Over the last nine months, hundreds of organizations, community leaders, and politicians have written to the Federal Communications Commission in support of M2Z Network's proposal for a free national broadband service.

But while the idea may stumble over FCC auction rules, it has stimulated an interesting debate about the agency's competitive bidding system for spectrum.

Menlo Park, California based M2Z petitioned the FCC for their proposed "family-friendly, free, nationwide wireless broadband service" in May of 2006. Here is how their idea works:

• Users of the free, advertiser based service will access it from their computers like television after they purchase a "relatively inexpensive M2Z-certified reception device available from various competitive vendors."
• Their wireless network would operate in the 2155-2175 MHz spectrum, working at a capacity of 384 kpbs downlink/128 kbps (kilobits per second) uplink. This qualifies as high speed broadband, according to the FCC, which defines the term as a service that provides Internet access in at least one direction at a speed faster than 200 kbps.
• The service will include a "compulsory setting that will utilize state of the art network filtering technology to take every reasonable and available step to block access to sites purveying pornographic, obscene or indecent material."
  The system will filter porn out "without the need for special end-user software," the company promises.
• M2Z will make the network available to any public safety organization without putting any limits of the number of devices used.
• The company will voluntarily pay the U.S. Treasury five percent of its gross revenues from its "Premium Service."

M2Z says that it wants to roll out the network to 95% of the population of the United States within ten years of receiving a license. One of the proposals' biggest selling points is its claim that the network will save the FCC's Universal Service Fund billions of dollars by taking on the USF's mission of bringing broadband to poor and rural areas.

Needless to say, the smut free aspect of M2Z's proposal makes it a strong sell with parents, community, and indecency groups across the United States, who have filed hundreds of pro-M2Z comments with the FCC.

"By making a commitment to use highly effective network based filtering, M2Z has found an innovative balance between spurring the rapid adoption of high speed internet service ad protecting children and families from on line pornography and sexual predators," wrote Donna Rice Hughes of Enough is Enough, an anti-pornography non-profit, about two weeks ago.

The mayors of Norfolk, Virginia and Juno, Alaska have endorsed the plan, as has the President of the National PTA, six Tennessee state representatives, and U.S. Senator Orrin Hatch.

"I know many Utahns would welcome the opportunity to provide their children with the educational and economic opportunity which broadband access can provide without having to become software engineers in order to protect their children," Hatch wrote to the FCC on February 16.

Some media reform groups have offered qualified support. A Media Access Project's recent filing questions whether the 384 kpbs download rate is sustainable in the long run, raises First Amendment concerns about content filtering, and wonders if M2Z's rollout strategy will reach rural America.

But Media Access's comments also praise M2Z's proposal as "straightforward and candid" and "vastly superior to an auction of the spectrum in question."

That, of course, is not what CTIA - The Wireless Association, thinks.

"CTIA urges the Commission to deny the Application because M2Z is first-and-foremost a profit-driven entity, which the FCC should not subsidize with free spectrum," attorneys for the cell phone trade group wrote the FCC on March 2nd:

"M2Z should pay for spectrum through a competitive auction if it wants to sell wireless broadband access."

The most recent filing on the docket aggressively responds to this stance. It comes from former FCC Chief Economist Simon J. Wilkie, now a professor of economics at the University of Southern California, and asked to explore the problem by M2Z.

Wilkie's March 26th, 82 page analysis argues that the FCC's Advanced Wireless Services (AWS) auction system sometimes allows incumbents to squeeze out socially useful and unique entrants like M2Z in a number of ways:

First, by pressuring the FCC to use the "slice and dice" method to allocate spectrum, incumbent bidders have historically made it difficult for new entrants to buy enough spectrum to build a "national footprint."

M2Z's business plan won't work if the firm can't reach an area of the United States large enough to attract commercial sponsors, Wilkie warns. Lack of support will cause the firm to fail in the auction, "even if they are the bidder with project that would provide the highest social value."

Second, the low cost, subscription free nature of M2Z's product means that company could be outbid by big wireless incumbents, "even if they [the incumbents] are not the most efficient users of that new spectrum."

Third, if the FCC develops a spectrum band plan that does not favor the frequency band access technology that M2Z plans to use, their strategy won't work.

And last, "an additional social cost is that the public would incur the delay in use of the 2155-2175 MHz frequency band because of the time delay of the process of developing a band plan and then an auction plan," Wilkie writes. "The cost of such a delay could be significant."

In the end, Wilkie argues that " . . . the naive belief that spectrum auctions are always the most efficient and effective solution to the social allocation of resources as a matter of economic theory is in error."

Whatever happens to M2Z's proposal, the company has stirred up an interesting debate on the FCC's auction system.