WASHINGTON-While most wireless operators and manufacturers are planning for only a scant three to five years down the road, the Federal Communications Commission, according to Common Carrier Bureau economist Gregory Rosston, already is wondering how it will make spectrum available to new and incumbent applicants 10 years from now. Others wonder who will be providing wireless service and how new money will be raised.
Speaking at last week’s Wireless Communications Summit, sponsored by Warren Publishing Inc., Rosston said of the future, “Our biggest problem right now is scarcity of spectrum. We will try to make more available by overlay, and we want to make spectrum more responsible to market demand by giving licensees flexibility.”
Because auctions will be the principal method of getting channels out to the public during the next few years, there is some concern that only a few well-heeled companies will end up providing the bulk of wireless goods and services. Perceptions regarding the purpose of today’s auctions also have changed, moving away from a method of allocating channels toward one of making money with little regard for marketplace realities.
“The idea of auctions was to get the FCC to [fulfill] a broad public-interest requirement,” said Len Kolsky, vice president of global telecommunications relations/office of public relations for Motorola Inc. “What has happened now is that the commission is concentrating on [giving new licensees] flexibility.”
According to Kolsky, if this trend toward flexibility continues, manufacturers will lose economies of scale, because there won’t be any more specific services operating in specific bandwidths. Because manufacturers have been able to build equipment for a particular market, private-radio users in particular usually take advantage of the mass-market low prices that buying in bulk promises.
“We have to keep auctions in perspective,” said Charles Jackson, a principal of Strategic Policy Research. “They could be used inappropriately, like for public safety; satellite services; and shared, nonexclusive, unlicensed spectrum.” Public-safety entities not only have no money with which to bid, Jackson explained, but their whole jurisdiction-backed system takes years to plan, fund and change. Satellite services are, for the most part, global, which could cost a carrier untold dollars if each country passed or served adopted an auction scenario.
“The industry could end up in the hands of a few, but probably not,” said Christopher Carter, GTE Corp.’s assistant vice president of business administration. “The big mergers all make sense in some way, but no one player will dominate. There could be some regional strengths, though.”
Jackson added that there could be a concerted effort by major carriers to consolidate into three or four major entities, with an emphasis on building a nationwide footprint.
“There will always be niche markets,” assured Steven Halstedt, a general partner of investment concern Centennial Funds. “Some capital-intensive areas will continue to get money. With the wireless market as hot as it is now, companies are able to raise cash and high-yield debt [junk bonds].”
