FCC Mandates 'Open Access' In 700MHz

WASHINGTON — The Federal Communications Commission (FCC) approved open-access rules for a slice of the 700MHz analog-TV spectrum last week, contending the rules will accelerate competition and foster innovative wireless applications and handsets that existing cellular carriers have stifled.

The "open access" rules will apply only to a single 22MHz block within 62MHz of UHF TV spectrum that will be auctioned off beginning in January. The 22MHz block will be auctioned off in 12 large geographic regions in a way that the FCC said would promote aggregation by a single national operator.

The FCC contends the rules will produce a single nationwide wireless network open to all compatible wireless devices, not just to those sold by the network operator and not just to those whose feature set is heavily influenced by the operator. The network operator will also be required to allow over-the-air downloads of applications and content from any third-party provider unless the downloads harm the network or are illegal. The Commissioners didn't mention whether the rules would prohibit a winning carrier from subsidizing the price of handsets that it sells to gain an advantage over competing handsets.

The ruling was applauded by the Consumer Electronics Association (CEA), called "unfortunate" by CTIA-The Wireless Association, dubbed an "excellent first step" by Skype and lamented by lobbying group Public Knowledge as not going far enough. (See reaction story on www.TWICE.com)

Some FCC commissioners also thought it didn't go far enough. Commissioner Jonathan Adelstein contended the requirements will foster service innovation by breaking "the shackles of a handful of [carrier] gatekeepers." He and other commissioners, nonetheless, said they would have preferred an additional rule forcing winners of open-access spectrum to wholesale their bandwidth to other companies to further encourage competition and innovation. Opening the network through a wholesaling requirement, Commissioner Michael Copps added, could have created a nationwide wireless competitor to cable and telco company broadband services.

The launch of an open-access network could have an impact beyond operations in the 700MHz band, analysts told TWICE. An open-access 700MHz network will step up pressure on cellular carriers to let "unlocked" unsubsidized phones onto their existing cellular networks, activate phones and devices not sold directly by them, and stop blocking third-party application and content downloads, analysts said. The rules could also promote direct sales of handsets and other wireless devices to retailers, who currently buy most of their handsets from carriers.

"Things have been going that way anyway," said In-Stat analyst Alan Nogee. Sprint's planned WiMAX network, he noted, is also built on that business model.

The trend toward openness is underscored by the small but growing number of unlocked GSM phones that suppliers are selling direct to retailers, although at prices that don't benefit from GSM carrier subsidies, he noted. Over-the-air downloads of ringtones, songs and games are generally controlled by carriers, added Gartner analyst Phil Redman, although some applications can be delivered via a phone's SMS or Web browser.

During testimony at the FCC meeting, Jason Dillards, CEO of Skydeck, called open access the means by which innovative services blossomed over the wired Internet network. The wireless internet, however, has been "hobbled" by the requirement that third-party innovators must get carrier approval to appear on their phones' decks.

Use of the spectrum for an open network is not assured, however, because revenues from the spectrum must exceed a minimum amount. If the minimum isn't hit, the spectrum will be auctioned off without open-access rules.