Showing posts with label auction. Show all posts
Showing posts with label auction. Show all posts

Wednesday, February 6, 2008

So Maybe Verizon is Bidding Against Itself

After round 40 of the Federal Communications Commission's auction of 700 MHz airwaves, Verizon might be bidding against itself, in a sense. Observers say it is possible for Verizon to bid directly on each of the eight regional allocations that make up the national C block. And if any contestant has the highest bid in a region, it wins the spectrum even if some other entity has the highest overall bid for the entire C block.

In this scenario Verizon would simply have to ensure that its regional bids were high enough to top the amount any other player submitted for the entire national spectrum. Clever.

FCC Auction: Who's Bidding on C Block?

At the end of round 39 of the Federal Communications Commission's auction of the national C block of 700 MHz spectrum, it appears at least two entities continue to bid.

The top bid now is a bit over $4.83 billion, up from the prior high of $4.7 billion at the end of round 38. Some of us think Google has halted its bidding, and most of us think Verizon Communications intends to win the C block. So if all that is true, at least one other company continues to bid against Verizon. Curious.

It's hard to picture at&t bidding for C block spectrum, as observers have predicted it would focus on filling in holes in its 700 MHz spectrum by bidding on local chunks of the B block.

Thursday, January 31, 2008

C Block Hits Threshold for Open Access

The C Block of 700-MHz frequencies today hit the minimum amount required to trigger the "open access" provisions Google had been so anxious to foster. So now we have to wait and see who ultimately wins the spectrum. At this point, Google's minimum business objectives have been met.

Tuesday, January 29, 2008

Sloooow 700 MHz Auction Pace

The high bid on the national 700 MHz spectrum block stood at about $3.4 billion on Tuesday. Bidding is proceeding slowly and about all we know is that it will go higher until the minimum to compell an open network framework is reached. Google has pledged to bid at least that much and we have no reason to think it will not. Another billion and some odd to go until that point is reached, though.

Wednesday, January 23, 2008

Auction Starts Jan. 24

Bidding begins Jan. 24 for the 700-MHz spectrum that will, among other things, allow creation of a new broadband network with significant open access requirements for devices and applications. The auction also will allow some regional players to acquire new spectrum on a local basis, either to fill in a national footprint or to serve some new local need. The biggest unknown is whether Google will place an initial minimum bid only, and then watch other bidders increase their bids to win the auction, or make some move to try to win the spectrum.

Under FCC rules, the identities of daily bidders will be kept secret although bid amounts will be posted on the agency's Web site on a daily basis. So we'll know soon enough.

Most observers saay the requirement to support any technically compliant device on the C block national network, as well as any lawful applications, has contributed to a recent "embrace" by Verizon and at&t Wireless of open-network policies even on the existing mobile networks.

Sunday, January 20, 2008

700 MHz Auction: Not the Best, Not the Worst


For many observers anticipating the soon-to-begin auction of valuable 700-MHz wireless spectrum in the U.S. market, there is some combination of great hope and fear that it will all be business as usual and that nothing much will change.

The great hope scenario calls for some new entrant to win the C block and create a national, open, Internet style broadband wireless network. The great fear is that at&t or Verizon will be the big winner, stifling innovation once again.

For mobile industry service providers, you can reverse the hope and fear positions. Incumbents hope at&t or Verizon will win, precisely to prevent the emergence of an open national broadband mobile network. They fear an outsider could snatch the spectrum away and actually do that.

In the end, he outcome will not be so wildly good for innovation, but not stultifying either, even if an at&t or Verizon wins the spectrum. Change is coming simply because the mobile Web is coming, and no contestant can stop that. Innovation will continue to flourish on the Web side of the business, no matter what is done on the walled garden sides of the business.

Consider the mobile music business. We are far from knowing how the use cases and business models play out. But we already can point to some facts. Walled garden services featuring downloads or rental have been seen as the logical evolution, and that certainly is where early efforts have focused.

Over time, users might do other things. They might sideload their music, then share with their friends using Bluetooth, Wi-Fi, 3G or 4G. You might say this is a laborious process, and you would be right, if all we have is today's tools. That will change. Somebody will author an elegant program for syncing sideloaded music with other handsets. It might not be iTunes that drives this, since iTunes is quite sharing-unfriendly by design.

But somebody will do so. And then the business might shift as it grows. Online downloads and sideloading will increase. But then sharing will kick in. Then it might turn out that walled garden download services aren't as big a deal as we once thought, but open download services are. Maybe the sharing software is simple enough that users can see each others' playlists and trade songs, one for one.

