Is the cup half empty or half full?
In January, the US Government will auction off a new block of wireless spectrum. This 700 MHz block has, until now, been used for analog TV. Congress has said that by February 2009 all television will be digital and that analog broadcasters must vacate the 700MHz spectrum premises.
Spectrum is a limited resource and this newly-freed block is being greeted with a lot of excitement. Some people consider it especially valuable because by its physical nature, this range can penetrate walls and other objects more effectively than other portions of the spectrum.
So as you might guess, is a great deal of interest over this auction and the terms around it.
Remember, "owning" the airwaves can be wildly profitable - just ask any television station, or the telecom giants. The rights to deliver exclusive products and services in a particular spectrum has generated piles o' profits. Of course the flip side is that competition, innovative and consumer access tend to get pushed to the side.
Google, along with various public interest and consumer interest groups, has been promoting the concept of "open access". Essentially, open access means all software vendors and hardware makers can let their products work together wirelessly across all networks, no matter who owns the network.
Great for the consumers. Not so great for the digital gatekeepers like AT&T. As you might imagine, a bit of debate has been raging about this.
A few weeks ago Google upped the ante by pledging to bid at least the auction reserve of $4.6 billion if four open access tenants were included with the spectrum. These four are: open applications, open devices, open services, and open networks.
Open applications would let consumers download and use any software applications, content, or services they desire. You wouldn't be limited to only those applications or content the network's owner offered.
Open devices would let consumers use handheld devices the wireless network of their choice. Under this arrangement, the iPhone-only-on-AT&T's network scenario would not be possible within a service in this spectrum.
Open services would let resellers buy wireless services on a wholesale basis. If you wanted to buy a chunk of the network and offer "Tammy's Best Wireless", well, you could.
Open networks would let third parties interconnect at any technically feasible point in a 700 MHz licensee's wireless network.
This week the Federal Communications Commission (FCC) voted for two of the four open access conditions proposed by Google: open applications and open devices. This opens up the opportunity for consumers to buy a cell phone and select a cell service separately. And, more significantly, analysts say this will change the digital telecommunication market as much as the landmark 1968 Carterfone ruling changed the phone industry.
How many of you remember the time when the only phone you could get had to come from Ma Bell and it was illegal to have an extension phone unless you were buying and paying for it? Almost seems quaint now, doesn't it?
In 1959 a man named Thomas Carter invented a machine that connected radio transmissions into a phone network. His main customers were oil rigs, who used this as way to connect to remote landlines.
The AT&T monopoly did not like this. Not one little bit. It claimed attaching non-AT&T devices would damage the network and forbid anything else from connecting.
Carter sued and eventually - in 1968 - the FCC ruled that anyone could make devices that connected to the network. And suddenly the market for Mickey Mouse and racing car phones was born! Well, ok, maybe that's a little flip, but once the network was declared device open, the dynamics change, innovation emerged, and consumers got lots more choices and better price options.
Opening the network to competing retailers and the third parties might have been a bit too much of jump - the lawsuits from the half open ruling will be clotting the system for years. Remember - nothing gets a good battle going than dollars or god. And for some of these players, they are one and the same.
The consumer folks are disappointed - they wanted all four open tenants. And the telecoms are deeply unhappy. They wanted none of the open tenants. But maybe, if you're trying to shape policy in these challenging waters, the glass filled is just right for this time, place, and auction.
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