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FCC wireless plan torpedoed by Google-loving mega-startup

Frontline takes a hardline

The smart choice: opportunity from uncertainty

The Federal Communications Commission is facing criticism from both sides of the great 700-MHz debate as it prepares to auction off a prime portion of the US wireless spectrum.

Earlier this month, Verizon asked the US Court of Appeals to smack the FCC for changing its auction rules, and now über-startup Frontline Wireless is telling the FCC it hasn't changed them enough.

As Verizon works to maintain a tight grip on the wireless market, Frontline is siding with Google in an effort to inject a little more competition. In a recent FCC filing, the startup insists that FCC rules for the 700MHz band have undermined a Congressional mandate to allow "small businesses [and] new entrants" into the market.

In a petition filed with the Court of Appeals, Verizon badmouthed the FCC's new "open access requirement," which would allow consumers to attach any device and any application to a portion of the 700-MHz band, due to be auctioned off in January. The mega-telco likes the status quo, where it controls devices and applications.

Unhappy with the status quo, Frontline is pleased with this open-access requirement - but it's peeved the FCC hasn't included a "wholesale requirement," which would force the winning bidder to share the band with other ISPs.

Run by several veterans of past wireless wars, including former FCC chairman Reed Hundt, Frontline envisions a wireless market where a wide of a range of carriers offer unfettered access to the internet. And it says that Congress has called for this sort of wireless nirvana with amendments to the US Communications Act.

In filing a "petition of reconsideration" with the FCC, the startup insists that the commission's 700-MHz rules - laid down with an official order on August 10 - have undercut this push for new competition.

"The commission should repair the damage the order inflicted on the goal of promoting small business/new entrant participation in spectrum-based businesses," Frontline's petition reads. "Congressional mandates require this outcome, and the commission itself made findings that new entrants would promote the policy goals of competition and innovation in the wireless and broadband markets."

Yes, the petition was written by a team of lawyers. According to Jonathan Kramer, a telecommunications attorney with the Kramer Telecom Law Firm in Los Angeles, this sort of FCC filing could lay the groundwork for legal action against the commission.

"Petitions for reconsideration are a customary tool used to introduce additional views and rebuttal into the FCC's rule-making process," Kramer told us. "An underlying purpose in filing for reconsideration is to help set the stage for the petitioners in potential litigation against the commission, just in case the commission isn't persuaded by the reconsideration petition." So Verizon has already gone to court over the 700-MHz rules. And now its rivals are gearing up for a fight back.

Like Frontline, Google has fought heavily for new competition in the market. This summer, before the FCC laid down its rules, the Mountain View outfit said it would pony up $4.6bn for a 22-MHz portion of the 700-MHz band - if the commission included both open access and wholesale requirements.

This "C Block" portion has indeed been designated for open access, but since the FCC has sidestepped the wholesale requirement, it's unclear if Google will bid. Without a wholesale requirement in place, the band is more attractive to the big telcos, and they may be willing to place higher bids.

That $4.6bn figure is the "reserve price" for the C Block. If the FCC doesn't get a bid of at least that much, it will rejigger its rules and hold another auction. To wit, it could remove the open access requirement. Worried this might happen, Frontline has also told the FCC that this reserve price is much too high.

So the fight for the 700-MHz band is a bit like a chess match. And the clock is ticking. Congress has also mandated that the FCC hold its auction by January. ®

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