AT&T buys Aloha's 700MHz

Tired of waiting for the auction, AT&T buys Aloha's spectrum.

From The Street:

"AT&T got a jump on next year's radio wave auction with a $2.5 billion bid for Aloha Partners' 700-megahertz spectrum licenses. In the deal, AT&T would take ownership of former UHF channels 54 and 59, the so-called C block of wireless spectrum Aloha had acquired in the past few years. Aloha owned the largest swath of licenses covering about 80% of the population in the top 100 cities.

From the press release:

"Customer demand for mobile services, including voice, data and video, is continually increasing," said Forrest Miller, group president-corporate strategy and development. "Aloha's spectrum will enable AT&T to efficiently meet this growing demand and help our customers stay connected to their worlds."

From Unstrung:

"AT&T's experience on deploying UMTS at 850 MHz makes 700 MHz a great fit with its existing network," says Gabriel Brown. "In particular, the carrier should be able to source attractive 3G handsets that work at both frequencies."

Brown says the price AT&T has paid for this spectrum is "full but fair." He calculates that, at a price of $2.5 billion for 12 MHz of spectrum covering 196 million people, AT&T has paid roughly $1 per MHz per head."

Eric Schmidt on the Spectrum Auction

22 megahertz of "open access"

Well we were waiting all day for the news but it came over the wires around 6 last night. The FCC approved "open access" for part of the spectrum. Some say its kind of a win for Google but AT&T is keeping its own spin positive.

From Reuters:

"The U.S. Federal Communications Commission on Tuesday voted to shake up the wireless market by approving a set of ground-rules for a big airwaves auction that would require the winner to make them accessible to any cell phone, device or application.

The access requirement would apply to 22 megahertz of the 62 MHz of spectrum to be sold. The FCC suggested a $4.6 billion minimum price for the 22 MHz block of airwaves. If that price is not reached, the airwaves would be auctioned again, but without the access requirement, according to the agency."

Kevin Martin's statement (via MocoNews)

Chairman Kevin Martin: I am committed to ensuring that the fruits of wireless innovation swiftly pass into the hand of consumers.

Currently, American consumers are too often asked to throw away their old phones and buy new ones if they want to switch cell phone carriers. And when they buy that new phone, it is the wireless provider, not the consumer, who chooses what applications the consumer will be allowed to use on that new handset…

A network that is more open to devices and applications can help foster innovation on the edges of the network...We will ensure these open platform rules are implemented, through significant enforcement mechanisms that place the burden on the licensee to demonstrate their compliance and that their policies are fair and reasonable.

Interested parties respond (via GigaOM)

Google: “The FCC took real but incomplete progress this afternoon,” said Rick Whitt, Google’s lead policy exec, in a conference call Tuesday afternoon, lauding the openness conditions but lamenting the omission of rules enforcing wholesale access to the spectrum. When asked if Google would still bid on the spectrum, Whitt said Google “didn’t say it wouldn’t,” meaning that Google will make that decision at a later date.

Frontline: “The FCC [vote] did not make it impossible for us, but they did make it clear that they weren’t going to use [the auction rules] to alter the importance of Verizon and AT&T,” Hundt said. Hundt’s take is that since the rules do allow for a bidder to construct a private-public partnership for public-safety buildout, there is still a chance for ideas like Frontline’s to succeed, but only if tech companies who agree with its goals stop “acting like warring Scottish clans” and instead band together more closely in their efforts.

AT&T: Though we have not yet seen the details of today’s decision on the 700 MHz spectrum auction, the FCC appears to have struck a reasonable balance between the competing interests debating the Google Plan. As we’ve previously noted, if Google is serious about introducing a competing business model into the wireless industry, Chairman Martin’s compromise plan allows them to bid in the auction, win the spectrum, and then implement every one of the conditions they seek. We commend the FCC for adopting this approach rather than stacking the deck in Google’s favor.

700MHz Shootout: AT&T vs. Google

Things are still heating up in the 700MHZ wars. You probably had a hard time getting through the weekend wondering what AT&T would say about Schmidt's letter.

From Techcrunch:

"CEO Eric Schmidt sent a letter to FCC Chairman Kevin Martin stating that they would commit to bid at least $4.6 billion in the auctions if four key platform rules are adopted. These rules will define what types of services the winner could offer, and would require third party access to the bandwidth:

1. Open applications: Consumers should be able to download and utilize any software applications, content, or services they desire;
2. Open devices: Consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
3. Open services: Third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
4. Open networks: Third parties (like internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee’s wireless network.

