Former FBI chief joins wireless auction group
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Former U.S. FBI Director Louis Freeh  threw his support behind a start-up wireless company that is  proposing to build a national network shared with commercial  and public safety users.
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A handful of people who bid in the disastrous C-Block PCS auction in 1996 plan to participate in the upcoming 700MHz contest despite warning signs indicating the potential for similar troubles.Like the earlier auction, the 700MHz auction is set to occur in a faltering economy, presenting challenges to license hopefuls needing cash. Yet, just like that ill-fated auction more than 10 years ago, an oddball collection of participants plan to bid, this time including the Missouri Farmers&#39; Union, the Roman Catholic Diocese of Brooklyn, and Disney.The C-Block PCS auction was infamous because it was designed not just for companies with access to billions of dollars but for entrepreneurs interested in getting into the wireless industry. Postal carriers, lawyers, and doctors quit their day jobs and invested their savings, confident that U.S. Federal Communications Commission (FCC) incentives would help them make it big.But the auction turned into a debacle. Of the original 255 bidders, 89 emerged with licenses, and only a handful of them actually started businesses. The rest went bankrupt, sold their licenses for pennies on the dollar, or returned them to the FCC in an amnesty program.Take Vince McBride, an approved bidder for the upcoming 700MHz auction who lives in San Diego and has won and lost in several auctions. &quot;There are ups and downs, but I keep trying,&quot; he said.McBride was a postal carrier who sunk his life savings into the PCS auction in 1996. A series of lawsuits delayed the auction and then the award of licenses. During that time, Wall Street soured on the wireless market and license winners, who bid prices sky high based on attractive payment terms set by the FCC, struggled to finance their wins. McBride got lucky and returned his licenses to the FCC for little loss.Then the FCC reauctioned licenses and McBride won a new one, which he managed to sell for a nice profit. But in a subsequent reauction, he won another license that was later repossessed by the FCC, which was forced to give it back to the original winner after a series of lawsuits.McBride&#39;s sometime partner Scott Reiter, an emergency room physician who splits his time between Santa Monica and the Philippines, has had a similar series of wins and losses in FCC auctions. He too plans to bid in the upcoming auction. Reiter won a few licenses back in 1996 and shortly after got a few good offers from operators interested in buying them.&quot;I got greedy, basically,&quot; he said. He held out for better offers, which didn&#39;t come, and eventually had to sell his licenses at a loss.Reiter was undeterred, though. He entered the 2002 auctions for 700MHz licenses --&#160;back before there was a solid deadline for when TV broadcasters had to vacate the spectrum. He bought licenses in three markets, later selling the spectrum for a nice profit to AT&amp;T.&quot;When I bought that spectrum, it went up in value like crazy,&quot; Reiter said. McBride also won 700MHz licenses then, later selling them to AT&amp;T. They both agreed with AT&amp;T not to disclose the purchase price.Bidders are currently in a quiet period during which the FCC forbids them to discuss their plans for the upcoming auction. But some of them say that because this time around there is a fixed date for when the spectrum will be available to buyers -- 2009, after the TV broadcasters must vacate it -- the value is easier to gauge than in the previous 700MHz auction. However, it may be difficult for some bidders to get credit these days, which could help keep prices down, they say.While many of the individual bidders insist they intend to build networks if they win the spectrum, many likely have other plans. &quot;I think many of them want to buy and resell it,&quot; said Nadine Manjaro, a senior analyst with ABI Research. A look at the result of the earlier 700MHz auctions, which distributed what&#39;s thought to be less valuable portions of the band, could be spurring big dreams for bidders.Aloha Partners, one of the biggest winners in those auctions, sold its licenses to AT&amp;T for $2.5 billion late last year. Aloha spent over $40 million at the auctions but also later bought licenses from other companies for undisclosed amounts. It is thought to have made a handsome profit.While much attention has been focused on the billions that big companies like Google had to put up to enter the 700MHz auction, some of the licenses could go for quite cheap, which could be attracting some of the individuals hoping to turn around and sell the licenses for a profit. Some licenses in small markets require as little as $10,000 in an up-front payment, Manjaro said.Still, for bidders with bigger aspirations, the sinking economy will likely harm their efforts, unless they already have secured funding.