M2Z Networks, a VC-backed startup, on Thursday slammed the Bush administration for its attempt to derail a plan by the U.S. Federal Communications Commission to auction spectrum that will be used in part to offer free wireless broadband service.

“The Bush administration is marked by years of failed policy initiatives that benefit corporate interests, and this is just another example,”  M2Z CEO John Muleta said in a statement.

Menlo Park, California-based M2Z is an advocate of free broadband services and has applied with the FCC to license a swath of wireless spectrum to be used for that purpose.  

In a letter addressed to FCC Chairman Kevin Martin, Commerce Secretary Carlos Gutierrez said that the FCC plan to attach the free-service condition on the use of the spectrum “would likely lead to congested and inefficiently used broadband.”

In the letter, which was made public on Wednesday, Secretary Gutierrez said that the free broadband rules are inconsistent with the Bush administration’s view that spectrum should be allocated by markets not by government.

M2Z, which is backed by Kleiner Perkins Caufield and Byers, Charles River Ventures, and Redpoint Ventures, first approached the FCC in 2006 with the idea of using a swath of spectrum to offer both free and paid wireless broadband services. (Startup Pushes Free Wireless Broadband For Everyone)

After years of challenges and discussion, the FCC set a date, December 18, for a vote on the plan. M2Z, the most vocal supporter of the idea, was set to participate in the auction that would occur if the commissioners voted for the plan. (M2Z Moves Closer to Free Mobile Service)

“All of the policy and technical benchmarks have now been met and all that is needed is an affirmative vote by the FCC Commissioners so that this spectrum can be auctioned and be put into productive use as quickly as possible,” Mr. Muleta said in the statement.

If the plan is approved the spectrum licensee would use the allotted airwaves for free, filtered service at a lower bandwidth for under-served areas or lower income users, along with a revenue-generating, higher-bandwidth, unfiltered service.

It is those conditions that prompted the Bush administration’s 11th hour protests.

“The administration believes that the … spectrum should be auctioned without price or product mandates,” the statement said. “A government mandated free nationwide network is not the most effective or efficient way to assist underserved areas.”