An Overview of the FCC's 2008 700MHz Auction

The upcoming auction by the FCC concerns the band of spectrum between 698MHz and 806MHz, and is divided at 746MHz into what is called the lower 700 and upper 700 megahertz bands, encompassing the UHF channels of 52 through 69. Some of this spectrum is already owned from previous auctions, most predominantly by Aloha Partners, who plan to use channels 54 and 59 for their HiWire MobileTV. Qualcomm's MediaFLO Mobile TV network owns channel 55. The remaining spectrum is divided into 5 blocks and has been mandated by the FCC to fulfill a number of needs and services.

• Block A is 12MHz in the lower 700MHz and is broken into 176 regions that the FCC calls Economic Areas (EA). This is the current channel 52 and 53
• Block B is also 12MHz and is broken into 734 localities deemed cellular market areas (CMA).
• The C block is 22 MHz and is set aside for commercial purposes, broken into 12 regional licenses, and is subject to the FCC's open access rules.
• Block D is a nationwide commercial license of 10MHz, to be paired with the12MHz that is set aside for public safety and is also mandated as open access.
• Block E is 6MHz broken into EA's.

Excluding the Public Safety band of Block D, any winning bidder can end up with multiple regional or local licenses.

The blocks that are of the most interest, and indeed have generated the most controversy, are the commercial block C, and the Public Safety/Commercial block D.

Walled Garden Crumbles to Open Source

In March of 2007, an unlikely group of tech companies banded together to form the Coalition for 4G in America. Led by Google, coalition members Intel, Yahoo! Skype, EchoStar, DIRECTV, and Access Spectrum successfully lobbied the FCC to stipulate open access rules for the commercial block C. Fearing a "walled garden" approach to this valuable piece of spectrum, the coalition proposed, and the FCC agreed, that the winning bidder must allow any wireless device on the network, and cannot block any outside applications or content.

While the FCC did opt for open access, it declined to add what Google really wanted; requiring the winners to resell spectrum wholesale to competitors. No doubt as a consequence of this decision, Google will be a bidder at the 700MHz auction. If the $4.6 billion reserve is not met, the FCC will reauction the block without the open access requirements.

The whole argument of the open access vs. walled garden approach rekindled the Net Neutrality debate, with the Free Marketers (i.e. AT&T, Verizon) arguing against Federal regulation of the Internet. Cell phones from today's carriers are heavily subsidized, and without them, retail prices would be upwards of $200. Rouge devices or bandwidth hogging applications could bring a network to its knees.

In the end, the FCC's decision in this case was a victory for wireless network neutrality, with open devices and applications getting a free ride on the wireless waves. Perhaps as a consequence, late last year Verizon caved by announcing it would open its network to any device or application that meets its specifications by later this year. Man, they really must want a piece of this pie bad!

D Block Looking Bleak

The FCC's plan for the D block, 10MHz located next to the 12MHz swath reserved for public safety, is to merge government with free enterprise by joining the two bands. The winner of the commercial block would partner with the public safety licensee to build out a nationwide broadband network for joint commercial and public safety use. Commercial use of the network would be secondary, as public safety has the priority and could pre-empt the network as needed. I guess the intent here is to get the most bang for the buck.

The plan was put forth by Frontline Wireless LLC, who was until recently considered the "frontrunner" in the bidding for D block. The group is backed by some politically and financially well connected individuals, in the likes of former FCC chairman Reed Hundt, and James Barksdale former Netscape CEO.

Frontline had asked for and got the open access rule, and was planning to sell wholesale to other wireless providers.

On January 9th, Frontline announced it was withdrawing from the bidding, and in fact, was closed for business. Unstable financial markets were said to be the blame. In September, Frontline petitioned the FCC to lower reserve prices of the 700MHz auction blocks.

So where does that leave D block now? With a reserve of 1.3 billion and an upfront payment of $128.2 million, speculation has it that only the big boys, Google, Verizon, AT&T or Cox to name a few, would be able to compete. Besides, its doubtful they would want to, having to work with government agencies and all that.

And that is where we stand, one week before the bidding begins. Don't hold your breath for the results, as the auction could go on for months. Any blocks that don't meet the minimum reserve will be re offered in FCC auction 76, striped of any rules and regulations. Congress has already spent a big chunk of the money, and is likely to say just sell it!

It has been said that Google is in it to be sure block C meets its minimum reserve, and is used as an open network. The fate of block D is a little more ominous. For the consumer, if these blocks do fail to meet the reserve, we can all just bend over and kiss our open access goodbye! For now, anyway.

Author Michael Talbert is a certified systems engineer and web designer with over 8 years experience in the industry, and is currently managing editor of VoIP-Facts.net. For more information on VoIP and Unified Communications, visit the website VoIP-Facts, or the VoIP Blog for up to date industry news and commentary.

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