STATEMENT OF
COMMISSIONER ROBERT M. McDOWELL
DISSENTING IN PART
RE: Service Rules for the 698-746, 747-762 and 777-792 MHz Bands, WT Docket 
No. 06-150, Revision of the Commissions Rules to Ensure Compatibility with 
Enhanced 911 Emergency Calling Systems, CC Docket No. 94-102, Section 
68.4(a) of the Commissions 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 Commissions 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, 
Second Report and Order, FCC 07-132
First, I would like to thank my colleagues, the dozens of bureau professionals, the 
scores of representatives from the tech community, the investment community, 
consumer, public safety, public interest groups, and potential bidders - both large and 
small - with whom I have met and who have worked so hard on what is being dubbed the 
auction of the century.  Thank you for your suggestions and insight regarding what is 
the best way to use this spectrum to meet the demands of American consumers.  This is 
an historic day for the Commission and for America.
The Order before us has certain positive attributes.  Among them is the plan to 
spark a public/private partnership for public safety by allocating an additional 10 
megahertz of spectrum to aid in the construction of a nationwide, interoperable network.  
This plan has been assembled as the result of close coordination with the public safety 
community, and I am pleased to support it. We all owe many thanks to my distinguished 
colleague, Commissioner Copps, for his passion, vision, leadership, and toil on this 
matter that is so vital to our country.  Of course, the next step is to ensure that a bidder 
willing to accommodate public safetys specifications buys this slice of spectrum at 
auction and builds it out in a timely manner with state-of-the-art technology.  With 
todays action, public safety will have about 107 megahertz of spectrum at its disposal.1  
So it appears to me that ongoing efforts should more closely focus on attaining the 
quickest and most efficient use of this spectrum.  Protection of Americas security cant 
wait any longer.
  
1  See Report to Congress on the Study to Assess Short-Term and Long-Term Needs for Allocations of 
Additional Portions of the Electromagnetic Spectrum for Federal, State and Local Emergency Providers, 
Federal Communications Commission  5 (rel. Dec. 21, 2005).  
2
Another positive attribute of todays Order is the band plan for the commercial 
blocks of the 700 MHz spectrum, which I am supporting.  This band plan has been 
advocated by a wide variety of interested parties, including possible new entrants, Silicon 
Valley companies, as well as existing wireless license holders.  The band plan, minus the 
open access condition, could provide new opportunities for a wide variety of technologies 
and business plans.  
With respect to performance requirements for the commercial spectrum, I have 
listened to parties discuss the merits of various requirements with an open mind.  On the 
one hand, it is important that the Commission not set the bar too high, which may cause 
licensees to deploy less robust technologies.  On the other hand, this spectrum has 
excellent propagation characteristics, so network construction should be more 
economically efficient.  Certainly we want to ensure that all Americans, no matter where 
they live or work, have prompt access to advanced wireless services.  I support the
requirements set forth in the Order, and am pleased that the new rules will allow 
interested entities access to any un-built spectrum sooner rather than later.      
After careful deliberation, my conclusions regarding some of the other more-
publicized issues are as follows:  
1) While we can agree on the destination -- consumers should be able to 
enjoy device and application portability if they want -- we may 
respectfully disagree about the best path to get there; 
2) In an unencumbered auction, any winning bidder is free to offer those 
features without restrictions; 
3) Large wealthy corporations interested in a particular business plan do 
not need the governments help in this auction; and
4) In the absence of market failure, I favor a market-based pro-
competition solution to the challenges raised in this proceeding over a 
prescriptive regulatory approach.  
In other words, I am disappointed that the majority didnt try to work with industry to 
forge a consensus solution rather than rushing to regulate without thinking through 
possible unintended consequences.
As background, my original vision for the 700 MHz auction was for our rules to 
maximize investment, innovation, and consumer choice by promoting competition
through the crafting of a wide variety of unencumbered market and spectrum block sizes.  
We had the opportunity to help foster the development of a fourth, fifth or sixth new 
broadband pipe offered perhaps by small town entrepreneurs or new regional players. In 
fact, weve heard from a broad array of companies, and an overwhelming number of 
Members of Congress on this important point.  Unfortunately, the encumbered spectrum 
structure supported by the majority will force large wealthy bidders away from the Upper 
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Band and into the smaller, unencumbered blocks in the Lower Band.  Smaller players, 
especially rural companies, will be unable to match the higher bids of the well-funded
giants.  
Depriving the nascent 700 MHz market place of smaller new entrants will result 
in less innovation and competition, not more.  Consumers could be short-changed as a 
result.  And it is small new entrants that should be as important to this equation as large 
new entrants.  Pinning our hopes on a single national white knight to offer only one 
new pipe is risky at best.  And keep in mind that the Commissions rules do not prevent 
any bidder from offering any kind of new application or functionality, including device 
portability, or from aggregating smaller market sizes to forge a national footprint, as we 
witnessed with last summers Advanced Wireless Services auction.  Throughout this 
proceeding, I have not heard a convincing argument refuting why wealthy Silicon Valley 
new entrants are not as capable of bidding on unencumbered spectrum as other wealthy 
companies.  More importantly, I remain unconvinced that the Commission must favor 
large companies over smaller entrepreneurs.  Why not give both an equally fair shot with 
one open, condition-free auction that offers varied market and spectrum block sizes?
