Wireless Auctions

Is Free Nationwide Wireless Broadband on the Horizon?

Bernie — Mon, 21 Apr 2008 23:07:43 -0400

Rep. Anna Eshoo (D-Calif.) has introduced legislation that mandates free broadband wireless service to 95% of the country’s population within 10 years. This ambitious proposal would be accomplished through wireless broadband service utilizing spectrum located at 2.155 GHz. Rep. Eshoo’s legislation calls for the spectrum to be auctioned by the FCC, and contains the 95% mandate, as well as ‘family friendly’ requirements which would filter out offensive content like porn. The legislation is called the Wireless Internet Nationwide for Families Act. The details in the legislation are quite similar to a proposal floated by M2Z Networks, which wanted the FCC to provide M2Z the spectrum for free, provided they paid 5% of their revenues to the U.S. Treasury. The FCC politely declined.

The concept is an interesting one, with perplexing competitive implications. The free service would offer a minimum speed of 200 kbps – not exactly considered broadband speeds by today’s (or even yesterday’s) standards. But should it become available, it certainly will tempt the remaining dial-up hold outs to move to it, robbing conventional service providers of the opportunity to convert those customers. Perhaps that dwindling base of dial-up customers are no one’s loss. Or perhaps those dial-up converts will be itching for even faster speeds once they get this “broadband lite” taste. Maybe it will serve as a boon for more conventional broadband competitors. The real question is what is the purpose of this legislation? Is it a M2Z engineered effort to push the FCC towards their original proposal? I just don’t see anyone (other than perhaps M2Z) remotely interested in fulfilling these mandates after obtaining spectrum at auction. Maybe it’s worth watching, maybe not.

700 MHz Auction Slows to a Trickle

Bernie — Mon, 25 Feb 2008 09:11:17 -0500

The 700 MHz auction has slowed considerably, leading some to believe this may be the last week of the auction. At the conclusion of round 105, there were 1,090 provisional winning bids among 1,089 provisional winning bidders, for a total of $19,524,595,900 billion bid. Action on the nationwide C block has long since ended, and it appears the regional bidding for the “nationwide” C block will prevail. The C block spectrum can be won in one of two ways, either as a single nationwide license, or broken into 8 “regional” licenses that cover the entire nation. Whichever approach receives the most money, one nationwide bid, or the collective eight regional bids will win. The D block, which has the mandated public safety provision, has only received one bid of $472 million, which is well below the FCC reserve price of $1.3 billion. It will probably be reauctioned at a later date. The remaining activity is centered in the E and B blocks.

700 Mhz Auction Continues its Record Run

Bernie — Mon, 11 Feb 2008 02:37:19 -0500

The 700 Mhz auction continues to impress, with a record $19.2 billion bid for 1089 provisional winning bids. Round 52 is scheduled to begin Monday morning, and continue throughout the day with six scheduled rounds. Although bidding on the nationwide “open-access” C block has slowed down, there has been much speculation that the Verizon and Google are the bidders in play. Many are speculating that Verizon has abandoned the nationwide C block bid, and is instead trying to trump Google by concentrating their efforts on the regional C block licenses. If the regional C block licenses garner more dollars than the national C block version, the regionals win. If Verizon wins the C block contest through this regional approach, many believe they will drag their feet on the “open access” provision, much to Google’s chagrin. While the action has slowed down in the A, B, and E blocks, there still continues to be interest in certain regions.

700 Mhz Auction Heads Into Record Territory

Bernie — Fri, 01 Feb 2008 15:19:23 -0500

The 700 MHz spectrum auction has set a record for bids, and at the end of round 24, had raised a total of $17.5 billion for the U.S. treasury. The previous record was $13.9 billion, set at the AWS auction of 2006. The bidding has slowed somewhat today, compared with yesterday, when over $4 billion was added. At the end of round 24, there were 1067 provisional winning bids among 1060 provisional winning bidders. The auction is expected to continue for several weeks, and will end when there are no more additional bids. Perhaps the biggest news of the auction is that the “open mandate” clause for the C block has been reached, as bids now surpass the $4.6 billion minimum bid required by the FCC to trigger it.

It’s somewhat unchartered territory for the open mandate of the C block spectrum. The concept is that consumers will have the ability to connect any compatible device they choose to the winning bidder’s network. Those devices will be available through consumer electronics channels, and consumers will not have to go through the wireless carrier to obtain them. It's somewhat analagous to how you can connect any laptop or other device you want to W-Fi networks today. It could lead to a variety of new and innovative devices and applications as well as a somewhat different business model for mobile carriers. In addition to pre and post paid subscribers, “nomadic” users for the network will pay by a time period (say a day’s access), or maybe even by the megabyte. Other business models may emerge as well – perhaps free, but ad supported, access will be available. The open mandate was “championed” by Google. The potential for mobile ad placement and search creates a huge opportunity for Google. They will be driving much of the refinement of this new approach to mobile wireless and its impact on the competitive environment.

