Tactics and strategy. Battles and wars are won and lost on both levels. And while tactical finesse was certainly on display at the FCC’s spectrum auction in March, with several major telecommunications players making moves both bold and canny, the long-term strategic script will take time to play out.
That’s particularly true when it comes to implications for mobile broadband, which is still in its infancy but very much on the strategic radars of several spectrum bidders.
The auction resulted in an obvious power play by dominant cell phone providers, Verizon Wireless and AT&T, which came away with the lion’s share of spectrum, while their primary competitors stood on the sidelines.
Consumer groups bewailed the lack of competition among cellular providers that might lower prices. However, the quality of the spectrum and its consolidation will give Verizon and AT&T better cellular networks, more capable of offering advanced services, including mobile broadband.
SLICING AND DICING
As TV Technology’s Doug Lung pointed out in his March 21 RF Report, the winning bidders are not going to want to use their pricey spectrum for broadcasting video services, such as MediaFLO (which delivers television to wireless devices), but rather employ the cellular architecture for Web, texting, and other point-to-point services. They’ll instead reserve broadcast or nonreal-time video transfers for their DTV broadcast infrastructure.
But that doesn’t cover the gamut of envisioned mobile broadband services. Qualcomm, which operates MediaFLO, bought $558 million worth of spectrum, which it can use to increase MediaFLO bandwidth.
However, it was the spectrum purchased adjacent to Qualcomm’s that raised the most eyebrows.
With a $711 million bid, satellite TV provider Dish Network secured a chunk of wireless licenses it kept mum about afterward. But the spectrum it won is really unsuited for two-way communications, which left analysts prophesying a video-on-demand service to complement Dish’s satellite offering, or even a service delivering video directly to cellular devices. Analysts were quick to point out that the Qualcomm and Dish adjacent spectrum buys would be most effectively operated by one provider, leading to even more speculation.
Of course, buying spectrum is only the first step. To build out a wireless video network would take up to $5 billion, analysts said. As I pointed out in last month’s column, the climate for cash-raising has never been worse. But Dish has extra incentive as it tries to fend off a reported takeover attempt by, in the most noncoincidental of ironic twists, AT&T.
Finally, in what could be an historical footnote or a prelude of things to come, cable provider Cox, with a reputation for taking bold technological leaps, bid $305 million for a spectrum slice it could use for expanded wireless services. One example would be mobile wireless access for its broadband customers.
DO ANDROIDS DREAM OF WHITE SPACE?
The most complex move of all was made by a bidder that deliberately sought to lose.
While its $4.7 billion offer for the particularly valuable slice of C Block spectrum lost out to Verizon, Google’s position as a bidder successfully pressured Verizon to announce it will accede to FCC provisions that it open its network later this year to devices it does not sell.
Google had been leading the charge for devices that use “white space,” or unused portions of the broadcast spectrum. Despite NAB howls about interference issues, Google and the White Spaces Coalition, which includes Microsoft, Intel, HP and Samsung, have been pressing the FCC to accept white space devices, framing their argument as a service to the public (white space devices, for example, could serve rural areas and public safety communications). They also argue that employing WiFi 2.0 technology on any white space network would ramp up mobile wireless to the next level.
While the white space debate is worth another column, the open access Google has won on Verizon’s network means an open path for Google’s other strategy: open handsets.
Dashing rampant blog speculation over the past months that it was developing an iPhone killer (i.e. a Gphone), Google has instead unveiled its new open-source cell phone operating system, code-named Android (hey, at least it’s a cool moniker). It’s set to launch this fall.
Google and more than 30 companies in the Open Handset Alliance have been developing the OS, middleware and applications that could position Android as the dominant next-generation mobile broadband platform—all with Google’s advertising stream riding piggyback.
It’s that very ad model, that generated a sizzling $4.2 billion in net income last year, that allows Google to offer Android for free, said Andrew Rubin, Google’s senior director of mobile platforms and Android co-creator, in a recent NPR interview.
“We focus on building the killer applications that delight consumers, and they want to keep coming back,” Rubin said. “And then Google can help them through advertising, get relevant information about the products they’re searching for.”
Google recently announced it will hand out $10 million awards to programmers who design the “coolest, most delightful” Android applications. That’s led to a dizzying rush of developers, which may yield spectacularly addictive results.
So while bandwidth geeks can analyze the tactics of spectrum slicing and dicing all they want, it may very well be Google’s content strategy that drives the next generation of mobile broadband.
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