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FCC eyes in-flight cell phones, Web
Agency votes to sell piece of the airwaves needed for high-speed Internet, cell phone use on planes.
December 15, 2004: 3:25 PM EST
By Chris Isidore, CNN/Money senior writer

NEW YORK (CNN/Money) - Some time soon high-speed Internet will go high altitude, and people will be able to connect to the Internet using wireless devices on commercial airline flights, as well use their cell phones.

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CNN's Louise Schiavone takes a closer look at the debate over cell phones and wireless high-speed Internet use on commercial flights.
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But there's still a lot of disagreement among the companies that want to provide those potentially lucrative services as to the best way to make that connection.

It is believed by just about everyone involved that the so-called air-to-ground portion of the public airwaves used to carry phone calls from airline seat-back phones would be better used to carry both phone calls and high-speed Internet connections.

The Federal Communications Commission voted Wednesday to hold an auction to award new licenses for that part of the spectrum. That means as soon as the end of 2005, air passenger will be able to surf the Web, and to send and receive e-mails either with their laptops or a hand-held device like a Blackberry.

Eventually they may be able to use their ground cell phones or Internet phones to make and receive phone calls while in the air -- the FCC also agreed to start considering a new rule to allow cell phone use while in flight.

The Federal Aviation Administration will also have to weigh in on the issue due to concerns over interference the cell phones can cause to a plane's navigation system. But if allowed, those cell phones are likely to be connected to ground through the same broadband connections used by the Web surfers.

Fighting for air

Still, what will emerge from that auction is a subject of much controversy.

Passengers may soon be able to surf the Web while flying using the same spectrum now used for air-to-ground phone calls.  
Passengers may soon be able to surf the Web while flying using the same spectrum now used for air-to-ground phone calls.

One side, companies such as Boeing (Research) and AirCell, which provides air-to-ground calls for private jets, says it is necessary to have overlapping licenses in order to provide the competition that flyers will need to have both a choice of service and the lower prices that go along with competition.

The other side, led by Verizon Airfone, the unit of Verizon (Research) that operates the seat-back phones, argues that only by granting licenses that are exclusive over the available portion of the airwaves can the service have the quality that consumers have come to expect from online connections on the ground.

Wednesday the FCC voted to let both sides make bids using the rules they would prefer -- either overlapping licenses, or licenses that split the available 4 megahertz of space into exclusive 3 megahertz and 1 megahertz wide bands.

The smaller band would not be enough to provide high speed broadband access, though, so non-overlapping licenses would leave flyers with only a single Internet service. FCC Chairman Michael Powell said the rules will still insure that there will be competition available to consumers. But FCC member Michael Copps said the auction rules could block out needed competition.

Competition vs. quality?

"If a company bids enough, it can exclude all other competitors, leaving airlines with only one possible supplier and passengers with no choice," Copps wrote. "Experience shows that if a company has the chance to buy a monopoly license, it will pay a premium for it. That is because it allows them, with one fell swoop, to ensure that competitors will not be able to keep prices down or force them to innovate."

But AirCell CEO Jack Blumenstein said he's more encouraged than he was before the FCC vote that the way the rules are set up will allow those bidding for overlapping licenses to outbid someone bidding for an non-overlapping license.

"I have to look closely at it, but it's certainly a lot better than the worst-case scenario that we had feared," he said Wednesday afternoon. "I'm a little more heartened by the efforts to build in a pro-competitive bias."

Verizon is also pleased that it will get a chance to bid for an exclusive 3-megahertz license it says is needed to provide quality service.

"We believe the only way to provide a robust service is to have an exclusive license," Verizon Airfone President Bill Pallone said. "If you have two people sharing the license, frequently the service will slow to a trickle or the plane will be out of touch completely."

Can you hear me now?

The FCC decision to start looking at allowing cell phone calls is also not without controversy.

When CNN/Money wrote a story about that proposal last week, it was flooded with concerns from readers who said they dreaded sitting next to someone talking on a cell phone throughout a long flight. FCC member Copps echoed those concerns Wednesday.

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"Many airline passengers don't relish the idea of sitting next to someone yelling into their cell phones for an entire six hour flight. I know I don't!" he wrote in is statement. "Here at the commission we need to determine precisely what jurisdiction the FCC has over the annoying seat-mate issue. If we are limited to an exploration of the (technical issues), we must ensure that some authority, maybe the airline, is empowered to control the problem."

But even Copps said there are benefits to allowing cell phone usage on the planes and Powell said changing the rules could be important for the traveling public.

"Our actions today begin a process that I expect will benefit the traveling public as well as public safety personnel, by increasing the communications options for those aboard airborne aircraft," he said in his statement.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.