Wireless auction yields mixed results for consumers

By , IDG News Service |  Mobile & Wireless

The completion of the 700MHz wireless spectrum auction on Thursday should bring
more choice and new types of services for end users, although the results were
not as rosy as some observers had hoped for.

For the first time in such an auction, the FCC required winners of some of
the spectrum to allow any phone and any application to run on their new networks.
These "open access" terms mean that end users should be able to choose
from a wider selection of devices, along with new types of Web 2.0 services
to run on them.

The change affects mainly Verizon, which won
almost all of the licenses
that must follow the open access rules. Google
entered the auction but did not win any licenses, although its participation
was seen by many as way to promote the open access requirement, rather than
as an attempt to become a network operator.

Verizon and AT&T, another big winner, will most likely use the spectrum
to offer high-speed data services -- either mobile or fixed line -- which would
provide an alternative to cable or DSL (Digital Subscriber Line) Internet services.
The networks will probably use the new LTE (Long Term Evolution) cellular technology.
Trials could begin by the end of next year, although broad availability probably
won't come until 2010 or 2011, said Bill Ho, an analyst with Current Analysis.

The new networks are unlikely to deliver cheaper services for users as some
had hoped, however, at least not for a while. The operators will need to pay
off the billions of dollars they pledged for the spectrum, in addition to the
investment in the new networks. "It won't be cheap right off the bat,"
said Ho. "At some point there will be mainstream adoption, and then the
price goes down."

Nor did the auction result in completely new types of companies entering the
wireless market, which had been another possibility when the auctions were announced.
Some said they expected all along that the incumbent operators would dominate.

"The whole thing was set up from them beginning for [the incumbents] to
win all the licenses," said Vince McBride, who won just two licenses at
the auction, covering only a small geographic area. The big winners in the auction
picked up hundreds of licenses.

A former mail carrier, McBride has been trying his luck at FCC auctions since
1996. He said new rules for the auction favored large companies with deep pockets.
For example, the FCC shortened the amount of time that the winners would have
to build their networks. "All that did was prevent small businesses from
coming in. They were scared of the build-out requirements," he said.

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