Competition Works: The Commission Strikes Down M2Z’s Proposal

You may be asking yourself, “Who is M2Z, and why do we care?” And with good reason as the Menlo Park, California startup only ramped up in 2005 and hasn’t received much public exposure. Those of us in areas with very few to no choices for internet service providers, may want to pay attention. M2Z is a broadband wireless company created by former head of FCC’s wireless bureau, John Muleta, and Milo Medin. M2Z filed a petition with the FCC in 2006 to license the 2155 MHz to 2175 MHz band of currently unused radio spectrum in order to provide broadband wireless to the public at no charge. According to M2Z’s proposal, they would deploy access to 95% of American homes within 10 years, providing basic high speed access for free, while charging for premium services. On September 7th, the Commission denied M2Z’s petition on the grounds that proposed network speeds and project timing were not sufficiently impressive.This story begins to look like the, ‘public interest versus profit,’ battle that has long been waged in broadcasting, and is being reignited in the wireless space. Given the current auction method of allocating spectrum licenses, startup groups like M2Z can rarely compete with major carriers like Verizon and AT&T. M2Z attempted to circumvent the auction obstacle by petitioning the FCC for private access to this portion of fallow spectrum for fifteen years, in return for a percentage of future profits. The majors were certainly paying attention, and they argued against M2Z’s proposition vehemently. The FCC is one of the most heavily lobbied federal agencies, particularly by telecom corporations. Naturally, decisions that seem to favor major carriers appear a bit suspicious, particularly to the social advocacy groups supporting M2Z in hopes of mending the increasingly daunting digital divide. I very much sympathize with the goal of achieving universal internet access. But I question if it is reasonable to grant a monopoly for the right to broadcast, solely on a theoretical proposal. And really, who is M2Z? A ten year timetable, although ambitious when considering 95% penetration, is a glacial pace for the technology sector. It is likely that cheaper, more advanced methods of providing widespread broadband access could be developed and implemented in that time.The auction method of allocating broadcast licenses is probably not the most fair or conducive to social welfare, and in turn, to economic growth. But sweetheart deals for companies that in the end are also profit minded, might not benefit the consumer in the long run either. We’re all tired of internet service providers who provide next to nothing for their hefty charge. And we know that those who are precluded internet access whether by cost or geography, are at a severe disadvantage. But granting one- off licenses to companies with seemingly good ideas won’t address the real issue raised by these disputes. The licensing process should be tailored past a pure auction model. Google has given similar suggestions in their fight to place network openness conditions on spectrum licenses. Strictly market based license allocation, although preferable to the lottery style of yore, is growing less and less adequate, particularly considering the consumer benefits brought on by internet and wireless technologies. Putting heavier provisions on broadcast licenses, and providing incentives for carriers to encourage publicly minded action, would help bolster our lagging telecommunications infrastructure. Although M2Z’s plan for providing high speed internet access to the masses might not be feasible or desirable, under the current system, who will be willing to determine a better one?