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A proposal to create a free, national wireless Internet service on the 2150 MHz band got a boost Friday, says the Wall St. Journal. FCC engineers concluded that such a service would not interfere with other carriers (pdf report).

The report clears the way for the agency to move forward with a plan to auction of airwaves to a bidder who agrees to offer free, national wireless Internet service.

The engineers are confirming that this can be used for broadband services without interfering with spectrum users next door,” Martin told Dow Jones in an interview. The FCC is expected to finalize rules this year and could begin auctioning off airwaves in early-to-mid 2009.

The report was bad news for T-Mobile USA, a unit of Deutsche Telekom AG, which uses the nearby AWS band (1700/2100 MHz), for which it paid about $4 billion in 2006.

Of course all the carriers knew at the time of the AWS auction in 2006, that both the 2150 Mhz band and the “white spaces” band (on unused television frequencies) were on the table by the FCC and could provide potential “free” competition.

M2Z put forward a plan to use the 25 Mhz chunk (2155-2180 Mhz) using TDD Mobile WiMAX. It proposed free service (funded by advertising), as well as pay tiers.

In May, 2006, M2Z asked the FCC to give it a national 25 megahertz block of airwaves. The start-up said in lieu of payment, it would pay the Treasury 5% off the top. The idea of handing out airwaves potentially worth billions didn’t go over very well at the agency. But in May, 2008, Martin proposed auctioning off the airwaves to a company willing to set aside some of its airwaves for free use. The network would have to reach 50% of the U.S. population in four years and 95% within a decade.

Related DailyWireless stories include; CellCos to Martin: Sit Down and Shut Up, FCC: Free Broadband at 2155-2180 MHz, MXtv Makes Its Move, Free 2155-2175 MHz!, The Free Triple Play, How to Fix Muni Wi-Fi, Wavion Beamforms Backhaul, San Jose International: Free Wi-Fi, Bill to Free 2155-2180 Mhz, M2Z Vrs FCC, Freesat: Free Satellite HD in UK, Freeview Goes HD, UK: Free For All, BSkyB: Free Broadband, Murdoch to Offer Free Broadband?, Equal Access Happy Talk, Broadband Wireless — Hello Goodbye, Frontline: Rumble in the Jungle, The OTHER Public Safety Band, Public Service Moves to 800Mhz, FCC Hangs Up Free M2Z Service, 2.1GHz for MuniFi?, and M2Z: Free Internet Now!, Pipeline Wireless: We’re 3.65 GHz, FCC: Go For 3.65GHz, Airspan, Free 3.65GHz Mapping Service, Who the MuniFi MAN?, WiMAX: No Satellite Interference says WARC, Intel’s Rural Connectivity Platform, Airspan Gets FCC Nod for 3.65 GHz, Pipeline Wireless: We’re 3.65 GHz, FCC: Go For 3.65GHz, Airspan, Free 3.65GHz Mapping Service, Who the MuniFi MAN?, WiMAX: No Satellite Interference says WARC, Intel’s Rural Connectivity Platform, Airspan Gets FCC Nod for 3.65 GHz, 3.65 GHz Gets Real, FCC: Non-exclusive 3.6GHz Licensing and 3.65 GHz Gets Real.

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