Same faces will win 700 MHz spectrum

Today is the deadline for those companies that want to bid in the upcoming 700 MHz auction to submit their forms to the FCC. Google has already announced its intent to file today, and word is a plethora of other non-traditional companies are interested too. Pundits are excited about the opportunity for players other than the Verizon's and AT&T's to change the landscape of the mobile industry. But will the 700 MHz band really produce a new out-of-the box wireless broadband provider?

Google, which is going it alone in the auction and probably has the deepest pockets out of any potential non-traditional bidder, doesn't appear to be any too gung-ho on the prospect of outbidding telecom incumbents. Back in October, Google co-founder Larry Page said [1]: "I think we have many [2], many [3] different options available to us as a company, in terms of spectrum and connectivity for people in wireless and so forth, so I don't think we feel like there's any desperate need for us to have to bid to win or anything like that. And again, the money is not burning a hole in our pockets."

That doesn't sound like an aggressive bidding strategy to me.

Simply put, incumbents such as Verizon have the wherewithal to spend billions on licenses and billions more to build out network infrastructure. That's their core business. And with the 700 MHz band the last of the so-called beach-front property, operators are prepared to drive the price up to a hefty level, especially given the fact that new 4G networks need a nice chunk of extra spectrum, about 20 megahertz, to deliver the broadband data speeds that are advertised.  

Remember that last year's Advanced Wireless Services (AWS) auction, which garnered the U.S. Treasury $13.7 billion, was supposed to result in new operators. Satellite companies EchoStar and DirecTV had made the largest upfront payment in the auction: $972.5 million. The two were aggressive bidders in early rounds as they fought to capture spectrum that would give them a national footprint. But as bid prices soared a week later, the duo dropped out.

The big winners were T-Mobile, which desperately needed new spectrum to roll out 3G, and Verizon. T-Mobile bid some $4.2 billion on 120 licenses. Verizon won 13 licenses for $2.8 billion. In the 700 MHz auction, those amounts will be chump change.

While a host of alternative operators is a nice dream for the 700 MHz band, we are ultimately going to see the same faces walk away with some mighty expensive licenses.-Lynnette [4]