The FCC Spectrum Auction Decision: The Emperor Has No Clothes

[David Farber <dave () farber net>]

Begin forwarded message:

From: Lauren Weinstein <lauren () vortex com>
Date: July 31, 2007 11:34:45 PM EDT
To: dave () farber net
Cc: lauren () vortex com
Subject: The FCC Spectrum Auction Decision: The Emperor Has No Clothes



        The FCC Spectrum Auction Decision: The Emperor Has No Clothes

                http://lauren.vortex.com/archive/000263.html


Greetings.  In the wake of the FCC's hot-off-the-griddle decision on
the rules for the upcoming spectrum auction, the spin has gone
hypersonic from various quarters.  Let's try to apply the brakes
without getting burned.  The fact is that this decision is likely to
do relatively little to really help consumers in the long run, and
carries the significant possibility of actually making some aspects
of the situation even worse than they are currently.

Keep in mind that we're talking about spectrum that would become
freed by the turning off of all analog TV broadcasts in the U.S.,
supposedly in February 2009.  That's less than two years away.  Yet,
surveys consistently show that most over the air television viewers
-- not just those who can't afford or don't want cable or satellite,
but also persons who have secondary sets that depend on air
reception -- don't have a clue that this deadline is coming.

There are supposed to be government coupons to help defray the cost
of digital converters for older TVs, but Congress has been expressing
increasing concern about the lack of awareness at this stage.  It is
not impossible that the deadline will get pushed back again.  But
let's assume that the cutoff takes place on schedule, and that the
spectrum goes to the winner(s) of the new auctions on that date.
Who are those big winners likely to be, even under these new rules?

Answer: The Phone Companies -- "TPC" and their associated wireless
units.  I discussed the underlying philosophical aspects of the phone
companies in this regard recently in:

Spectrum: Why Google is Right, and the Phone Companies are So Very Wrong
( http://lauren.vortex.com/archive/000262.html )

Now today we're seeing headlines like: "FCC Hands Partial Victory to
Google" or "FCC Hands Partial Victory to Phone Companies."
Lobbyists are falling over themselves to try spin the decision in a
positive light -- even some of the consumer group lobbyists.

To a considerable extent, this is understandable.  Google doesn't
want to make declared enemies of the phone companies.  Google uses a
hell of a lot of bandwidth, and most of that -- for now anyway --
still comes from the telcos, and there are other useful, strategic
Google projects in targeted areas along the way that benefit from
telco cooperation.  Understood.

But the phone companies -- now, that's where the lobbying expertise
really is -- more than a century's worth.  The general impression is
that they're kinda disappointed that the FCC ruling provides for any
open access at all, but "well, golly gee whiz we can live with it I
guess."  You can almost see them slowly dragging the toe of one
tennis shoe in the dirt while looking downward, like a kid who
pretends to hesitantly agree to something while actually being
thrilled.

Because the telcos are in the winning cat seat yet again.

The "open access" provisions for one section of the new spectrum do
not actually represent the kind of sea change that many people seem
to expect.  In fact, it is already possible to use a vast array of
devices not "officially" sanctioned by the telcos on the wireless
networks (particularly easily with GSM) so long as they meet the
necessary frequency band and subscriber authentication requirements.
Such requirements will still be present.  The key factor limiting
the device selection for most subscribers isn't the actual range of
available devices, but the devices that the telcos have chosen to
subsidize at reduced or zero cost.  That list becomes the de facto
set of devices to choose from for most people.  That's unlikely to
change much either.

But even now, you can go out and buy pretty much any compatible
GSM phone and use it with, for example, Cingular/AT&T, as long
as you use standard SIM identity cards.  And many of the advanced
devices already allow for vast ranges of third party software (both
commercial and free), as does the device I use right now.

The new rules also specify that this spectrum segment will allow any
compatible applications, but again, in reality that's much the way
it is now in many cases.  I can run virtually any TCP or UDP
application on my phone, from ping to Skype (if I had any reason to
run Skype, which I don't).  But wait a minute, don't wireless terms
of service often include a prohibition against at least some sorts
of streaming applications?  Sometimes they do, but these are rarely
enforced, and even then only typically against users of relatively
massive amounts of data.  The telcos have -- and will continue to
have -- other ways to control them via pricing tiers, even when it
comes to so-called "unlimited" data plans -- which virtually always
actually have some sort of limit that you won't find out about until
you hit it.

Remember, we're not talking about "free to use" spectrum -- you're
still going to have to be a subscriber of the spectrum owner
to use it, and pay the going rates.

Now hold on, even if all this is true, isn't the part in the new
rules where the spectrum owner promises not to slow or block
competitors' services a good thing to have in writing?

Yeah, it's very pretty.  But, uh, aren't we talking by and large
about the same telecom firms who have spent the last couple of years
saying that they don't do such dastardly things anyway, and so
there's no need for network neutrality rules?  Is it possible that
by specifically putting such rules in place only for this new section
of spectrum, that we might be handing these firms a form of carte
blanche for more draconian behavior in their other spectrum blocks
and non-wireless services?  After all, they can easily point at the
new spectrum and say that if you want to be treated equally, you can
only do it over there.  Wouldn't happen?  It won't be an excuse to
avoid sorely needed, widely applicable network neutrality
legislation?  Hmmm.

What would have really changed the rules of the game in a potentially
great way for consumers was a key part of the Google proposal that
didn't go through, that would have required wholesale reselling of
spectrum chunks.  That could have opened the door to true
competition in terms of actual new players -- not just at Google
scales but in a variety of different sizes -- who could operate
their own networks, not just the shuffling of control among the
established telecom conglomerates that the auction decision appears
to codify.

But clearly at the FCC, real competition isn't what's it's cracked
up to be, and one of the best chances for a major telecom shakeup
that would have benefited consumers has been lost again.  Any
possible improvements for consumers in the new spectrum auction
rules are very minor compared with what they might have been, and
bring along new possible risks.

Overall, the FCC decision is a serious disappointment from a consumer
telecommunications standpoint, and there's little to really cheer in
there -- unless you're in the happy family group of the telecom
giants themselves.  The emperor in this case actually is wearing no
clothes, or at the very most a g-string.

The more things change, the more they stay the same.

--Lauren--
Lauren Weinstein
lauren () vortex com or lauren () pfir org
Tel: +1 (818) 225-2800
http://www.pfir.org/lauren
Co-Founder, PFIR
   - People For Internet Responsibility - http://www.pfir.org
Co-Founder, IOIC
   - International Open Internet Coalition - http://www.ioic.net
Founder, CIFIP
   - California Initiative For Internet Privacy - http://www.cifip.org
Founder, PRIVACY Forum - http://www.vortex.com
Member, ACM Committee on Computers and Public Policy
Lauren's Blog: http://lauren.vortex.com




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