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.

New Report Busts Telco Myths about U.S. Internet

A report released today decisively shoots down many of the myths that telecommunications lobbyists and shills have manufactured about the health of America's Internet.

The report, "Shooting the Messenger," urges policymakers to focus on the real problems that have caused America to fall dangerously behind the rest of the world in Internet adoption -- competition and availability.

Mythmaker Mike McCurry

The report's authors at Free Press (my organization) believe the root of the problem to be the "cozy duopoly" of cable and broadband providers that stifle competition and innovation while driving costs to consumers through the roof.

These same companies -- including AT&T, Verizon and Comcast -- have unveiled plans to block or degrade Internet users' access to Web sites and services by erecting new toll booths on the Internet. This threat to Net Neutrality has compelled more than 1.6 million Americans to write Congress demanding legal protections for Internet freedom.

Earlier this week people from every corner of the country flooded the FCC with comments, 20 to one in support of full Net Neutrality protections.

Dismissing the Shills

Shooting the Messenger's findings dismiss many of telecommunications industry's excuses for America's failures compared to the rest of the world -- and prescribes policy solutions that would make our Internet more open, affordable and accessible to everyone.

Recent data from the Organization for Economic Co-operation and Development (OECD) ranks the U.S. 15th in the world in broad penetration per capita, down from fourth in 2001 and 12th just six months ago. The OECD data is not alone. Reports from the International Telecommunications Union, United Nations and Communications Workers of America demonstrate nationwide problems with access, speed and affordability.

The near absolute control phone and cable giants have over America's Internet is being bolstered by a Washington establishment that's loath to upset this imbalance of power.

Papering Over Failures with Telco Talking Points

Instead of addressing America's digital decline, federal policymakers and industry representatives have attacked the methodology of researchers. Fully expect that they will 'shoot the messenger' in response to Free Press' new report or attempt to obscure the findings with a feckless veneer of telco talking points dressed up as independent research.

Report author S. Derek Turner said, "no amount of industry spin can excuse the problems caused by lack of broadband competition, or the irreparable harm to our economy if we fail to address the mounting crisis."

The Free Press report found that the critiques leveled at the OECD report fall apart under scrutiny. No matter how one measures broadband penetration the United States still ranks 15th among the 30 OECD nations. [For an understanding of how France has outpaced the U.S., read this article published today at BusinessWeek]

"There is absolutely no correlation between a country's population density and its broadband penetration," the report finds. Despite what telco shills have said, the geographical size of the United States doesn't explain the poor state of broadband adoption and availability."

According to Communications Daily, the Bush administration's top Internet official, NTIA Assistant Secretary John M.R. Kneuer, claimed that America has already met President Bush's goal of universal broadband access. Kneuer's based his claim on the recent increase in the availability of data-enabled cellular networks.

But a cell phone is no substitute for a true broadband connection -- "and if these phones were counted, the United States would fare even worse in the world rankings," the report finds.

The Solution: Competition, Accessibility and Neutrality

While U.S. consumers have at best two choices for a wired broadband connection, in Europe consumers have many choices -- sometimes dozens -- among providers on just a single platform.

Such competition brings new innovation into the market while driving down prices to the consumer. It also safeguards against the types of Net Neutrality abuses that the phone and cable duopoly explicitly have in store for American Net users.

"International rankings do matter," Turner said. "This is not just a point of pride. Each spot the United States slips represents billions in lost producer and consumer surplus, and potentially millions of real jobs lost to overseas workers."

The Prescription: Policies that Work

It's no surprise that those selling high-cost, low-speed broadband want to defend the status quo. AT&T, Verizon, Comcast and their many Washington flacks are desperate to assert that everything is peachy in broadband land.

There's no need to upset a thriving free market, they crow, while quietly pressuring Washington to pass laws that lock in their near total control of our connections to the Net.

What's more worrying is the near total abdication by elected and government officials, who are allegedly in place to protect the public interest.

Policymakers who are serious about America's economic and social well-being should reject the distraction of excuses and focus on policies that bring open, affordable, high-speed broadband access to all Americans.

The public has already spoken out on the issue. We don't need more federal handouts to industry, but policies that work for us all.

