How To Get Spectrum Back From TV For More Useful Purposes

from the property-rights? dept

If you look at how our radio spectrum is allocated today, you discover that TV broadcasters have a huge chunk of spectrum (that chart doesn't directly display how much spectrum is actually included -- I remember seeing another chart, which I can't find now, that shows proportionally how much more spectrum broadcasters have). This was given to them -- entirely for free -- years ago, when spectrum wasn't used for much. These days, however, spectrum is precious for so many different things, and certainly much of it could be put to better use. Of course, the broadcasters aren't thrilled with giving up any of their windfall. For years, they dragged their feet, kicking and screaming, about switching from analog to digital broadcasting, which was needed to reclaim some spectrum. More recently, they've been fighting attempts to use "white space" spectrum -- which is spectrum that's unused, but close to used spectrum. The broadcasters insist there will be interference, while technologists insist the technology is good enough to block interference.

So, it's interesting that, just as we're hearing of the first tests of white space networks, the FCC is also talking to broadcasters about other ways to reclaim some spectrum and put it to use on something more useful and productive. Apparently, the plan on the table right now would be for broadcasters to give up the spectrum in return for a cut of the revenue the government would get in auctioning off the spectrum for wireless use. Of course, some may find it distasteful that public spectrum that was given to these companies for free can then get sold off with at least some of the money going to those who never bought or truly "owned" the spectrum in the first place. But, given that the FCC set things up in a way where it basically created a de facto ownership structure of the spectrum, it's difficult to see any reasonable way to get that spectrum back without paying for it.

In the link above, Adam Thierer suggests we just give the current holders property rights in the spectrum, and assume that they'll then sell it off to those who can do something more innovative with it (or change and do something more innovative themselves). I've long been a proponent of giving up the ridiculous idea of having the government decide how each slice of spectrum must be used. Why not let the companies who control the various slices of spectrum make use of it as they see fit? It seems more likely that we'd get more efficient uses of the spectrum. So, it's good to see more thinking about ways to put some of that spectrum to better use, but it would be nice if we allowed the market, rather than the government, to figure out how to best use it.

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If You Have WiFi, a Cell Phone, Or Lots Of Other Things, The FCC Thinks It Can Search Your House

from the respect-my-authoritah dept

Part of the Federal Communications Commission's job is to regulate the airwaves, ensuring that radio devices don't unduly interfere with each other and turn the spectrum into a morass of noise. Generally this entails making sure that licensed radio and TV stations are staying within the frequencies they're assigned and within certain power levels, and also cracking down on people broadcasting in licensed frequencies without licenses. One tool in the FCC's investigative arsenal is the ability to inspect radio gear, like TV stations' transmitters, but the Commission also says that this extends to things like WiFi routers, cordless and cell phones, remote garage door openers, TV remotes, or "anything using RF energy." This means that if you have any of those products, or anything with a radio, the FCC thinks it has the right to search your house (via Boing Boing). The FCC contends the authority stems from the Communications Act of 1934, but as Threat Level points out, it's never been challenged in court, mainly because it's a relatively recent phenomenon for essentially every American household to have so many radio devices. While it's unlikely that the FCC will begin raiding homes to confiscate WiFi routers and garage door openers, there is speculation that should FCC agents enter a home and see evidence of unrelated criminal behavior, that evidence can be used for criminal prosecution. This could give law enforcement a potential back door around search and seizure laws, a move which certainly merits some concern.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Senators Call for Spectrum Inventory

from the we're-missing-one-spectrum dept

There's been a lot of talk over the years about the various studies and statistics used to measure broadband in the US. Very often the figures don't tell a completely accurate story, so there's been a push for the government to get better data as a part of the formation of a national broadband plan. It's clear, though, that wireless access will play a big part of the broadband future of the country, but it has to be handled a little differently. Wired networks can always have more capacity added, but wireless networks have the constraint of a finite amount of radio spectrum. A big part of regulators' work in enabling mobile broadband to blossom is in ensuring that spectrum is being used efficiently. This is part of the drive behind plans like the digital TV transition and the white spaces spectrum, which seek to wring more productivity out of the airwaves. But for more of these types of efforts to move forward, it's crucial to get a better handle on just how the entire spectrum is being used, so a couple of senators have introduced legislation that would have the FCC and NTIA undertake a "spectrum inventory" detailing the usage of spectrum between 300 MHz and 3.5 GHz. Hopefully this will make it clearer how much valuable spectrum is being mismanaged or hoarded, and open the door to some new licensing policies, like spectrum markets, or even just the opening of more spectrum to unlicensed use to take advantage of new technologies.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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NAB Cries To The Court About White Spaces Spectrum Plans