Curiously, however, in an effort to favor a specific business plan, the majority has 
fashioned a highly-tailored garment that may fit no one.  Its not what Silicon Valley 
wants; its not what smaller players have told me they want; and its not what rural 
companies want.  To date, the Commission has received no assurances that any company 
is actually interested in bidding on the encumbered spectrum. Not one. The majority 
recognizes the risk that the encumbrances pose by taking the unprecedented step of 
designing a fall-back Plan B auction in the event the first auction fails. Perhaps the 
majority has only little more confidence in its plan than I do.
If this new regulatory regime is all in the name of fostering device and application 
portability, I want consumers to know that the seeds of these offerings are already 
germinating.  The wireless market is starting to deliver device and application portability 
because it has been allowed to function freely and has been responsive to consumer 
demand. For example, over the past couple of years, wireless carriers have offered at 
least ten different phones that are compatible with any Wi-Fi network. This capability 
allows consumers to navigate the Internet just as they can on their home computer, and 
download software such as voice over Internet protocol applications, or popular search 
engines.  
Savvy consumers may be the only ones who are in-the-know today, but they are 
the early adopters who are paving the way for the rest of us laggards.  Further, these 
business developments are by no means the end of the innovation that is rising above the 
horizon, but the beginning of a brighter revolution that is already dissolving walled 
gardens across all platforms.  Just ask America Online about the long-term viability of a 
walled garden strategy.  So, Im not sure it makes sense for the majority to take credit 
today for spurring device and application portability when its sprouting on its own.
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The new regime adopted today is being imposed against the backdrop of a vibrant 
wireless market.  Just last fall, in our 2006 Wireless Competition Report,2 all five of us 
concluded that it was healthy, open and competitive. There, we noted that, over the last 
13 years, wireless subscriber growth has grown exponentially and competition among 
numerous providers has flourished.  Ninety-eight percent of the total U.S. population 
continues to live in counties where three or more different operators compete to offer 
wireless service, while nearly 94 percent of the U.S. population continues to live in 
counties with four or more different operators competing to offer service.3 At the same 
time, prices are decreasing.  Our report estimates that revenue per minute (RPM) declined 
22 percent in 2005 alone.4  RPM currently stands at $0.07, as compared with $0.47 in 
December 1994  a decline of 86 percent.5
It is interesting that todays Order does not cross reference or otherwise discuss 
the Federal Trade Commissions recent unanimous and bipartisan finding that there is no 
need for net neutrality regulations like the ones imposed today.6 Only one month ago, the 
FTCs Internet Task Force recommended that policymakers proceed with caution before 
enacting broad, ex ante restrictions in [the] unsettled, dynamic environment of 
broadband Internet access.7 Specifically, the report concludes that the effect of potential 
conduct by broadband providers on consumer welfare is indeterminate.8 The report 
adds, No regulation, however well-intended, is cost-free, and it may be particularly 
difficult to avoid unintended consequences here, where the conduct at which regulation 
would be directed largely has not yet occurred,9 and cites growing consumer demand, 
increasing access speeds, falling prices, and new market entrants as evidence that 
competitiveness in the broadband Internet access industry is moving in the right 
direction.10 Todays Order offers no evidence to refute the FTCs findings and 
conclusions. Furthermore, the FCC should heed the FTCs warning about the unintended 
consequences of unnecessary regulation.
Perhaps most surprisingly, todays Order acknowledges that the Commission need 
not decide whether competition is sufficient enough to refrain from imposing open access 
requirements in this proceeding because these questions are being considered more 
broadly elsewhere.  Despite this express acknowledgement, however, the majority seeks 
  
2 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report 
and Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, WT Docket 
No. 06-17, Eleventh Report, 21 FCC Rcd 10, 947  2 (2006).
3  Id. at 10,964  41 (2006).
4  Id. at 11,008  154.
5 Id.
6 Federal Trade Commission, Internet Access Task Force, Broadband Connectivity Competition Policy 
FTC Staff Report (rel. June 27, 2007).
7  Id. at 9.
8  Id. at 157.
9 Id. at 155.
10  Id.
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to encourage additional innovation and consumer choice and spur the development of 
innovative products and services by encumbering the C Block license.  At the same 
time, the Order does not dismiss or otherwise dispose of the pending Skype Petition.11  
Moreover, the majoritys decision to impose open access requirements on the C 
Block licensee represents a sharp departure from well-settled FCC precedent.  First, the 
decision runs contrary to the market-driven framework established by Congress.  Starting 
at least as early as 1994, the Commission established as a principal objective the goal of 
ensuring that unwarranted regulatory burdens are not imposed upon any wireless 
providers.12 Just this year, I was pleased to support the Commissions action to classify 
wireless broadband Internet access service as an information service because our 
determination will maximize innovation and consumer benefits as wireless services 
continue to flourish and evolve.  By dictating how spectrum must be used, the majority is
locking the Commission into a particular approach that is not guaranteed to work but is 
guaranteed to be nearly impossible to change.     
