A brawl has erupted at the FCC and in Congress over what rules should apply to an auction of a narrow swath of electromagnetic spectrum. Because the auction is likely to reap $20 billion in revenue for the U.S. Treasury, Congressional interest is high.  All of the players in the current communications industry are involved in the fight, making strong arguments about the conditions under which this spectrum should be licensed.  The size of the spectrum licenses (local, regional, or national?), the business model of the licensee (wholesale or retail?), and the obligations of the licensee to public safety officials (build a network for public safety, or make some services available at a low price?) all are subjects of extensive commentary.

Reports about this 700 MHz auction have prompted a vigorous debate in the press and the blogosphere about the goals and expectations of U.S. communications policy.  Opponents of license conditions typically focus on the revenue to be gathered through the auction, and argue that any limitation on what could be done by licensees will diminish the market value of these licenses.  (Sad rumor about this argument here in a post by Harold Feld suggesting that the Bells are hard at work commissioning a favorable report from OMB that will show that license conditions will depress revenue from the auction.) 

Defenders of license conditions make different arguments.  Many argue that the market for wireless highspeed internet access is highly concentrated, and that license conditions could spark additional competition.  In an editorial, the Los Angeles Times says, for example, that “the point isn’t to raise the most money for the Treasury, it’s to generate the broadest public benefit from these valuable public airwaves. . . The FCC should [ ] require winning bidders to provide wholesale access to their networks.”   Others argue that the most important element of the auction should be to require the winner to build a national public safety network. Still others argue that the auction should be focused on allowing new models of dynamic spectrum allocation to thrive that could also take advantage of unlicensed airwaves elsewhere on the spectrum dial.

The debate over the rules to be applied to the 700 MHz auction is just one example of a broader problem in communications regulation that has been exacerbated by the advent of the internet. 

The problem is this:  What is the "public interest" to be served in regulating communications in the 21st century? Both the FCC and Congress are confronted with multiple demands, including:  (1) Congress’s own budgetary needs, (2) the needs of public safety officials, (3) the demands of existing communications companies, and (4) the demands of companies that would like to be new entrants in the communications industry.  A threshold problem is which of these groups, all of which claim to represent the public interest, should be the beneficiaries of the rules. 

For example, in the case of the 700 MHz auction, should the FCC focus on generating the most auction revenue possible, leaving the resulting questions about competition to the marketplace?  Alternatively, should the FCC support proposals that serve public safety by providing that a licensee must build a free national network for their use, or proposals that serve future innovators who want to manufacture devices for use on wireless networks?

How should the FCC and Congress choose among (or combine) the various "public interest" claims involved in spectrum policy?

The real story of the 700 MHz auction lies in its repetition of the three great themes of radio regulation that have been playing out since the time this regulation began:  protection of incumbents, uneasiness about new technology, and priority of public safety.  Nothing much has changed in the American regulatory landscape since 1912, when hundreds of thousands of amateur radio enthusiasts and other small operators were swept into spectrum Siberia.  The technological landscape has changed dramatically, however.  Over the last ten years, highspeed access to the open internet by general-purpose devices has become increasingly important to the economic and cultural development of people around the globe. This changed technical reality should have more effect on U.S. spectrum policy than it currently does. 

Broadly speaking, regulators should choose spectrum policy actions by weighing (1) the effects on longterm improved internet access created by a specific policy against (2) the short-term incentives of particular incumbents.  A wish to maximize overall improved internet access might encourage the adoption of rules that limited the vertical integration of oligopolist incumbents and mandated open, ubiquitous transport. Such rules would benefit developers, users, companies, and public safety alike. 

Perhaps the "public interest" should be understood to have a temporal aspect as well as a substantive one.  It could be understood to mean "the longterm economic and cultural interest of the greatest number of Americans."

But at the moment the negotiation over the "public interest" is more accurately described as a brawl.

====Summer Friday video link. Medieval tech support - the "making of."  ht: John Firestone.