FCC's Martin Says Auction Rules Will Benefit Competition

WASHINGTON -(Dow Jones)- Federal Communications Chairman Kevin Martin said Tuesday he would be "troubled" if one incumbent broadband provider such as Verizon Wireless ended up with a large portion of the radio spectrum that will be auctioned off early next year.

But he said the open-access conditions that he had determined should be attached to around one third of the spectrum went some way to "ameliorate" his concerns were one company to acquire a significant portion of it.

"Do I think it would trouble me if one person ended up with all the spectrum? Yes," Martin told Dow Jones Newswires. "But to some degree it would be less of a concern than it would have been otherwise without the open-access conditions."

Earlier Tuesday, Dow Jones Newswires reported that the draft rules that Martin will circulate soon to fellow commissioners will incorporate some of the demands made by Google and high-tech companies.

Specifically, Martin partially embraced the concept of open access. This would prevent the successful bidder of a large chunk of the spectrum from restricting the types of handsets or software used on the eventual wireless broadband network it built.

According to an FCC official briefed on the draft rules, the open-access condition would be attached to two chunks of 11 megahertz of spectrum that could be joined together to form a national license.

A further 10 megahertz has been earmarked for some sort of public private partnership where the licensee would have to work with the public safety to provide the country's fire, police and emergency services workers with broadband service.

The reaction to the draft rules has been mixed. Some have suggested they won't go far enough to encourage a new competitor into the broadband market and the spectrum will simply end up in the hands of incumbent broadband providers like Verizon Wireless.

It has been the most active of the incumbents lobbying the FCC against the open-access proposals that Google and other hi-tech companies have advocated.

There is the chance that it could end up with both the 22 megahertz block with open access attached to it and the 10 megahertz chunk to be used to provide service to public safety. This would leave the company controlling a full half of the spectrum to be auctioned off.

In total, 60 megahertz of valuable spectrum is being auctioned off early next year by the FCC as television broadcasters move to a digital signal, which requires significantly less spectrum than an analog signal.

While Martin has seemingly embraced open access in so far as it applies to handsets and software used over a broadband network, he told Dow Jones he wasn't convinced by the need to include the obligation that the spectrum be used on a wholesale basis, one of the key requests made by Google.

"I wasn't convinced of the need to have a wholesale requirement, it could deter some folks from participating," he said. "I wasn't even sure of how that idea would work practically."

Martin dismissed concerns raised by many public interest groups that were Verizon to acquire a large chunk of the spectrum it would simply "warehouse" it and not use it.

"We include as part of the rules strict build-out requirements that says whoever wins these pieces of spectrum will have to build out a network within 10 years. I think they will be some of the strictest build out requirements ever passed by the Commission."

-By Corey Boles, Dow Jones Newswires; 202-862-6637; corey.boles@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 11th July 2007