From GigaOM:

"Jim Cicconi, AT&T Senior Executive Vice President, External and Legislative Affairs in a written statement emailed to us said:

Not satisfied with a compromise proposal from Chairman Martin that meets most of its conditions, Google has now delivered an all or nothing ultimatum to the U.S. Government, insisting that every single one of their conditions “must” be met or they will not participate in the spectrum auction. Google is demanding the Government stack the deck in its favor, limit competing bids, and effectively force wireless carriers to alter their business models to Google’s liking. We would repeat that Google should put up or shut up— they can bid and enter the wireless market with any business model they prefer, then let consumers decide which model they like best."

Industry opinions:

TechCrunch: "The FCC has competing goals of maximizing revenue from the auction (suggesting less regulation) and protecting the public (suggesting more rules to force competition). Having open access requirements like those suggested by Google will spur competition and grow an economy around this spectrum. It will also put commercial pressure on mobile operators and broadband companies to reduce the restrictions they have on current broadband and mobile services.

GigaOM: "While the sheer historical inertia of the telcos’ lobbying influence may win them the first round of the 700 MHz fight, Google is quickly catching on to the lobbying game, even holding mashup-type camp sessions to show legislators how to join the Internet age. With his letter to the FCC, Schmidt has moved the 700 MHz argument past the “regulation will limit the incentive to invest in new networks” bromide and is instead asking out loud whether the U.S. wants networks that are old and busted, or the new hotness."

Terry Heaton: "As the leader in the open internet world, Google stands to benefit in a purely open wireless world, but so will we all. Big or small, a level field of play will mean an explosion of creativity and applications that we can’t even imagine today. Just look at what has taken place in the 802.11 spectrum (Wi-Fi) since the FCC made that truly open. From your cordless phone to your home wireless network to hotspots in various public and private locations, all are there using “free” spectrum. "

Google's thoughts on 700MHz

This is a big deal.

From Google Public Policy:

"Too much is at stake for the federal government to let that happen. Late yesterday, we filed a letter urging the FCC to take concrete steps to make sure that regardless of who wins the spectrum at auction, consumers’ interests are best served. We believe that the winning bidders should be required to adhere to enforceable rules that require the adoption of four types of "open" platforms:

• Open applications: consumers should be able to download and utilize any software applications, content, or services they desire;
• Open devices: consumers should be able to utilize a handheld communications device with whatever wireless network they prefer;
• Open services: third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and
• Open networks: third parties (like internet service providers) should be able to interconnect at a technically feasible point in a 700 MHz licensee's wireless network.

We believe that adopting these four license conditions collectively will encourage prospective broadband companies to participate in the auction, and be able to bid successfully for the available spectrum. Not only are new entrants more likely to embrace an ethos of openness, but additional forms of competition will emerge from web-based entities, such as software applications providers, content providers, handset makers, and ISPs. And consumers ultimately will come out ahead in that rich and vibrant broadband environment."

From Daily Wireless:

"Martin may be giving a bone to Frontline for 10 Mhz (+12Mhz of public safety spectrum) for a shared public/private partnerships. But let’s be realistic — more than half the valuable real estate is not addressed by this proposal. It enables Verizon to buy into the Upper 700 MHz while leaving the lower 700 Mz band (with 30 MHz) largely unregulated and unrestricted.

What’s going to happen to it?

Some 60 Mhz of 700 MHz will be auctioned off early in 2008. Cellular companies may get the lion’s share, anyway. That’s because the lower 700 MHz band is also home to Qualcomm’s proprietary MediaFLO. It blasts out a 50,000 watt broadcast signal to mobile phones. A 100 mW two-way radio on an adjoining frequency is going to be drown out. It’s no good for two-way communications.

Block “E” (Channel 56) adjoins MediaFLO (on Channel 55). Verizon may pick that up. Block “A” and Block “C”, although they are composed of two, 6 MHz channels, ajoin the powerful broadcast blocks of channel 55 and 56. That makes them less than ideal for two-way communications. Robert Townsend’s Aloha Partners has already picked up most of the spectrum on block “C”, buying up hundreds of regional licenses. What does that leave for effective two-way communications? Block “B”.

Could 2×6 MHz (on Block “B”), using 6 regional licenses to create a nation-wide wireless broadband network, be a competitive threat to Verizon? I don’t think so. It’s a rural play. A 700 MHz urban tower would be swamped. Verizon might get RUS funding to supply “closed” access on that piece of spectrum - with their own mobile television channel on Channel 56."