Ex-FCC chairman: Future of networks determined by next election

Whether or not open access rules are enforced or remain could be determined by who becomes president, Former FCC Chairman Reed Hundt says.

PALO ALTO, Calif.--The 2008 Presidential election will determine whether wireless networks will be open or closed, former Federal Communications Chairman Reed Hundt said during a presentation at the Hot Chips conference taking place here at Stanford this week.

The FCC is gearing up for the January auction of the spectrum--the 1GHz and below part of the spectrum--currently dedicated to UHF TV. It's valuable spectrum, Hundt noted. It goes through walls and building. A nationwide network on the spectrum should cost about one-tenth of the cost it would require to build a network for the 2.4GHz spectrum.

"This is the last auction," he said.

In a recent decision, the agency ruled that a valuable portion of the spectrum will be auctioned off with the requirement that it be left open. That is, companies that own the spectrum would have to let anyone with any kind of wireless device to access content on the spectrum. Carriers could not wall off elements from their own customers.

Entertainment services like V Cast from Verizon would not be permitted, according to Hundt.

Still, even though the spectrum will be auctioned off this coming January, some of the regulations regarding open access will terminate in January 2009, right after the election. Thus, he stated that whether or not open access rules are enforced or remain could be determined by who becomes president.

Hundt is not an impartial observer. He is one of the figures behind Frontier Wireless, a company that plans to buy much of the spectrum to be auctioned off. Unlike traditional carriers, however, Frontier will not sell content or service packages to consumers. Instead, it will sell it wholesale to others. Hundt further added that the company is asking the FCC to regulate it so that it can't move into the retail market.

Although Frontier says it is dedicated to helping preserve freedom for the average American, it's backed by several former Netscape execs, venture firm Kleiner Perkins, and other captains of industry.

Analog TV, by the way, won't disappear until February 2009. That wasn't because of the election cycle. The FCC picked it so that it would come between the Super Bowl and the NCAA championship, Hundt said.

The battle over spectrum is akin to the antitrust battle over railroads at the end of the 19th Century. In 1860, 10 percent of the government's property was effectively given to railroads. Twenty years later, railroads were some of the most powerful and profitable businesses in the country.

In modern-day America, communications carriers have experienced a boon through regulations. A significant portion of their market value, Hundt asserted, derived from how government rules help them grow and protect their markets.

Meanwhile, the average American is not enjoying a robust economic life these days, he said.

"Average wages are lower on an inflation adjusted basis than they were in 2001," he said. During the same time, "47 percent of income gain has gone to the top 1 percent in the country," he added.

Traditional carriers have heavily criticized and fought open access regulations.

 

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