Winners and Losers in the 700 Mhz Auction

Bernie — Tue, 29 Jan 2008 09:10:37 -0500

We’re up to $6 billion in bids for the coveted 700 Mhz spectrum, with round 9 to begin this morning. Through eight rounds, there are 967 provisional winning bids for licenses, with 960 provisional winning bidders. Most of the attention is on the C block which has attracted a bid of $2,976,465,000 at the end of round eight. The C block can be won as a single nationwide license, or can be broken into several regional licenses, depending on the winning bids. The regional licenses overtook the one national license in earlier rounds, but by the end of round eight, the single national license was back on top in the lead position. We don’t know who’s bidding, but safe bets are it’s one of three parties – Verizon, AT&T, or Google. The D block which also a nationwide license, but has a public safety network build out mandate attached to it is languishing. It’s received a single bid of $472 million, well below the FCC reserve price of $1.3 billion. If the reserve price is not met, the FCC will likely re-auction that spectrum at a later date without the mandates.

There is plenty of action in the A and B blocks. Unless Google (or some other entity that comes “out of left field”) wins the C block and builds a nationwide competitive network, the A and B spectrum block winners will probably have the most impact on the competitive landscape. Bids run the range from a low of $6,900 for the Johnson, Tennessee market B block, to a high of $298 million for the New York City market A block. A and B winners will be in a position to launch competitive broadband wireless networks on a regional and local level across the U.S. The “open” provision of the C block, assuming it remains intact, should add some competitive salt as well. While not necessarily adding competitive carriers, it could spur a wave of innovation and empower a variety of new applications and features which may impact the competitive landscape.

Keep track of the auction at the FCC auction 73 website.

Competitive Landscape Impacted by Frontline Demise

Bernie — Tue, 08 Jan 2008 21:27:13 -0500

Telecom’s competitive landscape is less one important player, with news today that Frontline Wireless has shut down. Frontline was believed to be a potentially serious player in the upcoming January 24th 700 Mhz spectrum auction. With backing from serious Silicon Valley money, Frontline was believed to be the only player, outside of the existing national wireless players, who had their eyes on building a competing national broadband wireless network. Frontline did not pay their required $128 million auction down payment and RCR Wireless is reporting they have closed.

With Frontline out of the picture, Verizon and AT&T are really the only companies in position to gain enough spectrum for a national footprint. The spectrum should come cheaper to the winner as well, with one less interested buyer. The only wildcard left is Google. But speculation is that Google has no intention of building a network and are only participating in the auction to ensure the FCC’s “open network” mandate remains. This development puts many smaller carriers at risk for providing 700 Mhz service as well, because it was widely believed that Frontline was going to partner with smaller carriers to build out a national footprint. The carriers that remain are far less likely to pursue a partnering strategy. The result may be far fewer competitive entrants, and a much less intense competitive environment.

Wireless Wholesale May Open Window of Opportunity

Bernie — Mon, 26 Nov 2007 10:39:58 -0500

Wholesaling wireless spectrum may be on the horizon, thanks to the upcoming 700 Mhz spectrum auction. While virtually absent from the wireless industry, wholesaling bandwidth is commonplace everywhere else in telecom. One could argue that MVNO arrangements are examples of wireless wholesale, but the MVNO reality looks more like a sales and marketing resale arrangement, than true wholesaling. The rules set up by the FCC for auction 73 may bring the reality of true wireless wholesale to the marketplace. If that reality indeed comes true, the competitive landscape could be altered, especially in smaller and underserved markets.

One of the primary reasons that smaller regional carriers can’t match their larger carrier brethren (i.e. Verizon, AT&T) with attractive wireless options is the high cost of spectrum. Additionally, past wireless auctions rules have favored larger carriers because the geographic regions for auction are very large. Auction 73 is attempting to remedy these challenges by encouraging true wholesale players to participate in the D block spectrum band auction. If a viable wholesaler wins the D block auction, they would in turn have the ability to lease spectrum to a variety of service providers who lacked the financial ability to gain 700 Mhz spectrum themselves. Conceivably, there would now be hundreds of service providers anxious to use this leased spectrum to provide wireless service of their own, which more than likely will compete with established services from AT&T, Verizon, Sprint, and others. Companies like Frontline Wireless are leading this wholesale option effort. There are a variety of factors tied to the wholesale rules, including making spectrum available for public safety purposes. But before we get ahead of ourselves, favorable wholesale rules don’t automatically translate into viable wholesale options. Potential wholesalers will have tremendous financial and operational challenges to overcome before they can hang the “We’re Open” sign in the front window. Like anything else, this issue has a variety of concerns unique to special interests. It's certainly not perfect. All things considered though, wholesaling wireless spectrum is a good thing, providing a method for service providers who normally would not have the means to participate in the wireless spectrum auction process, the ability to launch competitive wireless services.