FCC Approves Rules for Airwaves Auction

So.. the jury is in, having reached a verdict.

The FCC approved rules Tuesday for the auction of the 700Mhz spectrum, previously used by UHF television and set to be vacated by 2009.

While it does include "open access" rules for approximately 1/3rd of the spectrum that will be available, it is the watered down variety which will allow customers to use whatever phone and software they want on about one-third of the spectrum to be auctioned. While this is a belated step in the right direction, it smacks of compromise, and falls far short of the calls to separate infrastructure build-out from service provision. While various flavors of that model had been debated (particularly after Google declared their interest in bidding), the concept of service providers having wholesale access to the network, with the ability to package, price and deliver differentiated services (much as NextPhase does with DSL and and T1 circuits today, in many markets across the country) is for now, on hold.

As Michael Copps (one of the two Democrats commissioners) said after the vote, the commission "missed an important opportunity to bring a robust and badly needed third broadband pipe into American homes."

A total of 62 megahertz will be auctioned under the plan, with twenty-two megahertz subject to the "open access" rules. Another 10 megahertz will be dedicated to the national public safety network, which will be shared between a commercial operator and public safety agencies.

Tuesday's vote clears the way for the auction, which by law must take place no later than Jan. 28, 2008. It is expected to raise as much as $15 billion.

The pace of change is picking up

For those of you who follow our Press Releases, you'll see that the last couple of weeks has been pretty busy for us. We switched auditors, filed our Annual Report (10-K) and successfully completed the acquisition of Interactive Network Services, Inc. (INS), a New Jersey-based Internet Service Provider (ISP) providing primarily municipalities and more than 40 public schools in the U.S. Mid-Atlantic region with connectivity, web hosting and co-location services.

As you can imagine, that hasn't left a lot of time for blogging, but just like a kettle will boil once it is no longer being watched, the pace of change in the industry went from a jog to a Sprint (every pun intended) while our attentions were elsewhere.

So, to recap the events of the last couple of weeks, it boils down to the following; 700Mhz spectrum auction, Google throwing their ring in the hat, Sprint / Clearwire partnership, and finally today, the announcement of a Sprint / Google partnership.

• 700MHz spectrum auction
  This has seen intense lobbying of the FCC, by established carriers and potential new nationwide players. Previously used for UHF television, it has the potential to raise up to $20BN for the US Treasury (source: Aloha Partners). Where all the intense lobbying is coming from is the level of 'openness' that the different players are pushing for. Several groups want the auction rules to require that a winning bidder cannot offer retail sales of services. Rather, the winner would have to build a wholesale network and sell on a non-discriminatory basis. Other forms of openness include allowing any legal device to connect and allowing any legal use. These are pillars in the network neutrality platform, of course. (The four pillars are often cited as any resale user, any use, any device, and no tiered service.)

• Where does Google fit in?
  All of the top mobile carriers will be bidding on this spectrum, with AT&T being the powerhouse. Google have thrown their hat in the ring, committing to bidding a minimum of $4.6b if the auction proceeds with as much openness as they want. They have asked the FCC to embrace four additional conditions as part of the auction rules: open applications, open devices, open services, and open networks. Sensing a seismic tilt to the playing field, the other big carriers are lobbying hard to have the auction structured in a way that keeps Google out.
  

Here at NextPhase, we very strongly support network neutrality, and are hopeful that the FCC listens and acts wisely. Open networks are good for competition and good for the consumer. It allows resellers to differentiate themselves by service, and keeps them focused on delighting their customers.

• Sprint / Clearwire partnership
  Stating that they want to do for the Internet what cellular networks did for voice calls, Sprint Nextel and Clearwire Corp. confirmed reports last week that they will collaborate to build out a nationwide WiMax network. The companies will not build out the network together in specific locales, but will independently install and light up infrastructure in the territories they've already targeted, enabling roaming between the two networks. They will also "work jointly on product and service evolution, shared infrastructure, branding, marketing and distribution," according to the statement, as well as exchanging selected 2.5 GHz spectrum in certain areas to optimize the network's performance.

