**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

**APPROVING IN PART, CONCURRING IN PART**

** **

Re: Service Rules for the 698-746, 747-762 and 777-792 MHz Bands (WT
Docket No. 06-150); Revision of the Commission's Rules to Ensure
Compatibility with Enhanced 911 Emergency Calling Systems (CC Docket No.
94-102); Section 68.4(a) of the Commission's Rules Governing Hearing
Aid-Compatible Telephones (WT Docket No. 01-309); Biennial Regulatory
Review -- Amendment of Parts 1, 22, 24, 27, and 90 to Streamline and
Harmonize Various Rules Affecting Wireless Radio Services (WT Docket No.
03-264); Former Nextel Communications, Inc. Upper 700 MHz Guard Band
Licenses and Revisions to Part 27 of the Commission's Rules (WT Docket
No. 06-169); Implementing a Nationwide, Broadband, Interoperable Public
Safety Network in the 700 MHz Band (PS Docket No. 06-229); Development
of Operational, Technical and Spectrum Requirements for Meeting Federal,
State and Local Public Safety Communications Requirements Through the
Year 2010 (WT Docket No. 96-86); Declaratory Ruling on Reporting
Requirement under Commission's Part 1 Anti-Collusion Rule (WT Docket No.
07-166); Second Report and Order

Today we set the ground rules for how some of the most valuable spectrum
on earth will be used. The stakes are enormous. Will our decisions today
make our nation's citizens safer in the event of an emergency? Will they
increase the number and quality of wireless services available to
American consumers---to ***all*** consumers, both urban and rural? Will
they help correct America's dismal broadband performance?

Let's begin with public safety, because that's the most critical part of
all this. As I have many times said, my first preference---by a long
country mile---would have been a fully-funded, federally-funded
public-safety-grade network reserved solely for first responders and
built to the specifications they deem essential for their job of
protecting you and me. At this late date, that is apparently not to be.
In light of the options before us today, then, I believe that pursuing a
shared public-private model---and trying to make it work---is the next
best choice. There are no guaranteed outcomes here, but we have to find
a way---finally---to get this done.

For far too long, our nation's first responders have struggled with the
lack of interoperability. The terrible costs of this failure became
tragically apparent in the aftermath of 9/11 and again following
Hurricane Katrina. Today's item creates a framework for building a
national broadband network, based on a common technical standard, that
will allow universal interoperability among every jurisdiction in the
country. This represents a tremendous step forward.

Our nation's first responders have struggled for too long without
finding the capital necessary to build out a broadband network with the
configuration and the features they so desperately need and deserve.
Given where we are today, I think it is entirely appropriate to permit
them to trade access to their spectrum during off-peak periods---but
always with the ability to preempt commercial use during any time of
need---in return for access to a public-safety-grade broadband network.
This network will reach virtually all of the nation's citizens within 10
years. It will be constructed to the standards that public safety
demands and expects. And it will harness the astonishing technological
advances of the commercial wireless sector. If it works---and it's a
***big*** if---the American people will be appreciably safer.

Moreover, the shared network concept means that public safety will have
access to 20 MHz of broadband spectrum in the event of an emergency, not
just 10 MHz. This too is a difference that can save lives. Bandwidth
matters; speed matters.

One additional benefit of creating a national public safety licensee is
the effect it will have on the price and quality of equipment that first
responders use. Today, we have thousands of public safety agencies that
deal with a handful of equipment manufacturers, so public safety doesn't
have much protection against the higher prices big suppliers can charge
for the tools public safety must have. Our first responders can't
negotiate lower prices, nor can they drive technology development.
Today's order changes that equation. It establishes a single public
safety purchasing block. This will result in equipment that is both
better and less expensive, exactly what our nation's first responders
need. The item also ensures that the national public safety
licensee---and not the commercial operator---will have the final word on
which devices public safety users can attach to the network.

I appreciate my colleagues' willingness to work with me to build these
many safeguards for public safety into today's order. But I also want to
emphasize my belief that our work has really just begun. At the end of
the day, we need to ensure that this network ***actually works for
public safety*.** To me, this cannot and will not happen without strong
and ongoing FCC oversight. I have believed this for years. Today we put
the Commission in the middle of the public safety action---right where
it should have been all along. When the parties reach a network sharing
agreement, the license will be granted only if the full Commission
concludes that the terms reached are in the public interest. If
agreement has not been reached, the full FCC has the authority either to
decide outstanding disputes or to select another commercial entity to
negotiate a different network sharing agreement. After the license has
been granted, there will inevitably be questions about what a particular
provision means or whether it is necessary to adjust certain terms in
the agreement. Again, the Commission will be at the table, and it will
be there during the ensuing operation of the license, too.