Maybe there's even some monetization scheme possible where songs are traded or shared. Most people don't seem to mind paying a fair price to get a song they like. Maybe they won't mind paying some amount to share songs with friends or even bystanders.

The point is that walled gardens might be the logical way a service provider approaches building a new business. That doesn't mean other ways are precluded, especially when the mobile Web really gets to be popular.

In a sense, the very existence of the mobile Web ensures that innovation will happen. Some might argue a better way to approach things is structural separation, where transport and access are separated from the retail side of the business. Others will argue that it is more feasible simply to "functionally" or "operationally" separate wholesale transport and access from retail operations.

Even in the absence of those mechanisms, the mobile Web is going to allow innovators to do things "without asking permission" of the retail wireless operators. The Federal Communications Commission's rules on open network attachment for the C block will help ensure that regime, as the operator of the C block network will not be able to block the use of "open" or "third party" devices.

The likely outcome of the C block auction is that either at&t or Verizon wins it. Whichever contestant does not win the C block will pick up A and B block spectrum where it is needed to reinforce existing operations or extend the current service footprint.

Verizon and at&t simply have the business motivation to win the auction. Sprint won't be bidding and T-Mobile arguably can't afford to bid. Still, it won't halt innovation, though we won't see as much change as if an outsider with no vested interest in today's revenue models were to win the auction.

But the mobile networks are going open in some significant ways, even if the basic business model doesn't change as fast. But T-Mobile already offers a "data-only" service plan, with no need to buy voice to get the data. In principle, it should be possible for this to happen on a much-wider scale, and then users can draw their services entirely from the mobile Web, rather than using walled garden services.

The auctions probably won't be as good as some hope, but certainly not as bad as feared. And that might be case no matter which viewpoint one has. Those who want change will see measurable "goodness." Those who have reason to fear the coming changes will have time and resources to adjust and embrace the change.

When all is said and done, the auctions will neither be a disaster nor a revolution. Neither will they honestly be anything other than another important step towards more openness and choice, however. It's coming.

Wednesday, December 19, 2007

700-MHz Bidders Surface



Some 266 bidders for 700 MHz spectrum auction have surfaced so far. Not all the bidders will content for the national C block, though. Many of the bidders are small, independent telephone companies angling for local blocks of spectrum. But a few cable companies also are on the list. Of course, over time those fragmented allocations probably will be rolled up into larger networks, as has always happened in the past.

The bidders include Google (GOOG) Airwaves Inc.; Towerstream; Vulcan Spectrum;
Alltel; AT&T Mobility Spectrum; CenturyTel Broadband Wireless; Chevron; Cincinnati Bell Wireless; Cox Wireless; Iowa Telecommunications Services; MetroPCS 700 MHz; Qualcomm
Cablevision (CSC Spectrum Holdings); Verizon Wireless (Cellco Partnership) and Advance/Newhouse.

Wireline Substitution, Mobile Plans, Broadband


KPN seems to have found a way to take market share in the German wireless market: give customers unlimited calling for a flat fee, avoid phone subsidies or selling phones, and keep things simple. The growing number of wireless-only customers apparently is helping, as one obviously needs more minutes in the plan to cover the additional volume when all calls in and out are taken on the mobile.

For $108 a month, Base subscribers can make unlimited free calls anywhere in Germany. A comparable offer by Vodafone costs $144. The sister E-Plus brand KPN supports also has shifted to this "no frills" approach.

In the third quarter 2007 subscriptions wereup 16 percent year-over-year, to some 14.1 million. E-Plus operating profit also rose 79 percent over that period, with profit margins of 38 percent.

Of course, KPN will have to figure out how to translate that success into similar good fortune in the mobile broadband segment, where it might not be quite so easy to maintain robust margins of this sort. Still, KPN's approach to the market is an example of what a carrier can do in an environment where phones are unlocked.

As Verizon moves to "unlock" its CDMA network, and as the C block 700-MHz spectrum goes into operation, also with an "unlocked" approach to device use, one wonders how soon somebody will try this in the U.S. market as well. Cricket Communications, one might argue, already has been chasing the wireline replacement market, but without the unlocked phone component.

Wednesday, December 5, 2007

Comcast Won't Bid for 700-MHz Spectrum

Some financial analysts and investors had been worried that Comcast would do so, further depressing its battered stock price.

700-MHz Auction: EchoStar to Bid; DirecTV Won't

EchoStar Communications will bid for wireless spectrum in the Federal Communications Commission's auction of cho8ice 700-MHz spectrum on Jan. 24. DirecTV won't be bidding. Though the opening bids are set at $4.6 billion, the final price could range between $10 billion and $15 billion, some observers suggest, making an EchoStar win an unlikely event.