Some say that Carterfone-style regulations are appropriate for application to 
todays wireless marketplace because application of that policy revolutionized the 
wireline marketplace.13 Before arriving at the Commission, I spent my entire career 
counseling wireline entrepreneurs.  There is a world of difference between the wireline 
industry of the 1960s and todays wireless market. 
First, the AT&T of the 1960s was a nearly 100-year-old government protected 
and subsidized monopoly.  By any measure, todays U.S. wireless service providers lack 
market or monopoly power, as this Commission concluded just 10 months ago.14  
Second, unlike wireline voice services offered in the 1960s, todays U.S. wireless 
service providers have never integrated into the applications or equipment markets.  
Third, under common antitrust analysis, todays wireless providers lack the ability to 
exercise buying power over upstream handset suppliers, of which there are many
competitors, which wield significant countervailing selling power.  Fourth, wireless 
service providers are not subject to price regulation in the market in which they are 
  
11 See Skype Communications S.A.R.L.; Petition to Confirm A Consumers Right to Use Internet 
Communications Software and Attach Devices to Wireless Networks, RM-11361 (filed Feb. 20, 2007).
12  See Implementation of Sections 3(N) and 332 of the Communications Act Regulatory Treatment of 
Mobile Services, Second Report and Order, 9 FCC Rcd 1411, 1418 15 (1994).
13 See, e.g., Skype Petition.
14 As of Dec. 2005, the market power of Cingular Wireless (now AT&T) is 26.8 percent and that for 
Verizon Wireless is 25.4 percent.  See 2006 Wireless Competition Report at Table 4.  See also
Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, Fourth Report & 
Order, 15 FCC Rcd 13523, 13528  12 (2000) (explaining that Carterfone involved AT&T, the dominant 
provider of telecommunications at that time . [t]hus, the Commission has not applied principles 
established there to interconnection to carriers without significant market power, such as CMRS 
providers).
6
alleged to have market power, which otherwise might encourage them to seek profits in 
complementary markets.15
Others cite the European wireless marketplace as the one the U.S. should emulate.  
A closer look reveals that the European scenario isnt so rosy.  First, as noted earlier, in 
our 2006 Wireless Competition Report, the Commission found that, in addition to the 
four nationwide mobile telephone operators in the U.S., several large regional operators 
and a significant number of mobile telephone operators with smaller footprints compete 
in many regional and local U.S. markets.16  In contrast, in Western Europe, national 
mobile operators do not face competition from smaller facilities-based carriers like they 
do in the U.S.17 The top two competitors in Germany and Italy, for instance, have a 
combined market share of 74 percent.18 In Finland, the combined share is 85 percent.19  
Whereas the FCC has consistently resisted broadly imposing technology mandates, 
European regulators mandated the use of a single technology: GSM.  Given the dearth of 
choice among carriers and technologies, European per minute rates are high 
approaching 22 cents per minute.  Roaming rates from country-to-country are even worse 
 sometimes $1.50 per minute. Additionally, up front costs to consumers are much 
higher there than here.
I have also heard that todays action is just like the Commissions adoption of 
Wireless Local Number Portability (LNP) requirements in 2003.  I disagree.  First, the 
Commission mandated LNP only after years of attempts to broker negotiations between 
industry and consumers ended in failure.  No such effort at negotiation has been 
attempted here.  On a substantive level, LNP does not involve complicated network 
management issues like device and application portability does.  Instead, LNP is 
completed through a simple computer dip, which has nothing to do with the complexities 
of a carriers network.  Finally, without knowing what standard(s) the C Block licensee 
will adopt, it is unclear in todays Order whether its customers will be able to port to 
other networks.  I wonder whether this will lead the Commission down the path of 
imposing a European-style technical standard.
With respect to auction reserve prices, I believe these are best left to market 
forces.  Like artificial conditions, reserve prices have the effect of skewing the auction 
and hindering the efficient allocation of spectrum.  The problem with setting reserve 
prices is that it puts the Commission, rather than the market, in the precarious position of 
identifying the right value for the spectrum.
Finally, I am disappointed that the majority has rushed headlong to regulate with 
scant evidence in the record and without undertaking a sincere effort to try to bring 
  
15  See ROBERT W. HAHN ET AL., THE ECONOMICS OF WIRELESS NET NEUTRALITY (AEI-Brookings Joint 
Center for Regulatory Studies 2007).
16  See 2006 Wireless Competition Report, 21 FCC Rcd at 10,967  50. 
17  Id.  
18  Id. at 10,967  51.
19 Id.
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together consumer groups, industry and all interested parties to broker a private sector 
solution to any perceived imperfections.  The Commission has a long and proud history 
of meeting similar challenges in such a positive and constructive way.  I wish we had 
done so here.     
For these reasons, I respectfully cast my very first dissent in part. Specifically, I 
dissent from Sections III.A.2.a.iii. (Open Access) and III.A.3.d. (Reserve Prices) of 
todays Order.