Only a strong, active and involved FCC can hold the commercial licensee
to the spirit, as well as the letter, of the network sharing agreement.
I have no illusions that this process will be easy---but the stakes are
just too high to give this effort anything other than the fullest
measure of the Commission's effort.

Let's get one more thing on the table. The requirements we announce
today are very demanding. Building this network will involve costs above
and beyond those required to build a typical commercial network. But I
think that these are the minimum process requirements necessary to
ensure that the network actually works for public safety*.* If the
stringency of the requirements we announce today means that no one shows
up to bid on the commercial license, or that the two parties ultimately
cannot reach an agreement that ends up being in the public interest,
then I am perfectly willing to go back to the drawing board. I won't be
happy if this happens, but I'm not about to cut corners if it means
compromising public safety. Far better that public safety remains in
control of its spectrum---and free to find another model for funding
it---than for this Commission to bless a sharing arrangement that does
not fully protect the nation's citizens and its first responders.

Let me turn now to the commercial side of this auction. There is a lot
in this part of the Order of which we can be proud---but here, too,
there are no guarantees and some last-minute changes give me
considerable pause. First, the good news. I commend the Chairman's
leadership on the *Carterfone* issue. Six months ago, *Carterfone* was a
term of largely historical interest---an important and venerable
decision, to be sure, but hardly on the tips of most policymakers'
tongues. Even four months ago, when I called for a general rulemaking on
how *Carterfone* could be applied to the current wireless marketplace, I
had little hope that such principles would be codified in our wireless
rules anytime soon.

Now, within just the last month, *Carterfone* and wireless open access
have been on the front pages of *USA Today*, the *New York Times*, and
the *Washington Post*. They have been the subject of Congressional
hearings and industry and academic policy forums, as well thousands of
emails and letters to the Commission from citizens across the country.
What a striking reminder of just how powerful a good idea can
be---especially when coupled with strong Congressional oversight and
grass roots activism. I find it extremely heartening to see that an
academic paper---in this case by Professor Timothy Wu of Columbia Law
School---can have such an immediate and forceful influence on policy.
Credit is due to Professor Wu as well as many tireless advocates in the
public interest and high-tech communities for bringing this idea to the
fore. As Congressman Ed Markey, who has been a true trail-blazer here,
put it: *Carterfone* "result\[ed in\] ... incredible innovation and
\[was\] an unquestioned policy success. The FCC has a rare chance to
foster similar innovation in the wireless marketplace in the upcoming
auctions." Wireless *Carterfone*, in short, is an idea whose time has
come.

It is especially heartening to see wireless open access getting so much
attention because I am a true believer in openness and decentralization
when it comes to ***all*** of the industries this Commission regulates.
Whether we're talking about media ownership, the future of the Internet,
video distribution, or ownership of wireless and wireline assets, I
believe that reducing the power of gatekeepers and increasing the
intensity of competition is the right policy call. It's the right call
because it returns power to consumers and entrepreneurs and limits
incumbents' power to extract monopoly or oligopoly rents. The device and
application openness principles that today's Order implements for 22 MHz
of the commercial spectrum will mean more choices, better services and
lower prices. They will permit entrepreneurs to innovate without asking
somebody else for permission---just as the developers of the fax
machine, dial-up modem, and Wi-Fi router did.

Of course, as with so much of the Commission's work, the devil will be
in the details. It is especially important that today's item gives
consumers, device manufacturers, and other interested parties a right to
seek redress if the C-block licensee seeks to discriminate against them.
I believe that this case-by-case approach strikes the appropriate
balance between preventing harm to the network and giving teeth to our
anti-discrimination mandate. Justice delayed is often justice denied,
the old adage says, and that is why I am happy that we announce today a
180-day shot clock for Commission enforcement decisions.

Even though the device and application openness principles are indeed
good news, the Order does not go far enough in one important respect. We
all know that America's broadband performance leaves a lot to be
desired. To me, the culprit is clear: a stultifying lack of competition
in the broadband market, which in the words of the Congressional
Research Service is a plain old "cable and telephone . . . duopoly." A
22 MHz block of 700 MHz spectrum is uniquely suited to provide a
broadband alternative, with speeds and prices that beat current DSL and
cable modem offerings. Maybe this can happen yet in this spectrum, but
by declining to impose a wholesale requirement on the 22 MHz C-block,
the Commission misses an important opportunity to bring a robust and
badly-needed third broadband pipe into American homes.

