Is The FCC Blocking Wireless Competition?

M2Z Networks created quite a stir and sort of speeded its own rejection by hammering the FCC into a decision about the company’s proposed free, advertising-supported wireless broadband network. But also, M2Z has sparked fierce public debate over a host of issues that aren’t easy to resolve, including debates about free speech and Net Neutrality. 

Perhaps the most pressing (if not the largest) issue: What to do with all that unused spectrum?

Listen to the Muleta Interview

M2Z CEO John Muleta, whose venture-funded Silicon Valley company proposed the FCC carve out the 2155-2175 MHz band that had lain fallow since 2000 for their "family friendly" network, says the FCC is "sitting" on a lot of unused spectrum that could be used to create new wireless broadband competition.

Muleta brings not just his vested interest in the proposal, but also a Washington Beltway insider pedigree. From 2003 to 2005, he served as the chief of the FCC’s Wireless Telecommunications Bureau.

In an interview with WebProNews, Muleta describes M2Z as an answer to the telecom/cable broadband duopoly, and an anticompetitive market he suggests the FCC has helped to create by blocking startups such as his own.

M2Z was quite vocal in the final days leading to the dismissal of its proposal, noting the speed with which the Commission approved the largest merger in US history – the AT&T/BellSouth merger – and comparing it to the relative slowness of considering uses for fallow spectrum.

"The FCC has spent 15 months looking at our proposal and decided to think some more about it," said Muleta.

Commissioners criticized the proposal for not being aggressive enough in its build-out plans, and for not offering fast enough speeds. Muleta rejected both arguments, saying that the goal to reach 95 percent of the US population was "aggressive" and that 384 Kbs was comparable to the wireless broadband offerings of AT&T and Verizon, who charge $60-$90 per month.

Though the FCC said it needed time to devise rules and invite public comment on what to do with the spectrum (M2Z proposed a 5 percent of profit trade out), for deciding to license or not license, to auction or not to auction, etc., one Commissioner, Jonathan Adelstein, expressed disappointment that the Commission had not sought comment on service rules for this band before now.

"Why does it take 15 months to [initiate rule making]?" echoed Muleta. The answer may lie in that it’s more complicated than throwing spectrum to the first startup that asks for it.

Though there is certainly evidence that the FCC has sat on its heels in divvying up spectrum to would-be wireless competitors, or indeed, as Muleta put it, is flat out "getting in the way" of competition, M2Z’s proposal introduced two new and quite sticky elements to the debate: a Constitutional element; and a Net Neutrality element.

M2Z said content coming across its free network would be "family friendly," which means filters would be in place to block adult content. A premium service would also be available where the filter could be turned off.

Muleta equates it to free over-the-air broadcast television and radio, which has been (quite arguably) family friendly for decades, self-regulated by the networks with oversight by the FCC.

"If we granted a free service," he said, "we think it’s common sense that children don’t inadvertently get to pornographic material."

Listen to the Feld Interview

But Harold Feld, Senior Vice President of Media Access Project, a 35-year-old nonprofit organization dedicated to free speech in media issues and, more recently, opening up spectrum bands for unlicensed public use, says that the FCC granting a license allowing a network operator to filter content would be "an outright violation of the First Amendment."

Feld differentiates between broadcast and wireless broadband with some classic communication theory that involves passive versus active users.

"The problem was you’d be sitting there with your kids huddled around the television set or listening to the radio in this sort of Norman Rockwell type picture and then suddenly this terrible indecent content would jump out at you before you even knew it was there and your kids were exposed to it before you could even turn the dial."

Those were passive users. Active users, as with Internet users, seek out content.

On the Net Neutrality side of the debate, you might imagine, this would involve a government sanction for allowing a network operator to sniff around data packets, separate content, and ultimately decide what the end user can view. And that, says Feld, "sets an extraordinarily bad precedent."

Muleta is quick to answer, though, falling back on the argument that the free market will cure all ills and that the FCC has created the problem of Constitutional concern by clogging up the market in favor of incumbents, and preventing new entrants by doing nothing with the available spectrum.

In the rejection to M2Z’s proposal, Muleta notes not even these concerns were addressed. "What are they thinking?" he asks. "What are they doing out there? Are they fighting fires?"

The speed wouldn’t be blistering, mind you, just 384K, and content would be filtered for decency just like broadcast television. In return for not auctioning off this slice of spectrum like the rest, M2Z would funnel five percent of ad revenue into the US Treasury.

Of course a proposal like this brings up a whole host of issues, and forms unlikely alliances as opposing forces object for opposing reasons. Muleta accused FCC Chairman Martin of dragging his feet, an accusation which nearly sealed an answer in the negative, despite there being no good answer for Martin in this situation.

If the FCC approves M2Z’s proposal, it has to answer to AT&T and Verizon and even to the Public Interest Spectrum Coalition, made up of Free Press, Media Access Project and Consumers Union, natural opponents of telecom incumbents.

The incumbents don’t want competition offering what they offer, albeit much, much slower, for free. The PISC doesn’t want an ISP setting a precedent by being allowed to filter Web content. 

Sort of defeats the purpose of the whole Net Neutrality debate.

But if the FCC denied the proposal, it risks angering other sets of stakeholders, namely, the poor and the profanity police. Well, it’s most likely the latter the FCC’s worried about.