-- My original post

Open Access is the Real 'Revolution.' The iPhone is Nothing Without It.

The slick ads for Apple's "revolutionary" new iPhone promise to "put the Internet in your pocket." But the only way to get one of these gadgets is to sign on with AT&T -- which limits what you can do and where you can go on the wireless Web.

You don't have to own an iPhone to know why this problem persists: The big mobile phone companies lock their devices so they won't work on other networks, cripple innovative new applications, stifle competition and restrict access to their "preferred" content.

Launching the FreetheiPhone.org campaign

Think about it. The cable company doesn't tell you what kind of TV to buy. You can plug any toaster into the wall at home without the power company's permission. Whether you have a PC or Mac, you still can go wherever you want on the Web. Why shouldn't your mobile phone work the same way?

Ma Bell Doesn't Work

On Wednesday Professor Tim Wu testified before Congress that there’s "something weird" about America’s wireless market. "It's not like consumer electronics or software markets. It’s not like the Internet.” Instead he compared the current wireless market to the old vestiges of the AT&T monopoly model. “It's that model which has failed us.”

But it doesn't have to be this way.

Today, my group Free Press launched FreetheiPhone.org – a campaign to demand an open, competitive wireless Internet for everyone.

While the iPhone is the current fascination, this issue goes well beyond one single gadget. It's about a dysfunctional wireless system that stifles innovation and competition across the country, while stemming the free flow of information we need.

Real Open Access

What we need is real "open access." Real open access unlocks networks for innovation and wholesale markets for competition. Until we have this, the iPhone – and wireless handheld gizmos like it -- will never reach their full potential.

Earlier this week Federal Communications Commission Chairman Kevin Martin reportedly proposed something that is a small gesture towards open access. His plans would allow for device interoperability -- imposing what's known as Carterfone principles on a sliver of the spectrum. Merely unlocking devices is only a half-step in the right direction; it leaves us with the same few companies that are trying to undercut innovation and leave us with a slow, expensive network and a vast digital divide.

They can get away with this because there's not real competition. You should be able to unlock your device and use it on any network. You should be able to choose from many providers, competing for your business with better service, lower prices and new innovations. And you should be able to access all content and services without interference from corporate gatekeepers like AT&T or Verizon Wireless.

Breaking Open the Spectrum

That's real open access and politicians in Washington have the power to grant this wireless freedom.

Martin's FCC is about to auction off a valuable portion of the public airwaves that could connect tens of million of Americans to a real open access Internet. This "spectrum" – the 700 MHz band – is so powerful it can carry wireless internet signals through concrete buildings and over mountains. It could connect tens of million of Americans to the new mobile Internet via cheaper gadgets that work in every corner of the country.

"I think that we have a great opportunity with the 700 megahertz to create an open platform that will make sure that we have competition and choice and innovation in the future," Rep. "Chip" Pickering (R-Miss.) said earlier this week.

"Openness is creating a wholesale market. It is creating interoperability for devices so that you can use a device, whether it’s an iPhone or another device, with whatever function you choose. If you want to go to a Wi-Fi or WiMax spot and use it, or if you want to have the access to other networks, you can do so. That’s openness in wholesale."

Pickering is joined across the aisle by Rep. Ed Markey (D-Mass.) in support of a growing consensus for real open access in America. These two powerful congressmen sit on the subcommittee that – with the FCC -- will help determine the future of the mobile Internet in America.

They need to know that the public cares.

If we open up our airwaves to new competitors, protect your freedom to go where you want online, and unchain the devices --- not just the iPhone but whatever comes next -- we can create a new kind of mobile Internet, one that is truly open and accessible to all.

Members of Congress Call for iPhone Freedom

Bipartisan members of Congress spoke out Wednesday to free the iPhone and other next generation hand-held computers from the grip of phone incumbent like AT&T and Verizon.

During the hearing of the House Subcommittee on Telecommunications and the Internet, representatives from both sides of the aisle called for a more open wireless system where new innovations aren't held hostage to the competition-killing carriers that control the network.

Users 'Trapped'

Click to watch Markey's opening statement

In what's been dubbed the "iPhone hearing" Chairman Ed Markey (D-Mass.) and "Chip" Pickering (R-Miss.) called for a different system – where wholesalers could compete and new applications and devices could be connected regardless of carrier.

