M2Z Networks has lost another bid for spectrum to build a nationwide wireless broadband network, as the U.S. Court of Appeals has rejected M2Z’s petition for review of the FCC’s 2007 denial of M2Z’s bid. The company, formed in part by ex-officials of the FCC’s Wireless Telecommunications Bureau, presented its founders’ former colleagues with a novel application for a 15-year license in the 2155-2175 MHz band. The novelty lay in M2Z’s request for the spectrum at no cost – i.e., without the usual high-stakes auction. In return for free spectrum, M2Z proposed to offer free service to the public, with a “premium” tier available to those who wanted better service. To escape that pesky auction requirement, M2Z filed a separate petition arguing that the FCC had an obligation to further the public interest by adopting M2Z’s proposal. Without the auction.
In 2007, after due deliberation, the FCC said no.
Having failed to convince the Commission of its approach to licensing spectrum, M2Z headed to court. The D.C. Circuit heard the case and, as is typical in such matters, gave deference to the FCC. The Court found that, before rejecting M2Z’s requests, the FCC had given all due consideration to M2Z’s claims about the public interest, M2Z’s application, and forbearance from the Commission’s licensing and auction requirements. Once the Court had determined that the FCC’s decision making was not arbitrary and capricious, the Court concluded that siding with the FCC was “easy to do.” The Court was willing to give M2Z some props for coming up with “creative” arguments, but that didn’t help M2Z in the end. The Court summed up the entire M2Z enterprise succinctly in its closing paragraph: “Although M2Z presents a number of creative arguments, none of them has serious legal merit.”
We would have been surprised at any other outcome.