from the same-old-story dept

One of the better decisions to come out of the FCC during Kevin Martin's reign was the decision to free up the "white spaces" spectrum that lies in between TV broadcasts for other uses. The white spaces are unused spectrum that sit in between TV broadcasters' signals. They were important in analog broadcasts to keep stations' signals from interfering with each other, but they are less crucial in digital broadcasts (like the ones the US will eventually switch to). White spaces proponents say that they can effectively be reused by unlicensed devices that can seek out empty spectrum and use it to communicate, without interfering with licensed broadcasts, and the FCC concurred -- and, of course, made that a key part of its approval of the technologies. But as ever, the National Association of Broadcasters disagrees, and has sued to block usage of the white spaces, arguing it will interfere with their members' broadcasts.

We might be more sympathetic to the NAB's claim if it didn't have such a long and glorious history of trying to stifle anything that competes with incumbent broadcasters, and have such an annoying way of doing it. The FCC has put significant stipulations in place to ensure that white space devices don't cause interference, and despite the NAB's contention, the prototypes that failed in the testing process didn't do so. The FCC got it right by approving use of the white spaces with the restrictions and rules it put in place to tame interference; the NAB has once again got it wrong by trying to stifle innovation, and perhaps competition.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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FCC Just Couldn't Stop Voting

from the election-day-festivities dept

Well, it's election day and apparently the FCC commissioners liked voting so much they took votes on just about everything. Amazingly, it looks like they even made some good decisions. The big one, of course, and the one that will get the most press, is the unanimous vote to free up television "white space" spectrum. While the NAB made a last ditch effort to stop this, the FCC made the right call here. This spectrum can be put to much better use, which can have a huge impact on increasing innovation and wireless technologies. This is a big win. The FCC also approved Sprint and Clearwire's deal to set up a joint venture for their WiMax operations, as well as allowing Verizon to buy Alltel. Both of those deals make sense as well, so it's good to see them approved.

Other than that, the FCC said that it's going to start looking into the pricing policies of cable companies... and Verizon. Who's missing? FCC boss Kevin Martin's best friends over at AT&T. To be honest, while it's quite likely that the cable companies and the telcos (yes, including AT&T) are abusing their oligopoly position, the answer shouldn't be having the FCC act as a watchdog over pricing policies, but for a better system to be set up that encourages real competition. In the meantime, though, can someone explain why AT&T was left out of the bunch?

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Kevin Martin In Favor Of Freeing Up White Space TV Spectrum

from the good-news dept

While there's been a ton of propaganda from TV broadcasters (and, oddly, wireless microphone vendors) concerning requests from tech companies to make use of the so-called "white space" spectrum that surrounds the spectrum the TV broadcasters use, it appears that FCC boss Kevin Martin is now prepared to support freeing the spectrum for other uses. This isn't all that surprising, given that the FCC has been pushing to free up such spectrum for years, but it is very good news. While there were some early test device failures, the problems were with the devices themselves, not in creating any interference, as the critics claim. This totally unused spectrum could open up all sorts of interesting new wireless technologies that could be tremendously useful in many different ways.

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Flexible Spectrum Markets Would Improve The Wireless Marketplace

from the spectrum-for-sale dept

Mathew Ingram notes that Google is continuing its campaign to use television "white spaces" for Internet connectivity, a promising concept that hasn't panned out so far. I think the most interesting tidbit in Ingram's post comes from an interview with Richard Wiley, the guy who chaired the committee that developed what became the current digital television standard. Ingram says Wiley told him that one of the broadcasters' criteria for the new standard is that it use as much spectrum as possible. That sounds backwards, but it made sense for the broadcasters, because they knew they'd have to give back any spectrum they didn't use. And it's consistent with past experience; we've written before about the broadcasters' spectrum-hoarding tendencies.

