In a scathing filing with the U.S. Federal Communications Commission on Thursday,
an association representing mobile operators criticized the agency's plan to
auction spectrum that would require the winner to offer free wireless Internet
services.

"The proposal upends two decades of spectrum policy in favor of a specially
tailored auction designed to advance the particular business model of a single
company. Moreover, this business plan -- including free broadband -- has a track
record of failure," CTIA wrote in the filing.

The commissioners plan to vote on June 12 on the proposal to auction a 25MHz
piece of spectrum in the 2155MHz band and require the winner to use a specified
amount of spectrum to deliver free wireless Internet access.

The FCC developed the plan based on proposals from several companies including
M2Z Networks, Commnet Wireless, NextWave Broadband and others. M2Z in 2006 proposed
that the FCC give the company the spectrum so that it could offer free wireless
Internet access to users. The company planned to fund the network through advertising
and said that it would give the FCC 5 percent of its gross revenue. The FCC's
current proposal would simply auction the spectrum to the highest bidder and
require the free services.

In its comments to the FCC about the plan, the CTIA said that the commission
would be better off supporting its typical so-called flexible-use policy, which
allows the spectrum winner to use essentially any business model and technology.
The CTIA pointed to several historical examples of instances where the FCC adopted
special rules, only to find that the company that initially proposed the idea
behind the rule didn't end up bidding in the auction.

That happened in the recent 700MHz auction when the FCC made rules for a certain
segment of the spectrum along the lines of the business plan built by Frontline,
which ultimately did not enter the auction. No one won the spectrum carrying
the special rules.

The CTIA also pointed to the history of companies that have tried to offer
free Internet access in the past. "The Commission should take note that
those businesses that have tried to provide free services like the broadband
service under consideration here have failed in the marketplace," the CTIA
wrote. It pointed to some Internet service providers that once offered advertiser
supported dial-up Internet access, such as NetZero and Juno, but ultimately
failed. It also named many of the recent failures of free municipal Wi-Fi networks.

"In light of this history, on what basis does the Commission conclude
that the business model it plans to mandate is, in fact, viable on a national
scale?" the CTIA wrote.

The FCC has said that it hopes its free Internet plan will spur innovation
in broadband and offer users more choice for Internet access. The U.S. has fallen
behind many regions of the world in terms of broadband penetration and throughput
speeds.

The FCC first sought comment on its proposal last September and since then
many companies have filed their opinions on the idea. Existing operators are
typically opposed to the idea since it means that their services would have
to compete with a free offering.

If the agency approves the plan during its June 12 meeting, the auction could
happen in six months at the soonest.

IDG News Service

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