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Commentary

FCC Chair Must Face Down The Carriers In 700-MHz Auction Flap

I have wondered in this space before whether FCC chairman Kevin Martin has the, uhh, intestinal fortitude to pull off what will undoubtedly be seen as the defining task of his career: seeing through the auction of valuable 700-MHz spectrum so that it benefits consumers, breeds competition in the carrier-dominated U.S. wireless industry, and brings in many billions to the U.S. Treasury. Judging
I have wondered in this space before whether FCC chairman Kevin Martin has the, uhh, intestinal fortitude to pull off what will undoubtedly be seen as the defining task of his career: seeing through the auction of valuable 700-MHz spectrum so that it benefits consumers, breeds competition in the carrier-dominated U.S. wireless industry, and brings in many billions to the U.S. Treasury. Judging from events of the last month, the answer seems to be "Nope."Let's recap, shall we? Verizon Wireless, the No. 2 U.S. carrier, filed suit three weeks ago to have the rules for the auction -- in particular the provisions calling for open access to devices and solutions over any network the auction-winner builds -- struck down as "arbitrary and capricious" (which, I must point out, is a fair description of the terms of many wireless contracts in this country). At about the same time, on Sept. 17, Verizon Wireless CEO Lowell McAdam and other executives met privately with Martin and the chief of the FCC's wireless bureau and staffers.

Since then, according to RCR Wireless News, Martin -- who made some fairly eloquent calls over the summer for open, competitive networks -- has been "aggressively pushing for prompt revisions to the 700 MHz open-access rule."

So, after a few rounds of whist and some martinis with Verizon suits, Martin changes his tune and now wants to scotch the very provisions on which he had previously staked his legacy. It's no wonder that interlopers who want to upset the carriers' oligopoly, like Google and start-up Frontline Wireless, have decried the "opaque" nature of the Verizon meeting and demanded that the chairman not waver from his previously stated positions.

"We hope the FCC sticks to its guns as it tries to introduce the open ethos of the Net to a small segment of the closed wireless world," wrote Richard Whitt, Google's D.C. lobbyist, on his policy blog yesterday.

Interestingly, Whitt now says that Verizon is using a clever feint to convince the commission to dilute the open-access requirements. Rather than striking down the provisions altogether, Whitt says, "Verizon appears to be arguing that . . . the requirements for open devices and open applications should not apply to a licensee's own devices."

Under this scenario, you could bring an unlocked device from a handset vendor to a Verizon-owned network, but you couldn't buy unlocked devices from Verizon -- a ploy that would preserve the cornerstone of the wireless carriers' fortress, their ability to control what their customers can do with the devices they sell them.

Martin looks like a clever high-school sophomore, and he's a somewhat colorless public figure (he entirely lacks the panache and quotability of his predecessor Reed Hundt, who happens to be a co-founder of Frontline). There's nothing in his biography to suggest that he has the sangfroid to be a staunch and vigilant supporter of the consumer in the face of corporate muscle. Let's hope he finds some.