Spectrum Auctions: Billion Dollar Leapfrog
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Bidding hit $6.1 billion in the federal governmentâs auction of wireless spectrum. Two bidders appear to be bidding for the most valuable national license.
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Since its 700-MHz auction began on Jan. 24, the FCC has raised more than $18.8 billion. That well surpasses the agency's own early estimates of attracting between $10-15 billion.
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The search giant said it could bid up to $4.6 billion for a share of wireless spectrum being auctioned off by the federal government â if certain conditions are met.
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One of the major questions as the U.S. Federal Communications Commission kicks off a multibillion-dollar spectrum auction Thursday is whether the auction will produce a winning bidder that will challenge telecom and cable-based broadband providers with a national wireless broadband network.Other questions will also be answered in coming weeks as the auctions, for 62MHz of long-range, high-speed spectrum, unfold. Will Google or another bidder buy enough spectrum to launch a &quot;third pipe&quot; broadband network? Will any bidders step forward and pledge to build a nationwide broadband and voice network for emergency response agencies?The bids to watch in the 700MHz auctions are for the C block, a 22MHz band of spectrum broken up into 12 regional licenses, and the D block, 10MHz of auctioned spectrum paired with another 10MHz set aside for a combined national commercial/emergency response agency network. Startup Frontline Wireless, one of the primary backers of the public-private model for an emergency responder network, announced in December that&#160;it had ceased operations.&quot;The pull-out of Frontline leaves the whole D Block auction up in the air,&quot; analyst Jack Gold of J. Gold Associates said in an e-mail. &quot;There is no way to know if a last-minute group will come on board. While the goal of establishing a universal network for public safety/security is a laudable goal, it is not the most lucrative area from a pure business perspective, so it is not clear how much demand there might be or who might step up to the plate to make this work.&quot;The FCC may have made a mistake in adopting the plan by Frontline, a company with former FCC chairman Reed Hundt as its vice chairman, said Carlyn Taylor, a senior managing director in business consultancy FTI&#39;s corporate finance practice.&quot;I&#39;m not sure how well [Frontline&#39;s plan] hung together from a financial standpoint,&quot; Taylor said. &quot;I&#39;m not sure anybody else is going to try to do what Frontline says they were going to do. There doesn&#39;t seem to be anybody else with a similar approach.&quot;If any other company bids on the D block, it will be much less than the FCC would have received without the national public safety network build-out rules, Taylor said.But the Public Safety Spectrum Trust (PSST), the nonprofit group of emergency response agency representatives that&#160;controls the public safety portion of the spectrum, said earlier this month it continues to support the FCC plan for the D block. The FCC should &quot;do all that it can&quot; to advance the public-private partnership meant to bring about the nationwide public safety broadband network, said Harlin McEwen, the PSST&#39;s chairman, in a statement. &quot;While it would not be appropriate for the PSST to comment on any potential bidder&#8217;s strategy, we want to restate our enthusiasm for and commitment to what the FCC has done.&quot;In the C block, the FCC required that&#160;winning bidders operate under open-access rules, meaning the winning bidder must allow any legal devices to connect to the network and allow customers to access any legal Web content of their choosing. Google, which pushed for the open-access rules, has&#160;pledged to bid at least $4.6 billion for the C block, and the FCC later set that figure as the minimum price it will accept.FCC rules prohibit potential bidders such as Google from commenting on their spectrum plans in the run-up to the auction. Bidding is anonymous, but the FCC will release some information about the auctions at its auction Web page.But several wireless industry observers have suggested that Google may not want to win the C block spectrum. Google, by getting the FCC to adopt the open-access rules and by pushing Verizon Wireless and AT&amp;T to&#160;open up their current wireless networks to outside devices and applications, has already accomplished much of what it has wanted, Taylor said.&quot;I think it&#39;s fairly widely believed that [Google] doesn&#39;t really want to be the actual carrier,&quot; Taylor said. &quot;That doesn&#39;t mean they still wouldn&#39;t buy spectrum and then work with somebody else who&#39;s a carrier.