Signs point to 700 MHz auction as wireless inflection point

When Tiger Woods joined the PGA tour in 1996, his arrival was accompanied by an unprecedented media blitz that included more than $60 million in endorsement deals. At the time, many wondered aloud how a 20-year-old who had yet to play a round of professional golf could possibly be worth all the fuss.

Indeed, during an era in which style often is valued more than substance, many well-publicized people and events receive much more attention than they deserve, so the skepticism was understandable. But 11 years and 13 major championships later, it can be argued that Woods is a rare example of reality actually surpassing the hype, the one-time phenom who changed his sport, on many levels.

In the U.S. wireless arena, the promised watershed event is the 700 MHz auction that will begin Jan. 24. And all early signs indicate that this distribution of spectral “beachfront property” with ideal propagation characteristics for mobile communications will live up to the hype by forever transforming the wireless landscape.

Whether the changes ultimately will be as profound as those sparked in golf by the arrival of Woods is arguable, but there is little dispute that they are occurring. After fighting the FCC’s open-access rules for a portion of the 700 MHz band for months, Verizon Wireless recently announced it will allow third-party devices on its networks — a policy also adopted this week by AT&T, with the notable caveat that the wireless giant plans to maintain exclusive rights to the iPhone.

Several other announcements have been made regarding strategic decisions likely spurred by the 700 MHz auction, such as AT&T buying Aloha Partners’ spectrum in the band. Verizon Wireless has announced that it plans to use long-term evolution (LTE) in its 4G networks, which many analysts believe will first appear in the 700 MHz band. In addition, some vendor partnerships and alliances have been announced that would appear to better position those companies to take advantage of the 700 MHz opportunity.

Of course, the biggest opportunities — and greatest risks — will be available to companies submitting winning bids in the auction. On Monday, potential bidders for 700 MHz spectrum were required to submit applications allowing them to participate. It will be some time before we hear anything official from the FCC regarding the bidders’ identities, but many companies have announced their intentions.

Companies that have chosen not to bid include wireless carriers Sprint Nextel and Clearwire, software giant Microsoft, satellite TV provider DirecTV and cable companies Comcast, Time Warner and Charter Communications. Among those who plan to bid are search-engine giant Google, cable firms Cablevision and Cox Communications, satellite TV firm Echostar and wireless startup Frontline Wireless. In addition, most analysts believe Verizon and AT&T will participate.

What we don’t know is which licenses these bidders will pursue.

Yes, Google has long expressed interest in bidding on the 22 MHz of C Block spectrum, and Frontline Wireless has indicated its desire to work with public safety, which most assume means it will be a D Block bidder. However, both stopped short of making such a commitment publicly and the FCC’s anonymous bidding policy — designed to prevent collusion between participants — means we’re not going to know which companies bid until after the auction is complete.

Until then, the wireless world will have to be satisfied with watching the FCC tally the high bid for each of the licenses. For public safety, the key is to have a bidder meet the FCC’s reserve price for the D Block, which will let the winning bidder negotiate a deal with the Public Safety Spectrum Trust (PSST) to build and operate a nationwide, broadband wireless network for first responders.

If such an agreement can be reached and public safety gets the reliable broadband access it needs without having to pay the upfront capital costs, the landscape for first-responder communications will dramatically change — and the much-hyped promise of the 700 MHz auction will have been realized.

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