Bush, Martin at war over AWS-3 spectrum auction: White House argues for auction ‘without price or product mandates’

Federal Communications Commission Chairman Kevin Martin and the Bush administration are on a collision course over a possible Dec. 18 vote on a free, family-friendly wireless auction plan, uncharacteristically bringing into public view a high-stakes policy dispute between the Republican White House and one of its top appointees.
Meantime, a powerful Democratic senator may about to put the squeeze on Martin insofar as FCC decisions being teed up for vote in the remaining weeks before the incoming Obama administration assumes power.
In a letter to Martin on the eve of the public release of the official agenda for next week’s FCC meeting, Commerce Secretary Carlos Gutierrez urged the nation’s top telecom regulator not to move forward with the advanced wireless services-3 initiative.
“The administration believes that the AWS-3 spectrum should be auctioned without price or product mandates,” stated Gutierrez in the two-page letter. “The FCC should rely on market forces to determine the best use of the spectrum, subject to appropriate government rules to prevent harmful interference.”
There has been speculation for months that Gutierrez might weigh in on the FCC’s AWS-3 controversy. The commerce secretary’s letter closely tracks one sent by Meredith Attwell-Baker, acting head of the National Telecommunications and Information Administration, last month.
NTIA is a unit of the Commerce Department that advises the president on telecom policy and manages federal government spectrum.
“We’re reviewing the letter and it looks very similar what NTIA had put forward recently,” said FCC spokesman Robert Kenny. “We agree that free market forces should drive competition, but we believe that providing free basic broadband to consumers is a good thing. It’s not just about raising the most money as you can, but about advancing policies that bring benefits to consumers and ensure the most efficient use of the spectrum.”
Congress in 1993 said anticipated revenue alone should not drive the formation of auction rules.
Martin’s AWS-3 plan would require the winning bidder to offer 25% of network capacity for free and to employ network-based filtering to block pornography and other obscene content. The AWS-3 licensee also would have to allow third-party devices and applications on the network and provide service to at least 95% of the U.S. population by the end of the 10-year license term.
Key House Democrats support the free wireless broadband concept.
Sen. Jay Rockefeller (D-W.Va.), expected to be the new chairman of the Senate Commerce Committee, may want Martin to put the brakes on major policy actions so he can remain focused on issues related to the digital TV transition early next year. A Senate aide said Rockefeller may send a letter to Martin as early as today to make that very point, without explicitly expressing views on AWS-3 or other items the FCC chairman wants to consider at the Dec. 18 meeting.
Critics assert the FCC is crafting rules to accommodate the business plan of one company, Silicon Valley-funded startup M2Z Networks Inc. They also claim Martin is opening the way for disruption to mobile-phone communications in the AWS-1 band (2110-2155 MHz) by allowing wireless Internet operations in the AWS-3 band (2155-2180 MHz). Wireless microphone users in professional entertainment and sports industries have expressed similar fears about potential interference from AWS-3 transmissions.
An FCC engineering analysis concluded sufficient safeguards are built into proposed AWS-3 technical and operational rules to prevent harmful interference to AWS-3 mobile-phone communications and wireless microphone operations. T-Mobile USA spent $4.2 billion on 120 AWS-1 licenses at an auction two years ago that raised nearly $14 billion. The AWS-1 spectrum purchased by T-Mobile USA, the smallest of the four national cellular carriers, is critical to being competitive in the 3G market. T-Mobile USA is counting on holiday sales with the rollout of 3G service in more than two dozen markets by year’s end.
But M2Z has big plans itself.
“The Bush administration is marked by years of failed policy initiatives that benefit corporate interests, and this is just another example. Given the current economic crisis, the need for affordable and widely available broadband to stimulate the economy and bridge the digital divide could not be greater,” said John Muleta, CEO and founder of M2Z Networks. “All of the policy and technical benchmarks have now been met and all that is needed is an affirmative vote by the FCC commissioners so that this spectrum can be auctioned and be put into productive use as quickly as possible. America’s consumers have waited long enough and Chairman Martin deserves credit for pushing this innovative plan that will provide more access, create jobs and stimulate the economy. The administration should support this plan, not fight it.”
President-elect Barack Obama called for universal broadband service in a recent radio address, but neither he nor his transition team has taken a position on the AWS-3 matter. The Obama-Biden transition Web site, however, includes a blog on press reaction to the president-elect’s broadband remarks and reference to a possible Dec. 18 vote by the FCC on a wireless broadband plan.
The Wall Street Journal skewered Martin over AWS-3 in an opinion piece today.