March 21 – The Federal Communications Commission released the winners’ identities of the 700-megahertz auction yesterday, announcing Verizon as the top bidder for C-block spectrum licenses. Verizon will pay $9.6 billion for 108 licenses, most from the highly valued national licenses in the “C Block.” AT&T came in second place, winning 227 licenses for $6.6 billion, mostly from the regional “B Block” of spectrum. Verizon Wireless is a joint venture between Verizon Communications and Vodaphone.
This spectrum is critical to developing new wireless data networks for cellular companies. Traditionally, cellular networks operate at higher frequencies, such as 850 and 1900 megahertz. Lower broadcast frequencies in the 700-megahertz range penetrate buildings much better, as allowing for easier data transmission. AT&T traditionally has the most diverse spectrum license portfolio. For Verizon to compete with next-generation wireless markets, this auction presented a must win situation.
As a general matter, a wireless communications company must have three components to remain the leader in the industry: A rock-solid network infrastructure, spectrum space, and a flagship end-user device (or even a few) for consumers to take advantage of the first two. Verizon has secured two with respect to the next-generation wireless services.
Verizon is either missing the third component or being very creative in the way it plans to fill that void: open-network access. In November 2007, Verizon announced it would open it’s networks to all devices, rather than having “locked” devices that are tied to one wireless carrier. Hopefully, other companies will follow suit and join much of the international community in allowing portable devices among multiple networks. Verizon first challenged this concept when the FCC ordered that a portion of the “C block” have open access. Verizon claimed this would furnish more competition for the market and better consumer choice. The wireless company’s about face was a voluntary recognition of how important open access was to the next generation wireless market.
This open network concept for Verizon could shift the focus on the consumer to find the best end-user device and bring it to the best network, rather than forcing Verizon to spend time on research and development to fulfill the third component of the puzzle. Being the first company to voluntarily open its network shows Verizon’s foresight into solving the end-user dilemma for next generation wireless services. Verizon certainly will still have to invest in network devices and keep a close pulse on consumer trends, but this decision, along with their success in the 700-megahertz auction aligns the potential for Verizon to take the lead in next generation wireless services.
The New York Times has more on the auction here.
FCC Commissioner Kevin J. Martin’s comments are available here (pdf format).
Posted by thechritic 
