[RTC List] Spectrum policy redux

Tue Jan 22 07:32:00 PST 2008

*NYTimes item on public spectrum lease auction - of particular interest 
to residents of remote rural areas with lots of trees and mountains.

BUSINESS *   | January 22, 2008
* Airwaves, Web Power at Auction 
<http://www.nytimes.com/2008/01/22/business/22spectrum.html?ex=1201669200&en=c82a5b1a4642a5e5&ei=5070&emc=eta1>* 

By STEPHEN LABATON
The auction for rights to a highly valuable swath of the nation's 
airwaves will begin Thursday and is expected to include 
multibillion-dollar bids from the nation's two biggest wireless phone 
companies.

http://www.nytimes.com/2008/01/22/business/22spectrum.html?ex=1201669200&en=c82a5b1a4642a5e5&ei=5070&emc=eta1

WASHINGTON --- The auction for rights to a highly valuable swath of the 
nation's airwaves will begin Thursday and is expected to include 
multibillion-dollar bids from the nation's two biggest wireless phone 
companies, Verizon 
<http://topics.nytimes.com/top/news/business/companies/verizon_communications_inc/index.html?inline=nyt-org> 
and AT&T 
<http://topics.nytimes.com/top/news/business/companies/at_and_t/index.html?inline=nyt-org>, 
as well as Google 
<http://topics.nytimes.com/top/news/business/companies/google_inc/index.html?inline=nyt-org>.

Although industry executives and analysts agree that Google is unlikely 
to win any licenses, the company already has an invaluable victory: in 
setting the auction rules, the Federal Communications Commission 
<http://topics.nytimes.com/top/reference/timestopics/organizations/f/federal_communications_commission/index.html?inline=nyt-org> 
has forced the major telephone companies to open their wireless networks 
to a broader array of telephone equipment and Internet applications.

The radio spectrum licenses, which are to be returned from television 
broadcasters as they complete their conversion from analog to digital 
signals in February 2009, are as coveted as oil reserves are to energy 
companies. They will provide the winners with access to some of the best 
remaining spectrum --- enabling them to send signals farther from a cell 
tower with far less power, through dense walls in cities, and over wider 
territories in rural areas that are now underserved.

And the licenses are on the auction block just as it is becoming obvious 
to industry players and investors that wireless broadband is rapidly 
becoming the next big thing, the mobile Internet.

The latest government report indicates that in 2006, mobile wireless 
high-speed subscribers grew nationwide by more than 600 percent, and 
that during the last half of the year, those subscribers made up nearly 
two-thirds of the total growth in all high-speed lines.

Equipment makers and content providers are rushing to bring out new 
products as consumers increasingly use mobile phones and laptop 
computers to wirelessly connect to the Internet.

"The spectrum that we are auctioning off is going to be the building 
blocks for the next generation of broadband services," said Kevin J. 
Martin, the chairman of the Federal Communications Commission, in an 
interview last Friday. "It can carry lots of data, penetrates walls 
easily, travels far and allows for very good broadband wireless service. 
It will allow a wireless platform to be another competitor in the 
broadband space."

The F.C.C. has set a minimum price of $10 billion for five blocks of 
licenses --- 1,099 in all. The largest amount received by the commission 
in a previous license spectrum auction was $13.7 billion in 2006. Some 
analysts believe that record could be exceeded when this so-called 700 
megahertz auction is completed in the next few months.

Each day, the commission will post the leading bids, but only the amount 
bid, not the names of the leading bidders.

The auction's daily bids can be watched on the Web site, 
auctions.fcc.gov <http://auctions.fcc.gov>.

Because the commission's anticollusion rules preclude the bidders from 
discussing their strategies or possible bids, none of the major 
companies involved in the auction would comment for publication.

In setting the rules for the auction to some of the most valuable radio 
spectrum licenses ever issued, the F.C.C. decided last year to endorse 
one of Google's proposals by requiring that the winning bidders open 
their networks to a wider array of applications and phones. (Verizon and 
AT&T objected to the decision.)

The new rules have already begun to reshape the rapidly emerging 
wireless broadband industry. It prompted Verizon and AT&T to change 
their policies and open their networks to new applications and devices, 
just as Google and its allies had hoped.

"The issue has melted away," Mr. Martin said. "It is no longer as 
controversial, as the major providers have moved to open up their networks."

While Google has promised in return to bid at least the minimum reserve 
amount of $4.6 billion for one block of licenses, most analysts expect 
the company will be outbid because it is not expected to go higher.

"Google's intent was to win the open access rule, and that's what its 
bidding is about," said Blair Levin, a former senior F.C.C. official who 
is now an analyst at Stifel Nicolaus.

Despite losing the battle in the fight over whether to open their 
networks to rival software and equipment makers, Verizon and AT&T are 
likely to be winners in the auction. Since the licenses and build-out 
requirements for the networks are so expensive, experts say, it is 
unlikely that a new entrant will prevail, although some niche players in 
a handful of regional markets could take home some licenses.

"Most are of the view that we are unlikely to see a major new entrant 
coming in and establishing a new presence," said Carol Mattey, the 
national leader of the telecom regulatory consulting services at 
Deloitte & Touche. "Given the amount of money that would have to be 
spent not only 0n the auction but also on building a new network, it is 
pretty unlikely that anyone new will come out."

Verizon and AT&T as winners could be a mixed blessing for consumers. 
While the two companies would be able to offer more and faster services 
over greater areas, it also could mean that prices, which have already 
stabilized as a result of the widespread industry consolidation, will 
not fall.

One of the most closely watched licenses will be the so-called D-block, 
which is heavily discounted because the winning company must share the 
spectrum with public safety officials. But this month, a company 
interested in the license, Frontline Wireless, announced that it had 
closed, apparently because it was unable to obtain financing for the 
license, which has a reserve price of $1.3 billion.

The company was founded by Reed E. Hundt 
<http://topics.nytimes.com/top/reference/timestopics/people/h/reed_e_hundt/index.html?inline=nyt-per>, 
a former chairman of the commission, along with veteran wireless 
executives and a group of Silicon Valley venture capitalists.

The commission has not said what rules it would rewrite for a second 
auction if no bidder meets the minimum price of $1.3 billion for the 
D-block.

#  30  #

-- 
Sean McLaughlin
Executive Director
Access Humboldt
P.O. Box 157, Eureka, CA 95502
tel: 707-476-1798
dir: 707-476-2873
fax: 707-476-1702
cel: 707-616-2381
e: sean at accesshumboldt.net
web:  accesshumboldt.net

"Everyone has the right to freedom of opinion and expression; 
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and ideas through any media and regardless of frontiers."  
- Universal Declaration of Human Rights, Article 19 (UN, 1948)

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