Tales of the Sausage Factory

Crest’s Moronic Petition To Deny In Sprint/CLWR Symptom of Broader Idiocy That Actually Matters.

OK, I suppose I should really wait until they file, but this story detailing Crest Financial’s planned Petition to Deny in Sprint/Softbank/CLWR appears to be, in my humble opinion, the single dumbest grounds for a Petition to Deny. EVAR. For those just tuning in, Sprint, backed by Softbank, has offered approximately $3/share for the outstanding shares of Clearwire (CLWR). Because some analysts with no understanding of the actual spectrum market think CLWR is sitting on a spectrum pot ‘o gold, Crest is pissed and wants more money. It has already filed a shareholder derivative suit claiming that Sprint leveraged its insider position to buy out Clearwire below fair market value. Given how corporate law has crapped all over minority shareholder rights in recent decades, I am not giving this much hope. Apparently, Crest feels the same way, because they are now taking the fight to the FCC.

According to the story: “In going to the FCC, Crest will argue that the Clearwire deal artificially undervalues the company’s spectrum holdings, Schumacher said. That in turn potentially devalues future revenue for the U.S. government when it auctions off spectrum licenses.” Crest apparently thinks CLWR’s spectrum holdings are worth $30 billion, prompting me to wonder what planet they live on and whether they share it with House Republicans who keep thinking spectrum auctions are automatic pots of gold.

What makes this utterly dumb is the combination of a false factual premise combined with an utter lack of legal grounds, on top of a near zero chance of holding things up politically (unless AT&T or possibly DISH file, which might introduce greater political uncertainty). I would normally confine myself to simply snickering but there is a rather important point to be made here — especially for all those listening to analysts telling broadcasters they can make gajillions in the upcoming incentive auction –about spectrum valuations.

More below . . . .

 

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Econoklastic

Auction 86 — All Over, But Rural America is Shafted Again.

Auction 86, the BRS auction, is over and all bids have cleared. There were no defaults. The auction netted a mere $19,426,600, rather less than most industry analysts speculated before the auction. However, it must be remembered that the BTA licenses up for auction were heavily encumbered with the need for interference agreements with P35 license holders and resembled more “white space” swiss-cheese spectrum than real BTA licenses.

The bidding ended after 24 rounds in four days on Oct. 30. However, it took until now to be certain that no winning bidder was going to default.

As expected, Clearwire took the overwhelming majority of licenses at offer, 42 of them for $11,177,000. Those licenses represent a deepening of Clearwire’s spectrum pool for national footprint and, in a few cases, even expanded it. Utopian Wireless and DigitalBridge Spectrum, companies which are concentrating on providing WiMax in areas where Clearwire is not deploying, acquired 4 and 2 licenses, respectively. As expected, Stratos Offshore Services and Trident Global Communications shared the three new Gulf of Mexico licenses, 2 and 1 respectively, for a little over $2.5 million, the third most expensive acquisitions. Vermont Telephone Company acquired three licenses in its current footprint for the second highest expenditure in the auction, $2.8 million.

The other successful bidders included James E. McCotter (3 licenses), Ztark Communications (2), Cellular South (1), and Twin Lakes Telephone Cooperative (1) — all reinforced existing license footprint. Broadcast Cable Bloomington, Chevron USA, Emery Telecom-Wireless, Gateway Telecom, N-1 Communications and Pulse Mobile all walked away with no wins.

More interesting still, 17 licenses failed to clear. These licenses were overwhelmingly in rural areas, continuing the pattern established by Clearwire and its cableco and telco partners of redlining a substantial portion of rural America for broadband service generally and WiMax in particular. If this pattern had been allowed to prevail in rural electrification, much of the West and the South would still not have electricity. It makes you wonder where FDR is when you really need him.

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Tales of the Sausage Factory

FCC “WiMAX Auction” Already Over — Not a Surprise, But Still Impressive.

Some of you may recall that last month fellower Wetmachiner Greg Rose and I published our first industry report on the FCC’s Auction 86. We dubbed this the “WIMAX Auction” because the band at issue, the 2.5 GHz band, is the focus of major WIMAX activity in the U.S. and the report described the current state of the industry (including coverage maps for Clearwire and Sprint and the most extensive private database yet of who holds what in the band), likely outcomes in the auction, and what the behavior of bidders in the auction would tell us.

One prediction we made, that the auction itself would attract very little interest because it was an “ash and trash” auction of the leaving in the band, held up pretty well. The auction opened on October 27, and closed Friday, November 6. In other words, the entire auction lasted a week (4 bidding days) — which in FCC terms is greased lightning (the 700 MHz auction last year, for example, went on for 38 bidding days covering over 2 months). Total haul was $20 million, which will hopefully serve as a reminder to folks that spectrum auctions are not all multi-billion dollar gold mines.