&#160;The recent collapse of Frontline Wireless, a company created by luminaries in the wireless industry to win 700MHz licenses, has raised concern among other bidders. &quot;They had a really strong team of players, and for them to not be able to secure the money shows the impact of the economy,&quot; Manjaro said.One difference in the rules for this 700MHz auction compared to previous contests that could affect individuals who participate is that bidders will be anonymous. That could cut back on potential collusion, a problem that many have said plagued previous auctions.Another auction change, however, likely works against the smaller players. This time, license winners have just four years to build out a portion of their networks. That&#39;s a relatively short amount of time for smaller winners to raise money and build a network.A number of other license winners from the C-Block PCS auction are also approved to bid in the upcoming auction. Bill McKell, CEO for Horizon Chillicothe Telecom, an Ohio telecommunications provider, is on the list. His company was one of the first winners from the C-Block PCS auction to launch a network, but it later&#160;returned the licenses to the FCC.These previous bidders seem prepared to go ahead with this auction despite warning signs that the market might not work in their favor, just like in the PCS auction from 1996. FCC Chairman Kevin Martin recently acknowledged that poor economic conditions could impact the auction because bidders might struggle to raise capital.But these smaller bidders must be gamblers. &quot;Sometimes you get lucky,&quot; McBride said.
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The end of the cellular walled garden Comment The chairman of the US regulator the Federal Communications Commission (FCC) Kevin Martin came out this week and told a US newspaper just what he has in mind for the 700 MHz spectrum auction in late 2008, talking about an open network which lets any wireless device connect to it, and which places no limits on the services that can be offered across it.â¦
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(InfoWorld) - Several companies have challengedÂ spectrum auction rulesÂ recently set by the U.S. Federal Communications Commission, with Frontline Wireless protesting that the auction of the 700MHz band to be auctioned in January could shut out small bidders. In addition, AT&T has asked the FCC to reconsider requirements for the winning bidder of a block of spectrum to be used to build a nationwide broadband network for public safety agencies. The rules require bidders to reach a service agreement with public safety officials before the auction, and the FCC's decision to deny bidders the spectrum if an agreement is not reached is "an extreme penalty," AT&T said in its petition. AT&T and Frontline, a startup made up of government and wireless industry veterans, filed petitions for reconsideration of the auction rules with the FCC Monday. They were among 10 companies that filed petitions in the last week asking the FCC to reconsider the auction rules it set in July for the 700MHz band of spectrum being vacated by U.S. television stations. The FCC is scheduled to auction 62MHz of spectrum in the 700MHz band beginning Jan. 16. The FCC set a reserve price of $10 billion for the entire 62MHz, but many observers believe the auctions will raise much more than that. The spectrum is currently controlled by U.S. television stations using channels 52 to 69. The U.S. Congress in late 2005 passed legislation that requires the stations to move to digital broadcasts and abandon this spectrum by February 2009. Frontline raised several objections about the auction rules. The company and someÂ consumer groupsÂ had called for the FCC to require that the winning bidder of a portion of the spectrum resell the spectrum at wholesale rates, but the FCC declined to do so. FCC members talked about including small businesses in the auction, Frontline noted. But the FCC denied bidding discounts, called credits, for small business wholesalers, Frontline said. Small businesses can't compete against large wireless carriers unless they adopt a wholesale model, the company said. "Wholesaling is also the only model a new nationwide wireless network operator could realistically afford to adopt, given the massive costs associated with providing retail service -- consider Verizon's 2,300 retail outlets and its $1.9 billion annual advertising budget," Frontline said in its petition. Frontline also suggested the reserve, or minimum prices, for two blocks of spectrum are too high. Frontline objected to a reserve price of about $1.3 billion for a 10MHz portion of spectrum to be paired with 12MHz set aside for emergency response communications. Frontline said the $4.6 billion reserve is also too high for another 22MHz of