This month sees the long-awaited Federal CommunicationsCommission auction of "beachfront" wireless spectrum inthe 700MHz range to companies looking to provide broadband Internetservices. But there's already a battle brewing concerning anotherchunk of spectrum. The disposition of the band from 2155-2175 MHzmay ultimately be settled in the federal courts. According to the FCC, it is for "fixed and mobileservices and designated for Advanced Wireless Services (AWS) use."But a firm called M2Z Networks wants the FCC to turn it over, free ofany upfront charge.
So, who is M2Z and what does it want to do with this spectrum?M2Z isheaded by former FCC Wireless Bureau staffer John Muleta and backedto the tune of $400 million by a consortium of Silicon Valleyventure capitalists. M2Z proposes to use the spectrum to build awireless broadband network and offer free-of-charge access to 95percent of the country within 10 years.
M2Z first filed its proposal in May 2006, after waiting severalyears for an FCC decision on what to do with the frequencies.Although the FCC is supposed to issue timely responses to suchpetitions, it wasn't until August 31, 2007 that the FCC finallydenied M2Z's petition and issued a Notice of Proposed Rulemaking seekingcomment on possible permanent uses of the spectrum. M2Z then filedsuit challenging the FCC's action in October, and the case iscurrently wending its way through the federal court system.
By dangling the promise of "free," "public interest" services infront of the FCC, the M2Z proposal parallels the widely touted andlargely adopted proposal submitted to the FCC by now-defunct Frontline Wireless regarding thedisposition ofthe 700MHz wavelengths. Such rhetoric has evidently becomeboilerplate for firms seeking to pay less than a market rate forthe right to use spectrum.
To that end, M2Z has leaned heavily on rhetoric regarding theso-called"digital divide"--the fact that the richer you are, the morelikely you are to have broadband access. The assumption is thatbroadband access is akin to indoor plumbing or telephone service,an essential good that no American home can do without. It is anassumption with little basis, though. A recent survey revealed that almost one third ofhouseholds see little point in having Internet access at home inthe first place. It found that more than half of U.S. householdshave broadband services at home, up from virtually zero 10 yearsago. Only 11 percent of the 29 percent with no home Internet access(that's 2.3 percent overall) cite the cost of access as a stickingpoint. M2Z wants to bridge this divide by using the spectrum toprovide free-of-charge, advertiser-supported consumerbroadband.
To further the "public interest," this free service would behobbled by content filters that M2Z touts as "family-friendly."Unfortunately, M2Z has not specified whether or not the filterswould screen out such things as "hate speech." Many Internet filterservices do, but the "hate speech" moniker has been used as figleafto cover for the blocking of objectionable political content,such as pro-Second Amendment websites. M2Z's broadbandvision is analogous to the present situation with broadcasttelevision, where spectrum-subsidized broadcasters offer sanitizedentertainment and circumscribed political debate relative to themore freewheeling cable and satellite providers.
Any such plan raises serious questions: Would M2Z tweak itsfilters to curry favor with the FCC commissioners who vote onwhether or not it is meeting its obligations as the spectrumlicensee? Current FCC chairman Kevin Martin has shown a sudden zeal for extending its regulatory powerto cable television, and a similar impulse toward control can befound in other commissioners and possible future chairmen--even iftheir specific agendas are different. Their subsidized, censoredmedia could crowd out uncensored information and a true marketplaceof ideas.
But some critics would say that even that scenario gives the M2Zplan too much credit. It would offer 384 kilobits per seconddownstream and 128 kbps upstream within 10 years, which will beobsolete by the time the network is built. In some places, a threemegabits per second connection already can be gotten for around $30per month. AT&T is now offering 768 kbps DSL in some areas for$15 per month, and Verizon has a 15 Mbps service (40 times fasterthan the M2Z plan) for $53/month. Even wireless networks arerolling out "3G" data networks that will be faster than 384 kbps.Consumers may just ignore the chance to use free, slow, sanitizedwireless.
M2Z also wants to offer a pay service, with no filters and noadvertising, which would offer faster speeds, with five percent ofthe revenue going to the FCC. This reveals the heart of the M2Zplan: Get a hold of spectrum by pitching a "free" service in "thepublic interest," then convert it to a for-profit network, usingspectrum assets it otherwise would have had to buy.
Although M2Z has characterized the spectrum in question as"fallow," there are in fact several users on the frequencies whichwould have to be moved, at some cost. Mobile-radio and cell-phonenetworks use the wavelengths to move traffic within their networkbackbones, just not directly to consumers. Those servicesultimately serve the public as well.
The M2Z business plan for subsidized, sanitized, "free" wirelessInternet access simply has no special moral claim to the 2100MHzspectrum. M2Z is correct when it says that the notoriously inefficient FCC needs to stop playinggames and decide once and for all what to do with the spectrum. Butthat's not for the sake of M2Z. Participants in this month'sspectrum auction are not acting on complete information becausethey don't know when or if there will be another spectrumauction--or a giveaway--for another competitive consumer broadbandoffering.