700 MHz Endgame: Has AT&T Asked Bush to Put Thumb On Scale?

Unsurprisingly, in the swirl of folks around this week’s House Commerce “iPhone” Hearing, rumors and gossip about the 700 MHz Endgame abounded. In the nasty-but-sadly-believable category comes a rumor that the Bells have asked (through a wholly owned subsidiary in the House) for the Office of Management and Budget (OMB) to do a “study” on whether any open access condition (of any definition) or other incumbent restriction (such as the spectrum caps urged by the Public Interest Spectrum Coalition) will depress auction revenue.

To those who know how these things usually work, the first question is “Why Ask OMB and not the Congressional Budget Office (CBO) or the Congressional Research Service (CRS), which usually do this sort of thing?” And to those of us who have lived through the last 6 years of an Administration that spells “research” P-R-O-P-O-G-A-N-D-A will cynically answer, “because that way the telcos can make sure they get the ‘right’ result.” Unlike CBO or CRS, which are under the control of Congress and generally take their research pretty seriously, OMB is directly under the control of the Bush administration.

Man, Telco spying for NSA is just the gift that keeps on giving. First the Bush Justice Department behaves like a nice little lap doggie and rolls over and plays dead for AT&T buying BellSouth. Then Bush tried to give the Bells retroactive immunity for what they did. Now, according to rumor, Bush will help the telcos rig the auction to keep the status quo.

Some needed background and why the oft-repeated idea that open access will automatically reduce auction revenue is a load of nonsense below . . . .

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The 700 MHz Endgame Part II: Assessing the Martin Offer and Manuevering Room for Replies

In part I, I wrote about Martin’s carefull PR blitz to frame the 700 MHz endgame. But its important to look at the substance of Martin’s draft order itself. Because, as always, Martin is damn clever, and has put stuff in there that is bloody tempting to go for the compromise. To keep this manageable, I will limit my discussion here to just assessing the rumored offer and how I think we could improve it, keeping in mind that this is just press reports and really doesn’t cover the panoply of issues. In Part III, I will provide my Field Guide for the Endgame, reminiscent of my original Impossibly Long Field Guide from April (how much things have changed in 3 months).

Assessment below . . . .

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700 MHz Endgame Part I: Martin Tries To Redefine “Open Access” With A PR Offensive

Martin has opened the endgame on the 700 MHz auction rules with some strategic press leaks to frame the debate and the circulation of his draft Order. According to USA Today and The Wall Street Journal, Martin’s draft proposes including a network attachment/wireless Cartefone rule on two blocks (the “C” and “D” blocks). At the same time, Martin is redefining “open access” to mean network attachment/wireless Cartefone (the issue popularized by Tim Wu with the help of the iPhone) rather than the wholesale obligation pushed by Frontline and the Public Interest Spectrum Coalition (PISC).

What makes Martin’s proposal particularly problematic is that it does actually do some good on issues I (and other folks in spectrum and media reform) care deeply about. It does represent a step forward. But it represents such a baby step, and deferred so far into the future, that it becomes useless for the near term (as Google argued in this recent filing (worthy of a post of its own)) and may actually take the pressure off the FCC to do something real like grant the Skype Petition or do something real on Network Neutrality.

Still, it presents a real challenge for the Democratic Commissioners as they enter into negotiations. Do they hang tough and risk losing everything on a 3-2 partyline vote? Do they accept a compromise, recognizing the political risk?

Worse for the Ds (and supporters of open access generally), the pressure from Congress has gone fairly hard against wholesale open access in recent days. The Republicans in the Senate and the House have bombarded the FCC with letters against wholesale open access. While some Ds (notably Kerry) have supported real open access, the Dem leadership and most Ds have remained on the sidelines. Still, tomorrow’s House Commerce Committee Hearing on Wireless Innovation will offer Democratic leaders to weigh in — if they so desire.

This Is long, so I am going to break it up into a couple of posts. First, the difference between Martin Open Access and Real Open Access . . . .