spectrum, for which the FCC adopted so-called open access rules. If the reserve price is met, the FCC will require the winning bidder to allow customers to bring wireless devices from other carriers and prohibit the winner from blocking or slowing competing Web content. Under the FCC rules, both blocks of spectrum would be re-auctioned under new rules if the reserve prices aren't met. "The unlawfully high reserve prices will nullify or disrupt and damage the Commission's carefully considered decisions as to the highest and best use of this spectrum, encourage bidding strategies that defeat these sound allocations decisions and seriously reduce auction revenues," Frontline's lawyers wrote. Earlier this month, Verizon Wireless asked the U.S. Court of Appeals for the District of Columbia Circuit to review the FCC's decision to require open-access rules supported by Frontline and some consumer groups. Those rules are "arbitrary, capricious, unsupported by substantial evidence and otherwise contrary to law," Verizon Wireless said in a brief filed with the court.
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A venture led by Microsoft Corp  co-founder Paul Allen has applied to bid in an upcoming U.S. auction of coveted wireless airwaves, according to auction documents released late on Tuesday.
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Within weeks, the U.S. Federal Communications Commission is expected to set conditions for the auction of the most valuable wireless spectrum still available in the United States.
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Almost &#36;1 billion in bids were made on Wednesday on the opening day of a U.S. government auction of valuable wireless airwaves, with companies fighting hard for the Los Angeles market.
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Top bidders put up a total of more than $2.4 billion on Thursday in the opening round of the Federal Communications Commission's auction of coveted U.S. government-owned airwaves.
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A Google Inc.  executive  said on Tuesday that the company had heard the chairman of the  U.S. Federal Communications Commission will propose the winner  of a coming auction of valuable wireless airwaves be required  to provide an &quot;open platform&quot; to consumers and rivals.
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The networking giant formally signs on to the wireless broadband group as the organization's ranks increase.
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Bidding begins on Thursday in a  crucial auction of government-owned airwaves that is expected  to help set the future course of the U.S. telecommunications  business.
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The FCC auction of 700-MHz spectrum, which started January 24, is one of the biggest sell-offs of radio spectrum in years, and it's expected to raise at least $10 billion. Wired News explains what's at stake with this list of questions and answers.
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Blog: Search giant announces it's participating in the Federal Communications Commission's upcoming wireless spectrum 700MHz band auction--but there's a catch.
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(InfoWorld) - A plan to have private investors build a national wireless broadband network for police and fire departments met resistance at a U.S. Senate hearing Thursday, including from the man in charge of New York's emergency broadband network. Startup Frontline Wireless, backed by two former U.S. Federal Communications Commission (FCC)Â chairmen and several tech industry heavyweights, would set aside 22MHz of wireless spectrum from an upcoming auction of the 700MHz band for a dual-use commercial and emergency response network with the winning bidder required to build a nationwide network that would give priority to police and fire departments. A national broadband network for emergency response agencies would take billions of dollars to build, and a public-private partnership like the one Frontline has proposed is the only way it will happen, said James Barksdale, president and CEO of investment group Barksdale Management and a partner in Frontline. The U.S. government lacks the money to build the network, he said. "We're not asking agencies to give us the spectrum," Barksdale said. "And public safety gets a free ride on it -- that's a heck of a deal." Six years after the Sept. 11 terrorist attacks on the U.S. and two years after Hurricane Katrina, emergency response agencies across the U.S. still do not have broadband networks that allow agencies to talk to each other, said Barksdale, former CEO of Netscape. "The FCC can achieve, at no cost to taxpayers, an interoperable public safety network that, I submit to you, will never be built if we don't do it this way," Barksdale told the Senate Commerce, Science, and Transportation Committee. "We are long past the time to