Perverse incentives like this are an inevitable consequence of the FCC's Soviet-style process for assigning spectrum usage. As long as the uses for spectrum are decided by fiat by the FCC, current licensees are going to play these kinds of games to ensure they get the biggest slice they can, even if they waste spectrum in the process. A better way to handle the transition (and still a good idea today, for that matter) would have been to give the broadcasters a fixed spectrum allocation and then allowed them broad flexibility on how to use it—including the right to lease or sell unused portions to third parties. That way, if they found a way to transmit television signals with less spectrum, they would have been able to lease out the unusued portions to third parties who could put it to more productive use.

In addition to promoting more efficient spectrum use in the short run, putting more spectrum on the market (as they're doing in the UK) would have positive effects on the overall telecom market. By driving down the price of spectrum it would make it easier for new firms to get into the wireless market. So far, the relatively small number of licenses that have been put on the market has allowed incumbents to snapped them up and keep out new entrants. Putting more spectrum on the market would make this strategy a lot more difficult to pull off.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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AT&T Wants To Throw Some FCC Roadblocks Into Sprint, Clearwire Joint Venture

from the good-luck-with-that dept

In a move that is clearly designed to just piss off and waste the resources of a competitor, AT&T has filed papers with the FCC opposing Sprint and Clearwire's plan to merge their WiMax divisions, which was announced a few months ago (found via Broadband Reports. Of course, AT&T has a chummy relationship with the FCC, who has allowed it to merge with telco after telco without many real conditions (and even telling it that it can ignore some of the conditions it agreed to to get those mergers approved).

In this case, AT&T claims that it isn't really opposed to the merger, but it's filing opposition papers because it feels that Sprint and Clearwire aren't receiving the same level of scrutiny that AT&T received in its mergers, specifically with regards to it spectrum holdings. This seems like grasping at straws by AT&T just to throw some sort of extra paperwork roadblock in the path of the new Clearwire, which is an obvious competitor.

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How The Digital TV Transition Will Accidentally Help HDTV Sales

from the customer-confusion dept

There's been a huge amount of confusion concerning the February 2009 transition from analog over-the-air TV to digital over-the-air TV, but one of the big points of confusion is the false assumption by many that this has something to do with HDTV. It doesn't. It's just about the television content that's available freely over the air -- as opposed to via cable or satellite TV. For anyone who is a subscriber to cable or satellite (i.e., the majority of Americans) the transition basically means nothing. Yet, thanks to years of FUD from folks resisting the transition (mainly the TV broadcasters who wanted to keep their spectrum) many people are quite confused about what this means. Some new studies have looked at public readiness for the switch, and while most of the headlines focus on the fact that about half of those impacted are unready for the shift, what may be much more interesting is a tidbit not found in most of the coverage, but tucked into the Washington Post coverage:

About 30 percent of the respondents indicated they had plans to ready themselves for the transition, even though they do not have to do anything to maintain service.

In other words, an awful lot of people who already have a digitally enabled TV, cable service or satellite service somehow think they need to upgrade to keep service after February. Obviously, they're confused, and it would be a good guess to assume the root of at least a significant percentage of that confusion is that idea that this has something to do with HDTV. So, it sounds like a large group of cable or satellite TV subscribers are planning to upgrade to HDTV, not because they want to, but because they incorrectly think they need to to keep getting TV after February of next year. HDTV providers must be thrilled.

As for the percentage of folks who will be impacted and haven't done anything about it yet, that doesn't seem too troublesome. After all, there's still seven or eight months to get it done, and people sure do like to procrastinate. What's more troubling, perhaps, is the fact that the $40 coupons for converter boxes that are being sent out to those who request them expire after 90 days. Why? No one seems to have any clue, and its leading to many of these coupons expiring before people have a chance to redeem them.