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Open Access Gains Another Convert, AT&T Denies Poisition Change

A brief update on my recent post that AT&T recently conceded it might consider bidding on an open access license. Unsurprisingly, Frontline Wireless — the party pushing for the “E Block” public safety/open access network — filed a copy with the Commission stating that this proves that an E Block auction would attract bidders and that the business model is workable. In response, according to today’s (6/29) Communications Daily an AT&T spokesperson said: “Our position has not changed. As we’ve stated on the record at the FCC, mandated ‘open access’ conditions on licenses in the 700 MHz band should be rejected. We need to see the specific rules the FCC adopts for auction before determining our level of participation.”

The carefull reader will note that these statements are not inconsistent. Of course AT&T would prefer not to have open access, and — at the drop of a hat — will explain why open access is an unworkable awful idea and you should ignore all the evidence from Europe or from the U.S. until we abolished open access in 2005. But there is a huge difference between “we hate open access and think it’s a bad idea” and “we absolutely refuse to bid on a license with an open access condition and nobody else with any money would bid either.” Given that the most potent argument against open access from a political perspective is “don’t mess with the revenue” (as evidenced by the recent Op Ed in the Washington Post by two CTIA lobbyists wearing their “think tank” hats), proof that folks other than Frontline will even show up to bid (and folks with deep pockets at that) on an open access license is rather significant.

Meanwhile, open access for the 700 MHz auction continues to attract new supporters from different sectors of the industry. Northop Grumman, rather a heavy-weight in the equipment manufacture and public saftey/defense contracting world, filed this document supporting open access and explaining that yes, you really can construct a secure public safety network that shares spectrum with an open access commercial network. So much for “it will never work, it’s too hard, lets stick to what we’ve always done.”

In addition, the Frontline cover letter on the submission that introduced the “Well Connected” post with the AT&T interview stated that Citibank had made a presentation to the Commission “last week” explaining that open access is a workable business model. Annoyingly, I can find no record of this presentation in the record for Docket 06-150, but I may just be missing it (it is a pretty big docket). (UPDATE: My thanks to Susan Crawford for pointing me to the appropriate ex parte filing.)

But assuming that Frontline accurately describes a presentation that took place, we now have:

1) A statement by a major financial investor that open access is an attractive and workable model from a business perspective;

2) A statement by a major equipment manufacturer and network operator that commercial open access — even in the more complicated universe of a dual use public safety network — is technologically feasible;

3) A statement by a major incumbent that it would at least “look at” bidding on an open access license if the Commission adopts such a rule;

4) Statements by wireless equipment and wireless application providers that there is a desperate need for open access in the wireless world and in the provision of broadband services generally;

5) Over 250,000 individuals saying the status quo sucks and we want open networks and new providers.

On the other side, we have the entire incumbent industry and its usual cheer leading section chanting that everything is vibrantly competitive, we live in the best of all possible worlds, everything works perfectly and competitively, and even thinking “open access” too loudly will scare away bidders and reduce revenue to a fraction of the expected $10-15 billion. And besides, open access can’t possibly work either on the business side or the technical side.

And all the while, the clock ticks away, as everyone scrambles to get this done before the end of the summer.

Stay tuned . . . .

Possible AT&T Shift on Open Access May Signal Seismic Shift In 700 MHz Auction

Until now, the existing incumbents of all shapes and sizes have presented a solid, immovable wall of resistance against any kind of “open access”/wholesale obligation attached to a license. In the context of the Frontline proposal in particular, carriers have railed against it as a “poison pill” that would scare away potential bidders and reduce the projected $15 Billion auction revenue to spare change and half a wooden pencil.

Which makes this tepid expression of possible interest in a Frontline “E Block” license despite an open access condition by AT&T Senior Vice President Robert Quinn Jr. epic news and potentially another major win (on par with support from Senator John Kerry and Presidential candidate John Edwards) for the forces of open access. According to the article — reporting on an interview Mr. Quinn gave to the Center for Public Integrity’s Drew Clark:

“It’s a different business model for us, but one that we’d be looking at,” Quinn said in an interview with the Center for Public Integrity’s “Well Connected” Project. “If, in the end, that spectrum is attached to public safety, and for example there’s a wholesale requirement, we’ll take a look at it.”

AT&T is waiting for final FCC rules before deciding whether or not to place a bid. “Our position is that we need to see the specific rules the FCC adopts for the auction before determining our level of participation,” AT&T spokesman Michael Balmoris said on Monday. The FCC rules are expected by July.