A wholesale requirement would have been sound policy for several
reasons. First, requiring licensees to offer network capacity on
non-discriminatory terms would have been an enormous shot in the arm for
smaller companies---including those owned by women and minorities---that
aren't interested in or capable of raising the huge sums necessary to
build a full-scale network. Smaller entrepreneurs deserve an alternate
path to wireless access. Wholesale would have been good news for
them---and for consumers.

Second, a wholesale requirement would have leveled the playing field for
companies that want to get into the network business but cannot break
through the defenses erected by the massive incumbents who dominate the
industry. It is not hard to see why companies with extensive networks
and millions of customers are generally able to outbid new entrants,
even deep-pocketed ones. After all, the incumbents are (quite
rationally) willing to pay an enormous "blocking premium" just to
discourage new competitors. And their existing network infrastructure
gives them a huge cost advantage when it comes to building a new
network. Our current spectrum rules are tilted too much toward companies
with built-in, competition-killing advantages.

Moreover, due to the Commission's short-sighted decision a few years ago
to eliminate spectrum caps, we have seen a wave of consolidation among
wireless incumbents that has substantially increased the hurdles facing
potential new entrants. And now we live in a world where the two leading
***wireless*** companies are owned in whole or in part by the leading
***wireline*** telephone companies. It is no knock on these companies to
say that they may be more than a little reluctant to employ their
spectrum holdings to put price and quality pressure on their wireline
broadband products. What else would we expect them to do? The solution
is to encourage an additional wireless competitor that has no
affiliation with a wireline provider. A wholesale requirement would have
given unaffiliated companies the fighting chance they need.

Third, the record in this proceeding clearly demonstrates a strong
business case for the wholesale model. Some parties initially raised
doubts about whether a wholesale business model could be economically
self-sustaining. I believe that the record compiled in this proceeding
answers that question. Several sophisticated companies and financial
institutions have concluded that wholesale is indeed a viable economic
model.

I think it is very good news for consumers that we adopt build-out
requirements in this band that are among the strongest and most
innovative that we have ever adopted. Use-it-or-lose-it provisions,
along with geography-based benchmarks in the lower band, will ensure
that licensees have a reasonable period to make use of their spectrum
rights, while also allowing third parties a chance to provide service in
areas where the original licensees are not. In one respect, I would have
gone further. I believe that Commissioner Adelstein's proposal that
licensees who have met their 10-year benchmark should still be subject
to "triggered" use-it-or-lose it provisions---because if a competitor is
willing to make use of remaining unused spectrum, it should have the
right to do so. Spectrum is too valuable a resource to allow it to lay
fallow.

My deepening concern this afternoon is that this auction might not end
up being the stimulus to a third pipe, the right to attach devices, to
run applications and to encourage the innovation and entrepreneurship
that we all hope for because of some add-on provisions. The item now
imposes reserve prices on each of the individual spectrum blocks,
something without precedent in previous auctions and something, it seems
to me, rather at odds with letting the market pick the auction block
winners. The procedure in this Order carries chilling risk to the
success of the auction. If some of these blocks do not fetch the bid
prices stipulated, perhaps because of gaming of the worst sort, they
will be re-auctioned with weaker build-out requirements. If the 22 MHz
block, where we hope for *Carterfone* open access principles, fails to
elicit a \$4.6 billion bid, it will be re-auctioned without *Carterfone*
open access. In the end, all of this micro-managing virtually hands
industry the pen to write the auction rules and to constrict all the
opportunities this spectrum held forth. The end result could be: same
old, same old. What a pity that would be!

In closing, we came farther on some things than many thought likely a
few months, or even a few weeks, ago. There is much to approve in this
Order. I will concur in two parts because wholesale open access is not
stipulated and also because of the concerns I have discussed regarding
how the micro-managed reserve pricing scheme could subvert the higher
goals of the auction.

Many individuals and groups---too numerous to mention---worked hard to
assist us in our deliberations on this proceeding. I do want to thank
the Bureaus and particularly commend Chief Derek Poarch and Fred
Campbell for their insights, vision, constant availability and just
plain dogged determination to get to a promising result. I want to thank
the public safety community who gave so generously of its perspective
and counsel; consumer and advocacy groups that worked to make this more
consumer- and democracy-friendly, and the many entrepreneurs and
business leaders who shared their perspectives on how to make this
effort viable. I thank my personal staff, particularly Bruce Gottlieb,
for his tireless efforts, and also the staffs of my colleagues. I am
grateful to Chairman Martin for his vision and courage, and I thank each
of my colleagues for their commitment to public safety and their yeoman
work on this important proceeding. This has been a truly monumental
effort. I hope it works. And I pledge my ongoing commitment to make that
happen.