AT&T endorses FCC chief's wireless auction plan

Thu Jul 19, 2007 1:41pm EDT

By Peter Kaplan

WASHINGTON, July 19 (Reuters) - Leading U.S. wireless provider AT&T Inc. (T.N) on Thursday endorsed the proposal of a key U.S. regulator to impose open-access requirements on some of the valuable wireless airwaves to be auctioned by the government later this year.

AT&T said it supports a plan floated by the chairman of the Federal Communications Commission last week that would require the winner of the FCC's auction to make some of the airwaves accessible using any device or software application.

The open-access proposal was a disappointment to potential bidder Google Inc. (GOOG.O) and some consumer advocates, who said the government should go further in opening up the wireless business to competition.

Currently, wireless carriers restrict the models of cell phones that can be used on their networks. They also limit the software that can be downloaded onto them, such as ring tones, music or Web browser software. "If our understandings are accurate, we believe chairman

(Kevin) Martin has struck an interesting and creative balance between the competing interests," AT&T senior executive vice president Jim Cicconi said in a statement.

The endorsement came as Martin and the other four FCC commissioners are mulling different scenarios for how the auction should be conducted.

The airwaves to be sold in the 700-megahertz band can travel long distances and penetrate thick walls. The auction, to be held later this year, is seen as a last opportunity for a new player to enter the wireless market.

The No. 2 wireless service provider, Verizon Wireless, opposes Martin's idea of imposing conditions on the auction.

"To rig the 700 MHz auction in any way -- to limit its value and potential to deliver exciting new products and services -- would be huge disservice to the nation," Verizon Wireless said in a statement.

Verizon said any conditions imposed on the auction would amount to "corporate welfare" for Google. Verizon Wireless is owned by Verizon Communications Inc.(VZ.N) and Vodafone Group Plc (VOD.L).

The open-platform approach is backed by Google, which has been studying whether to take part in the auction.

In a separate letter co-written with other supporters of the open-platform idea, Google told Martin that his proposal was a "noble beginning" but would ultimately be inadequate.

Martin's proposal "will not be sufficient to create the environment that will produce a new broadband competitor," Google and the other open-platform proponents said in their letter. In addition to open access, Google and its allies want to require the winning bidder to resell some airwaves to competitors.

AT&T said Martin's proposal was acceptable because it did not require the resale of airwaves.

In addition, AT&T said its concerns were met by a provision that would set a minimum bid "to ensure that neither Google nor others would be able to obtain any block of spectrum without paying an appropriate price to the U.S. Treasury." If no bidders met the minimum amount, the auction would be rerun without the open-access conditions, AT&T's Cicconi said.

"In effect, (FCC) chairman Martin's plan faces Google and others with a 'put up or shut up' opportunity," he added.

"If they are serious, they will be able to bid and test their model in the marketplace against the business models of companies already enjoying widespread consumer acceptance," Cicconi said.

The 700-mHZ airwaves are being returned by broadcasters as they move from analog to digital signals early in 2009.

((Reporting by Peter Kaplan, editing by Gerald E. McCormick; Reuters Messaging: peter.kaplan.reuters.com@reuters.net; email: peter.kaplan@reuters.com; +1 202 898 8463, fax: +1 202 898 8383)) Keywords: ATT AUCTION/

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