Google To FCC: $4.6B for Open Network

Posted by Sam Churchill on

“I am your father”. — Richard Wiley

Google announced today that should the FCC adopt a framework requiring greater competition and consumer choice, Google intends to participate in the federal government’s upcoming auction of wireless spectrum in the 700 megahertz (MHz) band.

Today, as a sign of Google’s commitment to promoting greater innovation and choices for consumers, CEO Eric Schmidt sent a letter to FCC Chairman Kevin Martin, stating that should the FCC adopt all four license conditions requested above, Google intends to commit a minimum of $4.6 billion to bidding in the upcoming 700 MHz auction.

In a filing with the FCC on July 9, Google urged the Commission to adopt rules for the auction that ensure that, regardless of who wins the spectrum at auction, consumers’ interests are served. Specifically, Google encouraged the FCC to require the adoption of four types of “open” platforms as part of the license conditions:

  • Open applications: Consumers should be able to download and utilize any software applications, content, or services they desire;
  • Open devices: Consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
  • Open services: Third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
  • Open networks: Third parties (like internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee’s wireless network.

According to the NY Times, Google believes that the cost of voice calls and data connections to the Internet may be partly subsidized by advertisements.

Eric Schmidt’s letter to the FCC says Google will bid at least $4.6B on 22MHz — if the spectrum is truly “open”:

The Commission’s draft order for the 22 MHz “C” Block in the Upper 700 MHz Band reportedly allocates this block on a REAG basis subject to combinatorial bidding and includes some reference to “open access” principles. While these all are positive steps, unfortunately the current draft order falls short of including the four tailored and enforceable conditions, with meaningful implementation deadlines, that consumer groups, other companies, and Google have sought. In short, when Americans can use the software and handsets of their choice, over open and competitive networks, they win.

It is also my understanding that the Commission’s draft order includes a reserve price of $4.6 billion for the “C” Block, apparently to address unsupported claims about any impact from adopting open platforms conditions. We hereby inform you that, should the Commission expressly adopt the four license conditions requested in our July 9th letter – with specific, enforceable, and enduring rules – Google intends to commit a minimum of $4.6 billion to bidding in the upcoming auction.

The cellular trade association, CTIA responded:

If Google is willing to commit almost $5 billion dollars for spectrum that it wants encumbered with various requirements, then let it win that spectrum in a competitive auction and choose that business model. Google and its allies, with their collective market capitalization approaching half a trillion dollars, don’t need a government handout at taxpayers’ expense.

CTIA opposes “open” regulations, saying the FCC was making “special rules” for Google.

Believers in “real” open access, like Democratic Commissioner Adelstein, had worried that only one or two companies would bid on a license with wholesale open access conditions.
We don’t want to set the table unless we know someone’s going to come to dinner,” Mr. Adelstein said.

Google’s letter confirms that Google would meet the FCC’s financial minimums while complying with full “open access”.

AT&T Senior VP for Legislative Affairs responded; “…Google is demanding the Government stack the deck in its favor, limit competing bids, and effectively force wireless carriers to alter their business models to Google’s liking”…

AT&T, however, has broken with the mobile-phone industry by supporting Martin’s “open access” plan, which generally supports two of the four provisions favored by Google, says RCR News:

“We believe Chairman Martin has struck an interesting and creative balance between the competing interests debating the Google plan,” said Jim Cicconi, AT&T senior executive VP for external and legislation affairs. “The plan would enable the introduction of an alternative wireless business model without requiring changes in the business models of AT&T and others in what is a highly competitive wireless industry. … Based on these understandings, AT&T has no objection to, and would support, the chairman’s auction proposal.”

Public interest groups and high-tech companies generally support Google’s Four Principles of Open Access for 700 MHz.

The Cyren Call proposal urged the FCC to establish a Public Safety Broadband Trust to hold 30 MHz of spectrum in the 700 MHz band for some $5 billion dollars. The Trust would form a joint public/private service to provide broadband wireless service across the country. The plan found a cool reception in Congress, however, mostly because it would cost billions of dollars in lost auction proceeds.

Cyren Call’s proposal was shot down on two counts; (1) too much spectrum would have been taken out of the auction process and (2) Five billion was undervaluing the spectrum. Verizon said it was worth many times that amount. Cyren is now said to be teaming with Verizon for a joint public safety/commercial service.

Frontline Wireless proposed altering the FCC’s original frequency plan (one 5 Mhz pair and a 10 Mhz pair) in the upper 700MHz band, into three, 5 Mhz pairs (10 MHz times three). Another 30 MHz will be auctioned in the lower 700 MHz band, but that may be less optimum for two-way broadband because of powerful mobile tv transmitters (like MediaFLO).

Frontline would buy the 10MHz at auction and utilize the other 12 Mhz already reserved for Public Service for their joint public/private service. Some members of the FCC have un-officially supported that approach — but nothing has been written in stone. Yet. The FCC’s rules for the 700MHz auction are expected any day now.

Because Google is talking about a 22 MHz chunk (for $4.6B), it might be assumed that Google and Frontline would work together.

No word from Verizon…yet, but they have strongly objected to “open access rules”. A recent FCC filing submitted by the Wiley-Rein law firm on behalf of Verizon (PDF), says as much.

The 700MHz auction will take place in about 6 months, and is expected to raise some $15 Billion for the Treasury.

Related 700MHz articles on DailyWireless include; Frontline: Martin Plan Not ‘Open’, Equal Access Happy Talk, Frontline: Rumble in the Jungle, Adelstein: Open Access for 700MHz, Hearings on 700MHz, NXTcomm 2007, Broadcasters: Portable Devices Kill DTV, FCC: Beltway Vs Valley, 700Mz Support for “Open Access” Grows, Apple Developers Conference, 700MHz Battle Begins, AT&T “Open” to 700MHz — Not, General Dynamics Wins IWN Contract, Martin: Sharing is Good, Harold Feld on 700MHz, FCC Indecisive on 700MHz,

Posted by Sam Churchill on Friday, July 20th, 2007 at 9:04 am .

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