In a friendly and spirited debate this week, representatives from Google, AT&T and other companies sparred over the future of open access networks and consumer choice.
The debate, which was sponsored by the Massachusetts Network Communications Council, focused mainly on the opportunities that the U.S. FCC's upcoming auction of spectrum on the 700MHz band will present wireless broadband providers in the U.S. The debate panel - which included representatives from Google, AT&T, Microsoft, Frontline Wireless and Clearwire - generally agreed that the FCC did a good job of bridging a compromise between some telecom carriers and consumer groups that had pushed for open access rules.
"The debate centered around the advocacy by some that the wireless industry, if they wanted to bid on any of the U.S. spectrum, had to essentially alter their business models," said James Cicconi, the senior vice president of AT&T, referring to the demands by Google, Frontline and others that the FCC slap open access rules on all the spectrum up for auction.
"Most of us in the industry didn't feel this model was broken, so why should the government come in and impose a new business model?"
In the end, Cicconi said the FCC made a fair compromise by putting conditions on the so-called "C Block" of spectrum that would prevent its licensee from blocking devices or content produced by competitors. This way, said Cicconi, bidders who wanted to try an open access model would have a spectrum to work with, while other carriers could bid on the rest of the spectrum without altering their traditional business models.
Reed Hundt, a former FCC chair who serves as the vice chairman of Frontline Wireless, agreed with Cicconi that the FCC had made a good-faith effort at making a compromise, but said that there were some key mistakes that the agency made in their final decision. Among them were that the FCC hasn't required that whoever wins the spectrum should build a new high-speed broadband network, that the FCC did not tell Verizon and AT&T that they couldn't signal their intentions to each other regarding the auction and that if Verizon or AT&T purchased more spectrum, then the government should force them to sell some of the spectrum they already own.
"We see an emerging cartel between these two very, very successful companies," he said. "Everyone knows that having a couple of companies owning vital commodities is really bad for consumers."
Cicconi countered Hundt's arguments by pointing to the FCC's report last year showing that 94 percent of Americans were served by four or more competitors for wireless services. He also took issue with Hundt's recommendation that AT&T and Verizon needed to be specifically barred from communicating with each other regarding the upcoming auction.
"We haven't even said if we're going to be participating in the auction yet, and Reed's already accusing us of bid-rigging," he said jokingly.
Johanna Shelton, the policy counsel for Google, argued that despite having multiple carrier options, Americans were restricted by their carriers with what kinds of devices and applications they could use to connect to their networks.
"We've seen situations today where the network and cell phone operators have restricted Wi-Fi, we've seen situations where they've disabled certain Bluetooth applications for consumers, we've seen situations where someone wants to provide a free mapping service and a network provider wants to charge for that," she said. "I don't agree that consumers are really in position to say what they want right now, because consumers are very much tied into the network and the devices that the network providers are offering in their retail stores."
Hundt took Shelton's point a step further said that the United States could learn from the example of China Mobile, the government-owned Chinese company that provides wireless service to hundreds of millions of customers. According to Hundt, consumers in China can choose from any device available on the market without fear of China Mobile discriminating against certain devices. Cicconi pointed out that China Mobile was owned by the Chinese government and that Chinese consumers didn't have choices available to switch networks.
"I give you the example of China exactly to make the point that even in a Communist country, consumers have more choice than they do in the cellular industry in the United States," Hundt replied. "This is a really weird system, and it doesn't exist because the consumers chose it, and it doesn't exist because of competition; it exists because of the bottleneck power of a couple of companies."
The debate on the future of wireless broadband and open access networks was the first major event scheduled by MassNetComms for September / October 2007. Events include a panel on femto cells to be conducted October 11 and a panel on emerging IPTV trends to be conducted October 18.