&quot;A subcontracting arrangement with a wireless carrier would make sense for Google, she said.Blair Levin, a telecom analyst with Stifel, Nicolaus &amp; Co., also doubts Google will be a major player in the C block bidding. With the U.S. stock markets tanking in recent weeks, Google may not want to spend $10 billion to build a national network, he said, referring to the estimated cost.Before the FCC set the auction rules in July, Google had also inquired about the legality of selling spectrum on a wholesale basis. The FCC ruled that such a plan would be legal.In addition to the current wireless giants AT&amp;T and Verizon Wireless, other companies to watch are the cable television providers, satellite TV providers and handset maker Qualcomm, Taylor said. Qualcomm and cable provider Cox were among the 214 bidders approved by the FCC this month.Look for wireless carriers such as AT&amp;T and Verizon to bid defensively, she said. &quot;If the traditional mobile carriers really are the final winners of most of the spectrum, then nothing interesting happens,&quot; she said. &quot;They don&#39;t want to see some major new entrant coming in.&quot;Falling stock prices on Wall Street may discourage some competing bidders, with the auction coming at &quot;precisely a bad time&quot; for investment in a new nationwide network, Taylor said. But these auctions may be the last chance for a third nationwide broadband network, she added.The 700MHz spectrum band carries wireless broadband signals three to four times farther than some higher spectrum bands, making it perfect for long-range broadband networks. &quot;If you&#39;re going to build a green-field network from scratch, you want to build it at low megahertz like this,&quot; Taylor said. &quot;If anybody was seriously considering launching a fully new competitor ... from scratch, this is the chance. There isn&#39;t going to be another one, probably.&quot;
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Bids in the F.C.C.âs auction for wireless spectrum reached the governmentâs $10 billion goal. One problem: bidding for the biggest block of frequencies stalled at $4.3 billion, below the $4.6 billion reserve price.
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The U.S. sale of airwaves for advanced wireless services grossed a record $13.9 billion, and spectrum-hungry wireless carrier T-Mobile USA, and a group of cable companies were the highest bidders.
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The wireless service provider offered more than $5 billion in stock for rival Leap.
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Spectrum troubles, defections, and a new CEO? Best to look elsewhere.
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Carnegie Mellon professor and telecommunications expert David Farber explains what's at stake in the January 2008 FCC auction of spectrum in the 700-MHz band -- spectrum that Google has expressed interest in.
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(InfoWorld) - A $1.3 billion reserve price for a piece of wireless spectrum to be auctioned by the U.S. Federal Communications Commission in January is too high, according to one company interested in the spectrum. The FCC has proposed the reserve, or minimum price, of about $1.3 billion for a 10MHz portion of spectrum to be paired with 12MHz set aside for emergency response communications. With that 22MHz of spectrum, the winning bidder will be required to build a wireless network to be used by public safety provider and for commercial wireless communications. But Frontline Wireless,Â the startup that pushed the public safety plan, said Tuesday the FCC's reserve price for the so-called D Block of spectrum is "unprecedentedly and irrationally high." The winning bidder will be required to build out a national network costing billions of dollars, Frontline argued in a brief it filed Friday. Many bidders "will hold back bids in the initial action to prevent the reserve from being met," Frontline said. "They will withhold higher bids until the re-auction when there will be weaker service rules ... and fewer competing bidders." Frontline was one of 13 groups that filed comments by Friday's deadline on theÂ FCC's auction plan, released earlier in August. The FCC is schedule 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 spectrum in the 700MHz band by February 2009. Among other comments filed were ones from the Coalition for 4G in America, whose members including Google and Intel. The coalition called on the FCC to create definitive rules for extending an auction that would allow high bidders to meet the reserve price set for the auction. In a section of spectrum called the C Block, the FCC has set rules that would require that the winner of the 22MHz of spectrum allow any wireless devices to connect to the network, meaning wireless telephone customers could bring their handset devices from other carriers. The FCC, in so-called open-access rules, also prohibited the winning bidder on the 22MHz block of spectrum from blocking or slowing wireless and Web content from competitors. But if the reserve price isn't met, the FCC would re-auction the spectrum, presumably with the open-access rules removed. "If the 700MHz auction were cancelled for failing to reach the reserve price, it would not result in a re-auction, but effectively in a different auction altogether," the coalition said. Frontline, in its Friday brief, also called on the FCC to limit the amount of commercial mobile spectrum in each market to 70MHz. If the winning bidder has more than 70MHz, it should be disqualified from bidding on more spectrum, Frontline said. "Significant additional accumulation of spectrum by the largest wireless carriers in this auction, coupled with current market concentration, could cripple the ability of competitors to develop new services and cause serious competitive harm in the wireless market," Frontline said. Representatives of Verizon Wireless and AT&T didn't immediately respond to a request for comments on Frontline's filing.