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That Didn't Take Long: Verizon Wireless Trying To Get Out Of Open Spectrum Requirements

from the not-hard-to-see-that-coming dept

We noted recently that Verizon Wireless' new PR campaign around its "open" network offerings seemed open in name only, and it appears that the same concept is being expanded to cover the recently won 700 MHz spectrum, which FCC rules require to be open. Google has filed a petition to deny Verizon the spectrum, noting that the company's public position on how it will "open" the spectrum isn't really open at all. Basically, it looks like Verizon Wireless is trying to reinterpret the rules in its favor. Google isn't really asking the FCC to deny the spectrum sale, but really just wants the FCC to actually enforce the rules that were put in place. Given the FCC's friendly attitude towards telcos bending the rules, don't be surprised if that doesn't happen. Even if the FCC somehow tells Verizon to follow the rules more closely, it seems likely that Verizon will still figure out some way to wiggle out of them again.

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Politician's Spectrum Plan Sounds Mighty Familiar

from the m2z-in-the-house... dept

You may recall the well-hyped venture-backed startup named M2Z that wanted the FCC to hand over a segment of unused spectrum. Part of the plan was to offer a free ad-supported wireless service that would cover 95% of the country, that would be slow and "filtered" so that it was "family-friendly." It would also offer a higher-level paid tier, as well as priority services for public safety uses. The kicker, though, was that M2Z hoped the FCC would hand over the segment of spectrum for free in exchange for a piece of the profits down the road. The FCC turned down the request, but apparently that's not the last we've seen of it.

Congressional Representative Anna Eshoo has introduced a bill that would reserve the same slice of spectrum for a wireless service that would cover 95% of the country, that would have a free tier that was slower and filtered, as well as a higher-level premium tier, and which would offer priority services for public safety uses. The difference, though, is that it looks like this bill wouldn't involve just handing spectrum over, but would include an auction component towards how that spectrum is used. While it does seem like M2Z is well meaning in its plans, it's still hard to see why setting up all these rules makes sense. It still seems like it would make much more sense to create a much more open market system, to allow the spectrum to be put into the best use possible, rather than setting so many rules for each slice of spectrum.

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Cablevision Caught Blatantly Lying To Customers About Digital TV Switch

from the don't-blame-us,-blame-the-fcc dept

As you probably have heard, in early 2009, over-the-air TV stations will no longer be broadcasting analog signals to those who receive television over-the-air (with an antenna). This is part of a necessary effort to reclaim valuable wireless spectrum that the broadcasters have held (for free) for many years, and put it to much better use. This change only impacts those who watch TV over-the-air. That means it has no impact whatsoever on anyone who receives their television via cable or satellite TV (representing the majority of TV viewers out there). Yet, this apparently didn't stop at least one cable company from claiming otherwise.

Consumerist has caught Cablevision telling customers that they need to upgrade to a digital cable box by order of the FCC. This is simply untrue. Cablevision is upgrading many of its channels to digital format from analog, and those channels will no longer be available to customers who don't have a digital cable box. But, that's entirely a business decision made by Cablevision, and has absolutely nothing to do with the the FCC-mandated switch for over-the-air broadcasts. It's just that Cablevision timed this deal to coincide with all the stories about the over-the-air switch, and is using that to make people think that it's the FCC's fault. Cablevision responded to Consumerist admitting that the change has nothing to do with the FCC's mandated change -- but refused to explain why every customer support person Consumerist spoke to gave the FCC as the reason, even after they specifically went to check their training notes. It's a rather sneaky (and likely illegal) move to claim that people need to upgrade due to the FCC when the FCC has nothing to do with it.

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AT&T-Funded Politicians Accuse Google Of Gaming The Spectrum Auction System

from the please-explain dept

We've already explained why Google's actions in the recent 700 MHz spectrum auction wasn't "fleecing" taxpayers as some lobbyists had contended. Yet, it appears that the lobbying has been effective. A set of Congressional representatives have started asking whether or not Google gamed the system. This is a pretty bizarre claim against a company that put up $4.6 billion in an auction and was then outbid. Clearly, in putting up the bid, there was a chance that Google could have won and had to pay the $4.6 billion. There's no rule that Google had to keep bidding. The company stopped at the point at which it was comfortable bidding. Of course, it will probably surprise no one that if you look at the top campaign contributor to all 3 representatives attacking Google's actions, you'll notice a pattern (in the letters A, T and T). Check it out for yourself. There's Fred Upton, Cliff Stearns and John Shimkus. You think that had something to do with their opinion on the spectrum auction process? Nah...

