What The FCC Auction Rules Mean -- Less Than You Think

FCC's Kevin Martin. Google can take its ball and go home!

Whichever company wins a chunk of wireless spectrum in next year's FCC auction will have to open their network to any device or software application, Reuters reports. But the FCC didn't please everyone, such as Google, Skype and a coalition of wireless industry vets, which pushed for even more openness in the auction rules. In reality, this is a limited victory for device manufacturers, a big win for software and content companies, and a stick in the eye for Google, whose weeks of lobbying and media posturing in front of the FCC didn't get them what they wanted.

You're going to read a lot of hype about this decision -- even the normally sober Wall Street Journal ($) suggests it "could alter the cellular phone industry's competitive landscape." In theory, any device manufacturer could now build a gadget that can work on whatever network is set up using the new airspace. But handset companies will still have to deal with the network owner to get gadgets working properly -- and whoever buys the devices will still need to buy service from the spectrum owner, on their terms. And because the network owner will likely end up being one of today's wireless service providers, no major device manufacturer is likely to jeopardize their existing business to make new devices without the carrier's input. So much for useful open access.

This is a bigger win for software and content companies, who will now get a real shot at selling their services without bending over for the telcos. Verizon Wireless, which until recently lobbied strongly against any provisions of open access, currently bans many legitimate, legal applications like audio and video streaming, Web camera feeds, automatic data feeds or "place-shifting" video with services like Slingbox. If Verizon bids and wins that chunk of spectrum, they will have to change their terms for future contracts.

The loser here is Google, the lobbyist and would-be spectrum bidder, which is less likely to bid (though the company says it will "carefully study" the rules before it decides whether to participate in the auction). Google also now looks like a poseur: the company attracted a lot of attention with its promise to bid at least $4.6 billion in the auction -- the minimum bid for that slice of airspace -- if the FCC agreed to Google's own open-network plans. (In addition to open device and application access, Google wanted the network owner to be forced to offer wholesale network access and interconnections to other service providers.) But the odds of those two rules ever making it into the auction were always miniscule, and now Google can step away completely, blame the FCC when it doesn't bid in the auction, and look like a hero for standing up to The Man.