The fact that both at&t and EchoStar are bidding in the auction prohibits both of them from discussing a potential merger, so it isn't clear where the rumored at&t purchase of EchoStar might stand. The only thing that is certain is that any such talks must be on hold at the moment.

Tuesday, December 4, 2007

Verizon Will Support Android Devices


Verizon Wireless CEO Lowell McAdam says the company will allow Android phones on its network, which is scheduled to open up next year to outside applications and devices, according to Business Week. Of course, that's what one assumes Verizon Wireless meant when it said it would open its CDMA network to all devices compliant with technical standards it has yet to release. Still, it is good to get confirmation.

"We're planning on using Android," McAdam says. "Android is an enabler of what we do."

It remains to be seen how active developers may want to get for devices and software on a network that Verizon has declared is not its future, however. Presumably Verizon has figured out that apps and devices compliant on the CDMA network can be authored in such a way that the air interface is not a problem as its planned LTE fourth-generation network is put into service in several years.

And, of course, some note that Verizon retains the ability to reverse course on LTE and choose some other air interface, in any case. It should be an interesting couple of months, as Google and Verizon dance around each firms' strategy for the 700-MHz auction.

Monday, December 3, 2007

Comcast, Time Warner Won't Bid for 700-MHz Spectrum

Google is in, Time Warner Cable and Comcast are out, at least in terms of submitting an initial bid for 700-MHz spectrum. The big issue is how many of the incumbent wireless carriers will participate in the initial round. Verizon has been seen as a certain bidder, at&t a possible bidder, T-Mobile a potential bidder as well.

Cable companies have bid for spectrum in the past, in partnership with Sprint. So far, though, financial results from the cable-Sprint collaboration in the consumer market have been disappointing, though it remains unclear how much of the sluggishness is attributable to operational or marketing issues, and how much to "core competency" issues.

Up to this point, cablers have been most successful with products that can be delivered over their own plant. Wireless is outside that realm. Wireless might also be an area where telecom companies simply have more "core competence" capabilities that force cable companies to compete where they have few natural advantages.

For the moment, cable executives seem unwilling to acknowledge that wireless services are strategic.

Consumers really don't want a quadruple-play bundle, Time Warner Cable CEO Glenn Britt insists. "I don't think the quadruple play is a big deal," he says. "So far we've not seen a great demand for that." Comcast likewise only says it continues to study the matter of wireless services closely and continuously.

Friday, November 30, 2007

Google will Bid for 700-MHz Spectrum


Google plans to submit at least an initial bid for 700-MHz wireless spectrum, the Wall Street Journal reports. There is some thinking that with Verizon's declaration of willingness to open its network to any technically-compliant device, as well as similar open access provisions for any winner of 700-MHz C block spectrum, Google has less need to acquire its own spectrum to ensure an open environment for wireless Internet services.

Google also is working with Sprint and T-Mobile on open devices and applications on those wireless networks, plus Clearwire for WiMAX service. Given all of that recent development, there simply is less need for Google to own spectrum simply as a way of ensuring an open environment.

Friday, November 16, 2007

Google Will Bid on 700 MHz Spectrum!


Google is preparing to bid at least $4.6 billion for wireless spectrum to be bought at the Federal Communications Commission's January auction, the Wall Street Journal reported says. The company is planning to bid without partners, a move some of us would not have predicted.

The company is beta testing a wireless solution in preparation for running a full-scale national mobile network. Obviously, Google as a mobile network services provider would be highly disruptive to the existing legacy carrier business models, given the likelihood Google would emerge fairly quickly as a packaging, pricing and
network functionality innovator.

One simply has to point back to packaging and pricing innovation by just one carrier--AT&T--to illustrate the fact that a significant new pricing pattern, in this case the concept of a bucket of minutes for a flat fee, can cause an entire industry to react.

A bid obviously would vastly complicate Google's other efforts to gain favorable placement of its software on all sorts of devices compatible with all sorts of carrier networks. But Google probably wins even if it loses. By creating a "bid" poker chip, it can wring concessions out of recalcitrant carriers who might be wary of giving Google more play.

And there are very real costs to be borne by the likes of Verizon and at&t if Google enters the bidding contest. It is not simply the threat that Google wins. If Google bids, the final price paid by the auction winner, whether at&t or Verizon, will be higher than if Google had not been a contestant.

Monday, August 6, 2007

Google Phone Again?