As promised, we will release a post auction analysis available with the spectrum maps and databases for $799 within the next few months, once we (meaning Greg) have a chance to crunch the numbers and the round by round results. (Those who pre-ordered at the reduced rate when they bought the earlier report do not need to re-order). If you order now (the report is available through Muniwreless.com and through BroadbandCensus.com), you will not only pre-order the post-auction updates, but will get a copy of the original report with its industry analysis and coverage maps.

Stay tuned . . . .

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Tales of the Sausage Factory

We Release Our First Actual Industry Report on Upcoming 2.5 GHz Auction.Go us and buy our stuff!

Fellow Wetmachiner and all around spectrum genius Dr.Gregory Rose has written a report on the upcoming FCC Auction 86 in the 2.5 GHz BRS Band. Dubbed “The WiMAX Band: (2.5 GHz): Characteristics, Technology, Major Spectrum Holders in the BRS-EBS Service and Prospects for Auction 86, and edited by Harold Feld, this report contains information vital to understanding how the evolution of the 2.5 GHz band and the FCC auction beginning at the end of October will shape WiMAX Deployment in the United States. Resources with the Report include:

A Searchable Database of All BRS and EBS Licensees and Spectrum Lessees. Anyone who has used the FCC’s Universal License Service knows how difficult it is to search for even basic information. The master database takes all the information and puts it into an easily searched Excel® spreadsheet.

Special breakout tables and coverage maps for Clearwire and Sprint. Convenient tables and coverage maps show the coverage and relationships of these WiMAX giants.

• Analysis of the top 35 other providers. The report also lists the top 35 licensees in the band after Sprint and Clearwire, describing their general market areas and what their spectrum holdings say about their strategies.

The report cost $499 until FCC Auction 86 beginson October 27, at which point it goes up to $799. Those purchasing at $499 may buy the post-Auction update, scheduled to come out 3 months after Auction 86 closes, for a savings of $200 off the full post-auction price.

Copies of the report are available for sale at Broadbandcensus.com and at Muniwireless. Click HERE to get your copy today!

To see the full press release, click here.

To read the executive summary for free,click here.

Stay tuned . . . .

tags: wimax, wimax band, 2.5 GHz, wireless, spectrum, wimax report, wimax auction, fcc, fcc auction, fcc auction 86, harold feld, gregory rose, strength to strength develop-ed.

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Tales of the Sausage Factory

FCC Announces 2.5 GHz Broadband Radio Service Auction. Who Will Show Up to Fight Over Rules? Or Bid?

One might think from the press coverage that all spectrum auctions are multi-billion dollar affairs like the AWS-1 Auction in ’06 or the 700 MHz Auction in ’08. But these auctions are the exception rather than the rule. More typical are the steady stream of small auctions like Auction 78, which auctioned remaining licenses in the AWS-1 band.

Which brings us to the Wireless Bureau’s Public Notice of the Broadband Radio Service (BRS) auction. Some of us have followed the adventures of the 2.5 GHz band back when it was “Wireless Cable” and the non-commercial licensees used it to offer closed circuit television for what we now call distance learning. These days of course, we know this as the “Broadband Radio Service” (BRS) and the “Educational Broadband Radio Service” (EBRS), and we care about the 2.5 GHz band as the home of Clearwire and the great hope of WiMax.

You might think that the “WiMax” auction would be a big deal — but only if you don’t know the band, its history, and the inventory up for auction. If you know that, you know why this auction is likely to prove as boring but ploddingly necessary as a run for office supplies.

So why do I consider this worth blogging about, other than my sentimental fondness for the band and my general obsession about things spectrum? Because (a) my cause celebre, anonymous bidding, faces its first post-700 MHz challenge, and (b) 2.5 GHz is the home of the major WiMax plays, and what happens in the auction has the potential to shape the field going forward and influence whether deployment goes more smoothly or gets all bollixed up.

More detail below . . . .

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Tales of the Sausage Factory

Commission Meeting Happens! Begins With Gifts To Verizon and AT&T . . . .

O.K., we finally started at 3:50 p.m. Three items left, VZ/Alltel, New Clearwire, and White Spaces. I’ll split tdo my happy dance on his in two, so I can gripe about the suckiness of the mergers while doing my happy dance on white spaces unsullied by this market consolidation.

Details of merger suckiness below . . .

