Telecom Trends

The NY Times is reporting that FCC chairman Kevin Martin said that he circulated a draft proposal that would require the winning bidders in the upcoming AWS spectrum auction to be receptive “to all kinds of devices and applications” provided by independent consumer electronics makers and third-party software providers.

His proposal would set aside a third of the new spectrum for bidders who agree to operate wireless services in a more open fashion.

A variety of companies have proposed set-asides for spectrum in the upcoming Canadian auction. Those proposals would simply open up additional spectrum for new entrants but none have suggested that they would commit to the kinds of consumer benefits being proposed by Martin. Their proposals implicitly suggest that consumers will benefit from additional industry participants, but none have said that open access should be a precondition for bidding on a reserved block.

Of course, there are lots of questions that come to mind. Among them:

• If a company promises to provide open access, what enforcement mechanisms will ensure that the commitments are fulfilled? Would there be substantial penalty fees?
  
• Who will interpret the definitions of open access?
  
• Under an open access rule, can carriers lock consumers into multi-year contracts in order to recover handset subsidies? If consumers aren't receptive to paying full price for devices, are contract termination fees consistent with the open consumer access commitments?

Martin is proposing a novel approach that might add teeth to the 'trust us' types of competitive benefits that were submitted to Industry Canada from the potential new entrants.

Is open access a sufficient consumer dividend - a quid pro quo - for the free market distortions that could be created by a spectrum set-aside?

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Industry Canada, FCC, wireless, spectrum auction, AWS