The Great Spectrum Sweepstakes

Author:
Publish date:
Social count:
0

As the horses sidle up to the gate in the 700 MHz Spectrum Sweepstakes, those of us who can’t ante up $4.6 billion can still get to play, using the currency we’re all born with: our opinions.

Let’s look at three possible scenarios and handicap the ponies.

The winner in this auction (billed as “the last white space on the map”) can deploy a very low-cost national overbuild almost immediately. For wireless data, 700 MHz is a magic land, where high bitrate, low-wattage signals bend around walls, punch through leaves, and in general let users carry broadband around. The Internet in your car! Or up a tree. Folks who already have this capability based on wires and fibers will bid to defend their turf. Those on the outside want to bust things wide open.

First, the usual suspects: AT&T, Cablevision, Cox. As winners, they’d slowly roll out services on their new spectrum, and price them high. Wouldn’t you? The main vote on pricing and new services will be cast by their CFOs, who (enforced by the public markets) will do anything to maximize revenue and avoid cannibalizing existing revenue streams. They’ll charge for access to their walled gardens; it’s what they do.

Next up, Google, which has signaled its intentions before: It wants something that approaches open access. Example? Android (a.k.a. the GPhone), its open-source (that is, free!) next-generation cell platform. Google is nothing if not radical. If it wins, we’re likely to see a historic transformation of the entire telecom landscape.

Finally, the dark horse, Paul Allen. While he does control Charter Communications, it’s not clear to me that his bid is aimed at protecting that investment (which many observers think has performed very poorly indeed). He’s one of very few individuals who can write the sort of check that gets him into the spectrum derby. I see him as “Factor X.” Remember, he’s the “gigabuccaneer” behind SpaceShipOne, the only successfully tested spacecraft that was not launched by a government. If he can pull off something like that, obviously this guy is not easily deterred.

Readers will recall that I’ve advocated selling spectrum naming rights only, keeping the spectrum open for all to use for free. Perhaps that is unrealistic, although I can make a very good case that the national wealth would benefit most strongly from that scenario. In this race, my heart bets Google—but my inner adrenaline junkie bets Allen.

Related

Cover Story: The Great Reckoning

The end comes even for the most enduring hits. Deciding when to retire an aging show is one of the toughest choices a network has to make. And with only two weeks until the upfronts, time is running out.