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Google has said that it will commit to spending at least $4.6 billion in the upcoming 700MHz wireless auction if the FCC commits to greater competition and consumer choice as a requirement for using the spectrum.
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Business & money: Â· Auction poses threat to established networksÂ· Ofcom wants spectrum from Vodafone and O2
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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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A venture led by the Microsoft co-founder has applied to bid in a U.S. auction of wireless airwaves, along with Google, AT&T, Verizon Wireless and Qualcomm.
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The Federal Communications Commission is set next month to decide how to auction spectrum to wireless carriers to bring high-speed Internet service to  airlines as early as next year. But, regulators have been boxed into a corner: promote low prices and great features, or ensure the service works reliably.
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Chunk of spectrum latest must-have accessory for the super-rich? The FCC has revealed the list of bidders interested in owning a little 700MHz, a spectrum due for release in January next year with the switch off of analogue TV.â¦
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(InfoWorld) - Apple is debating whether to participate in the Federal Communications Commission's Jan. 16 wireless spectrum auction, BusinessWeek reported Monday, but analysts who follow Apple said the company would be crazy to build a nationwide wireless network. "That's way out in left field," said Gene Munster of Piper Jaffray & Co. "They're spending their money on other things like the price cut on the iPhone." Ezra Gottheil, an analyst with Technology Business Research, came to the same conclusion but wouldn't dismiss the report outright. "I wouldn't be surprised if Apple didn't do some head-scratching [on this idea]," Gottheil said, "but I don't see them taking their eye off the ball." Apple would face tremendous risk, something it doesn't need. "And it is a company that can only focus on one thing at a time." Apple would have to come up with some serious cash to enter the FCC auction, which will sell rights to the 700MHz band that TV broadcasters are handing back to the government when they go all-digital in 2009. The BusinessWeek story, however, noted that Apple has nearly $14 billion in cash reserves, more than enough to make the minimum bid of $4.6 billion. The story, which was posted on the magazine's Web site Monday, cited two unnamed sources who claimed that Apple CEO Steve Jobs has studied the implications of joining the auction but is leaning against the idea. Apple's iPhone, of course, is the genesis of any speculation that Apple might compete with other technology companies, most notably Google, in assembling a wireless network. One former Apple executive even told BusinessWeek that it would make sense for the company to give away access. "With the kind of cash position they have and the kind of push they just made into the handset space, it makes a lot of sense for them," the anonymous source said. No way, said Munster. "Not only is that not where they know what they're doing, but that's also not where they want to go. It's pretty clear that Apple wants to be a device and a software company, not a network operator." Van Baker, an analyst with Gartner, said somewhat the same thing, albeit with a caveat. "This would be very far afield for Apple, so I think the odds are very low that Apple would pursue this unless it is in conjunction with a partner," he said. Exactly, chimed in Gottheil. "Apple is unlikely to place a bid itself, but it would very much like someone to build a network they would like, one with a low barrier to entry like low-hourly-fee basic voice and Web access with fees for higher value services," he said. Apple might consider a joint venture of some sort, allowed Gottheil, who tagged Cisco and Google as possible candidates. "Apple has a long-standing relationship with Google, of course," said Gottheil. Three of the seven current Apple board members have ties to Google, including Eric Schmidt, the search company's CEO, and former Vice President Al Gore, who serves as a senior advisor to Google. "[But] they don't want to turn into a utility company. They don't want to risk their culture and too much of their reserves," Gottheil said. "On the other hand, they don't like the existing providers." Apple's -- and Jobs' -- antipathy to wireless carriers, even to AT&T, Apple's exclusive partner in the U.S. for the iPhone, has been the subject of blog postings and pundit musing since the smart phone's debut in June. Last week, for example, when Jobs announced the iPhone's $200 price cut, he made no mention of AT&T, nor did he mention T-Mobile, the wireless carrier that provides the hotspots for Starbucks, Apple's new iTunes partner. "Apple should become more net-centric, but they don't have to own the network to provide cloud-based services," Gottheil said.