You Can't Get Your iPhone

The big news today is a letter that Senator John Kerry, who sits on the Commerce Commitee, sent to the FCC asking for a better internet in light of the FCC's upcoming 700 auction of spectrum space.  Kerry is a tremendous ally of the net neutrality fight, helping lead the cause along with Ron Wyden and Byron Dorgan in the Senate.  Kerry also sits on the Commerce Committee, which is holding a hearing on Thursday on the issue.  This is big, big, big.  Already, 250,000 people have written the FCC on this issue, a major outpouring of organized grassroots support.  John Edwards has chimed in with smart policy recommendations, so it's gone Presidential (where are you, Obama, Clinton, Dodd, Richardson, Biden, etc).  

The fight over spectrum and open access involves a potential new industry worth hundreds of billions of dollars, and a moral argument about what the public airwaves are really for.  Verizon Wireless, AT&T Wireless, Sprint, and the Spectrum Company, which is backed by the cable industry, believe that our communications networks exist so that they can have something to control.  They are monopolists, run by seriously bad people, and viciously anti-democratic.  The telecom giants are large, lumbering, stupid beasts; cable companies are quick and weasely, but even more unethical if possible.  Both sets of companies offer awful service, dishonest pricing plans, and generally are in bed with politicians at a local level and on a Federal level that it's literally stunning.  The pay-to-play nature of the business runs through both parties, and it's not an accident that the late 1990s and early 2000s saw massive telecom frauds which benefitted high level political elites, including former DNC Chair and current Clinton campaign senior advisor Terry McAuliffe (Global Crossing) and Rudy Giuliani (MCI/Worldcom).  Verizon senior exec and policy head Tom Tauke is a former Republican Congressman, because this is a dirty dirty business with lots of money involved.

Consider that texting money over your cell phone, which is done regularly in foreign countries, doesn't happen here because the telecom companies will take half of all cash and send the vendor the balance in 180 days.  Boom.  That's an entire mobile economy that just isn't happening, thousands of entrepreneurs and jobs strangled in the crib by the capricious whims of the monopolists.  Or consider your roaming charges, or your high fees, or your year long contracts, or early termination fees, or the fact that you can't even change providers and keep your cell phone.  That's insane, they are all phones.  No, what's really restricting the iPhone from any company but AT&T is the monopolist deal that these companies have over our public airwaves, and that's all a spectrum game.  And for a long time, the only people who cared were the lobbyists and telecom companies getting rich off of it.  But now, because of net neutrality and Bush, hundreds of thousands of people are involved in a grassroots campaign over the very fiber of this country's communication network and by extension political and moral playing field.

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Edwards to the FCC: Free Our Spectrum

This is very exciting news. John Edwards is the first Presidential candidate to ask the FCC to unlock the incredible block of spectrum coming open in the next few years.  It's a bit complicated, as telecom stuff always is, but basically you have a huge slice of the public airwaves coming free, and the FCC must decide how it's going to be auctioned off.  Because the legislation freeing the spectrum was a budget bill, the auction must bring in a certain amount of money, so just making the spectrum open and free isn't an option.

The rules of the auction are key, because if a wireless incumbent like AT&T, Verizon, or a cable-owned wireless carrier like Sprint can muddle up the economics of a wireless broadband network, they will..  If the FCC decides to auction the spectrum off in regional chunks, then Verizon can, say, bid up the price of the Northeast section.  Since these networks only because profitable if they are national in scope, a large regional chunk controlled by an incumbent would prevent other bidders from creating an open national network.  

A good FCC could ban incumbents from bidding, but that's unlikely.  Still, if the bids are not anonymous, then there's possible collusion among the various incumbents.  Verizon, AT&T, and Sprint do not want to really use this spectrum, they just want to keep it off the market since that increases the value of their own existing-owned spectrum.  So anonymous bidding is important.  

And finally, wireless net neutrality would be really useful.  This basically means if you bought an iPhone you could use it on any network.  Locked in pricing, bans on innovation, and total telecom control of the network would be gone if this rule were in place.

Edwards is visiting Silicon Valley today, so his press release is stamped 'Mountain View'.  He won't be the last to speak out on this critical auction.

Dear Chairman Martin:

The upcoming 700 megahertz spectrum auction presents a once-in-a-lifetime opportunity to shape the next generation of American technology.

In recent years, the Internet has grown to touch everything and transform much of what it touches. It's not the answer to everything, but it can powerfully accelerate the best of America. It improves our democracy by making quiet voices loud, improves our economy by making small markets big, and improves opportunity by making unlikely dreams possible.

As you know, the Federal Communications Commission is now preparing to auction the 700 megahertz slice of the spectrum. This "beachfront" band is particularly well suited to wireless broadband because it has wide coverage and can easily pass through walls.

By setting bid and service rules that unleash the potential of smaller new entrants, you can transform information opportunity for people across America -- rural and urban, wealthy and not. As much as half of the spectrum should be set aside for wholesalers who can lease access to smaller start-ups, which has the potential to improve service to rural and underserved areas. Additionally, anyone winning rights to this valuable public resource should be required not to discriminate among data and services and to allow any device to be attached to their service. Finally, bidding should be anonymous to avoid collusion and retaliatory bids.

I urge you to seize this chance to transform the Internet and the future.

Sincerely,

John Edwards

To offer a bit of historical context, telecom/media issues had not been discussed by the public in any serious way since the 1930s.  After the fight over radio, when big companies began monopolizing everything and captured our regulatory agencies, the public was cut out of the process.  Both television in the 1950s and cable in the 1980s were huge moneypots delivered to business elites, without substantive input or discussion.  The internet was basically an accident, developed off grid by the government.

The first time the public really engaged in a mass scale in structural media issues since the 1920s was in 2003, on media consolidation rules.  Millions of people moved on this because they felt betrayed by the Iraq war and the trivialization of our politics and media.  And then in 2005-2006, we had net neutrality, and now the Presidentials are beginning to weigh in on spectrum.

This is a big deal.  We're at an inflection point.

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Edwards' letter to the FCC

Edwards sent a letter to the FCC today, asking for part of the 700mhz spectrum thats set to be auctioned off in the coming weeks to be used to provide internet access to all Americans, regardless of living conditions or economic status.  

See the letter after the jump...

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