Just Thinkin’

By now most folks have been aware of the great debate on the upcoming auction of the spectrum that will be abandoned when broadcasters go from analog to digital broadcasting. Things became especially interesting when Google stirred the pot with their guaranteed 4.6 billion dollar minimum bid if the FCC agreed to the following rules:

Official Google Blog: Our commitment to open broadband platforms

Open applications: consumers should be able to download and utilize any software applications, content, or services they desire;

Open devices: consumers should be able to utilize their handheld communications device with whatever wireless network they prefer;

Open services: third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and

Open networks: third parties (like Internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee’s wireless network

The FCC basically chafed at these rules at first but as time went on and a few of the incumbents like AT&T and Verizon began making noises about capitulating to a more open wireless network should they win the bid, the FCC just recently handed down the final wording of the rules that will set the requirements for companies bidding on this new spectrum and guess what? Looks like Google had a strong influence in the flavor of these new stipulations. Although the exact wording of the new FCC rules hasn’t been released yet, there’s a few excellent articles that cover the gist of it and cover some questions thereof:

For instance; can an incumbent provider incorporate the new spectrum into their already existing network? Apparently not as in this recent article at CNN Money:

FCC Rules Make Airwaves Unattractive For Incumbent - Source

The rules dictate that an incumbent company would not be able to integrate the section of the spectrum into their existing wireless networks.

This would mean the winner of the spectrum would have to build a new network to access the frequencies they acquired.

If a potential new entrant to the wireless market was the winner of the spectrum, this wouldn’t be an issue. But for existing players it would effectively mean they would have to operate two wireless networks side by side.

And what about the current practice of the consumer being restricted to only the devices that the provider allows? Read on:

F.C.C. Hands Google a Partial Victory - New York Times

While the language of the ruling has not been made public, it appears that any company that buys the new spectrum will have to leave it open to devices it does not approve or control. If, for instance, Verizon were to buy spectrum, consumers would have to pay Verizon for access to its network but they could use devices of their own choosing on it.

But wait…it’s not just the hardware involved apparently, but the software as well. At present, the providers maintain tight control over what software a user may download and use on their wireless devices. But now, when a company does acquire the new spectrum, the FCC has squashed that proprietary conundrum as well. The article at CNN Money continues:

FCC Rules Make Airwaves Unattractive For Incumbent - Source

The FCC rules state that whoever successfully acquires the 22 megahertz chunk will have to allow any handset device be attached to the wireless broadband network they subsequently build. They must also allow users to download any type of software or Web application on those handsets.

Now do you recall what I stated at the beginning of this post about Google’s 4.6 billion dollar guaranteed minimum bid on the spectrum if the FCC agreed to their rules?

F.C.C. Hands Google a Partial Victory - New York Times

Public interest groups said the $4.6 billion minimum auction price set by the F.C.C. might discourage bidders. The rules say that if the reserve auction price is not met, the open-access provisions adopted by the F.C.C. will be dropped in later bidding.

So there’s the fly in the ointment. No minimum bid–no open wireless.

However, to me it looks like Google knew exactly what they were doing when they offered up their minimum bid and their 4 rules in the first place. The thing you have to keep in mind about Google is that they never attempt to change things completely and directly by charging in and making veiled threats and demands as some other well known companies have a reputation of doing. Instead, Google excels at the art of strongly influencing and they certainly have the clout and the capital to back them up. One of Google’s most successful tactics is not making a lot a noise about every little thing every chance they get like a few others I could mention. So when they do make a move, folks tend to look up and pay attention.

Basically the FCC has told the incumbents that if they want this chunk of spectrum, they’re going to have to pay for it while at the same time telling Google to put up or shut up or at least that’s the way it appears. In my estimation, Google isn’t about to allow the spectrum to be sold off without these “open” provisions attached which is what would happen if the reserve auction price isn’t met. So it would seem awfully stupid and pointless if Google did not make the minimum bid even if it was only to force the incumbent’s subsequent bidding who might have otherwise held back in hopes that the “open” provisions would be dropped.

At that point, the existing providers would have to bid on the spectrum or lose it to Google who would then be in the fine position to lease portions of the spectrum out to said providers with all the open stipulations intact and maybe adding a few of their own in the future. This would just about guarantee an honest and competitive arena that would revolve around this new wireless network. Something I don’t believe the existing providers could stomach very well even if they had to except the FCC’s current open standards and pony up the dough to avoid it.

If you’re in doubt of this last statement, just imagine major providers like Verizon and AT&T having to answer to Google.

Either way, if Google does make their bid, the consumer wins or at the very least, their wireless life will get a heck of a lot easier to deal with. Whether it’s Google or one of the incumbents that acquires the spectrum; as long as Google bids, it will all be to our benefit.

Technorati tags: FCC, wireless, FCC auction, wireless auction, Google, telcoms, wireless spectrum, 22mhz, 22 megahertz

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