700MHz Spectrum Auction and Open-Access Rules: A Quick List of Winners and Losers

CIO — Much of the debate surrounding the Federal Communications Commission's (FCC) upcoming 700MHz spectrum auction centers on "open-access rules," or rules meant to boost competition in the broadband and cellular voice spaces. Such rules could require the auction winner to sell wholesale access to the spectrum to any interested party.

Winners:

Consumers. Should open-access rules be mandated, consumers would have a greater selection of carriers, service plans and devices that could be used on the network. Consumers would no longer have to sign a contract with one specific cellular carrier in order to use a specific device—as was the case with Apple's iPhone, which is offered exclusively on the AT&T network.

Third-party application providers. Companies like Google and Skype will benefit, according to Tole Hart, a research director with analyst firm Gartner. "Anybody who wants to run [or offer] applications that were previously thwarted by carriers" could potentially benefit, Hart said.

The smaller industry players. Such rules are meant to promote competition in the wireless space, and smaller cell phone carriers and tech vendors will likely benefit because they'll have access to the spectrum at reasonable costs and the network will likely support more devices.

Losers:

Large cellular carriers. Should open-access rules be mandated, the major cellular carriers will take a hit because such rules would make the spectrum much less attractive, according to Hart. Said companies could need to figure out how to make a wide array of disparate devices work on the network—an issue that could cost carriers big bucks in infrastructure tweaks and enhancements. Such rules could also stifle innovation and negatively affect true competition, according to a number of carriers, including Verizon. If the auction winner is required to offer wholesale access to the spectrum, carriers will also be deterred as the rule dictates what they can and can't do with their investment.

The FCC and Congress. By tying such open-access rules to the spectrum, the FCC could decrease the perceived value of the spectrum and reduce the amount of profits it takes in during the auction. Roughly half of the profits from the auction, which Congress expects to be around $10 billion, have been earmarked for the U.S. budget deficit, and it already shot down another proposal by Cyren Call Communications that called for the government to foot the bill for much of the network infrastructure costs.