FCC rules crack open door for wireless competition

The Federal Communications Commission yesterday set the stage for a significant airwaves auction, approving rules that commissioners said would encourage competition and innovation in the wireless industry but fell short of measures pushed by consumer advocates and Internet search giant Google Inc.

The radio spectrum going on the auction block is the FCC's crown jewel -- a swath of airwaves prized for their ability to carry signals long distances and penetrate buildings. The airwaves, which will become available when television broadcasters switch to digital transmission in February 2009, represent a chance to add new competition to the wireless and broadband market.

According to the rules approved yesterday, a portion of the 700 Megahertz spectrum will have an "open access" requirement, meaning that any cellphone or device and any application can run on a network. The order also set up a framework for a nationwide public safety network, to be built through a partnership with the private sector.

"This is an historic decision that is going to free consumers to use any device or application that the consumer chooses. That's a huge victory," said US Representative Edward Markey in an interview. "But there's more than 200 million cellphone users still captive to their service provider, so my hope is that the freedom that is going to be given to consumers on this new spectrum will create a positive domino effect."

Missing from the rules, however, is a provision backed by politicians, a consortium of consumer groups, and Internet businesses, that a portion of the spectrum be set aside for open wholesale access, so that it can be used by smaller firms and entrepreneurs.

Ben Scott, Washington policy director of Free Press, a nonpartisan organization that works for media reform, said that requirement could have given birth to a new age of broadband competition similar to the competition among dial-up Internet providers in the 1990s, with dozens of providers offering service.

"Sure, it's great we're going to take our handsets from one network to another. But that's small potatoes," Scott said. "This auction represented an opportunity to create that kind of competition -- history will record this moment as opportunity lost."

What really raised the profile of the normally mundane area of electromagnetic spectrum into the public spotlight was a flurry of new players, as well as growing awareness of the ways that wireless carriers control Americans' experience on their cellphones.

"Online we've seen YouTube, Google, Netflix, MySpace, Facebook, iTunes, blogging, mass adoption of instant messaging, online shopping, online banking, news and entertainment services -- meanwhile, in the wireless world what have we accomplished?" said Jason Devitt, chief executive of Skydeck, a California wireless startup, who testified before the commission yesterday. "Wireless e-mail, text-messaging, and ringtones. Ten years, and we've got ringtones."

Google Inc. said last month it was ready to invest $4.6 billion in the spectrum auction if the FCC implemented requirements ensuring various forms of open access.

Richard Whitt, Google's Washington telecom and media counsel, yesterday would not say whether the company would participate under the approved rules for the auction, which must begin by next January.

He lauded the two open access requirements that were included in the FCC's rules -- no locking phones onto a network and no blocking applications -- but said that a wholesale requirement was necessary to ensure new competition.

CTIA -- The Wireless Association, which represents the cellphone industry, had a mixed reaction to the order, praising the commission for not incorporating some of the requirements backed by Google and others.

"At the same time, we are disappointed that a significant portion of this valuable spectrum will be encumbered with mandates that could significantly reduce the number of visitors," CTIA president Steve Largent said in a statement.

Frontline Wireless, a company interested in utilizing the newly available airwaves, and one of its investors, Vanu Inc., a wireless infrastructure firm in Cambridge, lauded the FCC decision. The FCC action reflected several of Frontline's proposals -- including that a public/private partnership could be used to build and run a public safety network. In times of emergency, fire and police officials could commandeer the commercial spectrum.

"I think they went halfway to completely open networks that encourage new entrants," said Vanu Bose, chief executive of Vanu. "You can look at it as half empty or half full -- I look at it as half full because these are stipulations we've never had in wireless. It's a step forward we've never had before."

Carolyn Y. Johnson can be reached at cjohnson@globe.com.