talk about what might happen or should happen or is going to happen for public safety. Any serious proposal must address how this costly network will be funded and built without relying on government funds." But several people at the hearing, including Paul Cosgrave, commissioner of the New York City Department of Information Technology and Telecommunications, questioned the Frontline plan. New York has already built a $500 million emergency network that will roll out fully in early 2008, and the Frontline proposal could take away local control of emergency communications networks, he said. Spectrum that's optimal to use for emergency communications in New York may not work for Boise, Idaho, he said. "A national network, based on a one-size-fits-all approach, may not meet the disparate communication needs of emergency responders throughout the country," Cosgrave said. In addition, if emergency responders must share spectrum with commercial providers, the network may be jammed during disasters, Cosgrave said. The proposed network will be "dominated by commercial interests, and deployment and maintenance will be undertaken based on return on investment rather than effective emergency response," he added. The Frontline plan would take 10MHz from 60MHz scheduled to be auctioned by early next year and pair it with 12MHz of spectrum out of 24MHz set aside for public safety. The 84MHz of spectrum is becoming available after Congress voted early last year to require U.S. television stations to abandon the spectrum and move from analog to all-digital broadcasts. The deadline for the transition to digital TV is in February 2009. Under the Frontline plan, the winner of the auction for the 22MHz would be required to build a national broadband network, estimated by Barksdale to cost $12 billion. The network operator could then collect wholesale fees from emergency response agencies and from commercial telecoms that want to use the spectrum to provide broadband services. Frontline is also asking the FCC to create rules that would require the winner of the 22MHz chunk of spectrum to resell access to any customer that can pay. Several consumer groups and tech companies have also called for open access provisions for part of the auctioned spectrum, saying it represents the best chance for a new national broadband provider that would compete with cable and telecom company offerings. The FCC is expected to set service rules on the spectrum to be auctioned within weeks. Representatives of two wireless carriers told the committee they oppose open access rules in the auction. Dick Lynch, executive vice president and CTO at Verizon, suggested open access and net neutrality rules called for by several groups would limit the appeal of the spectrum and drive down the cost the U.S. government receives in the auction. The auction is expected to raise at least $10 billion with many observers suggesting much more money will be bid. "The auction must make the spectrum available in ways that will promote, not cripple, broadband deployment," Lynch said. [Open access and other] requirements are unwarranted, would deter innovation, and would not benefit consumers." Senator Ted Stevens, an Alaska Republican, also questioned the Frontline plan, saying the proposal doesn't address how local police and fire departments will pay for handsets and other equipment used to access the network. The best way to raise money for public safety equipment is to maximize the value of the spectrum at auction, he said. "There's no reason this [spectrum] shouldn't go into the private sector and be profitable, too," he said. Several Democratic senators and Wanda McCarley, president of the Association of Public-Safety Communications Officials International, were more receptive of the Frontline plan. The proposal includes many ideas that many emergency response officials want, McCarley said. "With this auction we stand at a crossroads," added Senator John Kerry, a Massachusetts Democrat. "Either we can provide extraordinary benefits to millions of Americans, or we can tilt the broadband policy to improve the already significant position of the powerful few that deliver this service. I think there's a clear path that we have to take -- the airwaves belong to the American people."
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Entrepreneur Vanu Bose says the FCC spectrum auction should include a nationwide public safety network that supports interoperability.
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A bid on the largest portion of public wireless airwaves, now being auctioned by the federal government, reached $4.7 billion on Thursday, triggering a provision to allow any device or software to work on that spectrum.
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SAN FRANCISCO--Cell phone pioneer Craig McCaw on Wednesday discussed Cingular Wireless&#39; acquisition of AT&amp;T&#39;s wireless division, harking back to the 1994 sale of his company to Ma Bell.