Global Insight Perspective | |
Significance | The 700-MHz band will help providers offer a range of services over large distances and to outdoor and indoor environments. |
Implications | AT&T and Verizon Wireless are the major winners of the spectrum. Google lost out, but will be able to access Verizon's network, given that open access conditions were triggered for the C block. |
Outlook | Uncertainties remain about the future of the D block, Frontier Wireless's strategy, as well as the attitude of Vodafone investors towards the money spent on the auction. |
It has emerged that:
- AT&T and Verizon Wireless accounted for over US$16 billion of the US$19.12 billion spent;
- AT&T spent some US$6.6 billion and Verizon just over US$9.4 billion;
- AT&T won 227 regional licences in the B block, while Verizon Wireless paid US$4.74 billion for a nationwide block of spectrum (C block). Verizon Wireless also won 25 regional licences;
- Frontier Wireless paid US$712 million for licences in 168 cities (E block), which will give it almost national coverage;
- Qualcomm paid around US$1 billion for parts of the B and E blocks;
- there were no successful bids for the D block.
Outlook and Implications
AT&T and Verizon Wireless won the lion’s share of the most attractive spectrum. This will aid their long-term strategies of developing new mobile broadband and value-added services delivered both over a wide area and to outdoor and indoor locations. The 700-MHz spectrum is able to deliver voice and data over long ranges and is highly penetrative. Verizon Wireless beat out Google to the nationwide C block and in so doing triggered open access requirements. This is a victory of sorts for content and other providers, which will be able to offer their own devices and services over Verizon Wireless’s network, albeit with a few restrictions (see United States: 20 March 2008: Verizon Reveals Open Network Specifications).
Other questions remain, including how the FCC will attract renewed interest in the D block, which has been set aside for a nationwide public safety network. The FCC has decided to auction the D block separately, but it may need to lower the asking price to encourage commercial operators to invest in the creation of a public safety network, which is widely seen as necessary following the 11 September 2001 attacks. The EchoStar-controlled Frontier Wireless has not said what it will do with its spectrum, although a mobile TV network looks a likely prospect. The US$9.4 billion paid by Verizon Wireless may also stir up some trouble for Vodafone, which has a 40% stake in the U.S. operator. In the past, Vodafone has faced some pressure among shareholders to divest or spin-off its stake in Verizon Wireless. The requirement to stump up a few billion dollars for the 700-MHz spectrum may reawaken that pressure.