The battle for the 700 MHz wireless spectrum has begun. It is both a business and political battle, while the issues are very technical. The US governement is holding an auction in January to sell off the most valuable wireless spectrum ever available, raising as much as $10 Billion dollars. It is a once in a lifetime opportunity for several reasons. The 700 MHz issue was raised at the CTIA conference.
More powerful and cheaper to deploy - The 700MHz spectrum is more powerful than the current cell phone spectrum, can go through walls much easier, and it is cheaper to deploy. Because the spectrum is more powerful it requires fewer transmitters and towers, making it much less expensive to build out a nationwide network. We are talking 50% less, ore eveen 70% less.
Why is this political? The government decides what gets auctioned, when, and under what rules. The incumbent wireless carriers (Verizon, AT&T, etc) want to own the spectrum and use it the same way they currently do for other cell phone spectrum. Google and others want in on the action, and want to change the rules of the game.
Why is Google interested? Google wants to buy the spectrum for up to $5 Billion dollars and make it available in much the same way that the Internet is available today. Everyone can access it, but you do need to pay. Here is how The Register describes Google's intentions;
"Google doesn't want to run its own wireless network. It wants to sell spectrum to third-party ISPs, hoping to finally create some competition in the broadband internet market. That's the broadband market as a whole, not just the wireless market. Remember, the likes of AT&T and Verizon control not only the airwaves, but all those wired lines as well."
What will Microsoft do? Microsoft is interested in seeing the Windows Mobile OS on as many cell phones as possible. Microsoft is a software platform company, not a wireless infrastructure company. In response to a question at the CTIA conference, eWeek reported that Steve Ballmer said
"No, we don't have plans to participate in the spectrum auction," said Ballmer, to audience applause. "We may be broader in what we do than any company, but we have a core competency. And we think the telecom industry has a core competency. It takes a real expertise to set up networks, to invest in capital expenditures, to provide customer service 24/7—that is a core competency. What would it buy us to own a piece of the spectrum? It would probably alienate us."
How much will it cost? Buying the wireless spectrum will cost at least $5 Billion. It will cost another $4 Billion or so to build out the network infrastructure, transmitters, etc. Then it will cost another $1 Billion or so to build the network services and control infrastructure. So, we are talking at least $10 Billion to make this spectrum available to the public. With that much invested any company will need a pretty good business model to get a return on investment. This is a complicated issues with lots of business and political ramifications. TechMeme has aggregated lots of stories on the subject.
John Doerr of Kleiner Perkins has been working hard to make this wireless spectrum available to anyone...just like the Internet. If you look at the rate of innovation on the Internet compared to the rate of innovation on the cell phone network you can see why this is important. US government regulation and monopoly ownership of the wireless spectrum is the single biggest reason why the US lags behind the rest of the world in cell phone technology and usage. Maybe the rules do need to change.