AT&T Retreats on Spectrum Auction Gripe
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Objections to proposed open-access rules on parts of the 700MHz spectrum are of less concern.
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(InfoWorld) - New broadband providers should be given a better chance of winning pieces of valuable wireless spectrum to be auctioned by early next year, several groups said Friday. The groups, including Google, startup Frontline Wireless, and consumer advocate Public Knowledge, called on the U.S. Federal Communications Commission to change the way it auctions spectrum when it sells off 60Mhz of spectrum to be freed up when U.S. television stations move to all-digital broadcasts. The auction of the coveted 700MHz band of spectrum -- which allows broadband-speed wireless signals to travel farther and penetrate buildings better than some other bands -- presents the best hope U.S. consumers have of a third major broadband service to challenge cable and DSLÂ carriers, said Michael Calabrese, director of the Wireless Future Program at the New America Foundation, a think tank that hosted Friday's spectrum forum. "If we do nothing -- if we take the [auction] rules we've used for the last 10 years, the same incumbents are going to win," added Harold Feld, senior vice president of the Media Access Project, an open media advocacy group. "There is no competition fairy. There is no magic that's going to happen that if we just deregulate enough, somehow a new competitor is going to emerge." The groups at the spectrum auction forum didn't agree on all the details, but they suggested that the way the FCC has auctioned spectrum in the recent past has favored large incumbent telecom carriers. The FCC is expected to set the rules and conditions for the auction of the 700MHz band of spectrum in the coming weeks. The groups called on the FCC to require that the winners of a chunk of the spectrum allow "open access" -- sell access to competitors on a wholesale basis. The open access requirement would allow a nearly unlimited number of competitors to offer wireless broadband services, said Gigi Sohn, president of Public Knowledge. The groups also want the FCC to conduct anonymous auctions -- where bidders wouldn't know whom they're bidding against. In the past, large wireless carriers have used transparent auctions to drive up prices on chunks of spectrum being bid on by small competitors, said Gregory Rose, an econometrician and game theorist working with open access proponents. In many cases, many larger carriers then dropped their bids after the smaller carriers were eliminated, he said. Some carriers have also engaged in retaliatory bidding against other companies that bid on spectrum they were interested in, he said. The retaliating bidder will bid on spectrum the second company is interested in, "as a signal to say, 'back off on the license I want, or I will drive the price of the license you want through the roof,'" Rose said. VerizonÂ and AT&T, two large broadband and wireless carriers, have declined to comment on the upcoming auctions. But some free-market think tanks and carrier trade groups have been vocal in opposing open access requirements for the spectrum auctions. Scott Cleland, chairman of advocacy group NetCompetition.org, questioned Frontline Wireless' open access goals in a blog post Thursday. Frontline "wants the FCC to auction spectrum to them requiring ... open access -- so effectively no company will be able/or want to pay much for the 700 MHz spectrum -- and so Frontline Wireless could capture this most valuable spectrum available at the market-managed price of pennies on the dollar," he wrote. But Frontline chairwoman Janice Obuchowski, speaking at Friday's forum, noted that the two largest wireless carriers are gobbling up market share, and without new auction rules, that will continue to happen after spectrum auctions. She called for the FCC to auction off the 700Mhz spectrum in small chunks that smaller companies can afford, breaking with Google's call for larger blocks to be auctioned. The goal of the auction should be for "true, robust competition" to emerge, she said.
