700 MHz Auction Signals Permanent Changes

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In January, the Federal Communications Commission (FCC) will auction off spectrum in the 700 MHz frequency band now occupied by television broadcasters. The TV folks are moving to new digs as part of the digital transition set for February, 2009.


This is more than geekiness. Indeed, it's almost like the powers-that-be decided to auction off the land in the Grand Canyon or Central Park in New York City. The spectrum sale is such a big deal that some people -- including this ABI Research analyst -- think it opens the door for the creation of a major mobile carrier.


Google, the analyst says, is the most likely candidate to fill this role. For one thing, the company appears willing. It has expressed a willingness to invest $5 billion in spectrum. And though there are more questions than answers right now about the Android handset platform announced earlier this month, the initiative clearly shows Google's interest in the sorts of projects that would dovetail nicely with the spectrum.


The ABI analyst also points out that Google has access to content and applications. This is an important point: The ways to reach end users through cellular, wireless and wired means are growing and, collectively, are making connectivity more or less a commodity. The real leaders increasingly will be those with access to valuable things to put atop that bandwidth.


The landscape is so roiled that Google even is rumored to be interested in buying Sprint Nextel. Though the Tech Dirt blogger doesn't think the deal will happen, he apparently thinks there is more logic to it than Barron's west coast editor Eric Savitz, who labels it "harebrained." The blogger's rationale is that Sprint, in the wake of its WiMax troubles, may be better off in the hands of a company whose backers are risk takers. Google, he says, also could benefit from the 2.5 GHz spectrum Sprint owns, regardless of what happens at the January auction.


The 700 MHz auction will be noteworthy for another reason: Creating a public safety infrastructure that is more robust than the networks that fizzled on 9/11 and during Hurricane Katrina will be a key goal. This Telecommunications Online story lays out the task before The National Public Safety Telecommunications Council (NPSTC) Broadband Working Group.


The story throws around a lot of long similar-sounding names on how the government will structure the initiative. The bottom line is that the licensees will build out a nationwide network. Companies winning licenses will be responsible for building and maintaining the network, though they will be able to operate one of the halves as a commercial entity. The public safety portion also can be used for commercial endeavors when it is not being used for its primary purpose.


At the end of the day, the auction -- just over two months away -- will have tremendous ramifications in a number of areas. This Q&A at Wired answers basic questions such as what the spectrum is and why it is attractive. The importance of the auction is financial as well as conceptual: The minimum reserve price -- the floor below which the deal can't be consummated -- now stands at $10 billion. The reserve price on the C-block is $4.6 billion. Those high prices generated grumbling.


Despite these astronomical dollar amounts, the most important thing about the 700 MHz spectrum is that it represents a break with the past in terms of who the key bidders will be and how the spectrum will be used once it is won.