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FCC Ruling May Spark Wireless Revolution

The FCC approved rules Tuesday intended to give people greater choice when it comes to their cell phones and wireless devices following completion of a pivotal airwaves auction next year.

The vote clears the way for the auction of the current analog broadcast television spectrum, which by law must take place no later than Jan. 28, 2008. It is expected to raise as much as $15 billion.

The Federal Communications Commission approved a much-debated "open access" provision, pushed by Chairman Kevin Martin, a Republican, and supported by the agency's two Democrats.

It will allow customers to use whatever phone and software they want on about one-third of the spectrum to be auctioned.

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"I am committed to ensuring that the fruits of wireless innovation swiftly pass into the hands of consumers," Martin said.

A more ambitious provision that would have required a licensee to sell access to its network on a wholesale basis was not included. That makes it unlikely that Google Inc. (GOOG) will bid.

Google said it might challenge traditional wireless companies if the rules were to the company's liking.

The rules also will allow for the creation of a shared public safety network that commissioners hope will solve many of the communication problems that firefighters and other first responders have experienced during disasters like the Sept. 11, 2001, terrorist attacks.

The vote was not unanimous. Republican Commissioner Robert McDowell dissented on the open access provision, his first "no" vote since joining the commission. Republican Deborah Taylor Tate also expressed concerns about the provision, but did not vote against it.

The two Democrats, Michael Copps and Jonathan Adelstein, preferred that the rules had included the wholesale concept sought by Google and consumer groups. Still, they ended up supporting the final order.

The text of the rules was not released at Tuesday's meeting. The language in the document ultimately will determine which investors will commit billions of dollars to develop new wireless networks and which may not bid at all.

The spectrum to be auctioned 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 vacating it to make way for all-digital television.

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

A total of 62 megahertz will be auctioned under the plan.

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

Martin said he tried to "strike an appropriate balance" with the new rules, acknowledging the criticism from his fellow commissioners.

Copps said that by failing to adopt a wholesale provision, the commission "misses an important opportunity to bring a robust and badly needed third broadband pipe into American homes."

While the Democrats thought the rules didn't go far enough, the two Republicans on the commission felt they went too far.

McDowell was concerned the rules would impose too much control on the wireless industry.

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 a third-pipe competitor would emerge 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 have discouraged big cable and telephone companies — who would be unlikely to lease space on the new network to potential competitors — from bidding.

Rick Whitt, Google's Washington media and telecommunications counsel, commented on the company's blog Tuesday that it "will need time to carefully study the actual text of the FCC's rules" before it decides whether to bid.

The spectrum will be occupied by television broadcasters until February 2009. The winning bidder or bidders then have to "build out" the network. This could take several years and billions of dollars.

AT&T Inc.'s (T) federal regulatory chief Jim Cicconi said in a statement that the agency appears to have "struck a reasonable balance between the competing interests debating the Google Plan."