Frontline Wireless’ decision to bow out of the 700 MHz auction proves that in the Wild West of spectrum speculation, only the bold need apply. Frontline dropped out of the auction after finding it difficult to raise enough money to cover a $128 million up-front payment on the spectrum.
Backers of Frontline included former FCC chairman Reed Hundt; some of Silicon Valley’s most elite investors, such as John Doerr of Kleiner Perkins; and angel investor K. Ram Shriram. These are smart guys who presumably knew what they were getting into, but the reasoned approach to high-risk investing, as practiced by VCs, is nothing like the wildcatter mentality needed by spectrum investors.
The proceeds from this auction are expected to range between $10 billion and $30 billion, and the cost of building out a network using that spectrum might reach $10 billion. If Frontline couldn’t meet a $128 million payment, it’s best they got out early.
The 700MHz spectrum licensed at auction may go to the telecommunications carriers with large pockets and an established business, but just in case Google still has plans to make a play, it’s worth reviewing some recent spectrum speculation history to show the Googlers what might be in store for them.
Aloha Partners is one of the freshest success stories of spectrum speculation. AT&T offered $2.5 billion for its 700MHz spectrum in October. Aloha bid for its licenses in 2002 and paid $29 million for them.
Aloha got its spectrum on the cheap, but Craig McCaw, the head of Clearwire Communications, has raised more than $1.6 billion (including a $600 million public offering) to build out a wireless network on the WiMax standard using 2.5 GHz spectrum. Clearwire hasn’t talked about its total spectrum costs, and its stock is off 44 percent from its IPO, but when McCaw sells a company, he tends to make the big bucks.
There’s also the rather repetitive history of the satellite industry, which is littered with investment, bankruptcy and buyouts. When it comes to spectrum, you have to pay to play, and even that won’t guarantee success.

Jason Calacanis launched yet another discussion of the future of the web with his official definition of web 3.0, in which web 2.0 cake is spread with a liberal frosting of people, but not just any people — “gifted” people. Aside from its introduction of magnet-school speak into tech talk, this definition is curious in that it mentions layering. But the web is a network, or as some gifted people already knew, a “graph.” The web is less a cake needing frosting than a stew mixing everything together, allowing for the possibility of any one ingredient touching another.
Today’s version of the web, whatever you want to call it, is notable because people and hardware and information and software and conversation are all mixed together into a hyperconnected network. Maybe instead of getting tangled up in discussions of what’s web 1.0 vs. web 2.0 vs. web 3.0, we might look instead at another shift: how the web enables us to move from one era into another, from the Information Age to the Connected Age. You can see this shift both in the practices of individual workers and in the strategies of technology companies.
Knowledge Worker (Information Age) vs. Web Worker (Connected Age)
The Information Age is the age of the knowledge worker. The Connected Age is the age of the web worker. Knowledge workers create and manage information, massaging it into intangible knowledge goods. Web workers create and manage relationships across knowledge goods, hardware, and people. The table below, taken from Web Worker Daily’s upcoming book “Connect! Web Worker Daily’s Guide to a New Way of Working” contrasts knowledge work and web work. Of course, in practice individual workers may take a hybrid approach, combining aspects of both.
It’s not just individual workers, though, that take a primarily Information Age approach or Connected Age approach. Companies do too. Microsoft represents the Information Age, while Google hints at the shift towards the Connected Age.
Microsoft (Information Age) vs. Google (Connected Age)
Microsoft (MSFT) exemplifies the Information Age. It uses step-by-step, top-down controlled project management methods to build monolithic intangible goods — desktop and client/server software — largely from scratch. It uses money as currency, monetizing knowledge products using licensing fees and strict control of software copying. Microsoft must rely on protecting access to its knowledge goods — because this is where it has created value.
Google (GOOG), on the other hand, hints at the Connected Age without entirely fulfilling its promise. Google uses openly available knowledge, human, software, and hardware resources (with a good dose of its own such resources) and harvests value from those resources by finding and creating relationships. Google monetizes the human behavior on the web — human action captured in web pages as links, content and meta data. It trades in the currency of attention. Across the company, Google uses a more evolutionary development style, seeking innovation by spreading bets over many possibilities, most of which have little chance of success. Google depends on a more emergent style of innovation.
Google, however, is a gigantic corporation. Could the Connected Age make corporations obsolete, at least for purposes of web work? We need corporations for the agricultural, industrial, and knowledge tasks of our society. But an entirely new engine of productivity might be built without formal organizations. Economist Ronald Coase has proposed that the reason firms exist is to decrease transaction costs. But the web makes transaction costs across individuals and ad hoc groups of people so small as to be unimportant to many web-era businesses. That is why we see an acceleration in the number of independent contractors and loose partnerships across small organizations.
Seeing Shifts
The Connected Age concept isn’t necessarily more real or true than the term web 2.0 or web 3.0 is, but just like those, it’s useful for seeing and understanding shifts brought about by the web and shifts that the web is itself undergoing. I count myself lucky to live in a time where there’s enough progress and action to even discuss naming the shifts we see taking place.
Zoho threw a jab at Google’s (GOOG) suite of online office applications with today’s release of its free database app, Zoho DB & Reports. Zoho’s latest offering brings the number of its online office applications to 13, an impressive attempt in the company’s bid to become the ubiquitous online office suite provider.
With competition from the likes of Google, Microsoft (MSFT) and Adobe (ADBE), we wonder how much the company’s lack of brand awareness will hurt it in the long run. However, if Zoho continues to innovate at top speed, it might make a smart acquisition target, perhaps for one of its competitors.
Zoho DB, at first glance, is reminiscent of Microsoft Excel, but a closer look reveals a database application more like Access. The SQL-based database supports importing and exporting from a bunch of different format types, and also makes it easy to make charts, summary views, and table views. Thanks to the online functionality, all this information can be shared with anyone across the web.
Earlier this week, Adobe entered the online office game with its acquisition of Virtual Ubiquity, a Waltham, Mass.-based startup behind online word processor Buzzword. Meanwhile, Microsoft just unveiled its Office Live Workplace, a web-based feature of its office suite that will let people access and share their documents online.