Interesting speculations by Peter Nowak in his blog.
The FCC leaves Canada in the dust again
Lost amid all the telco earnings last week was some monumental news from down south. On Tuesday, the U.S. Federal Communications Commission unveiled the rules for next year's wireless spectrum auction. The news was monumental because the rules go a long way toward busting up the oligopoly of U.S. carriers. In a nutshell, carriers will no longer be able to lock mobile phones onto their own networks. In other words, if a consumer buys a mobile phone, it will work on AT&T's network, on Verizon's network, T-Mobile's network, etc. Also, carriers will no longer be able to dictate what sort of software can be put on the phones. So if a consumer wants to put Skype on their phone and make free calls through wi-fi hotspots, thus depriving the carrier of some revenue, it's their right to do so. This move will also massively spur development of new software applications for mobile phones.
The FCC, however, stopped short of granting one further request made by Google Inc. and various consumer groups. Google and company had been asking that the winners of the auction be forced to rent their spectrum to third parties, thus making it possible for smaller players who can't afford the billions it takes to get airwaves to enter the business. The FCC turned down this request, a point lamented in an editorial by the New York Times. (The NYT link may not work too much longer, as the editorial will probably go up behind a pay wall sooner or later. The gist of the lament is that by forcing carriers to rent spectrum, the FCC would have created a third, wireless broadband pipe into the home to compete with DSL and cable. Not doing so is a missed opportunity.) With that said, there is nothing to prevent a deep-pocketed company from buying spectrum in the auction and following through with a rental scheme anyway - I'm betting that's exactly what Google does, just to stick it to the wireless carriers.
Are there Canadian ramifications for the FCC's bold moves? Sort of. While it's true that we have a similar spectrum auction happening early in 2008, there will be no similar rules set. An Ottawa source tells me that Minister of Industry Maxime Bernier could not add similar rules to the auction without first asking for public consultation on them. And the only possible time to add such rules is during an auction for new spectrum - any attempt by Ottawa to slap new requirements on the existing spectrum owned by Bell, Rogers and Telus would surely be legally challenged, and probably defeated. The new rules could be applied in the next spectrum auction, in 2011, when the airwaves currently used to deliver over-the-air analog television signals are repurposed. In the meantime, however, Canada will drop even further behind the rest of the world in wireless. We'll be the only ones continuing to use locked and blocked cellphones. The U.S., because of the FCC's new rules, is going to bound ahead.
There is one other alternative. Minister Bernier could delay the current auction by a few months and seek a new round of consultations on rules similar to those implemented by the FCC. Pushing the auction back could also have the added benefit of letting foreign players in - everyone expects the Conservatives to scrap foreign ownership restrictions if they get a majority government, which could happen in a fall election. The bottom line is, the reasons to delay an auction are mounting and going ahead with [it] is increasingly looking like a bad idea.
