[Infowarrior] - FCC to Rule on Wireless Auction

[Richard Forno]

FCC to Rule on Wireless Auction
Lobbying Intense As Google Seeks To Open Market

By Kim Hart
Washington Post Staff Writer
Monday, July 30, 2007; A01

http://www.washingtonpost.com/wp-dyn/content/article/2007/07/29/AR2007072901
259_pf.html


The Federal Communications Commission will set the rules tomorrow governing
the auction of $15 billion of public airwaves, a decision with stakes so
high that the major U.S. cellular carriers and Google have spent millions of
dollars on a lobbying campaign in an attempt to influence the outcome. The
decision could dramatically alter the nation's cellphone industry.

Google, the giant Internet search company, wants to extend its popular
tools, which include e-mail and video, to the rapidly expanding mobile phone
market. To do so, it may spend billions to build a new, open network it says
will loosen the grip telecom operators have over how consumers use their
cellphones.

Currently, the major U.S. wireless carriers, including AT&T and Verizon
Wireless, largely decide which Web sites, music-download services and search
engines their customers can access on their cellphones. This is accomplished
by wireless companies determining which cellphones will receive their
services: AT&T, for example, is the only carrier available to users of
Apple's iPhone.

Google wants to end that restriction and has urged the FCC to require the
winner of the auction to build a network that will be open to all cellphones
and services, so any consumer can have access to Google's array of
offerings.

AT&T and Verizon Wireless have been eyeing these airwaves for almost a
decade, waiting for them to be abandoned by television broadcasters moving
to digital programming. The airwaves, which are ideal for carrying wireless
signals, are particularly valuable because they will be the last up for
auction for decades. The auction is to take place in January.

They are crucial to wireless carriers looking for more ways to put
ever-more-elaborate video, music and Web-surfing tools in consumers' hands,
especially as cellphones continue to replace telephone landlines and offer
services heretofore available only on a computer. But the auction is also
testing the political might of Google, which has to this point been somewhat
of an outsider in Washington.

Google, in its first serious foray into the Washington regulatory scene and,
potentially, the wireless industry, has offered to spend at least $4.6
billion for the airwaves it would use to build the network it envisions if
the FCC's rules work in its favor. The move reflects Google's growing
ambitions to reach consumers in new ways while exerting its influence on
policy it sees as critical to its future. But the company's efforts to
recast the wireless landscape have met fierce opposition from AT&T and
Verizon, which worry Google's open network would undermine their businesses.

Google's 12-person Washington team, based in temporary quarters on
Pennsylvania Avenue, has aggressively confronted the legions of lobbyists
behind the two telecom behemoths. Its goal of creating an open-access
network, first thought of as a long-shot proposal, has gained substantial
political traction among FCC commissioners and Democratic lawmakers, who see
the auction as the last opportunity to create a new competitor in the
wireless industry.

"Google sees network owners as potentially coming between it and its
customers, so they realized how critical Washington was to their long-term
game plan," said Paul Gallant, a telecom policy analyst with Stanford Group
Co. "Google is still nowhere near the Bells and cable [television] when it
comes to lobbying, but it does have a real cachet that can make up some of
the gap."

Google has not always been taken seriously in Washington. When co-founder
Sergey Brin visited Capitol Hill two years ago, he had trouble persuading
members of Congress to meet with him. The company didn't bother to open an
office in the District until 2005, when it hired Alan B. Davidson, formerly
of the Center for Democracy and Technology, to tackle Internet policy
issues. A year later, Google hired Robert Boorstin, who held several
positions in the Clinton administration.

When the debate over the ability of Internet service providers to favor
certain Web content for a fee, a concept known as network neutrality, heated
up last summer, Google was late to the scene. It initially depended on
public interest groups to lobby on its behalf.

