700 MHz proceedings get messy

THE MOBILE-PHONE INDUSTRY FINDS ITSELF ADRIFT in a sea of uncertainty as the 2008 election year approaches, with litigation, legislation and other factors casting a collective cloud over spectrum auctions critical to rollout of next-generation wireless services and the existing regulatory regime.
Competition for new wireless licenses begins in just three months, but the Federal Communications Commission and prospective bidders-the latter busy with lining up financing and developing strategic plans-are left watching 700 MHz litigation only starting to unfold in a situation that could get messier if other parties join Verizon Wireless in suing the agency over rules for licenses in that frequency band.
Moreover, the FCC and cellular industry are not entirely out of the woods insofar as the legitimacy of last year’s advanced wireless services auction, given the likelihood the 3rd U.S. Circuit Court of Appeals will return to a lawsuit challenging small business bidding rules and AWS auction results. The 3rd Circuit recently dismissed the case on procedural grounds, but Council Tree Communications Inc. and other joint petitioners are expected to ask the court to rule on the merits of the case after the FCC acts on their petition for consideration.
Immediate concern to the FCC and the wireless industry is the upcoming 700 MHz auction.
The U.S. Court of Appeals for the District of Columbia Circuit last week rejected Verizon Wireless’ emergency motion for fast-track treatment of its challenge to the FCC’s open-access rule, increasing the chance litigation will remain in play in the lead up to the Jan. 16 start of the 700 MHz auction.
Judges David Tatel, Merrick Garland and Brett Kavanaugh without comment denied the carrier’s request for expedited consideration of its appeal of the open-access condition imposed on one-third of the 700 MHz spectrum set for auction. Verizon Wireless had argued it was imperative that judicial review of the issue be completed before the auction begins.
The FCC and Frontline Wireless L.L.C. opposed Verizon Wireless’ emergency motion, with the commission acknowledging more 700 MHz suits may be forthcoming and should be addressed as a package rather than in piecemeal fashion by the court. Additional suits could reach the court after the FCC acts on petitions for reconsideration of 700 MHz rules.
On a related front, FCC Chairman Kevin Martin broke his silence on his failed attempt to revise 700 MHz open-access language after Verizon Wireless and Media Access Project officials separately met with Martin and his staff on Sept. 17. Verizon Wireless executives voiced objections to the open-access requirement, while the public-interest group outlined its understanding of the rule’s reach and limitations later the same day.
Martin last week said he was merely trying to clarify the open-access provision-before the agency rules on regulatory challenges to the 700 MHz decision-to reflect the views of the Media Access Project.
“We did not ask for any kind of clarification,” said Harold Feld, senior VP of the Media Access Project.
The Public Interest Spectrum Coalition, whose representatives met with Martin and his staff last week, said they told FCC officials “they believed that, as a general matter, no clarification of the [700 MHz] order was necessary, and that specifically, the order was clear on the obligations of the network providers with regards to devices and applications. Further, efforts to clarify the order in response to hypothetical concerns could have unintended consequences, such as the creation of ‘safe harbors’ for discriminatory conduct.”
Public-interest groups and some companies eyeing the 700 MHz auction feared Martin’s move was a response to Verizon Wireless lobbying to persuade the FCC to water down the open-access rule.
Sources said objections raised by Democratic Commissioners Michael Copps and Jonathan Adelstein forced Martin to abort his effort to revise open-access language in 700 MHz rules. House telecom subcommittee Chairman Edward Markey (D-Mass.) also has raised concerns about any move to weaken the 700 MHz open-access requirement.
It is unclear whether Martin will pursue further changes to open-access language before the FCC rules on petitions for reconsideration.
“I don’t think that in any way I’m moving away from the open-access requirement that prohibits the network operator from discriminating against content or applications,” Martin told reporters.
Frontline Wireless, Google Inc. and other parties reiterated their opposition to any changes that dilute the 700 MHz open-access rule.
“We are still carefully analyzing whether and how we might participate in the upcoming auction. However, if we do end up bidding and ultimately win the spectrum in question, we would ensure that consumers have the right to decide which devices and applications they want to use on our network,” said Richard Whitt, Washington media and telecom counsel for Google, in a policy blog. “We would also encourage third-party software applications-even those that compete directly with our own services-on the theory that users deserve the right to pick and choose the programs they want to use online.”
Added Whitt: “We think the Internet offers the optimal model for what best serves the interests of all consumers. To that end, 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.”
Meantime, Frontline, headed by Washington political insiders and wireless industry veteran Haynes Griffin, and Verizon Wireless traded barbs over the latter’s 700 MHz lobbying at the FCC.
Cellular industry association CTIA took umbrage at Frontline’s claims that 700 MHz rules should encourage new entrants into the wireless space because the industry is becoming highly concentrated. “Frontline’s proposals are nothing more than a coordinated campaign to deter auction competition-especially by existing providers-for Frontline’s benefit alone,” CTIA said.
In addition to being an issue in the FCC’s 700 MHz proceeding, the competitive level of the wireles sector could become a flashpoint when the Senate Commerce Committee holds a hearing Oct. 17 on a bill to re-regulate the mobile-phone industry. The wireless open-access movement, wireless consumer legislation and the prospect of Democrats controlling the White House and Congress have the disruptive potential to fundamentally change the way the cellular industry does business well into the future.