So, obviously, M2Z is right that it’s a complicated issue. It’s interesting, though, that just last week approval wasn’t coming fast enough, and this week, a couple of days before the deadline, we’re all being too hasty about it.

Interestingly enough, M2Z cited PISC’s filed comments that "granting the license subject to a filtering condition… raises serious First Amendment concerns as well as statutory concerns" as reason to extend the debate.

"We applaud PISC’s thoughtful and considered comments.  They’ve raised important questions to the FCC and M2Z agrees that additional time is needed for a full and informed debate on the merits of M2Z’s pending application,” said Muleta. "Unfortunately, it’s clear that the full Commission has not yet had adequate time for a full review of our extensive docket.   The public interest will not be served by a rushed decision made because of an arbitrary September 1 deadline.”

M2Z disagrees, however, that there are Constitutional concerns with offering a filtered network. The basis for that argument are precedents set by over-the-air television and radio, both of which are regulated by the FCC.

However, if you want to get persnickety about it, that is technically government regulation of speech, which walks a fine First Amendment line as it is, and is peppered with consolidated media selected messaging.

Regardless, the TV and radio is what they’re basing their argument upon.

“Similar to free-over-the-air TV, we would have no idea whether a user of the free service is 9 years old or 40 years old," said Muleta. "We also believe, and that includes our investors who are Silicon Valley leaders, that offering Americans free and family friendly broadband makes good business sense since it provides consumers more choices in the broadband market.” 

He’s probably hit closer to the heart of it there – there are investors and markets at stake. But doin-it-for-the-kids is always a powerful political tagline. Funny how it didn’t sway anybody in power when the .xxx domain was proposed and shot down by both family groups and porn peddlers, one side wanting to pretend porn didn’t exist while the other pretended they’d go out of business if they had to move.

Though the .xxx domain proposal had it’s own issues – classic ones like the difference between smut and art – at least filtering at home would have been simpler, and best of all, not centrally controlled by a distributor with a vested interest in the content you see.

Again, M2Z’s "free" broadband is not free. Nothing is free as long as it is controlled.

What’s wrong with free broadband? Well, nothing, essentially, except that this free broadband, like the free lunch, doesn’t really exist. M2Z has proposed an ad-supported, "family friendly" network based upon the network television model, which sort of runs contrary to Net Neutrality principles, supported by at least a million and a half people, and opposed by incumbent broadband providers.

It runs the same risks of absurdity network TV has faced for half a century:

Who decides what’s decent?
Will advertisers decide what we see?
Will the Parents Television Council waste FCC time sparking debates over whether the term "hamsterbating" is appropriate before 9 PM?
What if Janet Jackson accidentally shows a nipple? Will it cause a Congressional hearing?

The idea behind Net Neutrality was that a democratic system stayed democratic and that no central power controlled the content.

At the same time, if the incumbents are against it, you automatically think it might be a good idea. But you’d expect them to be against free Internet, though wouldn’t you?

The broadband M2Z wants to offer the country is slow, too. About half the speed of AT&T’s apocryphal $10 DSL service – about 384K down and 128K up. Not really bad for free…except that other countries are kicking our butt in available speeds, so much that the $10 DSL might be offered for free in South Korea and nobody would care.

M2Z, which stands for "move the cost of data transport to zero," is headed up by former Clinton-era FCC Commissioner Wireless Bureau Chief John Muleta, who moved from D.C. to Silicon Valley. The company claims to have 50,000 supporters signed on to their plan, which aims to give 95 percent of the country free broadband access within the 10 years it takes to build out the network.

(Ten years is apparently the standard build-out period, as that was the amount of time given the telecommunications industry by Congress back in 1996 to build a broadband network that never arrived. And then there’s the matter of the missing $200 billion of tax-payer money that was supposed to be used to build it.)

Muleta’s company made its proposal to the FCC nearly a year and a half ago, and has yet to hear a response. He proposed that the FCC make available to M2Z a portion of unused spectrum from 2155 MHz to 2175 MHz, ideal for data but not for voice, in return for 5 percent of annual sales.

If that sounds like a bit of a bribe, well, it kind of is, and it also asks for special treatment by the FCC. Though the FCC has traditionally not had a problem with either concept in the right situation, decade-old rules (you know, the ones that required incumbents to build out the network instead of racing for long distance) require that spectrum be auctioned to the highest bidder.

Even if this particular slice of spectrum isn’t up for sale in either of the upcoming major auctions. But giving M2Z special treatment would almost certainly anger the incumbents, which the FCC is not too keen on doing.

Rightfully, though, M2Z has called for a ruling on the matter, accusing the FCC of dragging its feet. It took half the time to approve the largest merger in American history, the AT&T/BellSouth merger. Yet, a possibility for free broadband in America has sat on the shelf. M2Z has threatened to take the FCC to court if the council hasn’t ruled on the proposal by September 1st.

Which may speed up a denial chairman Kevin Martin has already promised. But it does put the FCC between an incumbent and a hard spot: How can we upset the telcos by giving special treatment to someone that wants to give America free broadband while telling America we turned down an opportunity for free broadband?

Tough one. But maybe you could say that a free, slow, and censored version of the Internet just wasn’t a good enough proposition. Or maybe you guys should ask for 10 percent, instead.