"The iPhone highlights both the promise and the problems with the wireless industry today," Rep. Markey said holding up before other members his newly acquired iPhone. "On the one hand, it demonstrates the sheer brilliance and wizardry of wireless engineering. On the other hand, the advent of the iPhone raises questions about the fact that a consumer can’t use this phone with other wireless carriers."

Markey highlighted myriad problems with our wireless marketplace, where "many consumers feel trapped having bought an expensive device or having been locked into a long-term contract with significant penalties for switching."

Representative Pickering called for more openness in the marketplace stating that "openness is creating a wholesale market" for competition between services.

"Openness is creating interoperability for devices so that you can use a device, whether it's an iPhone or another device, with whatever function you choose," the Mississippi Republican said. "If you want to go to a Wi-Fi or WiMax spot and use it, or if you want to have the access to other networks, you can do so. That's openness in wholesale."

'Calcified' Markets

Markey and Pickering spoke about the current dilemma in America's wireless system. The iPhone is shackled to AT&T and won't work on any other network. The reason? We have allowed carriers to exert almost complete gatekeeper control over all devices, services and content in the wireless sector.

This has left the U.S. generations behind other nations, a failure that prompted New York Times blogger David Pogue to call American carriers "calcified, conservative and way behind their European and Asian counterparts."

Regulations That Work

Click to watch Devitt's testimony

"I'm a small business owner. I don't like regulators," Jason Devitt, co-Founder and CEO of Skydeck testified during the hearing.

"In the context of wireless spectrum I do not have a choice between no regulations and regulations. We have a choice between badly written regulations and regulations that work."

'Mad as Hell'

Devitt continues:

"[I] flew here from Silicon Valley to tell you that we have a regulatory system that doesn't work and the only way we're going to fix it is if you have some form of open access …

"I am an entrepreneur and I am mad as hell that I require permission to innovate in the wireless market. I don't have to go to the great companies that built our public highways and ask them for their views for what kind of cars I can put on those roads…

"For some reason I have never been able to understand, I have to ask permission of Verizon Wireless to attach a computer or the computers that they now call phones to their wireless networks and I have to ask their permission to run applications and services on those phones."

DeWitt told representatives that we can fix the problem through open access regulation. "By open access, essentially it's what Mr. Pickering said, it is the opportunity to attach any device to the network. It is the opportunity to run any service on the network."

Spectrum Oligopoly

Click to watch Wu's testimony

Professor Tim Wu of Columbia University testified that there's "something weird" about America's wireless market.

"It's not like consumer electronics or software markets. It's not like the Internet," he said comparing the current wireless market to the old vestiges of the AT&T monopoly model. "It's that model which has failed us."

Professor Wu said that the one area that America has not been a technical leader is in the wireless space. "We have allowed one way or another there to be a spectrum-based oligopoly in wireless that has controlled innovation," he said. "This Congress and the FCC has a duty to set us back to a direction towards and open market."

Wu recommended that the U.S. implement wireless Carterphone principles and create an open access standard across the spectrum so that the next iPhone isn't held captive by a locked system.

Our Last, Best Chance for an Open Network

These concerns echo actions by the SavetheInternet.com Coalition to open the upcoming government auction of valuable radio spectrum.

In May, Free Press, Consumers Union, Public Knowledge, Media Access Project and others called upon the FCC to implement an "open access" model that included Net Neutrality conditions for content and applications and permitted third parties to access the network as wholesalers and provide a wide variety of wireless broadband services, devices and access alternatives.

In June, more than a quarter million SavetheInternet.com supporters put the FCC on the spot when they flooded the agency with comments and urged Chairman Kevin Martin to open these airwaves to wholesalers and Net Neutrality.

The upcoming auction has moved the debate over open networks and Net Neutrality to the wireless industry where carriers exert multiple layers of control over services, applications, devices and content. Their stranglehold on wireless has chilled innovation across the sector while shackling cell-phone users to pricey contracts, phones and termination fees -- severely limiting choice across the market

The airwaves on the block are frequencies being vacated by television broadcasters as they switch to digital signals. The auction is our last, great chance to create a "third pipe" for Internet access in a wired line marketplace that is controlled by many of the same companies that hold the wireless market in their grip.