Speculation about Google getting into the mobile phone space have been circulating all year. Most recently, the Wall Street Journal reported that Google has "invested hundreds of millions" into cellular phone development, and that the project goes far and beyond current incarnations of Google products on today's mobile handsets. So what is Google up to?

It isn't necessarily that complicated. Google might be simply be trying to show existing and would-be device manufacturers what can be done. Google doesn't necessarily have to be thinking about becoming a device manufacturer or "service" provider.

Google already has moved to put Google Search, Gmail and Maps onto phones. Google might be trying to illustrate, concretely, what a device can do, and look like, if unencumbered by all sorts of walled garden software. Call it a Google-optimized mobile Web approach, if you like. An approach that offers opportunity to exploit advertising revenues. If Google can get serious traction, it not only creates an important beach head in the mobile ad space, but also helps create the mobile version of the broadband Internet.

Ad-supported communications are a possibility, but not the only possibility. The "open" whole Web framework plays to Google's strengths. That might be the more important objective.

Expect to see Google pushing hard not only to get its software on more clients but to get users accustomed to behaving the same way with the mobile Web as they now do with the tethered Web. After all, the whole point of targeted advertising is to reach people where they are.

Three times as many mobiles are in use as landlines, and landlines don't offer much upside in the advertising space.

700 MHz Rules: More Impact than Carterfone


Though some might really have preferred mandatory wholesale rules for a portion of the 700 MHz spectrum, the "Carterfone" style "any compliant device can be attached to the network" provision will have much more impact than did Carterfone. Carterfone lead to widespread use of modems on the public network, initially by business customers who did not have to "ask permission" to do so. Consumers initially could "buy and own" their own phones instead of renting them from the phone company.

We also might credit the rise of much of the Interconnect and business phone system business to Carterfone.

Then, because modems could be used, we can further say that Carterfone helped pave the way for creation of the Internet itself. First dial-up access, then broadband access, became possible because of Carterfone. Because of broadband the visual and now semantic Web developed. These are significant effects, indeed.

But the 700 MHz spectrum should ultimately have more impact. We assume the C block will be assembled into a national network. We assume a high-quality, low-latency core, with short access "tails," and full mobility across the whole network.

The near-term impact will be significant. Device manufacturers will benefit, since they simply have to build equipment that complies with the technical specs. Users will benefit since they can use any handsets they choose. But there will be more impact, fairly shortly.

Because the new network will be based on IP (as well as Ethernet), there will be ways to provide VoIP, even if network operators try to wall off all voice services in the traditional walled garden. Technological cleverness will take care of that problem.

That is going to create a potential new "offer leader" in wireless. And recall that AT&T's "Digital One Rate" completely reshaped industry-wide packaging and pricing, not simply some of AT&T's offerings. The C block network potentially lays the framework for a service provider with some scale to reshape consumer expectations of what things should cost and how they should be packaged.

More significantly, the C block network potentially allows a provider some latitude to redefine the customer experience as well, creating new expectations of what media "should" be available, how they should work together and what the "right" price is for such capabilities.

We can't really predict what other developments might occur. I don't think one would have extrapolated the creation of the World Wide Web or VoIP from Carterfone. I don't think it is yet possible to extrapolate from the wireless equivalent of Carterfone, either.

But this is a bigger deal than most people assume. It just will take a while before the wider ramifications are seen. And by the time it happens, nobody will remember a relatively "small" regulatory decision.

Wednesday, August 1, 2007

No Wholesale? No Surprise

To almost nobody's surprise, the 700 MHz auction will not have a mandatory wholesale provision. We might argue that a robust "third" or "fourth" or "fifth" pipe would result. What is harder to argue is that any such pipe provider would be able to make the investments required, operate its network at a high level of quality and still return the required returns to investors.

Other wireless infrastructure initiatives highlight the problem. After reporting a $16.3 million second-quarter loss last week, EarthLink reiterated that it was reassessing its municipal wireless business. Revenue is the issue.

"Until we're confident that we can build new networks and get an acceptable return, we will delay any further new buildouts," CEO Rolla Huff said.

EarthLink has been one of the biggest builders of city wireless networks, with projects built or in the works in 13 municipalities around the U.S., according to its Web site.

The problem with wholesale access business models is simply that it is so difficult to earn an adequate return. In a competitive market, a provider needs both significant penetration and reasonable margin (40 percent is a common threshold). Wholesale makes that tough.

"Tokens" are the New "FLOPS," "MIPS" or "Gbps"

Modern computing has some virtually-universal reference metrics. For Gemini 1.5 and other large language models, tokens are a basic measure...