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Explain these auction rules to me again

Steven Titch
July 30, 2007, 6:01pm

I can't imagine anyone being happy with ambiguous rules the Federal Communications Commission announced today for next year's auction of spectrum for wireless services. As expected, FCC Chairman Kevin Martin decided to dabble in market experimentation, requiring the winner of a 22-MHz block of the coveted spectrum to allow any phone, device or application to work within that group of frequencies. Even then, Martin hedged, stating that this wireless network neutrality requirement is "subject to certain reasonable network management conditions that allow the licensee to protect the network from harm." Huh? Those two great words "network management" always seem to show up when network neutrality is on the table. Combine that with Martin's allowance of "reasonable" safeguards on the network and you have a loophole that you could fit Google's market cap through. In other words, the FCC rules allow the licensee, on its own and at any time, to start restricting devices and apps if it feels that they threaten the stability of the network, by themselves or when used by large numbers of customers. One assumes then that the licensee would then fall back on established bundled business models, which today assure that the device, the network and the application work properly. So much for wireless net neutrality. Despite the fervent calls for network neutrality by lawmakers and some industry leaders, when the rubber hits the road, they readily allow wiggle room, which to me reveals a startling lack of faith that net neutrality is correct policy. Even Alan Davidson, Google's Washington policy counsel, has said that not all network management is anticompetitive. Martin's allowance of "certain reasonable network management conditions" recalls the out he built into the network neutrality condition he placed on AT&T in return for approving its acquisition of BellSouth. There, he specially exempted video and wireless–the two services that network neutrality opponents say would be the worst affected by a ban on use of any network quality or reliability tools. Adding in the fact that Martin stopped short of setting aside spectrum for wholesale only (a decision that has the Consumers Union and Free Press apoplectic), it's hard to understand whether, in the long term, these auction rules change anything. Still, as Randy May notes, the FCC's lip service to wireless network neutrality gives credibility and momentum to those who seek to impose greater government regulation on the Internet, and who seek to impose these egregious and self-defeating rules, which address no real problem, on all Internet service providers. It would have been better for all if Martin had just opened the spectrum bidding to all-comers and allowed the winners to chart their own business course.


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