Join the Fight

Coalition groups such as Consumers Union, Media Access Project, Free Press and Public Knowledge are fighting for both wireless and wired line freedom in the broadest sense.

In the wireless world this includes the freedom to use any device on any network, the freedom to choose among competing providers and the freedom to access any content or services without gatekeeper interference.

Will Martin Really Free the iPhone?

Imagine our surprise this morning when we read that FCC Chairman Kevin Martin wants to transform the 700MHz band into a "truly open broadband network."

In articles seeded in both USA Today and Wall Street Journal, Martin indicated that he's siding with consumers to bring real openness, choice and innovation to the wireless world.

If true, this new position would mark a seismic shift for the chairman, who has routinely sided with the phone and cable cartel that controls wireless and wired Internet access for most Americans -- and against popular public positions on Net Neutrality and "open access."

But appearances can be deceiving.

Former AT&T boss Ed Whitacre chats up Martin

"Whoever wins this spectrum has to provide ... truly open broadband network," Martin told USA Today Monday night, "one that will open the door to a lot of innovative services for consumers."

According to Martin this means "you can use any wireless device and download any mobile broadband application, with no restrictions." You know what they say about things that sound to good to be true.

Has the Public Message Finally Gotten Through?

In June, more than a quarter million SavetheInternet.com supporters put the chairman on the spot when they flooded the FCC with comments and urged Martin to open these airwaves to wholesale access providers and Net Neutrality.

On the surface, it appears that Martin has heard these concerns, abandoned his cozy relationship with the phone companies and sided with the public on behalf of an open Internet.

Upon closer inspection, however, Martin's "plan" raises reasonable doubts.

Martin is reportedly going to circulate his "open access" proposal at the agency later today. But according to experts I spoke with today, Martin's version of "open access" falls far short of the ideal.

Martin Spins 'Open Access'

In May, Free Press, Consumers Union, Public Knowledge, Media Access Project and others called upon the FCC to implement an "open access" model that included Net Neutrality conditions for content and applications and permitted third parties to access the network as wholesalers and provide a wide variety of wireless broadband services and access alternatives.

Our open model would foster new and non-discriminatory high-speed wireless services to compete head-to-head with the telephone companies. It would free up the network so the next generation of iPhones won't have to kowtow to the likes of AT&T, Sprint and Verizon -- companies that now seek to "cripple" any functions that compete with their entrenched business interests. True open access would allow the next Google or small company with the next big idea to offer its services on a level playing field - unencumbered by these gatekeepers.

Martin's proposal reportedly will call for a limited "Wireless Carterfone" rule on some of the licenses in the 700 MHz band. Carterfone refers to the landmark 1968 decision that allowed competing devices to be connected directly to the AT&T network. Until then AT&T had complete control not over the telephone network itself but also over all devices (their trademark black rotary phone) that users could attach to it.

The Carterfone ruling opened up the market to numerous products, including answering machines, fax machines, cordless phones, computer modems and launched a new industry in innovative phone devices.

Such rules for the wireless network make perfect sense but they don't solve the competition problem. They don't address wholesaling or Net Neutrality, and are a far cry from true open access.

A Well-timed PR Offensive?

So to what extent does Martin's plan create a "truly open broadband network"?

His may be little more than a politically calculated gesture that sounds appealing in the media but delivers little to none of the urgent reforms needed to revitalize the nation's flagging Internet marketplace.

Public Knowledge's Art Brodsky called Martin's moves at USA Today and the Journal "impeccable" spin. Harold Feld of Media Access Project called it Martin's "PR Offensive."

"Martin and his staff made it appear as if the Commission was about to embark on a new, glorious age for consumers," Brodsky wrote, adding that the definition Martin uses for "open access" is far different than what's truly needed to foster real innovation and openness in the marketplace.

Martin floated his plan in advance of a Wednesday's House Telecom Subcommittee hearing on open-access and the iPhone. It's unclear whether this well-timed media play will derail efforts in Washington to create a network that is more open, neutral and accessible for everyone.

We certainly hope not.