ABI: 700 MHz Auction Bids Far Exceed Expectations
February 27, 2008 // Published as a news service by IHS
| |
| Electronics & Telecom Docs |
IHS sells a full selection of standards documents & collections from the industry's top organizations.
To learn more, and for a free quote, please complete the form below. |
|
According to ABI Research, the U.S. Federal Communications Commission (FCC) underestimated the demand for 700 MHz in its ongoing auction, along with everyone else.
Originally expected to raise between $10 billion and $15 billion, total current bids exceed $18.9 billion. Bidding on the sought-after C block also surpasses the FCC requirements ($4.6 billion) and now has a provisional winning bid (PWB) of $4.7 billion.
The demand for 700 MHz is so great, analysts said, not even the pending recession impacts the bidding process. This auction may be the last opportunity for new participants to gain ground in the wireless realm, which is dominated by incumbent carriers.
New participants include Google, Vulcan Spectrum, Tower Stream and Cox, while traditional participants include Verizon and AT&T.
Analysts said 700 MHz provides better propagation characteristics than 850 MHz, 1900 MHz, 2100 MHz and higher-frequency spectrums.
"For instance, cable companies can utilize this spectrum by launching their own mobile broadband networks - thereby alleviating the need to rely on wireless operators," said ABI Research senior analyst Nadine Manjaro.
"But Google draws the most speculation, since the company's entrance into the wireless market could significantly change the wireless industry."
Incumbent operators absolutely want to strengthen fourth generation (4G) deployments, analysts said, and 700 MHz will improve rural and in-building coverage at a lower cost than existing frequencies.
One surprise is the nationwide D block, set aside by the FCC for public safety. Analysts said Frontline Wireless - the expected front-runner - was disqualified due to its inability to pay the minimum bid. There has been only one bid, which failed to meet the reserve bid price of $519 million. The D block price is set at $1.3 billion.
"Beginning in 2009, the 700 MHz auction could alter wireless broadband services in the U.S. and abroad," said Manjaro. "Google's interest in the C block influenced Verizon's decision to open up access to its network, just as Apple's introduction of the iPhone stirred up the cell phone market. If Google or another disruptive player secures the C block spectrum, it could change the whole industry."
Source: ABI Research.