In the auction of the airwaves, two big winners came out on top, leaving Google phone in the dust. Verizon and AT&T combined to account of $16 billion of the 19.6 billion bid in the spectrum being vacated by the shift to digital by television broadcasters. Only one new entrant to the field, Frontier Wireless LLC, won enough new licenses to create a nationwide footprint.
From the Associated Press:
Despite the dominance in the auction by the major cell providers, the FCC chairman was upbeat about the auction results.
“A bidder other than a nationwide incumbent won a license in every market,” Kevin Martin said. As a result, there is the potential for a “wireless third-pipe” competitor to emerge in every market across the nation.
Broadband access is dominated by the major telecommunications and cable companies. Martin wants wireless to emerge as a third platform, creating competition.
But Ben Scott, policy director of Free Press, an advocacy group that supports greater access to communications services, said the auction failed in that regard because Verizon Communications Inc. already is a dominant provider of Internet access.
“The prospect of a genuine third pipe competitor in the wireless world is now slim to none,” he said.
One of the big questions to arise out of the auction is what is meant by “open” in the so-called “C-block” airwaves. The FCC requires that these airwaves be open to any device. But the specifications around the C-block are vague at best. And there is currently no way to know what Verizon plans to do with the block.
While the hope was to see new players arise in the wireless space, the general sense is that the big players just got bigger.
While the auction failed to produce a new national competitor, FCC Chairman Kevin Martin called the outcome a success and says the government did all it could to facilitate such an entrant. Martin, in an interview with BusinessWeek, noted that 99 bidders other than the dominant national operators won 754 licenses, or nearly 70% of the 1,090 licenses sold in the auction. “Would I have liked to see a new entrant on a nationwide basis? Sure,” Martin says. “But the auction will be used to create a third [high-speed Internet] pipe into people’s homes. It won’t be on a nationwide basis but it will be offered in each market.”
But Public Knowledge, one of many public interest groups that lobbied for open access, said it was disheartened that the auction hadn’t paved the way for new competitors as expected. “It is disappointing that new competitors and innovators won’t have access to the spectrum to give consumers the benefits of real broadband competition,” the group said in a statement.
The group also questioned whether Verizon, which purchased some of the spectrum with open-access requirements, will follow through on those principles. Arbogast echoes that sentiment: “My guess is they won’t go as far as the public interest groups and applications providers want.” Notably, just a day before the FCC auction results were disclosed, Verizon held a conference during which it revealed details of its open-access plans for the first time.
While the winners in this auction are clear, what isn’t clear is the impact on cellular users. Google pledged heavily to insure that a desirable block would be open to its apps and ads, but subscribers are still bound by the instruments that the provider sells. Or are they? Verizon is claiming that it will allow any compatible handset access to its network but what that will look like remains to be seen. As a Verizon subscriber, I would certainly like to be able to swap my existing phone for an iPhone, currently pledged only to the AT&T market.
We’ll have to wait until April 3rd or later to see what the final fallout will be. That is when the government’s anti-collusion rules will lift, and the auction winners will be able to sell or trade what they have acquired.
The question to us as consumers is this: Do we care? Is there really a new impact for us, or are we the losers because no new player emerged to provide an alternative to DSL and cable? Will this outcome be more than just an interesting blip on the wireless radar?
Verizon, AT&T win big in airwave auction (Los Angeles Times)
Auction takes ‘first step’ to open-access-wireless (San Jose Mercury News)
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