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Summary:

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 […]

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.

  1. [...] Thursday, January 10, 2008 at 6:00 AM PT Comments (0) Frontline Wireless’ decision to bow out of the 700 MHz auction proves that in the Wild West of spectrum speculation, only the bold need [...]

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  2. [...] Frontline Out of 700 MHz Auction [...]

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  3. Mausgru Sacraum Wednesday, January 23, 2008

    The real reason behind Frontline’s decision to close shop was a barely noticed announcement (DA 07-5100) by the FCC on 12/26/07 that denied a somewhat routine waiver request by Frontline to not make them an deposit additional $61 million for the auction for block “D”. A previous violation by Echo Star bubbled up to bite Frontline. Frontline clearly was shocked at having to raise this money over a week and decided to dump the bid, much to the chagrin of the FCC chairman himself as well as lawmakers like Dana Hartman. Issa shame!

    http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-07-5100A1.pdf

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  4. Mausgru Sacraum Wednesday, January 23, 2008

    Oops, I mixed up Frontline with Frontier. My bad, but the FCC PN still reads silly and child-like.

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  5. [...] talking about pretty much anything, it may be some time before we hear the full story behind the last-minute collapse of Frontline Wireless, the Reed Hundt/John Doerr-backed attempt to create a new national wireless [...]

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  6. [...] look into the allegations” of rumored shadowy deals that may have led to the collapse of Frontline Wireless and the apparent failure of the “D” Block segment to attract a minimum reserve bid in [...]

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  7. [...] look into the allegations” of rumored shadowy deals that may have led to the collapse of Frontline Wireless and the apparent failure of the “D” Block segment to attract a minimum reserve bid in [...]

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  8. [...] being awarded, 75 percent coverage after 10 years and over 90 percent after 15 years. After the last effort to use this spectrum failed because of its high reserve price of $1.3 billion, the FCC has cut the minimum bid for the [...]

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