For the past three years, a startup called M2Z Networks has been figuring out a way to blanket the nation with a free wireless broadband network to ensure all Americans have access to basic high-speed Internet connections.

Share story

WASHINGTON — For the past three years, a startup called M2Z Networks has been figuring out a way to blanket the nation with a free wireless broadband network to ensure all Americans have access to basic high-speed Internet connections.

Along the way, the company has found support in powerful corners of Silicon Valley and Washington, D.C. It has attracted funding from several of the Valley’s top venture-capital firms. And it has captured the interest of Kevin Martin, the chairman of the Federal Communications Commission, who is backing a plan essentially mirroring the M2Z proposal as a way to promote universal broadband.

Finally, this month, the company was nearing a breakthrough. Martin has pushed for a full FCC vote on his plan, which would set the rules for auctioning off the slice of wireless spectrum that M2Z wants to put its ideas into action.

But opposition forces gathered steam, deferring dreams for now.

Led by T-Mobile USA, the nation’s wireless carriers have been lobbying to defeat Martin’s proposal, which they say would interfere with their own services.

The Bush administration wasn’t happy either: It urged the FCC not to proceed with an auction that would favor one company’s business model.

And some key Democrats on Capitol Hill called on the agency to hold off on controversial items — which would include the M2Z plan — until the Obama administration takes over.

Facing such objections, Martin canceled this Thursday’s vote on the free broadband idea. The proposal remains on circulation at the FCC, and M2Z is suing the agency to gain access to the slices of the airwaves that it needs.

But now it looks like the company will have to wait until next year to know its fate.

Although the president-elect has not taken an official position on M2Z, he has said that wireless services could be one important channel for bringing broadband to all corners of the country. And that could be good news for M2Z.

What’s at stake, insists M2Z co-founder Milo Medin, is a “lifeline” wireless broadband network that would provide basic connections for people who cannot afford the premium services offered by the big phone and cable companies or live in places where those services are unavailable.

“We Americans are creating a two-tier digital society,” Medin said. “If you’re not connected today, you’re really at a disadvantage. But we can remove barriers that isolate people from the digital domain.”

Access question

It’s not clear exactly how many Americans have no access to broadband. According to a survey conducted in August by the Pew Internet & American Life Project, 57 percent of Americans subscribe to broadband at home. More people could get it, but choose not to buy it or can’t afford it.

One major advantage of wireless technology is that it has the potential to bring broadband to rural areas that the big phone and cable companies have abandoned as too sparsely populated to justify the necessary network investments. That’s because it costs less to blanket large areas with a wireless signal than to lay down wires.

Martin has proposed that the FCC auction a large chunk of airwaves to a company that would set aside 25 percent of the capacity for a free broadband service. Under his plan, the winning bidder would have to make that service available to 50 percent of the population within four years and 95 percent of the population within 10 years — or risk losing any remaining spectrum not yet being used.

The concept, explained John Muleta, M2Z’s other co-founder, is modeled after over-the-air television, which is available for free to anyone with a TV set whether or not they subscribe to cable or some other premium video service.

Two veterans

Founded in 2005, M2Z is a partnership between two broadband veterans.

Muleta, 43, has done two tours of duty at the FCC. Between 1994 and 1998, he worked in the section of the agency that regulates landline phone companies. And between 2003 and 2005, he headed up the wireless telecommunications bureau, overseeing policies on consumer wireless services and public-safety radio networks.

In between, Muleta held executive positions at PSINet, an early broadband provider that resold high-speed connections to corporate customers using facilities owned by the big phone companies.

Medin, 44, was co-founder and chief technology officer of another broadband pioneer — @Home, which partnered with some of the nation’s biggest cable operators to create the cable Internet market.

Although Muleta and Medin are based on opposite coasts — with Muleta in the Virginia suburbs of Washington, D.C., and Medin in Silicon Valley — they share a common experience.

Both worked at early broadband companies that relied on established telecommunications giants to provide the so-called “last mile” of network infrastructure needed to reach customers. And both of their companies landed in bankruptcy when their relationships with the phone and cable companies became unworkable.

“The lesson learned is that you have to have the last mile in order to control your own destiny,” Muleta said. “You need to have the direct relationship with the customer. Otherwise the company you rely on for that last mile will only let you survive only as long as it is in their interest.”

And that is where M2Z — which stands for “move transport to zero” and is also a play on the names of the founders’ children — comes in. The company would build its own nationwide wireless network to connect consumers to the Internet, bypassing phone and cable lines.

Billion-dollar effort

Muleta estimates it would cost $2 billion to $3 billion over a decade — plus the cost of the spectrum to be auctioned off — to build that network using new “spectrally efficient” technologies. The company won’t say how much funding it has raised, but it has the backing of several prominent venture-capital firms, including Kleiner Perkins Caufield & Byers.

M2Z plans to deliver free wireless access with downstream speeds of 768 kilobits per second — roughly on par with a basic digital subscriber line (DSL) connection.

To make money, M2Z would also offer a premium service with downstream speeds of 3 to 6 megabits per second for about $25 per month.

In addition, because the company’s wireless base stations will know where its users are, M2Z hopes to partner with search engines, Web portals and online advertising networks to target local ads.

M2Z has run into fierce resistance from the wireless industry. As Medin sees it, the industry is “really nervous about an outsider coming in and wrecking the place” — upending a lucrative market for mobile services with free broadband.

Officially, at least, much of the opposition is on technical grounds, especially from Deutsche Telekom’s T-Mobile.

Bellevue-based T-Mobile in 2006 spent $4.2 billion for a large chunk of spectrum — including airwaves right next to the frequencies M2Z is eyeing — to build its own “third-generation” wireless broadband network. T-Mobile argues that M2Z’s proposal would create interference for T-Mobile’s customers.

Although a technical report by FCC engineers in October concluded that technical safeguards would prevent interference with other wireless services, T-Mobile insists there will be problems in restaurants, airports and other high-density areas where people congregate.

Despite falling just short of an FCC vote on the plan, Muleta insists M2Z will continue its campaign to gain access to the spectrum it needs — before and after the Obama administration takes over.

“I’m optimistic,” he said, “because this idea that we need to change the way the broadband market is structured has received serious consideration.”