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8 Things to Know About the 700MHz Auction
The 700MHz auction kicks off today, and like kids waiting for Santa Claus, the technology and business publications are tense with anticipation. But FCC chairman Kevin Martin is keeping a lid on this auction, rather than post periodic updates as was done in the AWS auction in 2006.
While you wait to learn who gets the goods who gets a lump of coal, here’s a quick list of everything you need to know about the upcoming auction and why it matters. Check out all the links, because the bidding doesn’t conclude until March 24 and down payments aren’t due until April 11. You’ve got time.
- Setting the rules for this auction took a lot of time — and lobbying.
- There are a lot of bidders: Out of the 214 of them, the big ones to watch are AT&T, Verizon and Google. Interesting no shows are Sprint Nextel and Time Warner.
- It costs a lot to bid: Reserves are set high at $10 billion, but several people think that the current economic crisis might make it hard for those reserves to be met. Heck even Google has seen $16.15 billion lopped of its market cap so far this week.
- Already some have failed. Both Frontline Wireless and Cyren Call, both of which were going after the “D” block of spectrum and its heavy load of public safety requirements, have already bailed.
- Google is bidding, but may not be playing to win against the carriers.
- The winners have to create an open network. The dream of having a network that would allow any device onto it is still alive.
- Or maybe not. Om would like to see the spectrum become unlicensed and treated much like Wi-Fi is today for it to be truly open.
And like childhood obesity, short attention spans and the general decline of Western Civilization, you can blame all of this controversy on television — the shift from analog to digital TV signals, to be exact.
Frontline Out of 700 MHz Auction
Frontline Wireless is apparently out of the 700 MHz auction, according to reports from RCR Wireless and the New York Times, as well as an email note from our telecom analyst pals at Stifel, Nicolaus. According to the reports, the startup, which counted former FCC chairman Reed Hundt and VC John Doerr among its backers, apparently couldn’t raise enough money for the deposit required to participate in the upcoming auction.
The quick take: Good news for incumbents Verizon and AT&T, who no longer have to bid against Frontline for spectrum. Some might say Frontline’s fate was sealed this summer when the FCC issued rules for the auction that didn’t quite mesh with Frontline’s plans. Others, like the Stifel, Nicolaus gang (whose research is primarily targeted at large investors), note that it is neither easy nor cheap to build new national networks, and of course, there is no guarantee of profitability.
Because of “quiet period” rules governing entities participating in the auction, Hundt said he could not talk about the matter when contacted via email.
Here’s a small snippet from the Stifel, Nicolaus note:
New entrants always face significant problems in raising funds, but there are particularly challenging conditions attached to the D Block license. These include an obligation to coordinate with public safety to build out a joint network, a non-refundable down payment, an aggressive build-out requirement, and the details of the public safety trustee’s requirements. In short, Frontline’s difficulties were unlikely to be specific to Frontline, which, because of the track record of some of Frontline’s backers probably had as good a chance as any new entrant could in terms of raising money.
Paul Kapustka, former managing editor for GigaOM, now has his own blog at Sidecut Reports.
The 700 MHz Spectrum Auctions. Who’s In, Who’s Out.
The deadline to apply to participate in the FCC’s upcoming auction of wireless 700 MHz spectrum passed on Monday. And we still don’t know exactly who the bidders will be. But we have a pretty good idea.
Google is in. So is AT&T, Frontline Wireless, and Craig McCaw’s Clearwire. Comcast and Time Warner are out. But Cox Communications is in.
Verizon Wireless isn’t saying either way, but everyone expects it to bid. Sprint Nextel is sitting this one out, as is Microsoft. And T-Mobile isn’t expected to play a big role.
At least initially, there seems to be two major camps. Google and Frontline on one side, looking for an opening in the entrenched wireless industry. And AT&T and Verizon on the other, trying to keep the technology pirates from climbing aboard their ships. And Craig McCaw as always, is the wild card.
As for other possible bidders, you can never count out Qualcomm, or the handset manufacturers like Nokia or Sony Ericsoon, who might like to bypass the carriers for once. Smaller wireless companies like Alltel or Leap Wireless could bid on a regional basis.
I would not be surprised if at some point Google and Frontline combine forces. Any auction strategists or game theorists out there have any advice for how they can improve their chances of winning? Please enlighten us in comments.
(Photo by Steve Jurvetson)
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FCC Punts on 700 MHz rulemaking
In a rare late-night version of its monthly open meeting, the FCC Wednesday punted on making any first drafts of important rules for the upcoming 700 MHz spectrum auctions, instead pushing back some of the more-controversial elements to allow for more public comment as well as the inevitable behind-the-scenes lobbying and dealmaking.
One partial winner Wednesday was Frontline Wireless, the combination public safety/commercial wireless network plan led by former FCC chairman Reed Hundt. While Frontline’s proposal (which would require a slight tweaking of auction rules) clearly has fans and foes among the five commissioners, by asking for more comments on the proposal the FCC has moved Frontline’s plan from idea to possibility, while all but killing off consideration of a similar but different proposal from the Cyren Call operation.
Another group that is moving in the winning direction is the so-called Coalition for 4G in America, a Google-led group of high-tech players that also includes Intel, Yahoo, eBay, EchoStar and DirecTV. FCC Chairman Kevin Martin, in what amounts to a verbal smackdown (in the polite language of FCC proceedings), said he was “surprised” and “puzzled” that other commissioners weren’t more supportive of the coalition’s requests for rules that would help providers build a wireless access network.
Martin’s public flabbergastery — along with some pointed public reservations about the Frontline plan from commissioner Michael Copps — gave ample explanation behind the almost 10-hour delay of the open meeting, which was scheduled for 9:30 a.m. but didn’t start until after 7 p.m. Washington time. While there was easy agreement on some other housekeeping items for the auction — like a rule requiring warning stickers on analog TV sets — the meatier 700 MHz rule arena proved too discordant for commissioners to agree on, leaving only agreement on a “let’s talk more later” order that nobody seemed happy with.
Perhaps that’s because unlike other regulatory proceedings, which can drag on forever, the DTV transition has hard dates mandated by law — so the FCC knows it needs to establish rules soon, so potential bidders can have time to digest them and make economic plans. “We remain highly aware of the need to move swiftly,” said Martin at the meeting’s end.
