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Keywords and related tags: NTIA, White Space, Unlicensed frequencies.
An open access service rule would require winning bidders for half of the spectrum to make access to that spectrum available to third parties at wholesale rates. This model has a proven track record — it led to an explosion of competitive Internet Service Providers in the 1990’s. It is also the model adopted by those countries that are far ahead of the United States in terms of broadband speeds, prices and services.
The open access model requires no complex arrangements or new technology. It would simply require the licensee to sell interconnection to third parties at a gateway in the network, which would permit any number of competitors.
Network Neutrality/Right to Attach
All licensees would be required to operate their networks in a manner that “protects the consumer’s right to use any equipment, content, application or service on a non-discriminatory basis without interference from the network provider.” This protects against the licensee giving favorable speeds or quality of service to content, applications and services in which it has a financial interest. It also ensures that the consumer can attach any non-harmful equipment to the network. The FCC’s 1968 Carterfone decision mandated this attachment principle for wireline networks, but it has yet to be extended to wireless.
The bidding patterns of recent auctions demonstrate that communication and collusion between bidders enable the largest companies to lock out potential new entrants and keep prices low. The best way to prevent such anticompetitive behavior is through anonymous bidding — if bidders cannot identify one another, signaling and blocking behavior become more difficult.
Limits on Incumbent Eligibility
The best method for ensuring that the spectrum is not simply bought by incumbent broadband providers is by limiting their eligibility to bid — either through a flat prohibition or spectrum caps. The 1994 PCS auction had such caps and generated significant revenues. As an alternative, the FCC could give a bidding credit to new entrants.
“Use it or Lose it”
Winning bidders should not be allowed to simply let the spectrum lie fallow. “Warehousing” may be particularly attractive to incumbents who do not want to compete with their own wireline broadband services. Thus, rules must ensure a timely build-out and make unused spectrum available for other unlicensed and other uses.
Pro-Competitive Band Plan
The FCC should adopt band plans that allow competitive national broadband providers to achieve the necessary economies of scale. In order to achieve this goal, the auction must be structured to maximize the number of large spectrum blocks in the upper 700 MHz band.