700 MHz Auction - Latest Update

Ahead of the auction officially starting on January 24th, I'd previously posted a couple of blog entries that gave some of the background into the process, and why this spectrum is potentially important.

As a reminder, the auction is for a total of 60 MHz of spectrum, broken down into 5 Blocks (A through E). Block C is the most attractive block as it contains the most bandwidth -- 22MHz in total, broken into two 11MHz pairs -- and also because it consists of fewer regions, making it easier to assemble a contiguous, nationwide network. Also (primarily thanks to Google's lobbying efforts, and their commitment to meet the reserve bid of $4.6bn), the winner of this block must commit to creating an open-access network, meaning any device capable of supporting the appropriate protocols gets to play.

As always with the FCC, the processes and procedures tend to be a little bit more complicated than most people would like. Here's a summary of how 'Auction 73' works.

• Bidding began on January 24, in two consecutive rounds. Every business day, there is a total of three bidding rounds. After each round concludes, the FCC discloses the current asking price for each block without revealing anything about the winning bidders. Bidding continues indefinitely until no additional bids are placed.

• The reserve price for Block A is $1.81 billion; Block B, $1.37 billion; Block C, a whopping $4.64 billion; Block D, $1.33 billion, and Block E, $904 million. If at the end of bidding any reserves have not been met, a new auction, Auction 76, will automatically be spawned.
  

• The FCC's open-access requirement on Block C would be dropped if Auction 76 is triggered, fueling rumors that Google intends to bid up to the reserve price and then drop out. The date and new reserve prices for the remaining blocks would be decided when (and if) it's determined that Auction 76 is necessary.

So, here we are on day 5, and let's see how things stand:

• On most hotly contested C block, the current high bid is $4.3b, while the next qualifying bid must be at least $4.75b.

• As a whole, the auction has to gross over $10.3b, and that mark was also hit around noon today with $10.8b bid so far. That means that it’s extremely likely now that the auction will conclude successfully, and that the C Block will be won

• On the mixed public safety/private use D Block, the reserve price is $1.4b, but the bidding has hit only over $500m. If the bids don’t reach the reserve price, the block will likely be reformulated. Just days before the 700MHz auction began on Jan. 24, Frontline Wireless, one of the chief champions of the public/private public safety auction plan, dropped out, unable to secure adequate financing for the project.

While there are a total of 214 bidders for the various bands of spectrum, three players are considered front-runners for the C Block; Verizon Wireless, AT&T and Google. Industry watchers believe that having expended a lot of political capital in getting the open access provision included, Google are only staying in the race until the qualifying conditions are met, and they can gracefully decline to bid any further. Both AT&T and Verizon Wireless are looking at this Block for implementing their 4G plans (even though AT&T is already acquiring Aloha Partner's 700 MHz licenses. Thanks to the 70 MHz of spectrum that they have in many major markets (which is earmarked for their Xohm WiMAX roll-out), Sprint are sitting this one out, which is just as well, given their current financial situation.

All in all, while we don't have the final numbers in (sounds a bit like a primary, doesn't it), it seems like the auction is on track to a successful conclusion. Clearly, if the open access provision kicks in, we are all set to win. Google's CEO, Eric Schmidt, put it this way - “No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet.”

WiMAX news and views from CES

As expected, the annual CES event in Las Vegas has been the platform for updates, (re)commitments and demos of all-things WiMAX.

Starting with the updates, Intel used a small fleet of cars to drive the press and other guests around to demonstrate the power of the wide-ranging wireless technology. The cars were equipped with an Intel-based "info-tainment" system, with an in-dashboard personal computer that was connected to the Internet via a WiMAX service that was being delivered from four base stations equipped with 60 feet antennas. Journalists were able to listen to audio streams and make VoIP calls at road speeds of up to 50MPH without ever losing the connection.

Next up, Intel gave more details on their Menlow and 'Baxter Peak' chipsets that will be finding their way into ultraportables and mobile internet devices that will start to ship from later this year. Nokia have committed to using the Baxter Peak chipset in their next iteration of their N-series Internet tablet, which will be WiMAX-enabled, and here is a link to a reporter from Popular mechanics trying out prototype "any time, any place, anywhere" WiMAX devices.

Sprint reassured everyone that their WiMAX plans are still on track. Currently soft-launching their Xohm WiMax business unit in Chicago and Baltimore, Sprint Nextel's CTO (and Xohm's President) said "being first to market is a huge advantage... and WiMAX technology is here, now and mature". He went on to explain that they had also looked at LTE (Long Term Evolution) which is a fourth-generation upgrade to existing cellular technologies, but discounted it because it isn't available yet.

Nokia and Samsung both confirmed that they expect to have user devices ready to launch in the second quarter , while Motorola confirmed that it is working on a multi-standard device that will operate over Sprint's EV-DO (Evolution-Data Optimized) cellular network, Wi-Fi and WiMAX.

Samsung also demonstrated WiMAX products that are already shipping in other markets; the SPH-P9000 which is a true Mobile WiMAX convergence device, enabling wireless broadband access and voice communications, and the M8100 which is the first commercially available Mobile WiMAX PDA device. Mobile data transmission speeds of 100Mbps have been achieved on moving vehicles, with speeds of 3.5Gbps achieved under stationary conditions.

These products have been available in South Korea since May 2006, and Samsung now provides Mobile WiMAX network solutions to various service providers in North and South America, and Asia. As we're no finally getting a band of WiMAX spectrum (3.65 - 3.70 GHz) to play in, we should start to see products and the supporting products appear later in the year and into next year.

Lastly, Motorola unveiled its latest WiMAX modem - the CPEi 100 - which is a single data port, 2.5 GHz Consumer Premises Equipment (CPE) device, designed to sit on a desktop and serve as the interface between a PC and the WiMAX network. Motorola has already introduced a number of mobile WiMax CPE units under its MOTOwi4 brand, but this is the smallest yet.

Motorola also summarized their WiMAX progress to date, by revealing that they have 15 WiMax contracts and more than 57 WiMax engagements in 38 countries worldwide, including 44 active trials.

All in all, it's been a good week for WiMAX. When it gets to the point that you can kick the tyres by actually holding products in your hands and trying out real services, it makes it a lot easier to draw distinctions between technologies such as WIMAX that are here now, and are available (ok... almost here in the US) and those like LTE that still remain unrealized engineering pipedreams.