Google's Billion-Dollar Gambit Forces FCC's Hand on Open Access

I was encouraged on Wednesday when Google lined up behind a real notion of an open Internet -- taking a position that consumer advocates and public interest groups had long supported.

Now, the search giant is putting money -- in the amount of at least $4.6 billion - behind their pledge, agreeing to buy into a plan to bring real "open access" to America's wireless Internet.

Schmidt Ups the Ante

On Friday, Google CEO Eric Schmidt sent a letter to Federal Communications Commission Chairman Kevin Martin, stating that all companies licensed to use a soon-to-be-available chunk of the "700 MHz band" should provide (1) open applications, (2) open devices, (3) open wholesale services, and (4) open network access.

These four conditions are the true definition of open access, which has fostered innovation, competition and better user choice in Western Europe and Asia.

True Open Access

In the wireless world, open access would free millions of cell phone users to connect to an open Internet via any device or carrier. It would also blow open competition across wireless networks currently locked by a few dominant carriers.

Under such a system the new iPhone wouldn't need to be shackled to a carrier such as AT&T, which leverages exclusive control of the network to cripple many iPhone applications, stifle new ideas and competition in the marketplace and limit what users can do on the wireless Web.

Opening the 'Third Pipe'

Here's the kicker. Schmidt concludes in his letter, "should the Commission expressly adopt the four license conditions requested ... Google intends to commit a minimum of $4.6 billion to bidding in the upcoming auction."

Google's bid relates to the pending auction of a slice of the airwaves to be returned to the public by television broadcasters in 2009. By opening these airwaves to wholesale competition the FCC would spur the creation of a wireless Internet alternative to the entrenched cable and phone duopoly that controls high-speed "wired" connections for more than 96% of residential users in America.

Opening a "third pipe" of Internet access for American consumers is especially vital given the phone and cable company plan to discriminate against content over their land lines. If this threat becomes real, AT&T could strike a deal with a major retailer that would speed connections to the online shopping site Walmart.com, while degrading user's ability to surf to the Walmart protest site Walmartwatch.com.

By undoing Net Neutrality these Internet service providers seek to overhaul road rules that have kept the Internet a level playing field since its inception.

Calling Martin's Bluff

Martin Now Holds the Keys

Schmidt's billion-dollar guarantee handily erases the telco talking point that open access conditions would short the U.S. treasury billions of dollars in auction revenue -- as no company would be willing to bid on spectrum that's been tied to such requirements.

The $4.6 billion minimum likely came as a surprise to Chairman Martin who has been pushing a half-cocked notion of open access -- freeing devices to operate across networks but not freeing the networks for competition beyond the few companies that control wireless access today.

Missing from Martin's definition of open access is the provision that all license holders lease these airwaves on a wholesale basis -- a model that has sparked Internet innovation in France and elsewhere.

"Google's point is that high speed Internet access is just that -- access," explains Susan Crawford. "Google wants the pipes to be commoditized, to be as open as possible so that, like the Internet itself, this transport can make possible all kinds of innovation, economic growth, and creativity."

If smaller companies could gain access to a slice of the 700 MHz band, they would be able to offer services rivaling those of the telephone and cable giants, resulting in a consumer market with greater choices at lower costs. "When Americans can use the software and handsets of their choice, over open and competitive networks, they win," Schmidt wrote Martin.

Upping the Ante for a Better Internet

Google's move ups the ante at the FCC, according to Harold Feld of Media Access Project: "In a stroke, the Google letter changes the nature of the game. Google has now guaranteed that the feds will make their auction projections -- but only if they include real open access."

This is the position that certain SavetheInternet.com members - including the nation's leading consumer advocate and Internet rights groups -- put forth months ago when we urged the FCC to structure the auction to foster the development of high-speed wireless services to compete with the telephone and cable companies.

It makes perfect sense to us that this position is gaining currency in the business world as well.