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Frontline takes a hardline The Federal Communications Commission is facing criticism from both sides of the great 700-MHz debate as it prepares to auction off a prime portion of the US wireless spectrum.â¦
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(InfoWorld) - Google and Intel have already expressed interest in the forthcoming 700MHz spectrum auction. Now, speculators say Apple may throw its hat into the ring. TheÂ auctionÂ is creating a bit of a frenzy because the winner will obtain some of the last available prime spectrum, ideal for delivering broadband wireless Internet access. The U.S. Federal Communications Commission (FCC) expects to auction it off next year. While Google has said that it may bid in the auction, Apple's participation is pure speculation, and analysts appear split on whether it makes sense for theÂ iPhoneÂ maker to become a network operator. Apple's entry into the carrier business, while interesting to speculate, is difficult to imagine since the company already has a "sweetheart deal" with AT&T, said Michael Gartenberg, an analyst with Jupiter Research. In an unusual arrangement for the mobile industry, Apple is thought to receive a portion of the monthly service revenue that AT&T earns from iPhone customers. AT&T is the iPhone's exclusive carrier. Gartner analyst Van Baker finds it "highly unlikely" that Apple would be interested in buying the spectrum. "It's a very different business than they're in, and it's not something they have a whole lot of expertise in," he noted. Apple could decide to partner with another company that has more experience in the mobile operator business, which could make more sense, Baker said. Still, the arrangement between Apple and AT&T looks beneficial to both companies, so there probably isn't a significant incentive for Apple to want to change that setup, especially because the operator business comes with "lousy margins," he said. However, Apple might have at least one good reason for wanting to operate a network, said Avi Greengart, an analyst with Current Analysis. "They do like to control the end-to-end experience," he said. While becoming a mobile operator would be a "tremendous stretch" for Apple, it wouldn't surprise Greengart if Apple was considering it. An Apple network would likely be very tightly integrated with Apple products and come with very simple pricing, he said. Such a strategy could have a ripple effect across the industry. Operators tend to watch what competitors are doing and make adjustments to their own strategies accordingly, he said. Greengart and the others cautioned that they hadn't heard directly from the company or other sources that Apple was considering the auction. "But they're pretty good about being tight-lipped," Greengart said. Apple is known for being very secretive, with big announcements leaking out only days in advance, if ever. BusinessWeek first reported on the rumor that Apple might be interested in the spectrum auction.
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Intel (INTC ) and AT&amp;T (T ): The two icons of American business are both a bit down on their luck these days. In the past five years AT&amp;T has plunged from its perch as one of the world&#39;s most powerful communications
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AT&amp;T and Verizon Wireless want to go up against other current mobile operators and some possible future competitors, including Google, in next month&#39;s&#160;auction for 700MHz wireless spectrum&#160;around the U.S.The U.S. Federal Communications Commission on Tuesday released lists of accepted and incomplete applications for the auction, in which it will sell licenses to frequencies that are set to be vacated by analog TV stations. It has accepted 96 applications and reported 170 as incomplete. The latter need to be completed by Jan. 4.AT&amp;T and Verizon are not surprise entrants but are the country&#39;s biggest mobile operators. If either carrier won a portion of the spectrum that has been designated for use by any device and any service, it would have to open up its network more than any big U.S. operator ever has. Verizon has already unveiled part of a plan to further open its network.They were on the list of incomplete applications, along with smaller mobile operators Alltel and MetroPCS. Cable operator Cox Communications, an archrival of the telecommunications giants, is also preparing an application. And cellular technology giant Qualcomm, which is already building a mobile entertainment network on vacated TV channels, is also gearing up to bid. Would-be bidders with incomplete applications have until Jan. 4 to complete their paperwork.Google earlier this year&#160;offered to participate in the auction&#160;in return for the FCC imposing open-network requirements. The booming Internet company&#39;s involvement could drive up bids all around, helping the government reap its hoped-for $10 billion payday for the spectrum.&#160;Google&#39;s application&#160;has already been accepted, the FCC said Tuesday. So has that of Towerstream, a wireless broadband provider to businesses.One surprise applicant yet to complete its papers is oil giant Chevron.Participation by Chevron in the auction comes &#8220;out of the blue,&#8221; said analyst Jack Gold of J. Gold Associates. However, oil companies and utilities are big wireless users, so he can see why Chevron might be interested.Chevron, like Google, is unlikely to actually build a network, though, he said. &#8220;I can see them potentially winning but then becoming landlords, renting it out,&#8221; he said. For both companies, that decision wouldn&#8217;t be based on the cost of building a network but on the experience required: Neither company has any history of constructing and operating a wireless network, a complicated undertaking.Also Tuesday, the agency extended the Dec. 28 deadline for upfront payments in the auction to Jan. 4 and pushed back a mock auction until Jan. 22. The auction itself is set to begin Jan. 24.Nancy Gohring, in Seattle, contributed to this report.
