17 thoughts on “Verizon: Play fair in wireless auctions, as long as VZ wins”

  1. Om, are you suggesting that VZ shareholders would let Verizon spend over 10% of its market cap on spectrum and then sit on it?

  2. I was thoroughly insulted just reading VZ’s comments on Martin’s “openness” yesterday. The obvious see-through was VZ’s attitude of just give us the spectrum and everything will be fair. As if were idiots.

  3. Anything that will open up the carriers’ networks will spur innovation, competition and ultimately benefit us, the public. Today new technologies and services die because they cannot gain access to the carriers’ networks and handsets are locked down. The real tragedy in the 700 MHz auction is the the designated entity status for small businesses is essentially dead. We can all thank Counciltree for that. One note to Om’s article is that there are strict build out requirements for spectrum winners in 700 MHz.

  4. Jeff,

    while there are buildout requirements, i am suggesting lets go one step forward. penalties. that should get everyone moving, regardless of who it is.

  5. Tom,

    this spectrum bid they are going to make is basically going to be not that outrageous for verizon – they will buy it, sit on it, and when everyone has gone home, they will built another tightly controlled network. Which basically means that they might end up with two of the three broadband pipes.

  6. Pingback: PhoneDifferent
  7. Here is what I understand so far:
    1. 22Mhz is to be set aside in the lower (COngested) bands of the 700Mhz spectrum for Shared or Open Access.
    This is to be made available for the Local and regional providers to bid on as well as some set aside for the public Safety folks.
    2. That leaves 38Mhz in the premium Upper Band of the spectrum for the Nationwide Heavies to bid on-which means VW, AT&T and possibly some others with deep pockets (hopefully Google & partner will use their deep pockets to challenge these big carriers for the spectrum). Google needs this Last Mile Pieces to dominate the Access and Content/Apps market.

    FCC/Fed need the auction $$$ (bet it will exceed $20Billion) so they will allow this 38Mhz to go to a major player.

    Google vs. Verizon Wireless will be the game.

    VW will not sit on the spectrum but will use it nationwide to support (side by side)their EV-DO Rev A (+) cell net which needs to off-load their Narrowband data efforst to something that would deliver a real Broadband service. They cannot afford to allow a 3rd party to win this spectrum because it will force them to revert back to providing a robust Cell voice service.

    Verizon FiOS network will not be impacted by this acution, in that Fiber is far to robust (100Mbps to 1Gbps)and flexible (CATV/Data & Voice) to be challenged by a 3-10 Mbps wireless link into a home.


  8. A pure financial analysis would show Verizon couldn’t sit on it for long. At the currently projected bid price, controlling the 700 Mhz spectrum would increase Verizon’s debt by 60%. Call Dave Barden (BoA Securities) or Mike McCormack (Bear Stearns) and ask them what parking the spectrum would do to the price of VZ. My guess is the completely new management team would put it to use very quickly! (Don’t disagree with your point that it would be a closed network.)

  9. 2 points –

    No one who builds a network will allow “open access” as the pricing will ensure that RoI is -ve. Why doesn’t GOOG publish its Page Rank alogorithm and allow its server farms to be used “open” by everyone..The Silicon Valley group wants open as long as its not them opening up…The resistance to Linux is well know…We dont even have a open source document format that is used all over….

    The whole concept of GOOG building a network for $3-4B is BS. To get a comparable network like VZ (even in 700MHZ) is a $10-12B excercise at least…

  10. Om,

    Verizon can’t afford to sit on the spectrum… As a carrier successfully grows its subscriber base and doesn’t increase their spectrum position – the quality of their network will suffer (ask my old company AT&T Wireless). Furthermore, next generation services will require more bandwidth not less. Preventing wireless carriers from bidding to respond to demand only hurts consumers.

    On a related note, the last time we saw strong conditions in an auction was the NextWave (C-block, PCS spectrum) auction back in 1996. NextWave defaulted on their payments the following year. The result of micro-managing that auction – prime spectrum benched for over 10 years stuck in litigation. Mr. Hundt created that debacle too.



  11. Open devices. Open content. Leased access. it isn’t hard to do. Go look at the WCS spectrum auction and how screwed up it’s development has been – assuming thats the “sat on” spectrum historically.

    The trick is to simply make 700Mhz a local extension of the internet – a license to sell wireless ACCESS to the Internet. Nothing more. Let web services have and handle the rest. Convnetional cell phone rates will plummet. Chaos.

    My understanding is this is still going down geographically. So strategically, shouldn’t GOOG EBAY ETC just focus on buying the areas where Verizon is strongest? BID HIGH IN CONCERT on Verizon’s home turf?

  12. Those who claim Verizon can’t afford to sit on spectrum don’t understand what they are talking about. The truth of the matter is that Verizon and AT&T use less than half of the spectrum they own right now. Sure, in big cities they may be using 90+%, but head into rural areas and you will find <20% utilization. In the suburbs you tend to see right around 50% utilization. My claims come from actually going out with a spectrum analyzer to look at occupied spectrum as well as 6 years of doing frequency planning in markets like rural WV and ME as well as downtown Boston and Providence. Current build-out requirements are based on covered pops. This means you can cover only the most densely populated part of a license and still get credit for complete build-out. I’ve gone through this exercise in the past where by building one strategically located site, serving a few dozen highly populated square miles, the carrier got credit for building out a several hundred square mile license.

  13. “The truth of the matter is that Verizon and AT&T use less than half of the spectrum they own right now. Sure in big cities they may be using 90+%.” Exactly my point.

    Once again, they cannot afford to sit on this spectrum. Success in the wireless business is critical to funding their larger fiber initiatives, responding to increased consumer demand and satisfying their shareholders.

    Best, Chris

  14. Chris, when you post these kinds of comments, it would be proper for you to disclose that your firm Capital Solutions is a paid consultant to Verizon Wireless and CTIA, just as I am disclosing right now that I am a co-founder of Frontline Wireless.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.