I've probably had more investor calls on this topic than anything else, and what I've told everyone is that NextPhase sees this as a very positive move, both for the industry at large, and for our Company. With one big, bold move like this, Sprint Nextel and Clearwire Corp have legitimized the wireless broadband (and specifically, WiMax technologies) industry. To date, much of our time is spent on educating potential customers on the benefits of wireless technologies (e.g. flexibility, scalability, speed to deploy, cost-effectiveness, etc.) and this announcement makes that job a lot easier for us.

• Sprint / Google
  Google Inc. has made its biggest move yet on the U.S. mobile Web market by signing a deal with Sprint Nextel Corp. that positions the Internet company to build services to run on Sprint's planned WiMAX high-speed wireless network. The two companies announced today that Google will provide its Internet search service for a Web portal that Sprint is developing for the new WiMAX network. The press release went on to say that the deal is expected to boost Web access over the new WiMAX network and expand use of Google's search and communications services on mobile devices, with Google confirming that broadband wireless connectivity is key to growth and its strategy of selling Internet advertising.

Again, from NextPhase's perspective, announcements like this one only confirm that we're rapidly moving beyond technologies to rapidly maturing ecosystems. As I mentioned earlier in this post, the key differentiator is going to be service delivery. Here at NextPhase, we've been assembling all of the critical building blocks to be successful in this environment. We continue to build out our national presence in key secondary and tertiary markets through our M&A activity; we continue to expand our customer call center capabilities in Marietta, Georgia; we continue to develop relationships with market-leading partners, to deliver the next level of value-added services that will plug into this rich ecosystem.

A lot is happening very quickly, and it is a very exciting time for a very young industry, and particularly so for NextPhase. Keep watching this space, and we'll continue to try and to set all of these events into context, and sharing our insights into what we think will happen next.

Free telebriefing - WIMAX AND THE MOBILE INTERNET

In my previous life as CIO and CTO of 3 separate DuPont business units, I developed a healthy respect for the abilities of companies such as Gartner and Yankee Group to look into their crystal balls and predict how technological advances would impact the way we work and play.

The latter will be sponsoring a free telebriefing session on July 19th, 11:00 - 11:45 EST to share insights into areas near and dear to our hearts:

WIMAX AND THE MOBILE INTERNET

The Mobile Internet resides at the intersection of the two complementary worlds of Broadband and Mobility. When appropriately combined, technologies like WiMAX and mobile broadband will satisfy consumer and enterprise demand for next generation mobile services, extend the reach of Internet content and allow companies to do business anywhere. High-speed mobile broadband infrastructure and services will enable the always-on Anywhere Internet to develop as an open market for service, content, software companies and application providers to transform business and consumer interaction throughout the 21st century. This session explores what the implications of the mobile internet will be for carriers, enterprises and end-users alike.

Maybe it's because their insights are aligned with ours (the combination of different connectivity technologies to provide hybrid solutions, and the idea of an 'always-on Anywhere Internet'), but I think that this session is not to be missed.

Click here to sign up.

Hybrid solutions aren't just for automobiles

As covered in an entry last week, here at NextPhase, we firmly believe that the future of telecommunications is all about hybrid solutions, leveraging the very best of various wired and wireless technologies to to deliver flexible, scalable, cost-effective services that allow 'any time, any place, any device' creation, consumption and collaboration of content.

It was interesting to read today that Nortel Networks seem to feel the same way, too. They've announced their plans for creating what they're calling the "Unwired Enterprise", and it is all about integrating WiFi technologies into their existing product base.

Just like Moore's law, technological advances are going to keep squeezing ever more bandwidth out of copper, fiber and precious radio spectrum (both licensed and unlicensed), but at the rate that demand for connectivity continues to grow, it is going to take smart integration of all these various technologies to be able to deliver the goods!

Nortel Networks announced its plan for creating the "Unwired Enterprise," which involves integrating WiFi into existing wired infrastructure. Nortel said it will bring to market WiFi products based on the 802.11n draft specification once it's ratified as a standard. The idea is to combine WiFi and mesh systems, switches and routers embedded with wireless capability and a unified network management platform. For instance, Nortel will integrate WiFi functionality directly with the Ethernet switch, as opposed to offering stand-alone equipment like a wireless access point or a router.

Nortel's seriousness in the business can be measured by the fact that the vendor plans to build products in-house by upping its R&D spending. Previously, the company had outsourced its WiFi equipment to OEMs.