CHICAGO—M2Z Networks wants to be a data service provider on Day 1, as opposed to voice, but its strongest opposition these days is coming from the cellular camp.

In the back and forth that has marked M2Z’s life of late, the startup contends that the way in which testing was conducted on T-Mobile USA’s AWS-1 spectrum and adjacent AWS-3 spectrum was flawed. T-Mobile and others argue that it wasn’t flawed.

“We want to be really good at doing data,” said M2Z CEO John Muleta of the company’s plans to offer a free broadband Internet service across the country. The problem is, the company needs spectrum to do so, and it is eyeing the 2155 MHz-2180 MHz band, which has yet to be auctioned. It’s also where T-Mobile and others contend there will be interference with their AWS spectrum in which they are already heavily invested.

M2Z maintains the interference that T-Mobile points to is inconsequential. For one thing, the tests presumed a 3:1 ratio of AWS-3 devices to AWS-1, which M2Z says amounts to flawed logic considering its opponents don’t even think a free broadband service will fly with the public.

Muleta, who also was a speaker during the 4G Executive Summit yesterday, said during an interview that the big carriers essentially want to delay competition by running the clock. The FCC proposed a set of orders in June. T-Mobile insisted on testing, and “now it’s been 4 months. They have done all the testing. We’re now coming up to 5 months, and they’re still asking for more time.”

That, he said, essentially amounts to “squatting” on the U.S. spectrum. “To have a company owned by Deutsche Telekom, which is one of the largest monopolies … squat on the U.S. people’s spectrum … this is Deutsche Telekom, the largest phone company in Germany.”

Muleta said it boils down to the incumbent behemoths not wanting to compete with a free service. Studies show about 45% of people without broadband service do not have it because of affordability, and the other 45% who don’t have it is because of availability. M2Z wants to offer broadband to 95% of the population within 10 years. “We hope the FCC will make the right decision,” he said.

The other camp is waiting for the FCC to make a move, too. Chris Pearson, president of 3G Americas, who also participated yesterday in a separate 4G executive roundtable discussion before the start of WiMAX World, said during an interview that fear of competition on the part of big carriers is not the issue.

In the United States, AT&T, Verizon Wireless, T-Mobile, the new Clearwire venture with Sprint and the roaming partnership between Metro PCS and Leap Wireless International make for at least 5 competitors. “There are 5 significant operators,” he said. “The argument that they’re afraid of competition, in 3G America’s opinion, is unfounded.”

What will hurt competition is creating a spectrum policy created specifically for 1 entrant – “1 possible company,” he said. “It would hurt competition … if they could pull it off,” and the ones with a great deal of AWS-1 spectrum, or someone like T-Mobile, would be most hurt.

If the FCC were to side with M2Z, that would essentially mean the value of spectrum would come into question, he said. T-Mobile and others spent millions on the AWS auction, but if they are told they could face interference, that would de-value the spectrum.

Pearson also questioned why M2Z didn’t raise its issues when the testing was being done, as there was a full complement of FCC engineers there when the tests were conducted at Boeing. And 3G Americas has it on good authority that even the most advanced filters – something M2Z has suggested T-Mobile may need to invest in - couldn’t handle the type of interference that M2Z would potentially introduce. Muleta disputed that, saying necessary filters could be developed.

The FCC entered the test results into the record but did not interpret them. “We’re still waiting to see if the FCC will go on record with their interpretation, and we welcome that,” Pearson said.