The Last Great Spectrum Land Grab
Published on: 18th March 2008
The U.S. Federal Communications Commission's (FCC's) auction of frequency in the 700MHz band represents the wireless world's last great spectrum land grab, and will catalyze the development of wireless broadband, mobile video and other new mobile services in the United States, iSuppli believes. The winners of this $20 billion bidding war will make technology and standards decisions that will have major ramifications, both positive and negative, for individual members of the wireless supply chain.
Wireless Supply Chain Landscape
The 700MHz auction opened on Jan. 24, and at the time of writing, it was expected to close within days.
The 62MHz of available frequency in the 700MHz range offers unique propagation aspects, giving it high efficiency when delivering wireless broadband and broadcast video to mobile handsets. Making this event even more unique, the FCC mandated that 22MHz of the 62MHz band be available at auction as "open" to enable an unconstrained user experience˘â‚¬â€ťthe so-called "C-Block" portion of the spectrum.
"The open designation of this bandwidth is significant, given the fact that the incumbent wireless service providers now are invoking boundaries on destinations, applications and devices in order to maintain their positions as content gatekeepers," said Steven Mather, principal analyst for financial services at iSuppli.
Winners and Losers
The selection of the air interface for the open network on the C-Block frequency will have a major impact on members of the wireless supply chain.
For example, if the winner of the C-Block auction chooses WiMAX as its air interface, supporters of the standard - including Clearwire, Motorola and Intel - would stand to benefit. Without this jump start, the window for WiMAX deployments continues to dwindle.
Other companies that stand to win or lose based on the auction include:
- Qualcomm - is a key supplier of Intellectual Property (IP) for broadcasting video to mobile devices. Qualcomm could see significant licensing and hardware revenue from its proprietary MediaFLO system, which delivers audio and video multimedia to wireless subscribers. MediaFLO has been selected by major wireless carriers Verizon and AT&T. Qualcomm also has developed a DVB-H solution, which may be selected by European carriers rather than MediaFLO.
- Handset market leader Nokia - is assessing methods to leverage its market dominance. The establishment of an open network and Block C's attractive propagation aspects could be the opening Nokia has been looking for to establish a greater presence in the United States, especially since one of its biggest obstacles has been its weak relationships with the American operators. The availability of the Block C spectrum bypasses this barrier to some degree.
- Incumbent wireless carriers still have massive scale, resources and time on their side when it comes to Block C. Talk of the incumbents' demise due to the arrival of open networks has been greatly exaggerated.
- Any potential open networking licensee can look forward to many challenges ahead. First, the licensee must select the air interface, then it must engage in a costly and time-consuming network build-out process and finally it will have to steal subscribers from the large, incumbent carriers - a task that is likely to prove difficult.
- Regardless of who wins and who loses, the arrival of the new spectrum will have a major impact on the U.S. wireless services, and the supply chain.