Everyone wins in 700-MHz auction: analyst

26 Mar 2008

The recent auction of 700 MHz spectrum in the US could spell significant changes for service providers that ultimately benefit consumers.

Verizon Wireless and AT&T were the major winners across the board, together accounting for more than 80 percent of the auction's $19.1 billion in bids, according to ABI Research.

Verizon won seven of the 12 Regional Economic Area Groups in Block C, which provides nationwide coverage in the continental United States and Hawaii.

Nadine Manjaro, ABI senior analyst, said these licenses will enable Verizon to extend coverage into rural areas and potentially pose a significant threat to rural operators.

In addition, since Verizon has announced plans to deploy Long Term Evolution or LTE, she said it is highly likely that LTE will be deployed in this frequency band.

As for Google's ambitions, Manjero said it was 'no surprise' the search engine giant didn't win, since its real goal was to get the networks opened up.

'They did achieve their goal of requiring that the networks be open to whatever devices they intend to bring to market, without incurring major costs," Manjero said.

The auction also produced a new player in EchoStar, which won a nearly nationwide footprint in Block E and could potentially deploy mobile Wimax services similar to Sprint and Clearwire.

A major hindrance, however, said Manjaro, is that EchoStar only has 6 MHz of spectrum in each market compared to Sprint's approximate 90 MHz in each market.

The results of this auction will mean changes for existing operators, according to ABI.

"With flat rate pricing, all operators are now commoditizing the bandwidth. They will have to get creative in developing new services to increase revenue," said Manjaro.

Verizon, she said, is already on its way, launching its Open Development initiative, which allows third-party developers to build new applications and services for the network.

"That means consumers will win through flat-rate pricing and the ability to buy any device and use it on any network. That's what the FCC wanted, and to me, it looks like a win-win situation, except for the rural operators," said Manjaro.

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