Airwaves auction may disappoint consumers

WASHINGTON — FCC Chairman Kevin Martin has promised that a pivotal airwaves auction early next year will allow people to buy the cellphones they want, not just those offered by their service providers.

But the promise of consumer benefits in the proposed rules for the airwaves auction — set for a vote today by the Federal Communications Commission — may not be so bold after all.

The "open access" rules will have no impact until at least 2010, probably later; they affect only a third of the airwaves spectrum being auctioned; and serious questions are being raised about their enforceability.

"Consumers will still face restrictive use of their phones and BlackBerries for years to come and will only get the benefit of a more open attitude to devices if there is thorough regulatory oversight five years down the road," said Gene Kimmelman, vice president for federal affairs for Consumers Union, the nonprofit publisher of Consumer Reports magazine.

The FCC is expected to approve the open-access provision, along with a passel of other rules today. The dense, technically worded document will guide the auction's conduct. The contents, which are not subject to public scrutiny, have been eagerly anticipated by bidders.

The final wording may persuade some investors to commit billions of dollars to develop new wireless networks; it may dissuade others from bidding at all.

The publicly owned spectrum up for auction has been praised for its ability to travel long distances and penetrate walls easily — the same characteristics that made it attractive to broadcasters who are being evicted from it in the move to all-digital television.

The Congressional Budget Office estimates the auction's proceeds will amount to between $10 billion and $15 billion.

A total of 60 megahertz will be auctioned. Twenty-two megahertz will be subject to the "open access" rules being pushed by Martin. Another 10 megahertz will be dedicated to a national public-safety network, shared between a commercial operator and public safety agencies.

Last April, Martin described the auction as the last best opportunity to introduce a "third pipe" competitor to the world of high-speed Internet access, which is largely dominated by cable and telephone companies.

Public-interest groups, later joined by Internet search-engine giant Google, argued that the best way to ensure that third-pipe competitor was to reserve some of the spectrum for use by a wholesaler.

Google even said it might bid if such a condition were imposed. A wholesale requirement would discourage big cable and telephone companies — who would be unlikely to lease space on the new network to potential competitors — from bidding.

Harold Feld, who studies spectrum issues for the Media Access Project, a nonprofit public-interest group, said chances of a wholesale provision passing are virtually nil.

"Politics both inside and outside [the agency] make it a thousand-to-one against a wholesale open-access provision," he said.

But the more modest provision backed by Martin appears to have the votes. During questioning by a congressional subcommittee last week, Martin and the two Democrats on the five-member commission said they favor the idea.

But even with a favorable vote, many challenges remain.

The spectrum being auctioned will be occupied by television broadcasters until February of 2009. The winning bidder or bidders (the spectrum is in six geographic pieces) would then have to "build out" the network. This could take several years and billions of dollars.

Finally, there is no indication to date how the FCC intends to enforce the rule.

Whether the open-access provisions have any real effect won't be known for certain until after the current commission is out of office. Despite the concerns, however, Feld remains hopeful given Martin's forceful public statements.

"He's now staked his reputation on this," Feld said.