Discussion and voting on the use of AWS-3 spectrum is scheduled for the FCC’s Dec. 18 meeting, FCC Chairman Kevin Martin said today.

At least 25% of the spectrum must be used for free public broadband data service without pornography. Silicon Valley startup M2Z Networks is the leading company expected to bid for it.

M2Z’s plan is to build a mobile WiMAX network using TDD techniques.  The network may be ad-supported with location-based services, CEO John Muleta explained.

However, there may be a legal challenge to the upcoming vote by incumbent wireless carriers, such as T-Mobile USA. That company, along with AT&T, CTIA and others, are strong critics of the FCC’s plan, based on claims that too much interference would exist alongside current AWS-1 networks using FDD techniques.

T-Mobile conducted a public test to illustrate the interference, but FCC engineers said any interference can be overcome with current technology. Yesterday, T-Mobile suggested an alternative “Broadband Maximization Plan,” also based on FDD, which M2Z rejected.

M2Z, funded by Kleiner Perkins Caufield & Byers, maintains that its opponents are only claiming interference as a diversion tactic and that the real issue is money. The existence of a free network may cut into incumbent’s profit margins, Muleta said.

Other agenda items for the Dec. 18 meeting include digital television, E911 service and satellite radio.