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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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(InfoWorld) - Several lawmakers protested a spectrum auction proposal from the chairman of the U.S. Federal Communications Commission (FCC), saying his plan could limit the number of bidders and raise costs to consumers. FCC Chairman Kevin Martin's plan would require winners of part of theÂ 700MHz band of spectrum, to be auctioned by early next year, to accept any wireless devices, including phone handsets, allowing customers to transfer devices between mobile providers. Martin's plan would also include net neutrality-like rules, prohibiting auction winners from blocking or slowing Web content from other providers. But several members of the House of Representatives Subcommittee on Telecommunications and the Internet, many of them Republicans, questioned Martin's proposed rules, which have support of the majority of the FCC. Representative Joe Barton, a Texas Republican, said he was "very disappointed" that fellow Republican Martin was proposing regulations for part of the 60MHz of spectrum to be auctioned. Some proposals byÂ consumer groups and Frontline WirelessÂ would also require auction winners to provide wholesale access to competitors, and Barton praised Martin for not including that provision. "It's not quite as bad as the Frontline plan, but I don't think it's as good as absolute no-condition auction," Barton said. Many Republicans suggested that auction conditions would decrease the value of the spectrum. Congress has budgeted the auction to raise $10 billion with about half of that going toward reducing the U.S. government budget deficit. "Congress has already spent that money," said Representative Charles Gonzalez, a Texas Democrat. Questions about Martin's proposal came from a handful of Democrats. Representative John Dingell, a Michigan Democrat and chairman of the full House Energy and Commerce Committee, asked FCC commissioners whether the device-portability rules would increase the cost of wireless phone plans. Customers want to be able to take their mobile phones with them when they switch carriers, but carriers generally haven't offered that option, Martin said. "I think the benefits outweigh the costs and concerns," he said. Barton suggested that winning bidders could implement the device-portability and net neutrality proposals without FCC mandate. Google has indicatedÂ it could bid billions of dollars, Barton noted. "Why shouldn't we just let Google bid?" Barton said. "If they've got a better idea, why don't they go into the marketplace and bid their four or five billion dollars?" There's customer demand for device portability, but carriers haven't acted on it, Martin said. Wireless carriers didn't offer phone number portability until the FCC forced them to in late 2003, then millions of U.S. residents took advantage of it, he said. Asked whether they supported Martin's proposals, the FCC's two Democrats said they did, while the two other Republicans said they hadn't made their minds up yet. "Please let me keep my phone and let me take it wherever I want," said subcommittee chairman Ed Markey, a Massachusetts Democrat. The so-called open-access rules are necessary for new broadband competition to challenge cable and telecom providers, said FCC commissioner Michael Copps, a Democrat. The 700MHz auction is the last major spectrum auction on the horizon, many participants said. "This is one proceeding where we cannot fail," Copps said. Some lawmakers suggested Martin's proposal doesn't go far enough. Representative Charles "Chip" Pickering, a Mississippi Republican, called on the FCC to require wholesale access rules as well. Wholesale access would allow new and innovative services to flourish on the networks using the spectrum, he said. Martin's plan would "enhance markets and competition," he added.
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A $1.3 billion reserve price for a piece of wireless spectrum to be auctioned by the FCC in January is too high, according to one company.
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Bidding remained stalled Tuesday on  a key piece of spectrum in the U.S. government's wireless  airwaves auction, prompting concern regulators will have to  modify rules requiring some of it be shared with public safety  agencies.
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The new measures are due to AT&T's retreat from selling services to consumers, the company said today.
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An announcement that AT&amp;T would drop its prices for its VoIP CallVantage Service, its popular residential broadband phone service, from $34.
