FCC's Free Wireless Internet Plan Is Doomed To Fail, CTIA Charges - InformationWeek
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6/6/2008
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FCC's Free Wireless Internet Plan Is Doomed To Fail, CTIA Charges

The FCC's free Wi-Fi proposal is based on a bad business model, the mobile carrier association said.

Last month, Federal Communications Commission Chairman Kevin Martin proposed auctioning off an unused piece of spectrum with the condition that the winner offer free Wi-Fi.

In a filing (PDF) with the FCC, the CTIA said this is a horrible idea that is bound to fail.

"The proposal upends two decades of spectrum policy in favor of a specially tailored auction designed to advance the particular business model of a single company. Moreover, this business plan -- including free broadband -- has a track record of failure," CTIA wrote.

The FCC's plan involved auctioning off 25 MHz of wireless spectrum. The winning bidder could use the airwaves for commercial purposes but would have to offer free wireless Internet to 95% of the nation's population in 10 years. Additionally, obscene content would have to be filtered out, and the free Wi-Fi could have advertising to cover costs.

The FCC said the plan would spur innovation in broadband providers by offering more choices in Internet access as well as increase broadband penetration in the United States.

The CTIA urged the FCC to use its so-called flexible-use policy, where the winning bidder is essentially allowed to use any technology or business model to respond to consumer demand.

The mobile operator association pointed to historical examples where special rules to auctions have proved ineffective.

The CTIA contends that the D block section of the 700-MHz auction was tailored toward the business plan of the company Frontline, which ultimately didn't enter the auction. The D block didn't come close to reaching its $1.3 billion reserve price, with Qualcomm's $472 million being the highest bid.

The CTIA also pointed to companies like NetZero and Juno as examples of how an ad-supported free Internet business model is doomed to fail. The letter also said that multiple free municipal Wi-Fi services with a similar model have failed.

"In light of this history, on what basis does the Commission conclude that the business model it plans to mandate is, in fact, viable on a national scale?" the CTIA wrote.

The free wireless proposal was scheduled to be discussed June 12, but Martin recently delayed it to address concerns from wireless carriers that it could interfere with frequencies already in use.

Editor's Note: This story was updated June 10 to more accurately describe the specrum the FCC is considering auctioning off.

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