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Quick! Imagine you're a wireless carrier, and you've just won the much-delayed auction for 700 MHz spectrum.
Better yet, the analog UHF TV stations that once resided there have moved already to the DTV band. All this spectrum-channels 60-69-is now undeniably yours: now what could you do with it?
Plenty, says Kathryn Condello, the vice president of industry operations for the Cellular Telecommunications Industry Association, the primary wireless phone trade group. The reason: compared to other areas of the radio spectrum, 700 MHz's propagation is "phenomenal," she says. In fact, the number of 700 MHz transmission sites needed to cover any given territory "is radically lower than the PCS spectrum, and it's even lower than the cellular spectrum."
Better yet, the amount of bandwidth due to be auctioned by the FCC "is a fair chunk of spectrum," Condello adds. This means that carriers winning 700 MHz could provide 3G and other broadband services without having to build thousands of transmitter sites.
All told, these factors make the 700 MHz band "very sexy spectrum" for mobile wireless broadband providers, she concludes. Should a carrier manage to get its hands on this spectrum, "he would be able to get the most broadband for the buck."
That's the thinking of a lot of players who successfully lobbied the FCC to push the planned auction of 700 MHz analog TV spectrum back to March 6, 2001, from the initial Sept. 6 date. Major wireless providers such as Verizon Communications, Voicestream, BellSouth and Sprint PCS wanted to push the sale back to create more time for addressing such topics as clearing incumbent broadcasters from the spectrum, dealing with potential interference issues and in some cases forming bidding alliances.
Smaller carriers also are very interested: CTIA's enthusiasm for 700 MHz is shared by Daniel Pegg, senior vice president of public affairs for Leap Wireless. The small but growing carrier has nearly 50,000 subscribers to its Cricket service in Chattanooga and Nashville, Tenn., and has been acquiring 1,900 MHz spectrum feverishly in other markets. "From our perspective, it's excellent spectrum for voice and data," says Pegg of 700 MHz. As well, "it's proximity to the 800 [MHz cellular band] is ideally suited for folks who are already operating in that area."
Now, Pegg doesn't expect Leap Wireless to bid on 700 MHz. To do so you'd need "extraordinarily deep pockets," he says; at least deeper than Leap has at its disposal. However, he agrees that a carrier such as Leap could use 700 MHz to add voice and data capabilities to those it already offers at 1,900 MHz through its PCS networks.
SBC spokesperson Kristy Blankenship isn't quite as enthusiastic. In fact, she won't even confirm whether SBC intends to bid on 700 MHz. However, "if we were to win pieces of that spectrum, our primary objective would be to use it for voice and data mobility data services," Blankenship says. She adds that the FCC decision to delay the 700 MHz auction until next year is good news, because "it will give us some more time to gather all the things we need to gather to make our best bid." Evidently, for a 12.2 million subscriber carrier that hasn't made up its mind to go after 700 MHz, SBC is at least weighing the opportunity very carefully.
But neither AT&T Wireless Service nor Sprint PCS share in this passion for 700 MHz. The reason, says AT&T Wireless Services spokesperson Ritch Blasi, is that "AT&T doesn't need the spectrum."
Sprint PCS vice president of regulatory affairs Jonathan Chambers says his company is in the same boat. That's why he has no idea how Sprint PCS might use 700 MHz. "If you gave it to us for free, I'd have an answer for you," says Chambers. "But that's certainly not the way this auction is going to go."
Given the sky-high valuations bid for 3G spectrum licenses in the ongoing European auctions-about $80 billion in Germany and the United Kingdom alone-many analysts are predicting U.S. carriers will bid upwards of $10 billion or more for 1.9 GHz spectrum tentatively scheduled for a Dec. 12 reauction, with further billions staked in the March auction of 700 MHz licenses.
But even if someone did give 700 MHz to Sprint PCS, Chambers wouldn't get too worked up about it. Why? Well, first there's the current uncertainty surrounding digital television, he says. Thanks to the 8-VSB/COFDM propagation conundrum, the U.S. DTV rollout is up in the air: until this gets decided, no analog UHF broadcaster in his right mind would move off 700 MHz. That means this spectrum just isn't available to wireless carriers, no matter what the FCC says.
Second, Chambers questions the sense of carriers buying bandwidth to solve their capacity problems. Instead, Chambers thinks the smart answer is to use technology like CDMA, which not coincidentally is Sprint's platform for its national network. Thanks to recent technical advances, it can be reconfigured to add more capacity-necessary to support 3G applications such as high speed data and possibly video-within a carrier's existing bandwidth.
This said, Sprint's Chambers can understand Leap's and SBC's interest in 700 MHz. In the case of Leap Wireless, "they don't have holdings everywhere," he explains, "so they certainly are interested in upcoming auctions in order to expand their footprint. The same would be true of SBC and BellSouth: even after they combined, they don't have spectrum in New York."
Given all these diverse opinions, one thing seems clear: 700 MHz will attract wireless bidders due to their particular needs, rather than its own inherent properties. For carriers without enough bandwidth, any additional spectrum is good spectrum. For those who think they have enough, it's just not worth the price; at least not top dollar.
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