That looks pretty tame, until one considers the speaker and the context. In spectrum lobbying terms, this is roughly the equivalent of Iranian President Mahmoud Ahmadinejad saying that, under the right circumstances, he would accept an invitation to visit Israel and meet with Israeli Prime Minister Ehud Olmert.

More importantly, AT&T’s statement that it would consider bidding on an E Block license with an open access condition has significant implications for the debate about the auction itself. Statements churned out by incumbents and their think tank cheerleaders — such as this Washpo Op Ed from two CTIA consultants/think tank dudes — portray open access as so onerous that it will kill the auction revenue. AT&T’s statement that it would consider bidding on open access licenses demonstrates that such arguments are utterly bogus. Because if AT&T would consider bidding, you can bet your last cell tower that every other major incumbent would conisder it as well. What, sit it out and let all that spectrum go to a rival?

So why would AT&T even hint at a change in position, given how deeply this undermines the “absolutely no, never, you must be mad” rhetoric of the anti-open access opposition? For wild speculations, see below . . . .

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Adelstein Publicly Calls for Open Access

Two important updates from my most recent post. First, Commissioner Adelstein publicly supported some kind of open access requirement for the 700 MHz auction licenses. Wooo Hoooo! For us policy geeks, it’s kind of like the moment when the Millenium Falcon comes out of nowhere and blasts the Imperial tie fighters targeting Luke as he barrels down toward the access port. Not that I had any doubt where Adelstein’s heart was, but it’s always reassuring to see him commit himself.

The second update is that DIRECTV and Echostar got out bid by some Brits for Intelsat. This makes it more likely that they will want to bid aggressively in the auction, assuming they think they can win.

Stay tuned . . . .

Adelstein to Tech Sector & Frontline: Can You Hear Me Now?

FCC Commissioner Jonathon Adelstein’s recent speech at the Wireles Communications Association (WCA) conference — and subsequent remarks to the press on the 700 MHz auction have caused quite a stir among those in the blogosphere following this issue. My fellow advocates of open access, such as Matt Stoller at Mydd.com, voiced considerable concern that Commissioner Adelstein (a long-time friend of the public interest) would come down against open-access proponent Frontline and against the position staked out by the Public Interest Spectrum Coalition, the 4G/Tech industry and others in support of larger license blocks. (Go take a look at my Impossibly Long Field Guide if you are lost on who these players are). OTOH, Publius over at Obsidian Wings has posted a defense of Adelstein, in which he also falls into the classic trap (as he does in his (much shorter than mine) auction guide for dummies) in believing that the telcos are the antichrist when, at least in my opinion, it’s a Hell of a lot more complicated. Yo, Netheads! You can hate other incumbents besides the Telcos! Really!

Anyway, to get back to the issue of the day: Adelstein’s speech and subsequent reactions. Matt and Publius raise good points, but neither sees the full picture here. But heck, that’s why folks need TotSF (or so I like to think), to fill in the blanks and provide the needed backstory for those not familiar with how life in the public policy sausage factory works (and its why the average TotSF post is about 4 single-spaced pages — yeah, I talk too much, I know).

Short version: Adelstein was not committing to a position or dissing a proposal. He was sending a signal to the tech guys and Frontline that if they want to get what they are asking for, they need to answer some very real and legitimate questions. Because Adelstein and McDowell are widely considered “swing votes” on critical questions (with Tate and Copps believed focused primarily on public safety), their public speeches (along with Chairman Martin’s of course) get particular scrutiny. Adelstein has not sold out (as feared by Stoller). Nor is Martin a “a wholly owned subsidiary of Verizon”, nor are 4G Coalition (or yr hmbl obdnt) “useful idiots,” as argued by Publius.

So what is going on (at least in my long-winded opinion)? See below….

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700 MHz Auction Update — FCC Republicans Interested In Public Interest Proposals While Senate Democrats Take a Pass.

Welcome once again to the topsy-turvy land of spectrum politics. Although Republican FCC Chair Kevin Martin shattered expectations by seeking comment on the Public Interest Spectrum Coalition (PISC) proposals for the 700 MHz auction, the Senate Democrats have decided to avoid having anyone from the public interest discuss the auction at next Thursday’s (June 14) hearing. In other words, despite my hope to the contrary, the Democratic Senate Commerce Committee is still playing spectrum politics under the old rules (treating this as an industry food fight and a chance to raise revenue), rather than using this as a chance to promote a robust public debate on how to ensure that wireless auctions promote competition and serve the public interest.

