US wireless auction hots up

The US Federal Communications Commission substantially underestimated the demand for the 700MHz wireless spectrum, experts report.

ABI Research said that demand for 700MHz is so great that "not even the pending recession impacts the bidding process".

Originally expected to raise between $10bn and $15bn, total current bids exceed $18.9bn. Bidding on the sought after C block also surpassed the FCC requirements of $4.6bn and now has a provisional winning bid of $4.7bn.

This auction may be the last opportunity for new participants to gain ground in the wireless realm, which is dominated by incumbent carriers.

New participants include Google, Vulcan Spectrum, Tower Stream and Cox Communications, while traditional participants include Verizon and AT& T.

"700MHz provides better propagation characteristics than 850MHz, 1900MHz, 2100MHz, and higher frequency spectrums," said ABI Research senior analyst Nadine Manjaro.

"For instance, cable companies can utilise this spectrum by launching their own mobile broadband networks thereby alleviating the need to rely on wireless operators.

"But Google draws the most speculation, since the company's entrance into the wireless market could significantly change the wireless industry."

Manjaro explained that incumbent operators want to strengthen 4G deployments, and that 700MHz will improve rural and in-building coverage at a lower cost than existing frequencies.

"The 700MHz auction could alter wireless broadband services in the US and abroad," the analyst said.

"Google's interest in the C block influenced Verizon's decision to open access to its network, just as Apple's introduction of the iPhone stirred up the cellphone market.

"If Google or Microsoft (via Vulcan Spectrum) secures the C block spectrum, it could change the whole industry."