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No, Google Did Not Fleece Taxpayers Out Of $7 Billion

from the bad-math dept

We've talked about Scott Cleland before. He's a "telecom analyst" who has a reputation for stretching the truth as far as it can go in order to contort himself into making telcos look good and anyone opposing the telcos look bad. Jim Harper points us to Cleland's latest, where he accuses Google of "fleecing taxpayers" out of approximately $7 billion with its actions in the recent 700 MHz auction. He notes Google's admission that it was only in the auction to push the bid over the threshold requiring any service on the network to be open. This isn't a surprise. It was widely assumed that Google would merely bid up to the threshold, knowing that if it could buy the spectrum at that price, that would be great, but if someone else got it and the network was then required to be open, that was great too. So this is hardly a shocking admission on the part of Google.

Cleland then compares the prices of the other blocks of spectrum available (those that didn't have open access rules) and does a back of the envelope calculation that the average price per MHz was noticeably higher on the closed access spectrum than the open access spectrum. From that point, he jumps to the conclusion that the C block (the open access block) was significantly underpriced because (he claims) telcos valued it less since it was open. Of course, there are all sorts of problems with this. He determines the amount of the underbidding by merely averaging the % difference in the A and B blocks to the C block -- but it's a massive difference. The A block was 50% higher and the B block was 250% higher. He then just averages that to 150%. Yet, anyone who bothered to actually think about it (rather than look for a weapon with which to bash Google) would note that this calculation is quite dubious. Beyond the "small sample size" problem, the very difference in price-per-MHz in the A and B blocks should make it clear that there are many other reasons why the price would fluctuate having absolutely nothing to do with whether the network was open or closed. To assign the entire blame to that makes no sense whatsoever and ignores the realities of what these different blocks of spectrum were good for.

Next, Cleland tries to spin this story as Google illegally swiping $7 billion from taxpayers -- since this entirely mythical $7 billion would have gone into the treasury, which will now have to make it up from taxpayers. On top of that, he suggests (totally incorrectly) that the only real beneficiary of the open access rules would be Google for its Android offering. Except... not quite. He's ignoring (conveniently) the other half of the equation. The open access rules benefit plenty of other companies beyond Google (in fact, any company that wants to take advantage of those rules), and will likely lead to much greater innovation and new and valuable businesses and services, that will likely generate much more tax revenue for the government than the totally mythical $7 billion. But Cleland decides to ignore all that inconvenient information in order to make an entirely bogus claim against Google.

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Lessons From The 700 MHz Auction? More Of The Same

from the no-surprises-here dept

So the winners of the 700 MHz spectrum auction have been announced and to say that there were no surprises would be an understatement. It played out almost exactly as most observers predicted it would. Verizon Wireless ended up with the C-block (with Google only bidding right up to the cut-off amount to force Verizon to play by "open" rules) and AT&T added some spectrum as well, which it can add to the 700 MHz spectrum it picked up separately last year. The end result? Nothing too exciting for consumers. Whether or not Verizon Wireless's required "openness" makes a difference remains to be seen. What didn't happen was someone new entering the scene -- meaning that we're not going to see anything really new come out of all this spectrum.

In fact, perhaps the most bizarre bid of all was EchoStar spending $700 million on spectrum that can only be used for one-way communication. One-way communication is less and less useful these days. EchoStar has been making some interesting moves of late, but using this spectrum to build a mobile TV broadcast solution (which is what many expect) makes little sense. It will cost the company billions, and then they'll be limited to a one-way communication system just as people are recognizing that the real value is in multi-directional communications. It may give the company another option rather than relying on satellites (which are costly and troublesome at times), but the expense is way too high considering the limitations. So, even with EchoStar, we're talking about "more of the same." That's too bad, as there was a quiet hope that someone different would step in and do something really new and interesting with this valuable spectrum.

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Open Does Not Mean Communal

from the kill-this-myth dept

I hesitate to post anything that involves Scott Cleland, a telecom "analyst" who has a bit of a reputation for, well, perhaps stretching the truth in order to make a point that supports the big telcos who pay him to be a public advocate. However, with InfoWorld positioning him as a legitimate critic of the FCC's open spectrum rules and hearing him make statements like: "Everybody throws the word 'open' around and says open is wonderful. But 'open' means communal. It means not owned," it seems a response is necessary. This is an old trick used by those who can't actually come up with a reason why "open" systems are bad. So they fall back on the false claim that open means communist, and that's bad.