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Cellphone customers should soon encounter fewer dead spots in their coverage areas and more easily use next-generation phones that play television-quality video and perform other high-tech tricks, thanks to a Federal Communications Commission spectrum auction that concluded yesterday.
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A wireless startup company that planned to build a national public safety communications system has apparently bailed out of the upcoming airwaves auction, a move that creates doubt about the future prospects for the network.
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For the last several weeks, iPhone users have been by turns amused or enraged over the sheer heft of the bills they are receiving from AT&T.
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The FCC releases names of 266 companies officially planning to bid in the government's upcoming 700-MHz-spectrum auction. More than half those botched their initial applications, including big names like Verizon, AT&T,  Qualcomm and Alltel. They have until Jan. 4 to qualify for the auction.
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AT&amp;T hasn&#39;t decided whether it will bid for the highly desirable 700MHz band because it doesn&#39;t know if it can build a profitable business, given the open-access rules set for the wireless spectrum by the U.S. Federal Communications Commission in July.Calling the rules &quot;interesting,&quot; AT&amp;T&#39;s CEO Randall Stephenson said the company is hard at work crunching numbers and analyzing business scenarios, but hasn&#39;t reached a conclusion yet.&quot;Is there a business model there? I&#39;m not sure if there is or not,&quot; he said Friday at the&#160;Web 2.0 Summit, where he answered questions from conference chair John Battelle and from audience members.The FCC conditions, which include&#160;open-access rules on a third of the spectrum, have been a major source of controversy.The winner of 22MHz of spectrum must allow any wireless devices to connect to the network, permitting wireless telephone customers to use handset devices from other carriers. The winning bidder also can&#39;t block or slow down wireless and Web content from competitors.Some telecom carriers wanted no conditions, while some consumer advocacy groups and Google wanted the FCC to require that winning bidders also resell the spectrum at wholesale rates to competitors, something the FCC didn&#39;t adopt.The FCC is scheduled to auction 62MHz of spectrum in the 700MHz band beginning in January. The spectrum is ideal for long-range wireless telephone and broadband services, with signals that travel up to four times farther than in higher spectrum bands.&quot;It&#39;s a huge opportunity. It&#39;s beachfront property. When it comes to buying spectrum, it&#39;s the best you&#39;re going to find for a long time,&quot; Stephenson said.Data consumption on wireless networks is growing fourfold year over year, so a company&#160;such as&#160;AT&amp;T needs to bulk up on spectrum to keep up with the demand, he said.&quot;It&#39;s very obvious we&#39;re going to have to add to our spectrum holdings,&quot; he said.That&#39;s why AT&amp;T earlier this month reached an agreement to&#160;buy 12MHz of high-speed wireless spectrum&#160;in the 700MHz band from Aloha Partners for $2.5 billion.&quot;It&#39;s the first time, I think, that we&#39;ve ever paid $2.5 billion for a company that had no revenue,&quot; Stephenson said.The Aloha spectrum covers 196 million U.S. residents, including 72 of the 100 largest markets in the United States.In other matters, Stephenson said he was very satisfied with the&#160;iPhone deal between his company and Apple.&quot;I&#39;m not sure I could have asked for much more out of it than what we got,&quot; he said.Asked to comment on the decision to use the slower EDGE network for the iPhone, Stephenson said it was a request from Apple CEO Steve Jobs.&quot;He wanted a broad ubiquitous data network. The EDGE network is the only data network that covers the entire United States,&quot; he said. The situation will improve as AT&amp;T upgrades markets to 3G, he said.Stephenson acknowledged that AT&amp;T&#39;s directory assistance business is being challenged by ad-supported options from Internet companies&#160;such as&#160;Google.&quot;We better get our advertising-supported [directory assistance] model up fast,&quot; he said, adding that AT&amp;T is building such a service internally.On a lighter note, he said he&#39;s &quot;envious&quot; of Google and the success it has had with its business model. &quot;It&#39;s a great gig if you can get it,&quot; he said.(Grant Gross in Washington, D.C. contributed with this story.)