Although the papers somewhat ambiguously said that yesterday's moves by the FCC in the 700 MHz auction were a victory for Google and open access, that's not quite right. 

Google and a quarter of a million individuals and a host of public interest groups said they wanted "wholesale access" requirements to be imposed on the winner of a portion of the licensed spectrum. 

The FCC refused to take that step.

Why did wholesale access matter?  We have very little competition between providers of highspeed internet access in this country.  Prices are high and speeds are slow.  Making one wireless highspeed network provide its services on a wholesale basis would have greatly increased the likelihood that someone selling retail highspeed internet access would have sold it on a commodity basis, without trying to charge extra for particular "services."  Competition for highspeed internet access might have erupted, and a huge number of new kinds of services that depend on leasing network capacity might have emerged.  This might have helped us increase highspeed access penetration across the country at lower prices.  We won't see an auction like this again for a long time, if ever, and we've lost this opportunity to get new entrants into the market.

What did we get instead?  Until we have the text of the FCC's proposed rules for the auction, we don't really know.  It sounds as if some form of "no locking, no blocking" requirement has been imposed on six large regional licenses.  "No locking" means that the wireless provider won't be allowed to control exactly which devices can attach to its network (although it can set certification standards that have to be met).  "No blocking" means that the carrier won't be allowed to block particular applications that consumers want to use online (like voice or email applications).

That sounds pretty good.  What's the problem?  Changing consumers' expectations so that they clamor for handsets that aren't tied to particular networks is good, and will prompt a lot of innovation in devices.  Avoiding the blocking of applications is good too.  But the Commission set "reserve prices" for this spectrum, and if the "encumbered" licenses don't attract rich enough bids they'll re-auction the spectrum without these requirements.  Also, who knows how the carriers will try to game this or how enforceable these rules will be.  The carriers could subsidize devices that are locked to a particular network, or direct people over to other portions of their spectrum in some tricky way that don't have these requirements, or charge more for unblocked uses.  Details matter in this area.

What problem was the Commission trying to solve?  That's the question we should be asking.  If the problem was "increase competition for highspeed internet access," they didn't solve it.  If the problem was "don't make any one well-funded actor too mad at us," they may have solved it.  But is that the same thing as serving the public interest?

At one point during yesterday's proceedings, Chairman Kevin Martin departed from his prepared text and said something along these lines:

While I recognize that these rules may not fit any one company, the public interest isn’t about what one company wants.  It’s about serving the people.  And the people want the ability to choose devices.

The problem with this approach to the public interest is that it puts gadgets ahead of access.  Nothing wrong with gadgets - they're very empowering.  Gadgets are a means, though, and not an end in themselves.  Even President Bush recognized the importance of highspeed access, and promised that 2007 was the year.  We're nowhere close, and these rules don't get us any closer.