Start-up wants feds to decide on free Wi-Fi plans

More than 15 months have passed since M2Z Networks first petitioned the Federal Communications Commission for a 15-year exclusive, nationwide license to build and operate in the 2155MHz-to-2175MHz spectrum band, which currently lies fallow.

The wireless industry strongly opposes the idea, arguing that the law requires unused airwaves to be opened up for auction and that M2Z's proposed service would provide "limited" consumer benefits.

M2Z, based in Menlo Park, Calif., claims that under federal law, a decision about whether the proposal satisfies the "public interest" should have been issued within a year of its first petition, or by May 6.

In a statement this week (PDF), the company said it plans to ask the U.S. Court of Appeals for the District of Columbia to force the FCC to make that determination. M2Z Chief Executive John Muleta told CNET News.com on Thursday that lawyers were still preparing the paperwork and had no projected filing date in mind.

An FCC spokesman declined to comment because the proceeding is still pending.

What's more, as first reported by The Wall Street Journal on Wednesday, Muleta said the company heard late Friday that FCC Chairman Kevin Martin recently circulated a recommendation that the petition be denied. The other four commissioners haven't yet decided how to rule, but "to our understanding, there has not been a thoughtful analysis as to whether free broadband would be in the public interest," Muleta said.

FCC staff members have informed the company that they believe the deadline for a response is September 1, based on the date of a subsequent filing by M2Z, Muleta said. M2Z disagrees with that interpretation but nevertheless fears that the agency will rush to judgment in an attempt to meet that deadline. The appeals court may have to decide who's right.

M2Z, which was founded in 2005, is the brainchild of Muleta, a former FCC wireless telecommunications bureau chief, and Milo Medin, a former NASA engineer who went on to found the @Home cable broadband access service. So far, the company has received backing from three high-profile Silicon Valley venture capital firms: Kleiner Perkins Caufield & Byers, Charles River Ventures and Redpoint Ventures.

The company says the goal behind its proposed service is to help boost competition in the broadband market and to bridge the nation's much-talked-about "digital divide." As part of its FCC petition, it said it would ensure that the network could reach 33 percent of the American population within three years of starting its operations, 66 percent by its five-year anniversary and 95 percent by the 10-year mark.

The "free" service, supported by ads, would actually require purchase of an "M2Z reception device," which the company said could cost as much as $200 when first unveiled. It would offer speeds of at least 384 kilobits per second down and 128Kbps up. By comparison, the major DSL carriers' advertised "starter" plans offer downstream speeds of 768Kbps. (Muleta claimed that his service would be comparable, citing data showing that in reality, those companies rarely surpass the speeds M2Z would provide.)

Plans a "premium" service
M2Z also plans to offer a "premium" service, at an unspecified cost, that would give subscribers access to 3-megabyte-per-second speeds. It would also allow subscribers to escape the mandatory filters, designed "to block access to sites purveying pornographic, obscene or indecent material," that will accompany its free service.

Muleta said that move is legally necessary because the company will have no way of accurately knowing the age of its users. (There is no law requiring this, however. And many free open Wi-Fi spots, including ones run by government agencies, do not filter "indecent" Web sites.)

The company's request for spectrum access runs counter to the FCC's ordinary procedure of going through a lengthy rule-making process and then auctioning off vacant spectrum. But M2Z disputes any suggestion that it's getting anything for free. The company said it plans to hand over 5 percent of those gross revenues to the U.S. Department of the Treasury, which it claims will raise billions of more dollars than an auction of the same spectrum would.

M2Z has also pledged to let any federal, state or municipal public-safety organization hook up as many devices to the free network as it pleases.

According to M2Z, its plan has received more than 2,000 favorable public comments. Officials from about a dozen states have reportedly endorsed the concept, as have members of Congress, including Rep. Anna Eshoo (D-Calif.), whose district includes Silicon Valley. Advocacy groups ranging from the National PTA to the Minority Media and Telecommunications Council to Public Knowledge have also offered support.

Wireless association CTIA, which represents major carriers like AT&T and Verizon Wireless, has urged the FCC to deny the firm's petition because it claims that granting it would "create a myriad of legal and public-policy problems without effectively serving the public interest."

In comments filed with the FCC in April (PDF), CTIA called M2Z's plan a "self-serving attempt to gain access to valuable spectrum outside of the auction process." The group said federal law and FCC precedent "clearly" require the agency to open the airwaves to bidding by any interested parties, and it urged the commissioners to reject M2Z's arguments to the contrary.

The trade group also claimed that M2Z's offering would be of "limited benefit" because "such services--at higher speeds than M2Z proposes--are available today to the American public from a variety of sources."

Muleta shrugged off those comments. "The big carriers have an incentive to kill ideas that compete with them and that have dramatically different pricing structures," he said.