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It’s unanimous: 700 MHz auction rules set

And finally, after weeks and weeks of reading about who wants what with the 700 MHz spectrum, the FCC has voted on the official rules of the auction. However, more interesting than the actual results are the reactions of concerned parties. Well, not the general reactions: party lines were clearly drawn. But rather the specific reactions from specific people. Oh yeah, the results. Yes, we’re getting open-access requirements on 22 MHz of the spectrum. No, there isn’t a wholesale provision to be found.

The more we think about it, the more we don’t see it as a major victory for consumers. CNet set us straight, letting us know that if one of the big telecoms won the licenses for that 22 MHz of open spectrum, third party devices and applications could only be used in regions where they built out their network using said licenses. Yes, that’s logical and we probably knew it before, but hearing it again — in the context of the rules becoming official — really makes it sink in.

Joe Barton (R-Texas_, ranking member of the House of Representatives Energy and Commerce Committee, bashed the rules, saying that the FCC shouldn’t “rig” the auction in favor of Google.

“Google and others are free to use the spectrum under their proposed business models if they pay fair market value in an honest auction,” Barton said in a statement released after the vote. “Google alone has a market cap of approximately $160 billion, almost $40 billion more than Verizon.”

Okay, but Google isn’t a telecommunications company. That $160 billion is spread out into many areas. Plus, the “$40 billion more than Verizon” is disingenuous. Verizon Wireless is a joint venture of Verizon Communications and Vodafone. So don’t talk market caps when there’s another head to Verizon’s monster.

In general, it seems that Republicans oppose these auction rules. They favor open rules, as is their wont. Robert McDowell, a Republican Commissioner, went as far to say that the “commission has received no assurances that any company is actually interested in bidding in incumbent spectrum.” Uh, Rob, we don’t think that’s a huge concern right now. Bidders will come. Trust us.

Google’s Washington counsel, Richard Whitt, has it more accurately, we think:

“Because (an incumbent) already has a nationwide network and a customer base with an active revenue stream they can go to almost any limit and bid above fair market value to protect their business.”

Which was the entire reason for the wholesale provision. How useful is an open sector of the spectrum if it’s controlled by a major telecom? They’ll likely do everything in their power to hide the fact that it is open access, and further do anything they can to prevent people from actually exploiting those rules.

Then again, the rules did come with a provision that calls for strict enforcement of open access. That came as a surprise to many, but it should help a bit. But, once again, it appears that it was a mere concession.

Democratic commissioner Michael Copps speaks of the nonexistent wholesale requirement:

“A wholesale requirement would have leveled the playing field for companies that want to get into the network business but cannot break through the defenses erected by the massive incumbents who dominate the industry. It is not hard to see why companies with extensive networks and millions of customers are generally able to outbid new entrants, even deep-pocketed ones.”

That pretty much sums up the problem for us. So even if Google ponies up more money and seeks wealthy partners, there’s still no guarantee that they can overcome the bids of Verizon and AT&T, for which it is a matter of return on investment. Both companies would lose out huge if they didn’t win the auction. But if they won, they could recoup those dollars with their enhanced services.

It’s not every day that you come across someone who is willing to spend billions on something that does not directly benefit them. This is starting to look bleak, open access provision or not.

[CNet News]