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Tales of the Sausage Factory

Live Blogging the FCC Vote — What If They Called A Vote and Nobody Came?

So here I am, waiting for the white spaces vote, votes on the merger items, and a few other things. The FCC adopted two orders on circulation already — an item on closed captioning and an item on distributed television systems, a technology that will allow digital television broadcasters to keep their current viewers after the transition (I will explain this later). Given that Martin pulled the USF/Intercarrier comp itemyesterday at the insistence of the other Commissioners, that leaves (a) The Verizon/Alltel deal, (b) the New Clearwire deal, (c) the white spaces item, and (d) Google’s pending petition to have the FCC put some teeth into the C block conditions before granting the licenses to Verizon.

The meeting was scheduled for 11 a.m. It’s now after 12:30 p.m. Martin was down here for about an hour before heading back upstairs again. He appeared surprised at the delay.

Stay tuned . . . .

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Tales of the Sausage Factory

Update on Cablevision Free Wi-Fi, and What It Means for VZ (and everyone else).

Awhile ago, I wrote about Cablevision’s decision to offer free wi-fi to its subscribers throughout its footprint. As I explained then, this amounted to a “Plan B” after the failure to win usable spectrum in either the AWS-1 auction in August 2006 or in the 700 MHz Auction in the winter of ’08. Now, according to this story at DSL Reports, Cablevision is massively expanding and improving its wi-fi service for customers. This represents a real challenge for VZ, more so IMO than Time Warner’s participation in New Clearwire.

Why? See below . . . .

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Tales of the Sausage Factory

Cablevision’s WiFi Roll Out — A Wireless Plan B?

As I discussed in the context of the Sprint/Clearwire/Etc. spectrum menage (and discussed a bit more with Gordon Cook on his blog), the reality of the post-700 MHz auction world makes it necessary for cable operators to have some kind of wireless strategy if they want to meet the potential next generation competitive threat from either AT&T and Verizon or possibly from newly en-spectrumed DISHTV. At the same time, cable operators are desperate to avoid the downdrag on the their stock that would come from a heavy investment in wireless licenses and further nvestment in infrastructure — especially when analysts don’t give them a prayer of taking on the wireless carriers in what has become a reasonably mature market. How to resolve this difficult dilemma?

Those cable systems with the combination of resources and forethought to address this have opted for different solutions. Comcast, Time Warner and Brighthouse –through their new partnership with Sprint/Clearwire etc. — have flopped back to the old cable standard of joint ventures and strategic investment. (Anyone else remember @Home Network?) Cox went out and won its own set of licenses covering its cable service area, as did Charter parent Vulcan Enterprises (as have a few lesser systems, such as Washington Post owned CableOne, which captured a bunch of licenses in the AWS auction).

Cablevision tried twice to acquire its own set of licenses: first in the AWS Auction in 2006, and again in the 700 Mhz Auction. Both times Cablevision went home empty-handed, outbid by the wireless giants. With no new spectrum on the horizon, and apparently no invite into the Sprint/Clearwire Happy House ‘o WiMax partnership, Cablevision found itself in need of a spectrum “Plan B.” Happily for Cablevision, there is also such a thing as “unlicensed spectrum” which — as I and other boosters of the competitive power of open spectrum continually point out — is available to everyone and cheap to deploy (relative to building a licensed network from scratch).

Hence the recent Cablevision announcement that it will deploy a wifi network in conjunction with its cable network. As a Plan B, it has some real advantages over using licensed spectrum, as well as some potential disadvantages. But given Cablevision’s unique deployment situation — it is primarily located in New York City and Long Island which gives it incredible population density for its relatiely small footprint — this fall back position may work for it where it would not work for other cable companies.

A bit more analysis below . . . .

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Tales of the Sausage Factory

“The Spring Spectrum Shotgun Wedding Fling” or “Sprint WiMax, the Wily Temptress!”

Was it really only last August that Sprint threw over its cable allies by filing for a messy divorce with Spectrm Co. and ran off giggling with Clearwire and Google for a happy WiMax menage? Ah, what a tempestuous summer of spectrum love was 2007! So full of bright promises and prospects for a wireless third pipe that could genuinely compete with cable or DSL speeds. But with the autumn frost, passions cooled. Like Fantine from Les Miserables, Sprint soon found itself abandoned by its spectrum partners and out on the street on its own — desperately trying to make its way in the cold and uncaring world while posting a loss of $30 Billion, and reduced to chanting the old Israeli spectrum folksong Xhom golly, golly, golly, Xhom golly, golly.

But a possible happy ending for Sprint awaits below . . . .

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