Free Internet eyed as part of airwaves auction

By Peter Kaplan

WASHINGTON (Reuters) - U.S. communications regulators are considering auctioning a piece of the airwaves to buyers willing to provide free broadband Internet service without pornography.

Federal Communications Commission Chairman Kevin Martin is proposing to auction an unused piece of 25 megahertz wireless spectrum, with the condition that the winning bidder offer free Internet access and filter out obscene content on part of those airwaves, a spokesman for the FCC said on Thursday.

"We're hoping there will be increased interest in the proposal; and because this will provide wireless broadband services to more Americans, it is certainly something we want to see," said FCC spokesman Rob Kenny.

Under Martin's proposal, the winner would be allowed to use the rest of the airwaves for commercial services.

The plan would address criticism from some consumer advocates, who say the government has not done enough to get broadband service into more households. It also could win praise from anti-obscenity watchdog groups.

"I think there are a number of features of the plan that would be attractive to various constituencies," said Stifel Nicolaus analyst Blair Levin.

But the plan got a lukewarm response from existing wireless carriers. The industry's chief trade group, called CTIA, said auction provisions such as the free-service requirement were too rigid.

"CTIA supports flexible auction rules that allow any and all entities to participate," the group said in a statement.

The winning bidder also would have to build out the system to serve 50 percent of the U.S. population within four years and 95 percent within 10 years.

Further details of the plan have yet to be worked out, but Martin's plan is expected to come up at the FCC's next meeting on June 12.

Martin's proposal is similar to a plan put forth previously by a start-up company called M2Z. Under that plan, which was not approved by the FCC, M2Z would have been given the spectrum at no up-front cost. It would have provided free service, generating revenue partly through advertising.

The 25 MHz spectrum at issue is not viewed as highly attractive to wireless carriers, unlike the 700 MHz spectrum auctioned by the FCC earlier this year. There has been little previous interest in it, aside from the M2Z proposal.

(Editing by Tim Dobbyn and Gerald E. McCormick)