Is free nationwide wireless broadband dead?

Much to the dismay of some smaller Internet providers, the fate of the 2,155-to-2,175-MHz band is still up in the air.

The band, which is unlicensed and unused, has been sought by companies, such as M2Z Networks Inc. and NetfreeUS LLC, as a means to provide nationwide wireless broadband services. Each of the two companies had applied separately with the Federal Communications Commission for the rights to operate the band and use it to make a nationwide wireless network. However, the FCC announced on Aug. 31 that it was dismissing both applications, thus leaving the band's future uncertain.

In a statement supporting the applications' dismissal, Commissioner Michael Copps said that "the proper way to allocate this spectrum in the manner that best serves the public interest is to conduct a general rulemaking."

He described four different options that the FCC should consider for dealing with the band, including opening it up for unlicensed use, designating it as an "open access model that would combine wholesale broadband access and a Carterfone mandate," using it to create a free nationwide broadband network that would be supported both through advertising revenue and revenue generated from premium service fees, and licensing it through an open auction.

In a separate statement, Commissioner Jonathan Adelstein expressed frustration with what he said was a lack of progress by the FCC in designating rules for the band's use.

"I'm disappointed that despite the aggressive interest in and availability of this spectrum, the commission is only now expressing intent to seek comment on service rules for this band," he said.

The companies that filed applications to operate the band haven't given up, though. Shant Hovnanian, the CEO of Speedus Corp., the managing member of NetfreeUS, said that his company hopes to work with the FCC to shape their decision on the new rules.

"We are hopeful that there's an expedited process now to establish rules where we could still be victorious in getting our format approved," said Hovnanian, who added that he wants to see the band used to create a free wireless network that will be funded by advertising. The idea is to make the Internet more like analog radio and television, where people can tune in for free in exchange for being exposed to advertisements.

M2Z CEO John Muleta said he would like the FCC to adopt rules similar to what M2Z had proposed in its application. M2Z's original proposal would have given the company operating rights for the 2,155-to-2,175-MHz band in exchange for developing a nationwide wireless network that the company claimed would have provided free Internet service to 95% of Americans. The network would have operated at a speed of 384Kbit/sec. and would have featured an obscenity filter administered by M2Z's own National Broadband Radio Service.

Muleta says that while he's happy to see the FCC undertaking rulemaking sessions for the band, its actions may be too little, too late.

"We'd have welcomed this if they'd started it 15 months ago," he said. "A lot of the big carriers want to forestall competition, and the longer they make us wait to deliver our services, the better it is. ... Americans are dying for broadband, and it's not that it's not available; it's just incredibly expensive. We're offering a free service that's being retailed today for $40 to $90 a month."

Mike Jude, a senior analyst at Nemertes Research LLC, said that his preferred solution for the band would be to open it up for unlicensed use, which he says could open the door for more innovation akin to the early days of citizens' band radio, which he described as "a free-for-all that ultimately led to a lot of interesting ideas." However, he noted that the prospects for getting the current FCC to make the 2,155-to-2,175-MHz band unlicensed are grim.

"The FCC has long history of wringing its hands in public, and often what they do is most politically expedient thing, which means going to go through the same traditional auction," Jude said. "That seems to be the path of least resistance, and it has a lot of attraction for politicians."

Sascha Meinrath, the research director for the New America Foundation's Wireless Future Program, said that any of the four options for the band laid out by Copps could be beneficial depending on the details. In particular, the ideas he found most appealing were either making the 2,155-to-2,175-MHz band unlicensed or using it to provide a nationwide broadband service free of charge. However, Meinrath had some potential concerns with some of the proposals laid out by M2Z and NetfreeUS, such as the obscenity filter proposed by M2Z.

"You're either providing Internet access -- and the good, the bad and the ugly that entails -- or you end up becoming a government censor, which has incredibly scary connotations," he said. "Likewise, how advertising works on a free tier is vitally important. Ads should not be intrusive or end up degrading the user experience."

Meinrath said that auctioning off the band could be beneficial if it correlates mainly with providers' abilities to provide free service and not simply their ability to pay. Among the criteria he said he would like included in any potential auction are "free tier service speeds, buildout requirements and wholesale/open access."

"Opening the band up for auction a la the 700-MHz block is probably the worst idea of the lot," Meinrath said. "Let's have an auction that actually generates benefits that people will directly experience."

This story, "Is free nationwide wireless broadband dead?" was originally published by Network World.

Copyright © 2007 IDG Communications, Inc.

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