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July 31, 2007

FCC Sets Rules That Ensure No Third Pipe

By Glenn Fleishman

The FCC has voted on the auction rules for the valuable 700 MHz band’s upper reaches: The rules set for the 20 MHz hunk of spectrum that could be won by a bidder on a national basis will require that the winner allow any device and any service on the network. In practice, however, that won’t be as interesting as it sounds. If the FCC had applied those rules retroactively to current spectrum holdings by cell providers, it would be easier to find and use advanced phones from Europe and Asia for both GSM and CDMA networks. Verizon’s tetchy terms of services that prohibit anything but email, Web surfing, and corporate applications wouldn’t be allowed, either.

But this is a new band that isn’t used by any other countries worldwide for this purpose. It’s possible an ecosystem of devices will spring up for the U.S. market, especially if 700 MHz radios turn out to be relatively easy and cheap to make. But the failure to require the winning bidder to resell access on a wholesale basis means the winning bidder gets to set the prices it wants.

Two of three Republican FCC commissioners—oddly, not the chair Kevin Martin—thought open access and open devices were added regulation. I disagree. There is just as strong a regulatory hand involved when you tell carriers that don’t have to resell access as when you tell them they do. That’s a regulatory choice that impairs non-incumbents in the same way that the converse impairs new entrants.

It’s business as usual, folks, just a little more open.

Posted by Glennf at July 31, 2007 1:11 PM

Categories: Cellular, Financial, Spectrum

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