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A major opportunity for mobile unified communications was born this month with the completion of the FCC’s Auction 73 covering parts of the 700 MHz spectrum on March 18. This auction covered the much sought-after radio spectrum being freed up by the migration to digital over-the-air TV broadcasting in February 2009. The attraction for potential service providers is that a 700 MHz signal will travel much farther than either a 1.9 GHz cellular or a 2.5 GHz WiMAX signal, allowing a carrier to deploy a wide area wireless network using far fewer base stations.
Fewer base stations means less equipment cost, but more importantly, fewer backhaul links, which are ongoing (i.e. OPEX) costs. All those cellular base stations you see dotting the landscape must be connected back to central switching facilities. Cellular backhaul connections are made over private microwave links, or more typically, over T-1 channels leased from local carriers. As wireless networks move to higher and higher speeds, the backhaul capacity must be increased as well.
Radio licenses cover specific frequency bands in specified areas. In Auction 73, 1091 licenses were offered in 5 different frequency blocks that were divided into as many as 734 regional areas. Licenses covering more populous areas generally command higher prices. All but one was sold, and the total bids came to $19.6 billion.
The biggest buyers were the two major cellular carriers, Verizon and AT&T. Together they invested roughly $16 billion or 83% of the total take. The other national cellular carriers, Sprint and T-Mobile, sat this one out. T-Mobile stocked up on spectrum in the AWS auction in 2006 where they spent $4.6 billion. Cash strapped Sprint is sitting on a major swath in the 2.5 GHz Broadband Radio Services (BRS) band that they hope to use to deploy a nationwide mobile WiMAX service.
When we look at the results, we see that AT&T and Verizon went after very different slices of the pie. AT&T spent $6.64 billion and focused on the restriction-free 12 MHz B Block; they grabbed 227 out of 734 licenses covering areas across the country. Verizon was the biggest spender dropping a total of $9.63 billion. Roughly half of that went for unencumbered A and B Block licenses, but they also went for the much discussed C Band. The requirement for C Band bidders was "open access", where any network built on these airwaves would have to be open to any device and any application.The open access requirement drove down the bids, and Verizon got it for $4.75 billion, just 3% above the FCC-defined minimum.
Among the other winners were Dish Networks (bidding as Frontier Wireless) and Qualcomm. They appeared to split the 6 MHz E Block (what used to be UHF channel 56), with Qualcomm buying the major markets and Dish taking the smaller ones. Qualcomm was a winner in one of the earlier 700 MHz auctions when they acquired the nationwide licenses for the 6 MHz that was channel 55. Qualcomm is apparently looking to beef up the capacity of their floundering MediaFLO mobile video service.
Dish is being quiet about their intentions, but they could use some good news. On March 14 they launched the AMERICOM 14 satellite from the International Launch Service's spaceport in Baikonur, Kazakhstan, but it failed to reach the required 22,300 mile orbit. They were counting on that satellite to increase their high-definition channel capacity to better compete with the cable companies. Engineers are now working on ways to use satellite’s onboard thrusters to boost the satellite into the proper orbit, but burning that fuel reduces the operational life of the satellite.In any event, the 6 MHz they picked up here won’t offset that loss.
The market story is that the bands with the most restrictions brought the lowest prices. The most restrictive licenses were in the D Band, where the winners would have to share that spectrum with public safety agencies. None of the bids received met the FCC-defined $1.3 billion minimum, and that spectrum will have to offered again. It seems fairly clear from the C and D Block results that in a market process, encumbrances reduce the value of the asset.
The biggest non-winner was Google, whose participation was greatly anticipated. A non-winner is different from a loser, and Google might have much bigger plans afoot. Their lobbying was key to the FCC’s decision to make open access a key requirement for C Block bidders. Open access provides an opportunity for products based on their new Android platform, and may free them up to pursue other wireless initiatives. That’s the subject of another article.
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Communications Integrated to Optimize Business Processes.
UC integrates real-time and non-real time communications with business processes and requirements.
Uses presence capabilities for coordination, and presents a consistent unified user interface and experience across multiple devices and media types.
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