As a result, when the Senate Commerce Committee gathers to ask how the 700 MHz wireless auction can introduce new competitors for broadband and facilitate the open networks critical for civic engagement and innovation, they will hear from Mr. Dick Lynch of Verizon Wireless, Mr. Michael Small of Centennial Communications Corporation, and Dr. Amol R. Sarva of the Wireless Founders Coalition For Innovation. While Verizon has supported anonymous bidding, and the Wireless Founders Coalition supports open access, that hardly takes the place of having actual public interest representatives up there to press for real spectrum reform regardless of the impact on business models or bottom lines. As I say all too often (everyone repeat together) citizen movements must be citizen driven, and that includes giving us folks pushing the public interest an opportunity to speak rather than relegating us to the side-lines because corporate interests overlap with ours.

More below . . . .

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We Win Again On 3650-3700 MHz. So What Does It Mean?

Back in 2004-05, a bunch of us fought to open up the 3650-3700 MHz band for unlicensed use (Sometimes refered to as 3.65 GHz rather than 3650 MHz). While we did not get “pure” unlicensed, the FCC’s “hybrid unlicensed” regime gave us pretty much everything we wanted.

In August 2005, a group of tech firms led by Intel filed a Petition for Reconsideration. This group, which I dubbed the “WiMax Posse,” wanted the Commission to reverse itself and optimize the band for WiMax operations. Notably, this meant adopting a licensing regime instead of the open spectrum rules we won in March 2005.

By this time, Powell had left and been replaced with Kevin Martin. Martin had earned the eternal scorn of Netheads by deregulating DSL (actually a process begun by Powell). And, unlike Powell, Martin had no record of support for open spectrum. So even though the WiMax Posse and the various licensed wireless providers who came in to support them raised no new arguments, no one knew whether Martin would reaffirm the 2005 rules or side with the licensed spectrum/WiMax posse.

So I let out a huge sigh of relief and felt a modest sense of accomplishment when the FCC issued an Order denying the WiMax Posse Recon Petition and basically reaffirming our March 2005 win. Commissioner Adelstein had a very nice concurring statement highlighting the important roll played by WISPs and Community Wireless Networks (CWNs) in getting wireless connectivity to rural and underserved urban communities.

So what does this mean for wireless deployment for WISPs, CWNs, and muni systems? How do I read the FCC tea leaves in light of last month’s FCC decision terminating two important open spectrum proceedings? See below . . . .

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Slurpr! Slurpr! For Fun Legal Questions, It's A Wonderful Toy.

Numerous websites that follow wireless news have reported about a new wireless box called Slurpr, which allows someone to aggregate up to six open wifi access points at once. In just about the next sentence, of each of these reports warns of the potential legal consequences of “stealing wifi” by using an open network that the operator does not intend for open use. Or, as Glenn Fleishman put it: “This might get you arrested six times in one day.”

But will it? And, perhaps more importantly, should it? With the rise of applications like FON, wifi enabled phones, and now the introduction of Slurpr, we need to get this issue resolved sooner rather than later. Otherwise, we can expect to see more arrests of folks unaware they are committing a crime and another equipment/application industry killed off by regulatory uncertainty.

As I have argued before, it makes much better legal and policy sense to require access point operators (and the equipment manufacturers who set the defaults) responsible for their own equipment and require them to close a network rather than to require the public to treat all open networks as off limits unless the operator somehow expressly tells the user it’s o.k. Why shouldn’t the act of blasting an open network into a publicly accessible place or onto someone else’s property be sufficient invitation to use the network, especially when it would encourage people to set power levels to appropriate levels and stop imposing interference costs on the rest of us? Why on Earth do we want a legal presumption that imposes obligations on the broader public instead of the operator, makes it much harder for people that actively want to share their networks, and encourages (rather than discourages) interference problems and poor spectrum management? Most especially, why do we do this when creating this presumption actually flies in the face of the usual legal presumptions about intrusions of private property into the public sphere?

The only answer I can come up with is that network technologies appears to have the amazing power of turning certain people’s brains into pudding and making them forget about 10,000 years of human experience of living in urban environments. For further elaboration on these themes, see below . . .

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