FCC Drops Free Broadband Vote

Federal Communications Commission Chairman Kevin Martin finally gave in to pressure Dec. 12 from both Congress and the Bush administration to cancel a scheduled Dec. 18 agency vote on a controversial proposal to impose a free wireless broadband mandate on the FCC's next spectrum auction.

Martin's decision to cancel the vote came after Sen. John D. Rockefeller, D-W.Va., the incoming chairman of the Senate Commerce and Science Committee, and Rep. Henry Waxman, D-Calif., who will be heading the House Energy and Commerce Committee, co-signed a letter to Martin stating it would be "counterproductive" to vote on "complex and controversial items that the new Congress and new administration will have an interest in reviewing."

A day after receiving the letter, Martin's office quietly tabled the vote.

"We received the letter from Senator Rockefeller and Congressman Waxman today and spoke with other offices," Robert Kenny, an FCC spokesman, said in a Dec. 12 statement. "In light of the letter, it does not appear that there is consensus to move forward and the agenda meeting has been canceled.  The items will remain on circulation and the Commissioners can still vote on them."

Under Martin's plan, the winning bidder of 25MHz in the 2,155 to 2,180MHz advanced wireless services band would be required to provide a free wireless broadband tier to 50 percent of the United States in four years and 95 percent of the country within 10 years. The proposed free broadband network would support itself by advertising and offering faster speeds on pay tiers.

The free tier of broadband services would be family friendly, with the FCC requiring the winning bidder to filter out pornography.

Martin first proposed the idea in May but ran into stiff opposition from incumbent wireless carriers worried about interference with their own networks. In particular, T-Mobile, which paid $4 billion to win the airwaves adjacent to the spectrum that will be up for auction, fiercely opposes Martin's plan.

Republicans in Congress also oppose the spectrum auction mandates, preferring the FCC auction the airwaves to the highest bidder with no strings attached. Lame duck Secretary of Commerce Carlos Gutierrez stepped into the controversy with a Dec. 10 letter to Martin, urging the FCC chairman to reconsider the proposal in light of the Bush administration's position that spectrum should be allocated by markets rather than governments.

"The history of FCC spectrum auctions has shown that the potential for problems increases in instances where licensing is overly prescriptive or designed around unproven business models," Gutierrez wrote. "In contrast, open and highly competitive auction processes have supported both greatly expanded broadband services and the taxpayers' interests in spectrum license allocation."

Martin's plan closely mirrors a 2005 proposal by Silicon Valley start-up M2Z Networks. The catch, though, was M2Z didn't want to bid on the spectrum. Instead, M2Z proposed that the FCC lease the spectrum to the company in return for 5 percent of the gross receipts. M2Z now says it is now willing to bid on the spectrum. The company is backed by Silicon Valley powerhouse venture capitalist Kleiner Perkins Caufield & Byers.

AT&T and Verizon have also opposed the auction plan, as have the CTIA, the carriers' principal trade association, and several Republican members of Congress. In addition to interference concerns, the carriers have raised questions about M2Z's ability to raise the capital needed to build a nationwide wireless network.

Other members of Congress, though, have shown an interest in the M2Z proposal with Reps. Anna Eshoo (D-Calif.) and Chris Cannon (R-Utah) introducing legislation that would require the FCC to auction fallow spectrum (like the 2155-2180MHz band, for instance) to provide free, filtered broadband for 95 percent of the country within 10 years.