Spectrum Gold Rush

[David Farber <dave () farber net>]

Begin forwarded message:

From: Brett Glass <brett () lariat net>
Date: August 19, 2006 11:50:00 PM EDT
To: dave () farber net
Subject: Spectrum Gold Rush

Dave:

For IP, if you'd like. Our wireless Internet service provider, which  
has been seeking licensed spectrum for many years, knows how much  
spectrum is worth; we know that even the FCC's minimum bid in its  
current auctions is too high to allow profitable operation in many  
rural regions. But we've consistently been aced out of these auctions  
by large "spectrum barons," which bid far more than the spectrum is  
worth and then hoard it -- perhaps seeking to drive its market value  
up to what they paid by creating scarcity. These same companies are  
also forming small "shell" companies so as to obtain discounts which  
were supposed to be reserved for small entities like ourselves. We  
urgently need licensed spectrum to serve our customers, but the  
horribly flawed auction process is making it unlikely that we'll ever  
obtain any.

--Brett Glass, LARIAT.NET

----------------

Bidders Convinced of Huge Pot at the End of the Spectrum

By Arshad Mohammed
Washington Post Staff Writer
Friday, August 18, 2006; Page D01

The country's biggest telephone and cable companies, already fighting  
a ground war to sell consumers TV, phone and Internet service, have  
taken their battle to the air.

Both sides have spent the past two weeks bidding billions of dollars  
against one another to buy electromagnetic spectrum -- the  
frequencies that carry cellphone calls, TV broadcasts and wireless  
Internet access.

While they cannot see, taste or touch what they're bidding on, the  
companies can smell profit if they can grab enough of the airwaves at  
a government auction.

It is an article of faith in the industry that, over time, more and  
more communications will become wireless -- making spectrum a must- 
have asset for any company that wants to be a player.

"Spectrum is like money. You never have enough," said Roger Entner, a  
wireless analyst at independent research firm Ovum.

But it is a limited resource, and extremely expensive.

The federal government is expected to raise as much as $15 billion  
from its current auction. The airwaves up for grabs would be used to  
offer fast wireless Internet access and ever-more-elaborate cellphone  
service that puts e-mail, music and video into the palm of your hand.

This auction and another, due to be held by the end of January 2008,  
are regarded as the last, best chance over the next several years for  
companies to acquire "beachfront" spectrum that is exceptionally well  
suited for wireless Internet and phone service.

What has been most striking about the Federal Communications  
Commission's Advanced Wireless Services auction -- which began Aug. 9  
and could last for weeks -- is that satellite TV providers and cable  
companies were among the 168 bidders.

Full text at

http://www.washingtonpost.com/wp-dyn/content/article/2006/08/17/ 
AR2006081701574.html



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