Tag: mhz band

Sprint Swaps Spectrum Co. for Google: Care To Guess Who Bids in 700 MHz Now?

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As I repeatedly observed during the lead up to last Tuesday’s FCC meeting to decide the rules for the 700 MHz band, it is an extremely risky business to try to guess who will bid at this stage. Despite the much shorter time between announcing the rules for the AWS auction last year and the time bidders needed to get their forms in, numerous companies changed their positions, created new ventures, and generally did the unexpected.

Now, with everyone speculating whether whether or not Google will really bid or whether the cablecos will give the telcos a run for their money, comes a significant change. In the course of a week, Sprint has forged an alliance with Google, followed a few days later with a surprise request to exit the cableco consortium SpectrumCo. This comes on top of Sprint’s announcement two weeks ago that it will team with Clearwire to do nationwide WiMax.

And suddenly all those wise speculations about how Sprint won’t bid because it doesn’t have the cash and it has enough spectrum, Clearwire won’t bid because it’s too small to challenge the telcos, and Google won’t bid because they don’t have the expertise and don’t want to spend the money, need some serious recalculation. A Google/Sprint/Clearwire consortium (with possible help from Intel, which both owns a chunk of Clearwire and participated in the auction rulemaking as part of the “4G Coalition” with Google, Skype, and Yahoo!) looks like much more of a spectrum player than any of them alone. Sprint and Clearwire have the infrastructure and expertise, Google has the bucks and the need to expand into wireless. Further, depending on the nature of the partnership, Google could start testing and and marketing its wireless services now so that it does not have to wait until it has built and activated a network (which probably won’t be until 2010 at the earliest).

Meanwhile, what happens to SpectrumCo.? Granted the cablecos still have no plan for the licenses they got in the AWS auction (since, lets face it, the real reason to show up was to block DBS from getting a terrestrial broadband pipe), but to the extent they pretended to have a plan, they usually cited their ability to work with Sprint as a means of implementing it. So what happens now? Granted the cablecos still have tons of money to throw at this, but how will Wall St. treat their stocks if they look set to pour another couple of billion into a business without the benefit of an experienced partner with existing infrastructure? And besides, with the FCC adopting anonymous bidding, the cablecos will find it much harder (if not impossible) to target and block rivals without going all the way and actually winning the licenses. (Remember, blocking is usually cheap because you don’t usually have to spend the blocking premium, you just have to prove to the other guy that you are willing to spend the blocking premium. It’s like when tough guy walks in on shopkeeper and asks if shopkeeper would like to buy “insurance.” Tough guy doesn’t have to actually trash the store to get paid. As long as shopkeeper believes tough guy will break his legs, shopkeeper will pay to avoid testing the theory.)

So, a mere three days after the FCC announces rules, we find ourselves reexamining the conventional wisdom in light of changed events. McDowell rather relished the warning he gave Martin and the rest of the majority that it was “risky” to tailor the band plan to attract a single “white knight” who would become a new national broadband provider. Suddenly, Martin’s confidence that if you set the table folks will come to dinner seems a bit more justified.

But it’s still a few months until FCC forms to participate will be due, and anything can happen in between.

Stay tuned . . . . .

Open Access Gains Another Convert, AT&T Denies Poisition Change

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A brief update on my recent post that AT&T recently conceded it might consider bidding on an open access license. Unsurprisingly, Frontline Wireless — the party pushing for the “E Block” public safety/open access network — filed a copy with the Commission stating that this proves that an E Block auction would attract bidders and that the business model is workable. In response, according to today’s (6/29) Communications Daily an AT&T spokesperson said: “Our position has not changed. As we’ve stated on the record at the FCC, mandated ‘open access’ conditions on licenses in the 700 MHz band should be rejected. We need to see the specific rules the FCC adopts for auction before determining our level of participation.”

The carefull reader will note that these statements are not inconsistent. Of course AT&T would prefer not to have open access, and — at the drop of a hat — will explain why open access is an unworkable awful idea and you should ignore all the evidence from Europe or from the U.S. until we abolished open access in 2005. But there is a huge difference between “we hate open access and think it’s a bad idea” and “we absolutely refuse to bid on a license with an open access condition and nobody else with any money would bid either.” Given that the most potent argument against open access from a political perspective is “don’t mess with the revenue” (as evidenced by the recent Op Ed in the Washington Post by two CTIA lobbyists wearing their “think tank” hats), proof that folks other than Frontline will even show up to bid (and folks with deep pockets at that) on an open access license is rather significant.

Meanwhile, open access for the 700 MHz auction continues to attract new supporters from different sectors of the industry. Northop Grumman, rather a heavy-weight in the equipment manufacture and public saftey/defense contracting world, filed this document supporting open access and explaining that yes, you really can construct a secure public safety network that shares spectrum with an open access commercial network. So much for “it will never work, it’s too hard, lets stick to what we’ve always done.”

In addition, the Frontline cover letter on the submission that introduced the “Well Connected” post with the AT&T interview stated that Citibank had made a presentation to the Commission “last week” explaining that open access is a workable business model. Annoyingly, I can find no record of this presentation in the record for Docket 06-150, but I may just be missing it (it is a pretty big docket). (UPDATE: My thanks to Susan Crawford for pointing me to the appropriate ex parte filing.)

But assuming that Frontline accurately describes a presentation that took place, we now have:

1) A statement by a major financial investor that open access is an attractive and workable model from a business perspective;

2) A statement by a major equipment manufacturer and network operator that commercial open access — even in the more complicated universe of a dual use public safety network — is technologically feasible;

3) A statement by a major incumbent that it would at least “look at” bidding on an open access license if the Commission adopts such a rule;

4) Statements by wireless equipment and wireless application providers that there is a desperate need for open access in the wireless world and in the provision of broadband services generally;

5) Over 250,000 individuals saying the status quo sucks and we want open networks and new providers.

On the other side, we have the entire incumbent industry and its usual cheer leading section chanting that everything is vibrantly competitive, we live in the best of all possible worlds, everything works perfectly and competitively, and even thinking “open access” too loudly will scare away bidders and reduce revenue to a fraction of the expected $10-15 billion. And besides, open access can’t possibly work either on the business side or the technical side.

And all the while, the clock ticks away, as everyone scrambles to get this done before the end of the summer.

Stay tuned . . . .

Unlicensed Under Assault, or When Staff Attack!

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This latest Notice of Proposed Rulemaking shows how far in the wrong direction the FCC has come on spectrum issues. Funny thing is, I don’t think FCC Chair Kevin Martin hates unlicensed or is in the pocket of the licensees. I think this is an example of WHEN STAFF ATTACK!!! (specifically the wireless bureau staff).

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