FCC rejects free Wi-Fi start-up's spectrum plans

Editor's note: This story incorrectly stated the speed of M2Z's premium service offering. The correct speed is 3 megabits per second.

A Silicon Valley start-up that sought permission to build a "free, family-friendly" wireless Internet service on a stretch of unused radio spectrum has been shot down by federal regulators.

Late Friday, the Federal Communications Commission rejected a nearly 16-month-old petition by Menlo Park, Calif.-based M2Z Networks to receive an exclusive, 15-year license to build and operate such a network in the 2155MHz-to-2175MHz band, in return for depositing a portion of its revenues into the U.S. Treasury. In the same order, the FCC also rejected a similar proposal from a company called NetFreeUS. (Click here for a PDF of the FCC's order.)

The FCC said it wasn't persuaded that allowing a single company to control the slice of spectrum without first seeking broader comment on how the band should be used would serve the public interest. The regulators concluded that it's preferable to conduct their usual rule-making process to set parameters for the spectrum's use--a move that would begin "shortly," they said.

"Many have suggested that we should auction this spectrum, while still others suggest that due to the high demand for this spectrum we should consider unlicensed use of the band," FCC Chairman Kevin Martin said in a statement. "Each of these proposals has merit, and consideration of either would be inappropriately foreclosed by granting forbearance in this instance."

M2Z's plan was to offer a free, ad-supported network--plus the cost of a "reception device"--that would include a mandatory filtering system designed "to block access to sites purveying pornographic, obscene or indecent material." Users who didn't want the filters or wanted speeds faster than 384 kilobits per second down and 128Kbps up could upgrade to a "premium" service, at an unspecified cost, that would give subscribers access to 3-megabit-per-second speeds.

Some politicians heralded the plan because of the filtering features and what some perceived as ambitious "build-out" goals--that is, reaching 95 percent of the American population within a decade of the project's start. Some public safety officials also endorsed the plan because M2Z pledged to let them hook up whatever devices they pleased to the free network.

The regulators, in their order, said they were unimpressed by the "relatively slow speed" M2Z planned to offer its users and said the company's proposed network construction benchmarks were not "particularly aggressive."

The wireless industry had strongly opposed the idea, arguing it was a self-serving attempt on M2Z's part to sidestep the ordinary process for auctioning off vacant spectrum.

A loose coalition of public interest groups also recently voiced reservations (click for PDF) about M2Z's commitment to requiring network filters on the free service, arguing such a plan raises First Amendment concerns. The filing, penned by the Media Access Project, said the group wasn't convinced the band even needs to be licensed, but if it is, the group urged the FCC to impose Net neutrality requirements on those who license that slice of spectrum and require that they sell it on a wholesale basis.

M2Z's next steps weren't immediately clear. The firm's chief executive, John Muleta, told Bloomberg News that he would be active in whatever proceedings follow but hadn't yet decided whether to appeal the FCC's decision.