Monday, October 13, 2008

FCC Clears Free Wireless Web

Author: Amy Schatz

A proposal to create a free, national wireless Internet service got a boost as Federal Communications Commission engineers concluded that concerns are overblown about such service interfering with other carriers.

The report clears the way for the FCC to move forward with a plan to auction off airwaves to a bidder who agrees to offer free, national wireless Internet service. The FCC is expected to finalize rules this year and could begin auctioning off airwaves in early-to-mid 2009.

The report released Friday was bad news for T-Mobile USA, a unit of Deutsche Telekom AG, which uses airwaves that abut the chunk of spectrum that's set to be auctioned off. T-Mobile USA bought its spectrum for about $4 billion a few years ago.

T-Mobile has fought FCC Chairman Kevin Martin's proposal to encourage development of free Web access by raising concerns that the service would disrupt the company's 3G wireless network, for which it charges customers. But FCC engineers said recent tests in Seattle showed the airwaves could be used for a wireless broadband service "without a significant risk of harmful interference."

"This report confirms that we're able to move forward with broadband services as proposed by Chairman Martin without causing harmful interference to license users of adjacent spectrum," said an FCC spokesman.

A T-Mobile spokeswoman was not available for comment.

Wireless companies and some lawmakers have raised concerns about the plan, because the proposed auction rules appear to favor M2Z Networks Inc., a Kleiner Perkins-backed start-up that originally floated the free-Internet plan two years ago.

M2Z originally asked the FCC to give it a national 25 megahertz block of airwaves to build a national wireless Internet network. The start-up said it could pay for the build-out via advertising and a subscription-based plan for consumers willing to pay more for faster service.

The idea of handing out airwaves potentially worth billions didn't go over very well at the agency. But in May, Mr. Martin proposed auctioning off the airwaves to a company willing to set aside some of its airwaves for free use.

The network would have to reach 50% of the U.S. population in four years and 95% within a decade.

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