FCC backtracks on broadband plan

Sept.. 3, 2010

WASHINGTON – The Federal Communications Commission notified M2Z Networks Inc. and its Silicon Valley investors, including Kleiner Perkins, Charles River Ventures and Redpoint Ventures, that it has terminated the AWS-3 spectrum (2155-2180 MHz) public interest rulemaking, closing off the possibility of providing free nationwide broadband service in the United States for the foreseeable future.

The FCC was considering M2Z's proposal for a free nationwide broadband network using AWS-3 since 2006. The decision reverses the FCC's National Broadband Plan commitment to finalize the AWS-3 spectrum rulemaking in the fourth quarter of 2010 and for the spectrum to be auctioned by the second quarter of 2011.

The FCC's AWS-3 rulemaking, pending since 2007, consisted of three key issues:

A requirement that the AWS-3 licensee provide free broadband service to at least 95 percent of the U.S. population in order to address the digital divide;

a requirement that the AWS-3 licensee adhere to Net Neutrality principles of open access (end-user access to all lawful content) and open platforms (end-users to have the choice of devices); an enforceable requirement on the AWS-3 licensee to build-out a national broadband network covering 50 percent of the population in 4 years and 95 percent in 10 years.

According to the FCC's National Broadband Plan, 28 million Americans cannot afford to subscribe to broadband. A free nationwide broadband service using the AWS-3 spectrum band would have addressed this situation.

While campaigning in 2008, President Obama told the U.S. Conference of Mayors, "Every American should have broadband access – no matter where you live, or how much money you have. We'll connect our schools and libraries and hospitals. And we'll take on the special interests to realize the potential of wireless spectrum for our safety and connectivity."

The public continues to support a free nationwide broadband service, and FCC records show that during the pendency of the AWS-3 rulemaking, more than 50,000 Americans signed a petition supporting the proposed rules. The FCC and members of Congress also received more than 20,000 letters and e-mails in support of the proposed rules.

Government officials outside Washington– faced with a growing digital divide and a poor economy – also recognized the merit of the innovative private sector solution. FCC records show that more than 300 local, state and federal officials from all 50 states wrote to the commission in support of the proposed AWS-3 rules.

"The FCC's decision to delay the use of this valuable spectrum forgoes the consumer welfare and economic stimulus that would result from putting new spectrum into the marketplace," said John Muleta, CEO of M2Z Networks. "A new nationwide broadband entrant that provided a free broadband service would have created tens of thousands of direct and indirect jobs throughout the country while giving all Americans an equal opportunity to participate in the digital economy. Despite the spectrum crisis facing the U.S. as documented by the FCC's National Broadband Plan, the AWS-3 spectrum will continue to lie fallow providing no economic value to American consumers."