700MHZ Spectrum

Google and others are looking to ensure some of the 700MHZ spectrum is allocated for broadband wireless and moreover available at wholesale rates in order to help foster new and innovative services. For more on this story see this USA Today article.
Interestingly I also read a Telephony article where CTIA President and CEO Steve Largent called the proposed rules “Silicon Valley welfare.”
What I find interesting is this portion of the Telephony article:
Verizon Wireless vice president and general counsel Steve Zipperstein testified before the U.S. House Subcommittee on Telecommunications and the Internet, urging Congress to ignore Google and other Internet companies’ calls for open-access requirements to the 700 MHz bands, which are scheduled for auction in early 2008. Zipperstein said the results of such rules would favor the Internet companies over the wireless industry, effectively pre-determining the winners of the auctions in advance.

“The wireless industry has produced a steady stream of innovations — from devices, to applications, to features — that have given American consumers myriad choices about how they use their wireless service,” said Zipperstein in a statement. “Consumer choice would be the casualty of policies that mandate that all companies do the same thing the same way.”
Let’s put this in perspective. The carriers have not innovated in the wireless industry. Companies like Qualcomm and Alcatel-lucent have innovated on the equipment side and on the device side the innovation has been from companies like Nokia.
If you interviewed 10 executives from the wireless handset market in confidence, all 10 would tell you that wireless phone companies have blocked every effort they have made to innovate. How exactly is innovation defined by Mr. Zipperstein? Crippling bluetooth in devices? That is exactly what Verizon has done in the past. Is this wireless innovation?
Moreover, if the wireless companies could have stopped WiFi networks from ever becoming reality, don’t you think they would have? How would the free markets ever have an opportunity to harness the concept and promise of WiFi if the carriers made the spectrum unavailable? I find it difficult to understand how a company like Verizon has innovated more than Linksys or Skype.
Having said that, TMC spends a great deal of money with Verizon Wireless each month and they have the best US network for voice and data. But in reality, Verizon Wireless has to stop as much innovation as they can to keep charging the high rates they have charged in the past. They have an obligation to shareholders to warehouse as much spectrum as they can so it does not fall into the hands of companies like Skype that give away a free service and charge for premium services.
I am torn because part of me wants to allow Verizon and AT&T to keep as much spectrum to themselves so they can afford to invest billions in newer wireless broadband technology. On the other hand, what would the world be like if entrepreneurs got a hold of this spectrum and we saw new business models and services pop up that are affordable and more importantly useful? The saga continues.

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