Verizon Lawsuit Muddies Spectrum Auction Plan…
“Just when it looked like the FCC’s upcoming auction of 700 MHz spectrum might inject some degree of openness into the U.S. wireless industry, Verizon Wireless struck back with this lawsuit.”
Verizon Wireless is challenging the government’s rules for auctioning highly coveted frequencies in the 700 MHz band, raising fears about dampened enthusiasm for the radio waves in the face of legal uncertainty.
Verizon is asking a court to find that the Federal Communications Commission overstepped its authority by adopting open access rules for its January wireless spectrum auction. The wireless carrier is claiming that the FCC’s order violates the U.S. Constitution and the Administrative Procedure Act.
In its lawsuit filed Monday in the U.S. Court of Appeals for the District of Columbia Circuit, Verizon Wireless, a joint venture of Verizon Communications and Vodafone, accused FCC of going beyond the limits of its authority in mandating carriers to open their networks to all devices and cell phone applications.
The Basking Ridge, N.J.-based company sought to overturn rules, saying the rules are “arbitrary, capricious, unsupported by the substantial evidence and otherwise contrary to law.”
To encourage new players to bid for the 700 MHz frequencies and inject new competition in wireless services, the Federal Communications Commission (FCC) decided in late July that consumers would be allowed to use any mobile devices and download any applications on one portion of the spectrum.
Proponents of open access, particularly Google and other high-tech companies, criticized Verizon’s action, arguing that the rules were crafted to foster greater innovation and greater freedom for Internet users.
Chris Sacca, Google’s head of special initiatives, summed up Google’s position with his thoughts on Verizon’s move to block the auction’s rules:
The nation’s spectrum airwaves are not the birthright of any one company. They are a unique and valuable public resource that belongs to all Americans. The FCC’s auction rules are designed to allow U.S. consumers — for the first time — to use their handsets with any network they desire, and download and use the lawful software applications of their choice.
It is regrettable that Verizon has decided to use the court system to try to prevent consumers from having any choice of innovative services. Once again, it is American consumers who lose from these tactics.
“Here the rules were set for the auction and they were heralded by a lot of people as being a pretty big step for consumers,” said Google spokesman Adam Kovecevich. “For Verizon to sue, we do not think is in the best interest of consumers.”
The 700 MHz open-access rules according to the company would allow any device or software to work on a portion of wireless airwaves being auctioned by the government.
On Tuesday (September, 11), six years after the 9/11 terrorist attacks, the FCC issued regulatory guidelines to handle the auction of the 700 MHz band radio spectrum. The new rules are designed to make it easier to locate people calling the 911 emergency number from a cell phone.
FCC Chairman Kevin Martin has said the spectrum has the potential to become a key part of a next-generation high-speed wireless network, one that could pave the way for services such as mobile TV.
Other major wireless carriers had voiced concerns about open access during the FCC’s deliberations, but it is unclear whether Verizon will have allies in its court challenge. When asked for comment, AT&T spokesman Michael Balmoris pointed to a statement the company made July 18, lending its support to the balance struck by the FCC.
Several public interest groups, including the Consumer Federation of America, Consumers Union and Public Knowledge, decried Verizon’s attempt to have the open access rules overturned, warning that it doesn’t bode well for consumers and could delay the auction.
“It is one of these situations of Verizon being a bad winner. They got 99 percent of what they wanted from the commission,” said Art Brodsky, spokesman for Public Knowledge. “Verizon wins by litigation. It is one of their tools, and they are not afraid to use it.”
Made available for digital use for the first time, the 700 megahertz band is seen as being capable of having a host of uses, with its ability to travel long distances making it valuable for connecting rural users and its capacity for penetrating thick walls making it ideal in urban settings.
The auction is scheduled to take place on Jan. 16, and carriers and others are expected to pay as much as US$10 billion to $15 billion for the right to control spectrum reclaimed from outmoded analog television signals.
If the FCC goes ahead with its plan to auction the spectrum in January and a court challenge remains pending, auction winners could find themselves in the position of having to give back the frequencies if the rules are later overturned — a not-unprecedented occurrence in auction history.
The court challenge may not be the only wrench thrown into the 700 MHz spectrum plan. Interested parties have until Sept. 24 to petition the FCC to reconsider the auction rules, and those dissatisfied with the commission’s attempt to strike a balance are gearing up to file.
In essence, Verizon Wireless is seeking to strike a blow against concessions the FCC made at the behest of some parties, most notably Google, who want to ensure the new airwaves remain as open as possible.