T-Mobile (News - Alert) USA has asked the Federal Communications Commission to rethink its plans for mandatory free nationwide wireless internet service as one of the conditions for bidding on a block of 700-MHz frequencies. The new spectrum block is the former "public safety" band that got no bids in the recent 700-Mhz auctions.

 

In a new attempt to revive the auction, the FCC (News - Alert) has dropped the requirement for setting aside spectrum to support public safety networks, and has instead added the free access requirement.

 

Under the current rules, the winning bidder would have to create a free access network which covers at least 95 percent of the population.

 

T-Mobile says the free service could cause interference on its own wireless networks, which use an adjacent spectrum band. That's an almost-standard objection other users of licensed spectrum often raise, typically with at least some technological justification.

 

But T-Mobile and other operators including AT&T (News - Alert) also argue that the free offering would damage their for-fee Wi-Fi access businesses. That's arguably a bigger objection than the possibility of interference. No doubt the FCC would like to claim some clear public interest outcome for the auction. A new public safety network would have provided that result.

 

The free public access network would provide similar benefits, though at the likely cost of damaging or destroying some of the business value of the for-free hotspot businesses T-Mobile and others provide.

 

The final rules haven't been set yet, so there is always some chance the actual bidding will come with modified conditions from what now is proposed. Presumably the FCC will argue that the "free" service requirement will not impose undue extra cost, as the free services can be provided as a simple extension of the network that must be built in any case, and almost certainly will not provide access speeds as high as other for-fee services available on the new network.

 

If the requirement holds, we'll see a new attempt at business models built around free Wi-Fi access: namely one built on access to spectrum and fee-based services, with the for-fee services subsidizing the free service. If the requirement remains, it will be yet one more step in the direction some analysts already expect. And that is that Wi-Fi increasingly will be a "cost of doing business" more than an actual revenue-generating service. Understandable, then, is T-Mobile's objection.