There are just a few problems with this statement, with the big one being that it's completely wrong. First of all, "open" hardly means communal or communist. In fact, it often means exactly the opposite. It means creating a platform or a standard on which multiple parties can compete, as capitalists, rather than locking people out via a government-granted monopoly. Also, the smear that "open means not owned," is used to suggest that open systems are somehow antithetical to property rights. Again, this is hogwash. First of all, when discussing spectrum, we're never talking about property that is owned anyway -- merely a bit of the air that is licensed. Spectrum is, by it's very nature, the property of everyone. That's not a "communist" idea -- it's a factual one. The various spectrum auctions aren't about owning property, they're about getting a license from the FCC to be able to do something with the spectrum that is already around us.

What Cleland is really arguing for is the idea that it's better to have government-granted monopolies limited to a few big providers (mostly the ones who back his firm), rather than a more level playing field that creates real competition in a real market. For him to suggest that an "open" system is somehow less capitalistic than one that involves a gov't agency granting monopoly rights is simply laughable.

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Frontline Shuts Down; Spectrum Buying No Place For Startups Apparently

from the can't-upset-the-world-without-some-money dept

There was tremendous hype and a number of big names behind the wireless startup Frontline, who was talked up as a possible upstart bidder (and potential winner) for a segment of the spectrum that the FCC is auctioning off later this month. However, if one thing has become clear over the years, spectrum auctions are not a game for startups to play -- as unfortunate as that may be. On Tuesday, the news came out that Frontline had shut down after it was unable to find financial backers to pony up all the money it needed. There are some questions about this, as some of the company's early supporters represent a ton of money, but some are noting that this could actually cause something of a domino effect impacting all of the spectrum being auctioned off. There are a variety of rules and hurdles that various bidders need to meet, and if those hurdles aren't cleared, then the FCC can cancel the auction and try again -- with different rules that could toss out the open access requirements the FCC put in place. It's not clear if that will actually happen, but it appears to increase the likelihood significantly.

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Forget Google, Watch Out For Chevron In The 700 MHz Auction

from the my-ISP-is-Chevron? dept

Everybody's been buzzing about the likelihood of Google bidding on the 700 MHz spectrum that's up for auction in a few weeks, that's allowed a few other interesting characters to get in on the auction below the radar. The FCC has now announced that 266 separate entities have filed to take part in the auction, so it's quite a long list. So far, only 96 applications have been accepted, but the others have until January 4th to get their applications in order. Everyone knew Google was on the list, and it's no surprise to hear names like Verizon Wireless, Alltel, MetroPCS, Vodafone and AT&T (who already got a head start buying some other spectrum in the 700 MHz realm earlier). There was some speculation about cable companies participating, and sure enough, Cox and Cablevision will show up at the auction. Then there are a few surprises. Qualcomm is planning to bid -- which could upset some of the US carriers who consider Qualcomm more of a partner than a competitor.

In a list of 266 companies, there are always going to be some long shots -- but it still doesn't hurt to point out some of the more interesting bidders. Microsoft co-founder Paul Allen plans to bid via his Vulcan Spectrum LLC (reusing his favorite "Vulcan" name for companies). It's unclear what he would do with the spectrum. Perhaps even more surprising is the news that oil giant Chevron is planning to participate. What the company would do with the spectrum should it win (and it certainly has the money to win) is an open question, but there are a few intriguing ideas. As for Google, don't hold your breath for a win here. It has seemed pretty clear from the beginning that the company is only in the auction to bid $4.6 billion -- the lowest point necessary to force open access rules to kick in. It would be a huge surprise if the company bid much more than that, and it would be an even bigger surprise if no one outbid Google.

