Subject: [NEXTEL-1] Spectrum upswing

From: [email-masked]
Date: Mon, 19 Apr 2004 02:06:55 -0400

Spectrum upswing

by Dan O'Shea

TelephonyOnline.com, Apr 14 2004

During the industry's recent economic crisis, you couldn't sell radio
spectrum if you packaged it with baseball cards. Even with the removal
of the spectrum cap, no one seemed interested. Carriers had been burned
by spectrum auctions in the past, and 3G seemed like such a far-off
dream that no one was in a hurry to horde the spectrum that technology
migration would require.

However, harkening back to the days before that crisis--when spectrum
auctions seemed a source of constant speculation, controversy and
revenue for the federal government--spectrum acquisition and ownership
is again becoming a very sensitive issue.

Advancing mobile data adoption, and the need to fill coverage gaps in
the face of portability-driven competition, are doing their part to
create a new market for spectrum. However, Nextel Communications and
Verizon Wireless are doing much more.

You can argue that Nextel kicked off the new era by asking for spectrum
as part of a plan to relieve interference between Nextel and private
radio networks in the 800 Mhz band. Nextel is contributing $850 million
or so to the effort. Or, you could argue that Verizon, miffed at the
possibility Nextel will get spectrum without going through the
traditional auction process, made spectrum a hot-button issue once again
by pledging to bid $5 billion at auction for the frequencies Nextel is
after if the FCC rules not to give them to Nextel.

The discrepancy between the financial figures is pretty startling, and
it reminds anyone who participated in previous federal spectrum auctions
of the headaches they had trying to figure out what spectrum was really
worth.

Some people like to say that spectrum is only worth what you are willing
to pay for it, which is why spectrum auctions work. But there might be a
better way to put it: Spectrum is only worth what your competition is
willing to pay to keep you away from it. This makes all future auctions
no less dangerous than the series of auctions during the last decade
that soured our opinions on the value of spectrum in the first place.

http://telephonyonline.com/ar/telecom_spectrum_upswing/index.htm

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