US FCC auction of a thousand wireless licences for the 700MHz frequency after Verizon Wireless has challenged the rules of the game.
The FCC has attached open-access requirements to a 22 megahertz block of spectrum for the auction in mid-January.
Most of the mobile phone industry hated the idea of attaching conditions to any of the 700 MHz spectrum, but AT&T liked it.
Winning bidders of the 22 MHz worth of licenses are allowed to use any devices and application on their networks, as long as they don't harm the rest of the spectrum. Fighting against the FCC is legally messy and will take ages. Verizon suing will mean that the auction could be delayed for years.
Verizon claims FCC action "violates the US Constitution, violates the Administrative Procedures Act … and is arbitrary, capricious, unsupported by the substantial evidence and otherwise contrary to law."
The move might create a backlash against Verizon. Lawyers approached by RCR News said that the rules were designed to allow consumers, for the first time, to use their handsets with any network they desire, and download and use the lawful software applications of their choice.
People might get miffed that Verizon is using the court system to try to prevent consumers from having any choice of innovative services
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Verizon Wireless has sued the Federal Communications Commission for overstepping its power when it endorsed two conditions for its auction of 700 MHz wireless spectrum.
Specifically, the FCC in July embraced the concept of open applications, the ability to download any application, and open devices, using handhelds for any wireless network. Verizon Wireless says the FCC doesn't have the power to create those rules (Techmeme, Verizon Wireless appeal document, Reuters story). The looming court spat illustrates how the stakes are rising quickly ahead of the FCC's January wireless spectrum auction.
Back in July the FCC basically met Google halfway. Google dangled $4.6 billion as a minimum auction bid if the FCC agreed to four conditions.
Not surprisingly, Verizon Wireless is miffed. In the U.S. District Court of Appeals for the District of Columbia, Verizon Wireless petitioned for a review of the FCC's auction rules. Verizon Wireless is seeking the review on the grounds that the FCC's order "exceeds the Commission's authority."
According to Verizon Wireless, the FCC's order violates the U.S. Constitution, the Administrative Procedure Act and is "arbitrary, capricious, unsupported by substantial evidence and otherwise contrary to law." Google disagrees.
We'll let the lawyers figure it out, but there will be some interesting outcomes to consider:
Did the FCC overstep its authority? If so does it need Congress to mandate open platforms and devices in the wireless industry? Let the lobbying begin.
Clearly, Verizon Wireless is protecting its walled garden, which is its right. Google has its own motives. In the end, don't be surprised if the players change, but the goal of the walled garden remains.
The stakes for this 700 MHz auction are growing by the day. If you're Verizon Wireless it makes complete sense to appeal. If it wins, Google isn't likely to bid. An auction sans Google would mean Verizon Wireless would have one less well-heeled bidder to worry about.