Worst of the Week: 600 MHz auction rules: milk or beer?

Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
Well, there you go. The Federal Communications Commission this week came out with rules for the highly anticipated 600 MHz incentive auction that depending on which team you play for, you either laughed so hard milk came out of your nose, or you were left crying in your beer.
(I am just going to assume that those happy with the results drank milk ala Indianapolis 500 winners, and those that lost went directly to a bar ala Homer Simpson.)
As I previously mentioned, when no one is completely satisfied with the rules, that means the right rules were made.
The rules seemed to take a bit from both sides of the aisle, with the FCC moving forward with smaller license sizes in terms of megahertz and sort-of-small sizes in terms of geographic coverage with the awesomely names partial economic area model. (I and everyone else will/should laugh a bit inside every time someone types/says/thinks “PEA-sized.”)
Those decisions catered to the smaller-is-better crowd at the expense of the larger-is-in-charger crowd.
However, those with size-on-their-side gained a small victory in that a maximum of 30 megahertz of spectrum will be set aside in “reserve” for those operators short-of-substance to bid on without having to go against the money-is-no-object crowd. That decision could leave a healthy 40 megahertz of spectrum open to all, with most expecting the “all” to really mean Verizon Wireless and AT&T. Theoretically, that could mean that the big two could both walk away with 20 megahertz of spectrum each covering the country. AT&T is already in “game mode” claiming it would be interested in going after between 20 and 40 megahertz of spectrum. We can only hope.
And, there is nothing in the rules that says a smaller carrier can’t have a go at these unrestricted licenses. Heck, for all those carriers that touted the financial good of setting aside some spectrum in reserve, it would seem to behoove them to get involved in the unrestricted license bidding just to drive up the costs. Sort of like how I sell my stuff on EBay.
There is also the issue of how bidding on those reserved licenses might play out. With up to 30 megahertz set aside for every company outside of Verizon Wireless and AT&T, that means the smallest-of-small operators will have to go head-to-head with the biggest-of-small operators like Sprint and T-Mobile US, both of which generate billions of dollars in revenues and are backed by large, international firms.
Sure, Sprint and T-Mobile US could play nice and just go after 10 megahertz each, thus leaving a healthy 10 megahertz for one fellow small carrier to gain spectrum in a particular area. Or, Sprint and/or T-Mobile US could realize that maybe if they want to really be more competitive against their larger rivals or to get a leg-up on each other, they may want to go after, say, 20 megahertz for themselves, thus leaving nothing for a real smaller carrier.
This could prove a compelling move by Sprint, for instance, as the FCC also ruled that as part of its spectrum screen process it will take into account Sprint’s substantial 2.5 GHz spectrum holdings, which could impact Sprint’s yearning to purchase T-Mobile US. If Sprint’s future is as an independent carrier, wouldn’t a nice chunk of 600 MHz spectrum help from a competitive stand point?
The same could be said for T-Mobile US, which has been at the forefront of claiming how much more valuable sub-1 GHz spectrum is than those worthless slices of airwaves higher up the spectrum band.
So much potential for so many scenarios, and all of them as compelling as Jay-Z in an elevator.
The only downside now is that we have to wait more than a year (at least) for this thing to kick off, a time period in which the FCC will have to convince broadcasters to give up spectrum in an overly-complicated reverse-auction process in order for us to gain the entertainment benefit of watching how wireless carriers go bonkers in the forward-auction process.
We can only hope that those operators that felt they were left with the short straw in the 600 MHz auction rulemaking will take out their frustration on the upcoming AWS-3 auction, which the FCC has un-shackled from any cumbersome “rules.” And by “frustration” I mean bidding ludicrous amounts of money just because you can. What better way to get over disappointment than a shopping spree. And it’s probably healthier than milk-through the nose or a trip to the bar.
OK, enough of that.
Thanks for checking out this week’s Worst of the Week column. And now for some extras:
–Rumors sprung this week that Verizon Wireless is set to begin a new marketing push behind its deployment of 1.7/2.1 GHz spectrum to bolster its 700 MHz-based LTE network using the “XLTE” tag line. While I am regularly against all forms of marketing that cater to me like the child I am and refuse to acknowledge, I think this move is pretty sweet.
Even if this rumor proves to be false, I for some reason am enamored with that letter combination. It’s got the “LTE” with a nice “X” on the front, which is a nice play on “XL” and “LTE.” So creative. Also, the timing seems right on as I believe there is a new comic-book inspired movie set to launch that also prominently displays “X” in its title, thus giving Verizon Wireless a potential “x”tra boost in its marketing efforts.
Sure, “XLTE” could also be a good label for some over-sized SUV, but let’s not let that get in the way of how well it plays for a more robust LTE service. Plus, I am just glad we have so far avoided anyone going with “5G” to tout what is really, though not really, a “4G” service.
–Finally, the bar has been re-set in terms of the fastest text message, and to the surprise of no one that bar was re-set by a teenager. Marcel Fernandez this week managed to tap out a 25-word, pre-selected message onto a touch screen cellphone in just 18.19 seconds. That bested the previous record mark of 18.44 seconds.
Not sure about the rest of you, but it takes me at least 18.19 seconds just to remember how to send a text message from my cellphone, and then factoring in all the typing mistakes a simple message becomes a five-minute part of my day. Ah, to be young again.
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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