#2: Biggest Stories of 2006: AWS auction

FCC Logo - Return to the FCC Home PageBetween August 9 and September 18, the FCC held “Auction 66” for a total of 90MHz of Advanced Wireless Services (AWS) spectrum in the 1.7GHz and 2.1GHz bands. One-hundred and four bidders won 1087 licenses raising over $13 billion for the U.S. treasury.

The biggest dollar bidder was T-Mobile, spending $4.2B for a nationwide footprint it has announced it will use to finally roll-out 3G services. Two other big winners, MetroPCS and Leap Wireless, are likely to use their newly won spectrum for fairly traditional services – expanding their disruptively-priced voice services into new territories. T-Mobile, MetroPCS, and Leap may all increase competitive pressure in already competitive markets.

But, the real opportunity lies in new data services using new technologies. Verizon Wireless, Cingular, and SpectrumCo (Sprint, Comcast, and other cable partners) (obvious disclosure: Sprint is my employer) all were big winners who didn’t have immediate voice or 3G data needs and could be eyeing fourth generation technologies, such as WiMax for their new airwaves.

To get a sense of the potential market impact of these players, Verizon Wireless picked up 3.8GHz-MPops (Gigahertz x Million POPs covered), Cingular picked up 2.4GHz-MPops, and SpectrumCo 5.3GHz-MPops. Since the AWS auction was in blocks of 10-20MHz, this represents lots of people covered with 10-20MHz for each of these carriers. The actual performance and cost associated with building a network using this spectrum will vary dramatically depending on the technology chosen. However, it is quite feasible that this spectrum could be used by any of these carriers to deliver multi-megabit connectivity speeds at a fraction of the cost per bit of today’s 3G networks.

In other words, the AWS auction could usher in a competitive environment for multi-megabit mobile bandwidth at a price point that encourages broad adoption and that truly drives towards broadbandwidth being built into every electronic product (just as microprocessors have been built into everything).

This is “big news” and it’s exciting news.

But… Don’t expect this competitive market to develop overnight. The spectrum that was auctioned has been used for many years for other applications (mostly government). Before the winning carriers can build their new networks using this spectrum they will need to work with the current users to “clear the spectrum” – moving the existing applications off to some other solution. This can easily take years to complete (especially when government entities are involved).

That doesn’t make this event any less exciting! If we could only achieve those benefits faster…

One Response to “#2: Biggest Stories of 2006: AWS auction”

  1. […] On Thursday, I claimed that this year’s AWS auction was “big news” because it promises, within a few years time, the potential for multi-megabit mobile services at an attractive price point. I mentioned that several large carriers had gained 10MHz or 20MHz blocks of spectrum representing 2 – 5 GHz-MPops each. The only bad news was that it would likely take years for these carriers to clear the spectrum and start building the networks to launch meaningful services. […]

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