May 11, 2006 12:00 PM PDT
Why cable companies, Google are eyeing wireless spectrum
But what, exactly, will these companies do with this expensive asset?
The auction, scheduled to begin June 29, will sell off slivers of 90MHz radio spectrum in the 1.7GHz to 2.1GHz bands, which could be used to roll out more third-generation, or 3G, mobile networks or newer, 4G wireless technology that would shuttle voice, data, video and other services at even higher speeds.
"It's ideal spectrum," said Craig Mathias, an analyst with Farpoint Group. "I'd say it's as good as PCS (personal communications services) spectrum. It allows the owners of the spectrum to use any number of technologies, including next-generation cellular technology and Wimax."
On Wednesday, Verizon Wireless filed a Short Form Application with the FCC to participate in the auction, and other mobile operators, such as T-Mobile, are also expected to aggressively bid for spectrum. In addition to the traditional phone companies, other companies, such as Google and Time Warner, may also throw their hats--not to mention their checkbooks--into the ring.
On Wednesday Time Warner CEO Glenn Britt confirmed that Time Warner is considering bidding, along with Comcast, Cox Communications and Advance/Newhouse Communications. The four cable companies are already linked in a partnership with cellular provider Sprint Nextel that they announced last November.
It's difficult to know how aggressive Time Warner and the other cable companies plan to be. Britt said Time Warner may not even actually bid, but that it wanted to keep its options open.
Other rumored bidders, such as Google, have been mum about their plans. Google co-founder Larry Page said during the company's first-quarter earnings call that Google was looking into new ways to "expand" Internet access possibilities for users. Page didn't confirm the company's plans to bid on new spectrum, but he didn't deny the rumors either. Google CEO Eric Schmidt said at a press event Wednesday that the company would more than likely partner for spectrum. He indicated Google might consider teaming up with a partner to acquire new spectrum, or it might simply partner with a company that already owns spectrum.
"All these companies want to leave their options open right now," said Albert Lin, an analyst with American Technology Research. "Being a partner with a cellular provider is convenient, but it's also expensive. And even though spectrum is expensive, it's generally considered a rare commodity. The opportunity doesn't come along every day to buy it."
An alternative to standard networks?
What would these companies do with these licensed airwaves? Lin believes it's unlikely that they're looking solely to get into the already crowded cell phone business. Instead, it's much more likely they plan to use the spectrum to deliver wireless broadband services.
Time Warner and the other cable operators involved in the Sprint Nextel partnership have already indicated that adding wireless to their product suite means much more to them than simply adding cell phone service to their bundled packages.
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