Hailed as "the place to be" at March's CTIA show, Andrew Seybold's 17^th Annual Wireless Dinner will be held Tuesday, March 27, 2007, at the Peabody Hotel in Orlando, Florida. This dinner is by invitation only and is limited to 300 attendees who have contributed to the success of the wireless industry.  

Many companies large and small from the wireless and computing industries have benefited from sponsoring this dinner over the years. We have openings for three more sponsors for 2007 and the cost is reasonable. If your company is interested in learning more about sponsorships, please contact Ruth@4mobility.com

Spectrum -- The Wireless Industry's Currency

For fun, let's look at the FCC press release. It states that this spectrum may be used for a "wide array of innovative wireless services and technologies, including voice, data, video, and other wireless broadband services offered over Third Generation (3G) mobile networks." Okay, WiMAX folks, according to this, if you really are 4G, you cannot use this band! If you want to participate in AWS, you will have to admit you are not really 4G after all! You can't have it both ways.

Three of the top winning bidders, T-Mobile, Verizon Wireless and Cingular, should not be a surprise to anyone. SpectrumCo, the Sprint/cable partnership, and MetroPCS rounded out the top five winning bidders. No one is permitted to talk about what they plan to do with the spectrum until they have paid their money and the FCC has completed the paperwork. However, there is much speculation and some obvious answers to who will be doing what with the spectrum. T-Mobile for example, will either build out a UMTS network to join the big three at the wireless broadband table or perhaps move to a different technology to offer "better and different" services. Because T-Mobile really needed this spectrum, I was convinced the other players would force it to pay a lot more for the spectrum than it did.

Now the cable companies that partnered with Sprint will have to come up with a plan, and NextWave -- remember NextWave? -- which had lots of PCS spectrum, went bankrupt, fought the FCC in court, won some spectrum back, lost some, sold what it had won, has now bought AWS spectrum (154 licenses for $115.5 million covering 60 million pops). It should be interesting to see what NextWave is up to. As you go down the list, you find Cricket (Leap Wireless), not once but twice, the Washington Post, Warren Buffet (I wonder where Bill Gates is) and a host of others.

What Now?

Here is my take on all of this. First, we have 104 potential licensees of 1,087 new licenses covering much of the United States. It's fairly easy to figure out what the big boys, and perhaps companies such as Cincinnati Bell that expanded their territory, will do with their spectrum. What the other winning bidders do with their spectrum is another story. We could end up with a half-dozen different technologies, each aimed at a different market segment, with each company trying to make a go of wireless. Or, as I suspect, many of these bidders understand that spectrum is the only currency that is truly worth anything in the wireless world today.

How many of these players have an end game that does not include building out the licenses they have won? How many simply want a bargaining chip for when they step up to the table to deal? The saga will play out, the big wireless companies will use the spectrum to fill in, beef up, offer new services, provide more capacity and perhaps for new technologies. 2010 is not that far off and both LTE (Long-Term Evolution, the next generation of UMTS) and 802.20 are predicted to be ready for commercial service by then. Then there is WiMAX, but I don't know how it would fit into this strange band with a transmit and receive separation of 400 MHz. We'll have to wait and see what happens here.

The chip folks will, of course, fix the separation issue. They seem to be able to build as many different frequencies and technologies as we need into chips these days. Need another antenna or two in a phone? That won't be a problem either. So those who want to use this spectrum to augment their existing 3G networks shouldn't have any worries about phones and PC Cards. The interesting thing will be to see if anyone really believes they can build out a broadband-only data service, market it to notebook customers and make back their money. I have heard a few of the winning bidders do, but I sure wouldn't want to be putting up the money for such ventures.

There also appear to be a number of bidders who might want to enter the rural broadband business judging by the size of the companies, their locations and the spectrum they bid on. Again, we will have to wait until they are permitted to discuss their plans, or learn whether they even have any plans. Spectrum is a finite resource and this might be the last piece available for a while. Suppose Morgan O'Brien does convince Congress and the FCC to give the 30 MHz of 700-MHz spectrum to the first responder community instead of auctioning it. Would that mean the "big guys" will build out this 30 MHz of spectrum using a single technology? I don't think so.

But back to the AWS spectrum. A little more of it might become available if the proposed AWS-2 block is released and auctioned, but for now we have the 104 new license holders with a total of 1,087 licenses spread out among them. Leap and MetroPCS both came away with significant spectrum increases and I expect both to continue their build-out of all-you-can-eat, no-contract voice services and add more data services. Sprint and the cable companies now have licenses that cover 247 million pops in addition to Sprint's existing holdings on 850, 1900 and 2.5 MHz. What technologies will they settle on and what services will they offer? I'm not sure I want to hazard a guess at this point in time since I was surprised when they announced their intentions to build a 4G system in their 2.5 MHz spectrum.

NextWave sold off its PCS holdings in New York and the East Coast and bought AWS spectrum in the same area. It did get more for the PCS spectrum than it paid for the AWS spectrum, so I guess it ended up on the plus side of the ledger. But what NextWave will do with the spectrum it now owns remains to be seen. I won't speculate here at all. NextWave has changed business models more times than I can remember.

So the AWS auctions are behind us, left is the fight for 700 MHz and whether it will be auctioned or Cyren Call garners enough support for its plan. There is also the Verizon plan, which I happen to think is a gutsy move on its part. Yes, Verizon wants to see the 30 MHz of spectrum auctioned and would like to have it for its own, but the offer to build out 12 MHz of the 700-MHz public safety band was made without any guarantee that it would be the successful bidder for the balance of the spectrum. I think Verizon really wants to help the first responder community and I believe its plan is the best one on the table. It is also evidence of its position in the wireless industry as a good corporate citizen.

After the smoke clears, the dust settles and the winners start talking about their plans for their AWS spectrum licenses, I think we will be in for a few surprises. Because spectrum is the currency of the wireless world, much of the planning will take place behind closed doors. In due time, we will learn the answers to the questions that have been raised here.

Andrew M. Seybold

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