Dear Mr. Michael Powell: As chairman of the Federal Communications Commission, you will be presiding over the FCC during interesting times. Among the many decisions that your agency will make are three that will have repercussions lasting far beyond your tenure as chairman. But I am certain you know that, given that you have been serving as an FCC commissioner since 1997.

Of those issues, license auctions for the development of 3G (third generation) wireless services require your immediate attention.

I ask you to reconsider, postpone, and abandon the planned auction for the 700MHz spectrum, scheduled to take place on March 6, 2001, and replace it with a revenue-sharing model.

It is widely recognized that the last nine years of unprecedented growth in the American economy was in large part fueled by the high-tech industry. But what is less well-known is that revenue sharing among many participating companies, both high-tech and brick-and-mortar, also played a key role.

Unlike the industrial giants of the past, companies today are no longer able to create and offer services in their own narrow fields. Delivering high-tech services requires revenue sharing to defray huge infrastructure costs. I understand that revenue sharing is unusual for the federal government, but it will be necessary if we are to continue our economic growth.

The auctions for the PCS (personal communications services) spectrum that are just concluding have cost companies about US$20 billion. And in Europe the cost of 3G auctions was a staggering $100 billion, with the German spectrum auction alone coming to $45 billion and the auction in Great Britain reaching $35 billion.

An estimated $50 billion in license fees for what many consider the most valuable part of the spectrum for 3G -- the licenses in America -- will burden the telecommunications industry and inhibit both economic growth and innovation.

I ask you to reconsider the decision before these auctions take place and use instead a revenue-sharing model whereby the government can avoid both giving away a valuable asset owned by the American people and avoid strapping the telecommunications industry with a huge debt.

Some may say that an auction is the best way to ensure that America will catch up to Europe and Asia in the next great technology leap, believing the highest bidder will have the greatest incentive to lay out the infrastructure for 3G. These pundits say that, if nothing else, the price of admission to the auction will eliminate all but the most powerful companies, which are in fact capable of investing billions of dollars.

This is a dangerous oversimplification of how business works.

Rather than serve as an incentive for the highest bidder to invest once to gain rights and then invest billions more to build out, an auction will drive its winners to reamortize to get a higher return. In the end the auction process will drive up the price of wireless technology beyond all but the most affluent consumers' ability to pay and will also increase the cost of doing business across all industries.

As the wireless industry reaches certain subscriber milestones -- 1 million, 10 million, 100 million, and beyond -- revenue sharing on an incremental basis would allow companies to pay for the assets given to them by their Uncle Sam, even while they earn a reasonable return on what will still be a huge investment of perhaps billions of dollars.

Only this unprecedented step will encourage the infrastructure build-out of the 3G network and the continued growth of the American economy.

Two important issues remain: privacy and censorship.

Wireless technology will soon give local, state, and federal governments the ability to track and monitor the activities of many citizens in the United States. There must be a balance struck between what can be done and what needs to be done. More than a balance, such activities should be weighted toward a citizen's right to privacy.

I ask you to lead the FCC in taking the position that the burden of proof of any wrongdoing must be on the government's shoulders. The capability for indiscriminate snooping, or to call it by its right name, spying, on citizens -- whether done by private or public institutions -- must be curtailed by regulation.

Finally, if the Internet is any indication, access to information unencumbered by government regulation has led to an unprecedented amount of what many consider objectionable material on the Web. On licensed mediums such as television and radio this material comes under the close scrutiny of the FCC, but like it or not, broadband wireless access to information cannot be controlled in the same way. It will give publishers of any type of material yet another platform to peddle racism, violence, and pornography.

Again, I ask you not to bow to shortsighted pressure groups in calling for censorship, but to look instead at the long view: our country's 225 years of continuous freedom.

Thank you for considering my suggestions. I can be reached at ephraim_schwartz@infoworld.com.

InfoWorld

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