Martin Pulls AWS-3 Order from June Agenda, Wants July Vote

“The AWS-3 Spectrum or Free Internet proposal was removed by the Chairman from the June open meeting agenda to give the other Commissioners more time to review the proposal,” the spokesman said. “The two main issues under review are the interference issue and the content filter.” Consistent with remarks by Martin Thursday (CD June 8 p6), the spokesman said the chairman remains committed to a proposal that will “provide a broadband lifeline for Americans who currently do not have Internet access.”

Martin “does not agree with some critics who are pushing for an interference standard that is more cumbersome than the restrictions that were set forth for both the AWS-1 spectrum and the 700 MHz spectrum in those respective auctions,” the spokesman said. But the chairman believes “there is a way to deal with the content filter issue by allowing adults to opt out, while still maintaining this important protection in place for children who would access the free Internet service.”

The comments do not address public interest groups’ complaint that the proposal requires that only 25 percent of the capacity go to a free, not premium service. Sources said last week that Martin now seems to favor setting aside 20 MHz, not 25 MHz, to be auctioned in the AWS 3 auction.

The FCC should resist carrier and handset maker demands for interference testing before completing the proceeding, John Muleta, CEO of M2Z, likeliest to bid on the spectrum, said Friday. “After two years of being on notice and after making the poor business judgment to use foreign parts in their yet to be deployed handsets, the carriers are now using their last line of defense by asking for an open-ended ’testing period’ that allows them to unlawfully squat on the American people’s spectrum,” Muleta said. “The American people should not have to pay the price for corporate incompetence.” Muleta is “encouraged by the commission’s commitment to rapidly conclude this proceeding,” he said.

Carriers will find parts of the FCC statement disturbing, a wireless industry official said. “There seems to be an element, from the FCC of all places, that all spectrum is created equal and all uses are equal and that an interference approach that is good for 700 MHz or AWS-1 should be able to work fine for a different band,” the official said. “It seems to be an eyes wide shut approach… It almost seemed like a naive statement to say what worked over there should work here fine… Each band is different. Uses are different… There are so many factors that need to be taken into account and very carefully weighed.”

CTIA, while pleased by the delay, remains “extremely concerned about multiple elements of the proposal in front of the Commission, both from an interference perspective and an auction integrity perspective,” it said. The FCC correctly delayed action, a T-Mobile spokesman said. T-Mobile, the biggest player in the 2006 AWS-1 auction, was among the parties most actively lobbying the FCC about the proposal.

“T-Mobile commends the FCC for its wise decision to defer action on the AWS-3 matter pending further evaluation of the interference concerns we and others have raised,” the spokesman said. “We would welcome the opportunity to conduct joint testing with the FCC so policy-makers can evaluate the problem based on real empirical data. This ’time-out’ should also be used to reevaluate the misguided policy proposal to encumber a valuable block of the nation’s spectrum resource with one company’s specific and unproven business plan.”

Martin was right to pull the plan, since “critical questions remain about filtering, interference and ensuring that the service delivers the promised public benefits,” Harold Feld, senior vice president at the Media Access Project, said Friday. Feld said the FCC should approve service rules but seek expedited comment on sticking points. “Meanwhile, opponents of the proposal have never explained how else to make the AWS-3 band work,” he said. “If you want to shoot down a plan that converts a junk band into free broadband for all Americans, you should come up with a productive alternative.”

“It doesn’t matter to us when the FCC acts, but that it acts correctly,” a spokesman for Public Knowledge said. “Public Knowledge, as part of the Public Interest Spectrum Coalition, registered its objections to the proposed policy. We are pleased the FCC will take extra time to review it.”

The delay followed “intense” wireless carriers and satellite operator lobbying, Medley Global Advisors said in a research note. “The requirement to offer free nationwide mobile broadband raised huge alarm bells for the entire wireless industry since it could end up diluting the value of existing AWS licensees,” it said. “The rigorous nature of the build-out rules (50% of pops within four years and 95% by the end of 10 years) was also viewed as a risk among rural and regional bidders with limited spectrum portfolios.” But MGA predicted Congress will continue to press the FCC to approve a proposal for nationwide free broadband, similar to one M2Z originally pushed. “Despite the desire among some in Congress to push the FCC to create a nationwide licensee in the AWS-3 band and offer a free broadband product, the industry appears to have succeeded, for now, in persuading the FCC to hold off for at least another month or two,” the firm said.

The Wall Street Journal slammed the proposal in an editorial, citing FCC failure to find a 700 MHz D-block licensee. “You'd think Chairman Martin would have learned from this experience,” the paper said. “It’s not the role of regulators to pick winners and losers to achieve their preferred social outcomes. Private competition and the price mechanism can most fairly and efficiently find the best use for scarce spectrum.”