House GOPers Blast Martin Auction Plan
Senior Lawmakers Decry Scheme As Tilted to Google
By Ted Hearn -- Multichannel News, 7/29/2007 8:00:00 PM
Washington — If the upcoming 700-Megahertz spectrum auction bombs, Federal Communications Commission chairman Kevin Martin can’t say that his friends didn’t warn him.
Martin, a Republican Bush appointee, went to Capitol Hill last Tuesday to hear annoyed senior House GOP members vent that his auction proposals were wrongheaded, an abandonment of free-market principles and crafted to suit the needs of one company: Internet search giant Google.
“I am very disappointed that chairman Martin has come up with this plan,” said Rep. Joe Barton (R-Texas), the highest-ranking Republican on the Energy and Commerce Committee.
| SOURCE: Multichannel News research |
| Neutrality needed: The FCC would require winners of a 22 MHz license, which is expected to cover large geographic region, to allow consumers to use any handset and download and use any application. |
| Price must be right: If the 22 MHz block does not result in about $4.6 billion in revenue, the auction would be cancelled and a second auction held without the conditions from the first auction. |
| Wait ’til next year: The first auction has to begin not later than January 28, 2008 and the proceeds need to be deposited in the U.S. Treasury not later than June 30, 2008. |
MAKE IT WIDE OPEN
Key House Republicans, echoing in part their industry supporters, favor a wide-open auction designed to yield at least $10 billion to $20 billion. Many of Martin’s rules, they said, would needlessly blunt interest in the spectrum, reducing revenue.
“I hope what your takeaway from today’s hearing is that the plan we read about isn’t quite ready for primetime,” said Rep. Fred Upton (R-Mich.), adding that one part of Martin’s plan amounted to “price fixing.”
Martin wants to apply some Google-favored conditions to about one-third of the spectrum up for sale. Winners of a 22-MHz parcel would need to operate an open network, allowing consumers to use any wireless device and download any application.
“If Google is really right that there is market demand for [its] business model, [it] should be lining up to bid in a fair auction, without [Martin’s] requirements,” Upton said.
Google has promised to bid $4.6 billion, but only if Martin agrees to a more-extensive post-auction regulatory scheme that the one currently under debate. Martin indicated that he wouldn’t move any further in Google’s direction, especially on the need for auction winners to lease capacity to third parties.
“Google is upset about the non-inclusion of some of the wholesale requirements,” Martin said.
Martin largely stood his ground before his critics, calling his plans — which have not been made available for public review — a “modest step” that would give wireless customers more choices than they have today.
“Currently, American consumers are too often asked to throw away their old phone and buy new ones if they want to switch cellphone carriers,” Martin said, adding that wireless carriers should not solely determine which applications their customers may download.
LIST OF CONCERNS
Other concerns about the Martin’s rules include judicial intervention, postponing the start of the auction and putting at risk the receipt of billions of dollars anticipated by the U.S. Treasury.
Lastly, small bidders believe that hostility to the 22-MHz conditions will drive big players like AT&T and Verizon Wireless to bid on condition-free licenses that the FCC has earmarked for small and midsized companies.
“That’s something we all need to look at,” said FCC Republican member Robert McDowell, who has taken special interest in seeing that the auction results in more broadband availability in rural America.
Martin’s backers were chiefly Democrats, including House Energy and Commerce Committee chairman Rep. John Dingell of Michigan and Rep. Edward Markey of Massachusetts, who heads the Telecommunications and the Internet Subcommittee.
“The [FCC] has a rare opportunity to promote consumer choice, foster innovation, reinject competition into the wireless marketplace and advance the deployment of broadband services and applications,” Markey said.
Rep. Chip Pickering (R-Miss.) was Martin’s most vocal GOP supporter. “I want to commend him philosophically and in principle and for the boldness of what he is trying to accomplish and achieve,” Pickering said.
COUNTING VOTES
Martin likely has the votes of FCC Democrats Michael Copps and Jonathan Adelstein, who have opposed the FCC’s efforts since 2002 to allow broadband access providers to operate free from open access mandates.
Although Republican Deborah Taylor Tate said she hasn’t made up her mind, she hasn’t abandoned Martin on a key vote since she joined the agency in early 2006.
McDowell said he was “leaning against” a mandated consumer right to attach wireless equipment, adding that the free market might be well on the way toward tearing down “walled-garden” business models in the wireless industry.
The auction includes 60 MHz of old analog TV spectrum that is coming back to the government as a result of local TV stations’ transition to digital transmission in February 2009. Among other things, auction proceeds have been earmarked to underwrite a $1.5 billion program that will assist consumers in the purchase of digital-to-analog TV converters. Another $1 billion is to fund interoperable communications equipment for police, fire and other first responder organizations.
STEVENS’ MIND ON CASH
At a Senate Commerce Committee hearing last Thursday, Sen. Ted Stevens (R-Alaska) said he was concerned that Martin’s auction rules would depress the value of the spectrum and starve the converter box program.
“I hope that people are aware of the connection between the auction and the [DTV] transition,” Stevens said. “I don’t think that the FCC understands that this rattling the cage over this what’s-going-to-happen-at the-auction is doing anything other than reducing the amount of money we are going to get in.”
Sen. John Sununu (R-N.H) said it was “an economic fact of life” that spectrum auction conditions reduced revenue. Martin’s proposal, he suggested, does “place some of these programs at risk.”
The Commerce Department’s National Telecommunications and Information Administration is tasked with running the converter box program. In his Senate testimony, Assistant Commerce Secretary John Kneuer didn’t directly criticize Martin’s auction rules, but he agreed that a wide-open auction has the best chance of ensuring top dollar for the airwaves.
“Maximum flexibility does tend to lead to maximum revenues,” Kneuer said.
House GOPers Blast Martin’s Auction Plan
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