FCC Chairman Kevin Martin said he still wants to auction spectrum for free Internet service. Martin testified Tuesday at a hearing before the House Energy and Commerce Telecommunications Subcommittee (pdf).
“I think the business model that we should be advocating is trying to take into account some kind of a lifeline broadband service for consumers,” Martin told the Commerce Subcommittee. “I think that is important and I continue to believe that that is an important policy.”
However, Rep. Cliff Stearns (R. FL), whose career has long been funded by the AT&T PAC money, notes ArsTechnica, asked Martin to postpone the plan. Stearns took Martin to task because the Block D auction earlier this year didn’t have a winning bidder. The Wall Street Journal also hates the free idea.
Martin bowed to Stearns’ request and removed his plan from Thursday’s FCC meeting to auction 25 MHz of spectrum to a single bidder to build a nationwide network. The unused wireless spectrum is between 2,155 MHz and 2,180 MHz.
Martin said traditional industry players opposed his idea of free Internet because they wanted that spectrum for mobile video services.
“I’d like to point out a couple of things here,” she began, “and that is that 70 percent of the spectrum, the 700MHz auction, went to two companies. Two. Not 20. Verizon and AT&T. And I think what it points out is that we need real competition. We need real competition. In order for broadband to be broad and deep and pervasive in the country, I think that we need competition.”
The FCC’s Free Wireless internet plan is doomed to fail, the CTIA charged (pdf). They said companies like NetZero and Juno failed to deliver and that multiple free municipal Wi-Fi services with a similar model have failed.
Okay, Google and M2Z, here are some numbers for you to crunch. Cost of the spectrum: a guess of $3 billion, cost of the network to cover 95% of the U.S. population $20 billion, normal monthly operating costs $2 billion per year or $20 billion over ten years for a total of $43 billion. That is a lot of ads to sell, and if the network is not built to 99.999% reliability, even if 786 Kbps is free, who is going to tolerate all those ads except those who cannot afford to pay for Internet services. And I doubt if these users would be a market advertisers would really want to address.
Could “the free internet” work? Why not try harder — with different rules:
- Make the spectrum free (like WiFi).
- Make it lightly licensed (like 3650MHz).
- Dedicate it to municipal wireless (only).
- Provide priority access for public service users.
- Enable “tiered” premium service.
That might lower cost, increase revenue, reduce interference and provide a targeted solution for the “digital divide”. Perhaps the FCC boss is just being shrewd. Martin may know the 2150-2180 auction rules, written as they are, are not likely to impact anyone. It just doesn’t pencil out.
Currently there are a total of about 250 million cellular subscribers in the U.S., with about 85% of the country covered. By the end of 2017, Clearwire thinks it will have 30 million subscribers and cover up to 220 million people with wireless broadband for $50/month or less. Alternatively, one might imagine, they could provide a somewhat slower, ad-sponsored service, for half the cost.
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