There are no items on the agenda for next week’s FCC meeting from the Media Bureau, so one might think that the "broadcast" community could ignore this meeting. However, there is one matter that will be considered that may well have an effect on the media landscape for the foreseeable future. That is the adoption of service rules for the 700 MHz spectrum – the remaining portion of the spectrum to be reclaimed from television broadcasters after the digital transition. Part of that spectrum has already been reclaimed and is beginning to be used by companies such as Qualcomm offering digital multimedia services such as the MediaFLO system, about which we have written before. The remaining portion of the spectrum that will be auctioned by the Commission by January 2008 and has the potential to provide significant high-speed digital wireless services to the public. However, anyone reading the communications press would realize that there is a major controversy over how that service will be provided.
The argument is over whether service will be provided on the new spectrum in an open manner – in essence a wireless high speed connection to the Internet where any service can get direct access to the consumer – or whether it will function more like the current systems run by the existing wireless carriers, where the carriers will be able to control the content that will be delivered to the consumer. This is, by no means an easy decision, and it is currently being debated in Congress and at the FCC.
Users of the Internet, led by Google, have argued for an open system, where a subscriber pays for access to the wireless spectrum, and can essentially connect any device or receive any service, just as long as it does not damage the network. This is much like the current wired telephone network, where a consumer can connect a telephone or a fax machine or a laptop computer and get access to the network. Proponents of this model contend that it will encourage technological development as companies compete to develop different applications that can run on the network,and provide a "third pipe" into the home providing high speed Internet access to compete with that provided by cable and telephone companies. Some might assume that content providers like broadcasters would favor that open approach so that their content can be easily delivered to the consumer, without the broadcaster having to cut any sort of deal with the network provider to get access.
However, many of the existing wireless providers have opposed such open access. In order to build out a tremendously expensive nationwide system high speed wireless system on these channels, the carriers need an incentive to make that investment. If the carriers are expected to build out the system and then open access to any content provider at no cost, in essence the operator of the system is subsidizing the operations of the content provider by freely transporting their content to the user. If the carrier is not making money off of the content that is provided on the network, the amount the government will receive from the auction will be less, as the carriers will not have the ability to fully to monetize the system in the way that current wireless carriers do. The expectation would also be that buildout, especially to rural areas where there are fewer subscribers to pay for access to a wireless service, will be much slower than might otherwise occur. When one of the hoped for benefits of the wireless service is access to the Internet in rural areas, the regulators would hope to avoid disincentives to the provision of such service. While some content providers might say that access to rural areas will not provide the anticipated benefits if it is not full and open access to the entire Internet, others will retort that some access is better than no access at all. And many broadcasters have found that existing wireless carriers are open to deals with broadcasters, as they want to feature the local content that the broadcaster can deliver.
The arguments come in all shades and with many nuances – as some carriers have now come out in favor of some degree of open access, while some content providers are pushing for a totally open system where parties can come in and lease access from a network at wholesale prices to provide their own services. The arguments being made on both sides are incredibly technical, with good points being made by all parties. And there is lots of money at stake, as the spectrum is expected to fetch billions of dollars for the Federal government at auction.. For the broadcaster, future access to the consumer may be at stake, not only for the broadcaster and new digital services that it may want to provide, but also for the new media content providers who are more and more becoming the broadcaster’s competition. So the decisions made in the next few weeks as to how this service develops will have profound impact on the entire communications industry. Thus, while next week’s meeting may look like one that a broadcaster can ignore, in fact the broadcaster’s attention should be focused on the developments regarding this spectrum.