Verizon Sues To Block Open Access to Spectrum

With Verizon suing to block the open-access rules -- a move that Google has called "regrettable" -- industry observers are beginning to weigh in on whether the spectrum auction will take place on schedule. Philip Verveer, a Washington attorney specializing in the wireless industry, said Verizon faces a difficult time in trying to undo the FCC rules.

Verizon threw a wrench in plans for a quiet run-up to the Federal Communication Commission's January auction of the valuable 700-MHz spectrum. The telecom company filed a petition with a court of appeals to overturn the FCC's decision to attach open-access rules to part of the spectrum.

The filing does not state any specific grounds for review, asserting merely that the FCC's rulemaking exceeds its authority under the Communications Act, the Constitution, and the Administrative Procedure Act, and is "arbitrary, capricious [and] unsupported by substantial evidence."

In July, the FCC passed a plan for the auction that imposes open-access rules on the so-called "C" block of the spectrum, encompassing roughly a third of the spectrum to be auctioned. Under the rules, the C block spectrum must be open to all devices and applications.

Google Calls Action 'Regrettable'

Google, which had pressed for even greater rules for open access, has announced its intention to bid in the auction. Bidding starts at $4.5 billion and the winning bid is expected to wind up over $9 billion.

Writing on a Google blog, Chris Sacca, head of special initiatives, wrote, "The nation's spectrum airwaves are not the birthright of any one company. They are a unique and valuable public resource that belong to all Americans." Sacca went on to say that it is "regrettable" that Verizon has decided to use the court system "to try to prevent consumers from having any choice of innovative services."

Google might not have that much to worry about. Verizon faces a "very difficult" time in trying to undo rules the FCC has promulgated, Philip Verveer, a partner with the law firm of Willkie, Farr & Gallagher in Washington DC, said in a telephone interview. As an antitrust lawyer for the Justice Department, Verveer was instrumental in the breakup of the old AT&T.

"Agency action goes to appellate court with the presumption that the agency is correct," he explained. In addition, courts tend to defer to executive agencies in technical matters. "This matter is one where the FCC's discretion under the statute is very broad. Any appeal of agency action is going to have a very difficult time," he said.

Spectrum Auction Delay Unlikely

Because of the statutory requirement for the start of the auction, "it's going to be very difficult to convince the court of appeals" to delay the auction, Verveer added. To make matters worse for Verizon, "the more technical the rulemaking, the harder it is" to get it overturned, he said.

Verveer noted that Verizon has not yet tipped its hat as to its legal arguments. "As a practical matter, they may be trying to have a place at the table," he said. It's possible that the Frontline group, led by former FCC Chair Reed Hunt, would also appeal the FCC rules, arguing that the FCC "didn't go far enough." By appealing now, Verizon might be positioning itself to balance those arguments with the claim that the FCC went too far, Verveer said.

Verizon's next step will likely to be to ask the FCC to reconsider its decision and stay the start of the auction. The agency "almost never grants" such requests, Verveer said. Verizon would likely reveal its legal theories at this reconsideration stage.

Could all of this set back the scheduled start of the auction on January 16? "The FCC is going to be extraordinarily reluctant to let this affect the timeline," Verveer said. "Unless Verizon has a legal point that creates tremendous anxiety at the FCC, it will continue on its timetable."