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Summary:

Spencer Ante, a fellow telecom scribe and an editor at Businessweek caught up with FCC Chairman Kevin Martin following the announcement of the 700 MHz wireless spectrum auction results. His interview is pretty telling, especially Martin dodging the question about new entrants. He espoused that auctions […]

Spencer Ante, a fellow telecom scribe and an editor at Businessweek caught up with FCC Chairman Kevin Martin following the announcement of the 700 MHz wireless spectrum auction results. His interview is pretty telling, especially Martin dodging the question about new entrants. He espoused that auctions resulted in more broadband competition. Sigh!

Thanks to the auction, we will have more wireless broadband services that could compete with cable modem or DSL service. The auction was a success. The auction will be used to create a third broadband pipe into people’s homes. And that service will be offered by companies that are different than your local phone or cable company.

Okay, maybe different from the cable company, but the big winners according to FCC’s own data are Verizon and AT&T. In some cases, there are regional and independent phone companies that have won, but there aren’t any new players. It is still not clear what EchoStar plans to do with its spectrum.

Would I have liked to see a new entrant on a nationwide basis? Sure. I also do think there are examples of other new entrants. There was another bidder who won a license in every market of the company.

During the interview he kept bringing up the point of multiple licenses in each area, which is just such baloney. Previous auctions also brought many multiple players in different markets, but in the end they all were assimilated into Verizon, Sprint, AT&T, T-Mobile and a couple of other carriers. It is like déjà vu all over again. Of course, when all that happens, Martin would be peacefully installed in the House of Representatives, his ultimate goal.

In the end there was still an incumbent willing to buy the spectrum. I don’t think people anticipated an incumbent would purchase the spectrum with an open access provision. It’s a good thing because it will make all of the wireless industry allow for additional innovation.

  1. Previous auctions also brought many multiple players in different markets, but in the end they all were assimilated into Verizon, Sprint, AT&T, T-Mobile and a couple of other carriers.

    Yes, well, both fundamental economics and consumer preferences prefer large carriers with national networks. People don’t want roaming charges, and even though different players can sign cross-roaming agreements, there’s always going to be a lot of incentives for companies to buy each other.

    You’re right, previous auctions have shown that reserving spectrum for small new players only results in those small new players winning the auctions and then turning around and selling. Is Martin supposed to magically change reality, change market conditions and consumer preferences, and force someone to buy spectrum but not sell out to a merger or acquisition? Can he force Clearwire’s business model to work?

    He’s undoubtedly correct that it’s good that the fears of those who claimed that the incumbents wouldn’t buy spectrum with the open access requirements were wrong.

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  2. i started thinking about this yesterday – all the talk of winners and losers.

    i’m not sure who the winners were, but i know who the losers were – citizens.

    who said the 700 MHz spectrum was for the government to auction off to private corporations?

    the whole thing reminds me of the 1996 telecomm act that the conservative criminal, bill clinton, pushed through. and no media coverage.

    i don’t watch tv (sept for march madness, baby!), but were it not for google’s involvement in the auction, i might not have even known about it.

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  3. The biggest danger facing these network incumbents is the corporate culture they are creating within their own companies. The managers are perfectly happy to keep buying up all the licensed wireless spectrum, paying lobbyists to keep the government compliant, and provide horrible service to their trapped customers (in Tucson, AZ, both incumbent providers, Qwest and Cox, blatantly lied to me about their bandwidth plans in order to get me to sign up). However, this only works for a while because the technologists ultimately find a way to route around your existing network and put you out of business. I see two possibilities for how this will happen. One is some entrepreneur running FTTN or FTTH and guaranteeing that they will keep their networks and COs open to all comers from the beginning. The other one, that may be built on top of a new fiber deployment, is entrepreneurs deploying a whole bunch of wireless access points in crowded areas like cities and charging for wireless access. Eventually, someone is going to get one of these business models right and then the telcos will not be able to compete as they have bred a culture of incompetence and stupidity in the meantime.

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  4. All I can say is that I feel betrayed by Google. Looks like they were really not putting their money where they put their mouth. Contrary to what they claimed.

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  5. Jesse Kopelman Monday, March 24, 2008

    The problem isn’t who won the spectrum, it’s that the buildout conditions are so lax. The reason no one bought the D block is because the winner would have actually had to deploy service using it in a reasonable amount of time. The winners of the other blocks can site on the spectrum for 4+ years before they build cell site one, and then another 5 years before they build any significant coverage, and if history is any guide, that is exactly what they will do. Funny how congress pressures the FCC to auction as quickly as possible, but doesn’t care what happens to the spectrum once it is sold.

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  6. At Texas Instruments (TI), we are very excited that the 700 MHz spectrum has been successfully auctioned, and that it will be available for deployment in less than a year (February 2009). 700 MHz is great spectrum because it enables good penetration in buildings for better indoor reception, providing an opportunity to give consumers advanced services with good value. This also means that more spectrum will be available for HSPA, WiMAX and LTE. ATT and Verizon were the two big winners at the auction, and both have announced that they plan to deploy LTE. Additionally, TI believes that the 700 MHz deployments will be conducive to advanced services and applications. This is exciting for us because the OMAP platform is the multimedia engine for handsets, and we’re excited about the opportunities ahead as applications and the user experience become increasingly important to our customers and a driving factor in the mobile industry.

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