The Industry and 700-MHz SpectrumWednesday, October 10, 2007
The Industry and 700-MHz Spectrum
In the past month or so, I have been on a lot of planes traveling around to meetings, giving speeches and taking part in advisory council meetings. At each of these functions, the questions discussed more than any others concerned the 700-MHz auction―who will bid, how it will turn out, whether Google will really bid, how it will change the wireless landscape, whether the auction will really take place in January or if lawsuits and filings asking for reconsideration will mean delays, how much this auction will be worth when it is over and, of course, what the winning bidders will do with the spectrum and what technologies will be deployed by whom.
In my latest Blog entry, I pretty much covered my thoughts on Google, so I won’t spend a lot of time on that here, but Google could very easily play a major role going forward. Apple has expressed some interest in bidding as well, and I am sure there are several other Internet players assessing either a run for some of the spectrum or partnerships with others.
Several foreign network operators are also looking at the U.S. spectrum. Supposedly, foreign ownership of spectrum is not permitted, but if you look at today’s landscape and understand that Vodafone owns a major stake in Verizon Wireless, Deutsche Telecom owns T-Mobile and NTT DoCoMo used to own a piece of AT&T Wireless prior to its merger with Cingular, you understand that things are not always black and white. The United States is an attractive marketplace. There is still a lot of growth left in wireless. If you believe as I do that penetration will reach 300% of the population at some point in the future, there is plenty of opportunity ahead.
But there is also the possibility that this first 700-MHz auction may not be the last. If no one bids on the D block, the 10 MHz of spectrum that is to be shared with the first responder community, the rules might be changed and the spectrum put back out to bid. Two of the FCC Commissioners’ statements during the July 31 meeting acknowledged that this might be the case. This spectrum is an experiment and is expected to truly help the first responder community over time. But is there enough value in this 10 MHz for a commercial operator to sit down and work out a lot of the details with the first responder community, probably led by the Public Safety Spectrum Trust (PSST) and its official consulting or advisory company in the form of Cyren Call?
The issues facing both the PSST and commercial network operators are many: How robust does the network need to be? How much will it cost to build? How much will it cost for first responder organizations to make use of this spectrum and can they afford it? What types of services will the network be used for and what technology will be employed? Many more questions need to be addressed as well, and both sides will have to be reasonable and understand the position of the other if this experiment is to be successful.
The system will be used for data services, perhaps video transmissions and even VoIP services. But will it remain an interoperability band while the dedicated first responder spectrum that has been allocated adjacent to the D block is used for primary communications? And I question whether a commercial network is the right network for dispatch operations going forward. The commercial industry needs to thoroughly understand the requirements of the first responder community and, on the other side, first responders need to fully understand the capabilities and limitations of commercial technologies.
Dispatch requires one-to-many communications; it is inherent to the first responder’s ability to understand what is happening and to allocate resources correctly. The commercial operator that wins this spectrum will also need to understand that existing analog and P25 systems must stay in service because, today, commercial technologies do not support peer-to-peer or what is referred to as simplex or tactical communications. What equipment will first responders use? Will it be merely a hardened phone with data capabilities? First responders need a device with always-listening receive capabilities and, especially if the device is on the person, it needs to be a truly one-handed device. I have talked before about a single radio, built to first responder standards, that provided analog and P25 services in both the 800 and 700-MHz band with the commercial capabilities needed to operate on the new broadband system, but can it be built economically? In my ideal world, every radio on this new system would be identical for federal, state and local organizations. Every radio would have every channel and be capable of use on a daily, local basis and in times of emergency.
Moving on to the C block, which is 22 MHz of spectrum (11 X 11), there are only twelve licenses available nationwide, and this segment of spectrum is where current open access rules apply. I have to wonder if the value of this spectrum to incumbents is lessened by these requirements. How do you integrate this spectrum into an existing network on 850 and/or 1900 MHz and still meet the open access rules? If the reserve price for this portion of spectrum is not met, it will go back out to bid without the open access restrictions. This tells me the FCC is hedging its bets and is not fully committed to open access and more committed to market dynamics.
Still, at the very least, unless the rules are changed by reconsideration or a lawsuit, I believe Google will bid the reserve price in order to maintain the open access part of the rules for this portion of spectrum. In last week’s Commentary, I talked about the Sprint/Clearwire/Google WiMAX network, which they say will be fully open to any device capable of WiMAX and available to wholesalers and others wishing to resell on the network. The WiMAX network will be a true open access network not because it was mandated by the FCC, but because the network partners have determined that this is the best way for them to attract the most customers with the greatest choice of devices. Sprint has also said it will price access to the network by person or family, not by device. Isn’t this the best way to accomplish a true open access network, by letting the market determine if it is the best model?
The A and B blocks of spectrum are 12 MHz each (6 X 6) and there are 176 licenses for the A block and 734 for the B block. These bands are more in keeping with the existing license holders’ spectrum allocations and will be hotly contested by incumbents both large and small, as well as by some new entrants that might be interested in a smaller geographic network or that want to purchase some of this spectrum to use as leverage and for trading later on. I don’t expect any real surprises here since it will be very difficult for any single bidder to accumulate a nationwide footprint in either of these bands.
The last block up for grabs is the E block, which is 6 MHz of spectrum that is unpaired and would be ideal for today’s WiMAX or even to be used in conjunction with Sprint’s WiMAX network to replace the muni-Wi-Fi networks that seem to be on the decline. Or for that matter, it could be used by any network operator for TDD for better local coverage. There is a debate going on over the usability of this spectrum because it is adjacent to the MediaFLO high-power transmitter frequencies. While the MediaFLO system meets or exceeds FCC rules for out-of-band emissions, there will still be noise in that band from the MediaFLO transmitters, it cannot be helped. So perhaps MediaFLO will buy this segment or someone else will use it for high-powered transmitters for another service.
The reason the FCC grouped all AM, FM and TV transmitters in the same portion of the band was because they all can interfere with services adjacent to them. However, if they all are transmit-only, the interference is only an issue at the low and high ends of the spectrum allocation, which is another reason the FCC included guard bands in its 700-MHz band plan.
I started this Commentary with a partial list of questions that have come up at every meeting I have attended in recent weeks. While I did not answer them all—there are no answers to most of them, only unknowns―I looked at the situation logically and provided an assessment of some of the issues and possible scenarios. But until the last bid for the last block of spectrum has been made and the winners are announced, we won’t be able to answer most of these questions. Even then, I don’t believe we will have all the answers until post-auction deals, trades and partnerships are put together.
Andrew M. Seybold