While recent news coverage has focused on the battles waging for the presidency and for the Super Bowl, there is another battle being waged that could define what the next era of wireless communications becomes. The battle began Jan. 24, with the opening of the Federal Communications Commission’s (FCC) auctions for the much hyped 700Mhz span of the radio spectrum. More than 200 companies registered for the auction, including telecom giants Verizon and AT&T. As of Friday, the bids totaled more than $18 billion (although the identity of the bidders is still secret, per FCC regulations), about $7 billion more than the total of the reserve prices set by the FCC. Making its first foray into telecommunications, Google is also taking part in the auction, spurring the curiosity of investors and hardware manufacturers everywhere.
In the decades since the first radio broadcasts, the FCC has carved the electromagnetic spectrum into many discrete blocks. AM radio occupies the frequencies between 535Khz and 1.7Mhz, while FM stations are located between 88 and 108Mhz. The microwave in your kitchen generates radio waves at the FCC mandated frequency of 2450Mhz.
FCC control over the airwaves is designed to prevent manufacturers from producing devices that harmfully interfered with the services of another company. Some churches and theaters tried (illegally) to use radio-jamming equipment to prevent cellular phone calls when inside the building. Imagine the scenario where a television station broadcasts white noise over the signal of a competing station.
The 700Mhz region is important to telecom providers for the same reason it was useful to television broadcasters. Lower frequencies travel greater distances and through more physical material than higher frequencies (with the added bonus of requiring less energy to transmit). An FM station might not make it into an underground parking lot that a lower frequency AM station could.
The most important and controversial part of the 700Mhz spectrum up for sale is referred to as the “C Block.” It has the potential to provide true broadband wireless Internet access over large distances or provide a broadband media distribution service to handheld devices. The FCC has stipulated that the purchaser of the license must meet the $4.6 billion reserve price and ensure that their network be “open to any devices and services.”
One of the main reasons for Google’s involvement in the auction is pushing regulators to ensure that the open access requirements remain in place. Verizon only recently dropped a lawsuit to have the regulation overturned. Google wants to prevent the privatization of networks and network compliant equipment that currently exists in the cellular phone market. The iPhone is only available on AT&T’s inferior network and the same rules apply for Verizon’s cadre of entertainment-oriented phones.
Google hopes that the new “open access” requirements of the “C Block” will allow for greater diversity in phone and handheld manufacturers, providing the consumer with greater choice and ultimately lower prices.
But even with the current FCC requirements in place, the winning bidder will have the most say as to the definition of “open access.” Currently, wireless phone service providers can prohibit devices from using their network if the device poses danger or harm to the network. This rule is not likely to change, and if Verizon or AT&T wins they are likely to use the clause to prevent many third parties from operating on the new network.
Analysts speculate that Google’s ultimate goal is not to win the auction for the “C Block,” but to prevent other telecom giants from shedding the open access requirement. Whoever wins the auction will have to be ready to provide at least partial national service by 2009. Without an existing physical infrastructure and customer service department, wireless services analysts put the physical development costs at almost $15 billion beyond the FCC auction price.
The next generation of broadband wireless devices and services will most likely take place in the 700Mhz spectrum of the airwaves. While the battle is still in its infancy, it is clear that at least some of the winners and of the losers will be determined on the auction floor.