FCC Not Convinced To Just Hand Over Spectrum To Startup In Exchange For Potential Future Profits

from the FCC-prefers-its-money-upfront dept

In May of 2006, a VC-backed startup called M2Z petitioned the FCC to hand over some spectrum for free in exchange for a cut of future potential revenues. As you're probably quite aware, the FCC has been focused lately on auctioning off slices of spectrum to private companies for use in various wireless projects. The spectrum seems to only be getting more and more valuable as demands for potential wireless applications and services increase. Of course, as we've seen in the past, these spectrum auctions don't always work out so well, with companies overbidding and being unable to actually do much with the spectrum. Part of the problem is that the FCC wants to put all sorts of rules on the spectrum usage, rather than letting it be used for whatever makes the most sense, like some other countries.

However, the M2Z proposal seemed pretty questionable in its own way, promising nothing up front, and then making plenty of promises on the backend. The company claimed it would cover 95% of the country in broadband in 10 years, would have a "free" tier that was relatively slow and filtered, a more expensive upper tier, as well as offering priority for public safety uses. It may have been intriguing simply for the fact that it was different, but the FCC wasn't convinced. As has been expected for quite some time, the FCC has rejected the proposal, though some believe that the debate over this topic may eventually lead to good things from the FCC with the spectrum it's going to release in the near future. Of course, in the end all this really highlights is that the FCC still is focused on dribbling out bits and pieces of spectrum using different rules and regulations each time -- rather than coming up with a truly comprehensive spectrum allocation plan. Of course, some of us have been pointing this out for years, and the FCC never seems to get any closer to a comprehensive spectrum allocation policy -- and the country continues to suffer for it.
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Filed Under: fcc, spectrum, spectrum auction, spectrum policy, wireless
Companies: fcc, m2z


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  1. identicon
    Dave Burstein, 4 Sep 2007 @ 11:42pm

    Disagree about spectrum use

    Mike

    "Part of the problem is that the FCC wants to put all sorts of rules on the spectrum usage" sounds reasonable, but in the real world is probably off target. There's very good reasons to put rules on spectrum, and it's one of the few tools available. Until spectrum sharing becomes the norm, spectrum is short and a few companies are exercising undue power. Cognitive radio technology is close, and can open things up, but until then, certain rules make sense to me.

    For example, AT&T and Verizon would simply outbid everyone else in the 700 megahertz auction, buying spectrum they don't need, just to keep out competitors in wireless. That may not work in the long term, but since we went from six to four wireless companies prices have actually gone up and the "producer surplus" increased by easily $4B a year. The access terms you're indirectly criticizing were designed to discourage those two from keeping others out.

    Looking a little deeper, the incumbents are collecting an economically wasteful "rent", even though much of their spectrum came to them free. Using spectrum policy to bring in more competition could dramatically lower consumer prices. I think that's worthwhile.

    If I weren't on deadline, I'd feed you more data. Please look at this one more closely. db

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