Corporate Welfare, Auctions and AWS-3

Few of us like anyone telling us how to do our jobs, but in the case of the FCC, it is a required part of the job. The most recent round of  ‘tell us what you think’ pertains to spectrum in the 2155-2175 band, so-called AWS-3. This is the same chunk of spectrum that M2Z made a run at not too long ago, pitching the FCC on the idea that M2Z should be given the spectrum so it could offer ‘free’ advertising-based service. The FCC wisely rejected that silly notion, but now the Commission appears to be weighing another M2Z proposal to auction off that same spectrum, with the string attached that the winner must offer free service in that spectrum. It’s not literally the giveaway M2Z wanted in the first go-round, but it still amounts to suggesting the FCC stack the rules in favor of a specific company, providing them a proverbial free lunch at American taxpayers’ expense and harming consumers and licensees that have already ponied up billions of dollars in past auctions to offer wireless services. That’s a bad idea, and no agency of the US government has any business playing that game.  
 
There are all kinds of legal grounds on which arguments can be made as to why the FCC should not custom fit the rules for M2Z’s benefit. In fact, the Commission only has to consider fundamental principles to figure out the best means of going forward. For example, what’s worked in the past, and what hasn’t?

M2Z’s business model is nothing new. It’s been rolled out several times in the past, and has been an unquestionable flop. (For a current reference, see ‘Muni-WiFi’). At the same time, the FCC’s auction process has encouraged competitive bidding on unencumbered spectrum, historically resulting in service providers adding billions of dollars to the U.S. Treasury, and fierce competition that has led to a multitude of consumer benefits. The auction process works, and M2Z’s business model doesn’t. Simple, right?
 
Another basic consideration is the spectrum that has already been made available via auctions, such as AWS-1, and what rights those licensees hold. They spent nearly $14 billion to buy that spectrum, and many more billions to build-out their networks… and did so under the existing FCC rules. Is it fair now to play the shell game with them, change the rules to the advantage of a specific business plan, as well as disregard the numerous interference issues that M2Z acknowledges, yet continues to shove under the rug? The interference that will be caused by M2Z’s “AWS-3” operations is real, as is a similar problem for PCS licensees that will arise under the proposed rules in the so-called AWS-2 “H Block”.  American consumers, not to mention the companies which have already sunk billions of dollars into their competitive businesses, deserve better.

There is universal agreement that broadband deployment can be a key social and economic driver in the U.S., and the FCC’s statistics show that Americans are significantly favoring wireless as their newest on-ramp to the Internet. But, the reach of wireless broadband is being extended in a vibrantly competitive free market, and government intervention by arbitrary rulemaking is doomed to fail.  

There’s just no good reason why the FCC should morph the rules so that a well-funded company such as M2Z can lap the field with the commission’s help. I’m not going to join the chorus and tell the FCC how to do its job. That’s what an ex parte is for. But if the commission truly believes in its historically successful auction process, and creating the best possible communications environment for American consumers, then it should stay out of the business of trying to select winners and losers, and stick to what works and is fair for everyone.