Bush Administration Calls for Martin to Back Off AWS-3 Plan, Stirs Debate

The Bush administration reportedly is clashing with the head of the federal agency that oversees communications and is set next week to consider a plan to auction public airwaves, with a requirement that the winning bidder put some bandwidth aside for free nationwide Internet.

 

In a developing story that’s being closely followed by the telecommunications industry, Commerce Secretary Carlos Gutierrez urged Federal Communications Chairman Kevin Martin to desist with his so-called “advanced wireless services-3,” or “AWS-3,” initiative.

“The administration believes that the AWS-3 spectrum should be auctioned without price or product mandates,” Gutierrez said in a two-page letter. “The FCC should rely on market forces to determine the best use of the spectrum, subject to appropriate government rules to prevent harmful interference.”

 

The FCC is scheduled to meet on Dec. 18. According to Reuters reporter Kim Dixon, the Federal Communications Commission will consider the measure at its Dec. 18 meeting.

 

As MobilityTechzone reported, though supported in theory, the notion of free Internet faces opposition from the cell phone industry, which says it wouldn’t be a feasible business model, free speech advocates who argue against blocking specific content, such as pornography, and service carriers such as T-Mobile, who say the move could interfere with adjacent spectrum that’s already been purchased.

 

According to one prominent advocacy group leader, Ben Scott of Free Press, though free broadband and Internet access is a popular concept, “in practice, the way the model is set up, it may present problems.”

 

In a scathing opinion piece, The Wall Street Journal today accused Martin of effectively setting up an auction that would benefit M2Z Networks Inc., a company backed by venture capitalist John Doerr.

 

“Mr. Martin wants to place restrictions on how the spectrum can be used, which will discourage larger, established wireless carriers from participating in the auction and bidding up the price,” the WSJ writes. “The proposal – to be considered December 18 – requires the winning bidder to build a nationwide broadband network that reserves 25 percent of the spectrum band for a free Internet service that blocks adult content. And by some huge noncoincidence, an upstart telecom company has emerged with a business plan that mirrors those requirements. The company is M2Z, and it’s backed by the venture capital outfit Kleiner Perkins, where Mr. Doerr is a partner.”

 

According to the WSJ, Doerr has benefitted from Martin’s chairmanship in the past.

 

The WSJ also noted how unusual it was that the Bush administration called for Martin to back down from the plan.

 

Yet M2Z responded swiftly to the outgoing president’s administration, noting that Gutierrez’s comments appeared to contrast sharply with a goal that Bush himself outlined in a 2004 speech here, namely: “I’m talking about broadband technology to every corner of our country by the year 2007.”

 

The company notes that now, an estimated100 million Americans or more, mostly from low-income households or who live in rural or inner-city settings where existing providers refuse to serve, still lack broadband Internet access.

 

According to John Muleta, chief executive officer and founder of M2Z, the Bush administration is marked by years of failed policy initiatives that benefit corporate interests, and this is just another example.

 

Given the current economic crisis, Muleta said, the need for affordable and widely available broadband to stimulate the economy and bridge the digital divide could not be greater.

 

“All of the policy and technical benchmarks have now been met and all that is needed is an affirmative vote by the FCC commissioners so that this spectrum can be auctioned and be put into productive use as quickly as possible,” Muleta said. “America’s consumers have waited long enough and Chairman Martin deserves credit for pushing this innovative plan that will provide more access, create jobs and stimulate the economy. The administration should support this plan, not fight it.”

 

TMC President and Group Editor-in-Chief Rich Tehrani largely agrees.

 

For Tehrani, it’s “appalling” that parts of our government are against what appears to be in the consumer’s best interest.

 

“Providing free Internet service is a great way to ensure that everyone can have access to anything and everything they want on the go,” Tehrani said. “At this point, Internet access should be viewed as crucial to our national security as food, oil and water. Our national productivity is at stake and Kevin Martin should be commended for taking this pro-free Internet stance.”

 

The FCC is comprised of five members, including three from the “ruling” party. Martin, a Republican appointed by Bush, is expected to step down next month, when President-elect Obama is sworn in.

 

Reuters reports that Muleta sees consumers buying a router for free Internet access at midlevel DSL speed and paying a fee to upgrade to faster service. In Muleta’s mind, Reuters said, a lack of competition and rising prices for Internet services are creating consumer demand for cheaper service.

 

“It is a difficult time in the general marketplace, but this is not the financial services sector,” Muleta reportedly told the Reuters reporter. “This is not about subprime loans.”