Since then, Google has expanded its Washington presence. Besides increasing
its effort to sell its services to government agencies, Google has taken
what it calls a "Googley" approach to politics by seeking the business of
political campaign managers and starting a public policy blog. Last week,
the online video site YouTube, which is owned by Google, sponsored a debate
between the Democratic presidential candidates.

The company recently hired Johanna Shelton, formerly on the staff of Rep.
John Dingell (D-Mich.), an influential member of the House
telecommunications subcommittee. Google also frequently invites prominent
politicians to tour its Mountain View, Calif., headquarters. But its 2006
congressional lobbying budget of about $770,000, according to public
disclosures, is dwarfed by the $21 million spent by AT&T and $14.4 million
spent by Verizon the same year.

Unlike many campaigns that use well-connected lobbyists to persuade members
of Congress, Google and its opponents have fought this battle on paper,
using their lawyers to make their arguments in filings to the FCC.

Google's clout in the airwaves auction has grown slowly, marked by small
victories along the way. In February, it hired Richard S. Whitt, once a
lawyer for the now-defunct telephone company MCI, to lead its telecom policy
agenda. And Google also harnessed the power of politically savvy public
interest groups, consumer advocates and like-minded companies such as eBay
and Yahoo to push its idea for an open network.

In late April, FCC Chairman Kevin J. Martin endorsed the general idea. A
week later, during a tour of the Googleplex in Silicon Valley, he asked Brin
and the other Google co-founder, Larry Page, and chief executive Eric
Schmidt to suggest rules for the auction that would increase the chances
that a new wireless competitor would emerge.

"I think that was a little victory for us that showed the chairman was
willing to meet us in the middle," said Whitt, who has led Google's lobbying
operation.

Over the next two months, Google outlined its requirements for the auction
with the FCC. Its "alternate access team," run by three wireless engineers,
Chris Sacca, Larry Alder and Minnie Ingersoll, swooped into Washington for a
series of visits with FCC commissioners. Google has also hired game
theorists to strategize for the auction.

In the meetings with the commissioners, Google's team urged them to require
the highest bidder in the auction to build a network that would be open not
only to devices but also to software and third-party companies. Those
conditions would make the airwaves more accessible and, hence, more valuable
to Google, but would conceivably damage the business of the wireless
companies by no longer allowing them to differentiate their offerings from
one another.

Like the culture at many Silicon Valley technology companies, Google's
clashed with Washington's. Some FCC staff members said the company's tech
gurus came across as arrogant in meetings with commissioners.

"They're used to getting what they want rather than having to make a case
for what they want," said one staff member who spoke on the condition of
anonymity.

Martin subsequently said he favored requiring the auction winner to use a
chunk of the airwaves to build a network open to all mobile devices but
stopping short of meeting Google's other demands.

AT&T and Verizon initially blanched at Martin's proposal, arguing it would
tip the competitive scales in Google's favor. But in a series of hearings on
Capitol Hill, several lawmakers voiced support for using these airwaves to
give consumers more choices. Many cited complaints about the fact that
Apple's iPhone, recently introduced to great fanfare, can be used only on
AT&T's network.

Others said they were concerned that regulating the airwaves would diminish
the estimated $15 billion in revenue raised by the auction. AT&T questioned
Google's intentions, telling the company to "put up or shut up" in filings
with the FCC. To "put our money where our principals are," Whitt said,
Google then committed to spending at least $4.6 billion to bid on the
airwaves if its conditions were met. AT&T responded by shifting its position
to support Martin's open-access proposal.

Martin's plan for an open-access network "would enable the introduction of
an alternate wireless business model without requiring changes in the
business models of AT&T and others in what is a highly competitive wireless
industry," said Jim Cicconi, AT&T's senior vice president of external and
legislative affairs, in a recent filing with the FCC.

"It was very surprising that they backed down. . . . Google was getting
traction, and I think the major players wanted to be on the winning side of
this battle," said Doug Bonner, who heads the communications practice at the
law firm Sonnenschein Nath & Rosenthal. "Google's definitely putting their
currency to work."