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Verizon Wireless' Triple [Open] Play

from the competitive-pressures-at-work dept

The recent announcement that Verizon Wireless will support Android, Google’s new software platform for mobile devices, is an early warning sign that the traditional network operator model is fast becoming obsolete. To some this move seems to contradict a widely held presumption that two previous announcements (the choice of LTE with Vodafone and the inclusion of non-Verizon phones on the Verizon Wireless network) were a competitive strike at Google’s position in the upcoming 700 mHz auction. In conjunction, these three publicly declared commitments to openness are indicators that fundamental changes to the Verizon Wireless business model are set to occur over the next 3 – 5 years.

Verizon Wireless is preparing to compete in an industry that will resemble more of a free-for-all where innovation and customer value are the rule of the day. Verizon can no longer afford to maintain strict boundaries between the devices and applications “inside” and “outside” their networks. By embracing openness on several different fronts the company is seeking to offload a large chunk of the costs associated with developing devices to a wider ecosystem of participants. Inclusive device policies will retain the same effect that outsourcing the development and support costs for new phones would. It is no longer tenable to develop devices and support customer issues for every single customer on its network, so the company is looking to basically exchange network access for ownership of support issues, with a larger group of handset and application providers.

Particularly, the Android move is to ensure that an assortment of niche devices powered by Google’s platform will have a home on the Verizon Wireless network. The company should begin to feature an increasing number of programs and incentives for an increasing number of handset makers and wireless application developers. Meanwhile Verizon will begin to slash the high costs associated with developing phones with the Samsung and LG types. As a result, the number of phone models actually supported by the company (currently at around 50) is set to drop significantly by 2012 even as the total number of models running on the network will escalate.

As the most profitable U.S. cellular business, Verizon Wireless also has the most impetus to begin the process of expanding a revenue base limited to subscribers who are content to choose from 50 or so the company’s handsets. Spurred by a shrinking number of first time customers it is fast becoming critical to find ways to attract subscribers from rival carriers and open access policies are a good start towards that end. Along the same lines, the aforementioned Vodafone LTE announcement is key to the company’s strategic play for subscribers who, in the past, shunned Verizon Wireless for carriers that enable easier roaming. The goal is to extend the availability of “America’s most reliable network” to both sides of the Atlantic to boost the value proposition of becoming a Verizon wireless customer.

Verizon’s open evolution is a response to the limited growth opportunities faced by US mobile carriers in the face of market saturation (250 million across the country already have cell phones). Over the next 2-3 years what is now a rumbling from consumers will expand into smoldering demand for choices on wireless networks that reflect the nature of those provided on landlines. In effect the company realizes that it must adapt to an open-centric marketplace to compete and survive over the long haul, not just in the upcoming 700 MHz auctions. In doing so, Verizon has begun the transformation from staunch gatekeeper of a closed network into the heart of a more open wireless ecosystem.

Alex Fletcher is an expert at the Insight Community. To get insight and analysis from Alex Fletcher and other experts on challenges your company faces, click here.

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AT&T Buys A Little Head Start On 700 MHz Spectrum

from the gotta-start-somewhere dept

Just as the FCC is pushing back the start of the highly anticipated 700 MHz spectrum auction, comes the news that AT&T couldn't wait for that spectrum to come on the market and decided to buy up a different chunk of 700 MHz spectrum licenses from Aloha Partners for a mere $2.5 billion. There's plenty of speculation about what the company is planning to do with the spectrum, with some thoughts that it's going to ditch its Qualcomm partnership for mobile video and go it alone, but that seems like a market that's DOA.

Instead, it seems likely that this is just the beginning of AT&T lining up to get its hands on the auctioned spectrum to combine with this batch. There's been plenty of speculation about who might be the top bidder for the spectrum, with random startups, Google and Apple being tossed around as possible names along with the big telcos. Verizon's been making plenty of noise (apparently both publicly and behind the scenes), but AT&T has always been up there as well. Now, that additional spectrum becomes even more valuable to AT&T, so it might be time to push up how much AT&T is likely to bid on the auctioned spectrum. And, in the worst case, if AT&T doesn't win the auction, it can use this new spectrum it bought to try to barter a sharing arrangement -- or, alternatively, as Glenn Fleishman posits, be able to keep a locked up network going, while whoever buys the auctioned spectrum will have to be more open. If true, that seems likely to backfire. It could give AT&T an initial leg up, but those walled gardens tend to have long-term problems when competing against open systems.

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