Verizon warns against unnecessary U.S. auction rules

WASHINGTON, May 8 (Reuters) - Verizon Communications (VZ.N) opposes a proposal that would require the winner of an coming sale of wireless airwaves to offer "open access" to rivals, the company, a leader in broadband and wireless communications, said.

The U.S. Federal Communications Commission, which wants to auction off the swath of wireless airwaves in the 700 megahertz band later this year, has asked the public to comment by the end of this month on a number of last-minute proposals.

The airwaves are considered valuable because they can travel long distances and penetrate thick walls. The auction is seen as the last opportunity for a new player to enter the wireless market.

"We believe rules should not dictate a business plan. They should give every player a chance to bid on the spectrum," Thomas Tauke, Verizon's executive vice president of public affairs and communications, told a news conference on Monday.

Tauke was mum on exactly what kind of auction rules Verizon would prefer, but did take exception to one proposal that asked the FCC to designate half of the available spectrum as "open access." That means any company with a device or phone could pay to use or lease the winning bidder's network.

Tauke said open access would diminish the value of the spectrum and likened it to a form of Internet regulation.

"We believe that the auction process should ensure that the government receive the maximum amount of revenue for the spectrum," he said.

"(Open access) would restrict the number of people who could bid in that space, and for the use of spectrum in the sense that it tries to impose one business model over other business models," Tauke said.

The FCC's call for comments triggered a flurry of activity among wireless players and intense lobbying at the agency, which will decide how the auction will proceed.

The auction rules will be crucial for the five or six biggest players like Verizon and AT&T that want to bolster their networks, as well as, for the dozens of regional and local players clamoring for a piece of the action.

On the table are no fewer than five proposals on how to divide up the airwaves. The FCC will decide how winning companies should build out their infrastructure and what devices could be used on the networks.

Two potential networks are at stake in this auction of spectrum, which is being returned by the broadcasters as they move from analog to digital signals early in 2009.

One is a public safety network that would better allow emergency workers to communicate, a significant problem during Hurricane Katrina and 9/11. The other is a network that could potentially be the last opportunity for a new player to enter the billion dollar wireless space.

The FCC is now working within a tight timeframe as it must begin the auction no later than Jan. 28 2008 and must deposit the funds from the auction into the U.S. Treasury by June 30, 2008.

Before the auction can start, the agency must define how the auction will work, provide a set of rules on how the spectrum will be divided and say what services can be offered on the airwaves.