Why There Won’t Be Broadband Competition Anytime Soon

When it comes to the fixed-line Internet, thanks to an ineffective FCC that has failed to promote broadband competition, here in the U.S. we are stuck with a duopoly. The agency in general, and politician-in-waiting Kevin Martin in particular, would like you to believe that wireless broadband is going to be the answer, perhaps through schemes such as the D Block auction, spectrum grabs by M2Z Networks and white space initiatives. If you believe that, then you also believe that that you can walk away a winner from a game of three-card monte on a Manhattan sidewalk.

Yesterday, the FCC slashed the reserve for the D Block area of spectrum allotted for building a public safety network. Also this week, Google and M2Z networks redoubled their efforts to get regulations in place to create an alternative wireless broadband service, but the competition for wireless broadband isn’t close. 

As we said in our recent story on efforts to create wireless broadband using the spectrum between digital TV channels, the devil is in the details. Through rulemaking or setting incredibly high reserves, the FCC can cripple any wireless broadband competition. That means a network could look like it might happen, but get bogged down or end up useless. Through constant delays the FCC can hamper the creation of an alternative network, as it’s doing in the case of M2Z, and did all the way back in 2003 when it waffled over approving the ATC rules that allow a satellite company to offer both terrestrial and satellite coverage. That was supposed to bring wireless broadband competition too. And it may….more than half a decade later.

Since we have three proposals going right now, I thought I’d play Cassandra and warn that the FCC can delay these things by years, price them out of reach and insert all sorts of requirements into their rules for the use of the spectrum that kills the service. I also thought we should summarize the proposals in case readers want to lay bets on which service actually gets to the market — and nationwide coverage — first.

D Block Spectrum: Yesterday the FCC said it would re-auction the 700MHz D Block spectrum. The license winners must ensure 40 percent regional coverage within four years of the license being awarded, 75 percent coverage after 10 years and over 90 percent after 15 years. After the last effort to use this spectrum failed because of its high reserve price of $1.3 billion, the FCC has cut the minimum bid for the spectrum to $750 million. Someone call Reed Hundt.

AWS-3 Spectrum: A Kleiner-backed company called M2Z Networks has asked the FCC for use of the spectrum in the 2155-2175 MHz band to create a wireless broadband service. M2Z offered the FCC 5 percent of its revenue in exchange for the spectrum. It also pledged 25 percent of its network for free broadband service at lower speeds. The company would change more for faster speeds and would build out 90 percent of its network in 10 years. It may restrict porn on the network. Carriers aren’t fans, and big issues, such as building out the $2-$3 billion network and getting devices, remain.

White Spaces: Several technology companies, including Google, Intel, Motorola, Microsoft and Dell, are pleading with the FCC to open up the spectrum between digital TV channels so they can use it to offer fast broadband that would function much like Wi-Fi. On Wednesday Google’s Larry Page called on the FCC to issue a decision on the issue by election day. The National Association of Broadcasters and wireless mic users hope to block the proposal.