IP Democracy: Here Comes the 700 MHz Auction...

December is usually a very slow month for business news, and news in general. Or at least that's the theory. But in the communications and tech world, this December will kick off a feast of press and blogger speculation about the strategic moves of some pretty big players.

On Monday, December 3, companies interested in bidding on the 700 MHz spectrum that the FCC will auction next year must officially tell the Commission that they plan to bid. This simple requirement will answer some questions but also spark a frenzy of new ones.

There has already been a lot of build-up to the auction, with Google semi-successfully pressuring the FCC to "open" the airwaves, much to the objection of top carriers AT&T and Verizon. Verizon just this week scuttled that whole debate by announcing that it will "open" its network anyway.

A few big uncertainties have already been put to rest. Some folks thought that the nation's number one wireless company, AT&T, which last month spent $2.5 billion to buy 700 MHz licenses already owned by Aloha Communications, would as a consequence sit this auction out. But, as a thoughtful commenter pointed out to me, CEO Randall Stephenson said on Wednesday (webcast here) that "Of course, we'll participate. I think all wireless carriers will."

Google, which had promised to put up $4.6 billion in the auction if the FCC met its open access demands, has been vague about that commitment given that the Commission didn't fully meet its requirements. But, according to the WSJ, Google will announce today that it indeed plans to bid on the precious spectrum, marking a huge strategic shift for the search giant. (Update below notes that Google has announced its intent to bid.)

Other questions on the table that could be answered Monday:

1. Will AT&T Buy EchoStar? Rumors have been rampant for months that AT&T will buy its DBS partner EchoStar. EchoStar, along with fellow DBS provider DirecTV, was an active bidder during the last FCC spectrum auctions, although both companies dropped out of the bidding relatively early. If EchoStar files its intent to bid, under the FCC rules it can not have any merger-related discussions with any other bidder while the auction is ongoing. If AT&T and EchoStar each bid separately, then it's very unlikely that AT&T will buy EchoStar because that would mean any such deal would have to be postponed until the auctions are over, or until at least late-Spring 2008.

2. Is Cable Dropping Out of the Mobile Communications Game Altogether? During the last big sale of wireless spectrum in 2006, the AWS auction, a coalition of cable operators joined hands with Sprint and succeeded in buying a huge swath of mobile broadband spectrum for $2.4 billion. Since then, the industry has been silent on what it plans to do with the spectrum and its tepid experiment in selling Sprint-branded plain old cell phone service has been something of a bust. Cable leaders have spoken with less than enthusiasm about plans to bid in the upcoming auction, so it's not certain that cable will participate. If cable operators don't compete in this go-around, then it's pretty clear that mobile communications is just not cable's thing, which has major implications for the industry's competitive future.

All of these questions are merely the tip of the iceberg. And I'm sure that we're all in for a few big surprises that will serve as fodder for endless analysis.

The 700 MHz auction, in a way, crystallizes a pivotal time period in the evolution of all the businesses that have a stake in mobile communications, encompassing as it does virtually every kind of communication service, from Internet to voice to video to text. We'll know a lot more about where all communications industries and services are headed once the auction is over.

Update: Google did officially announce its intent to bid in the auction. Google's Official Blog has this post by Chris Sacca, Head of Special Initiatives, who says that Google fought for consumer choice in advocating open access and now "it's important to put our money where our principles are." Sacca also offers a very useful primer on how things will unfold in the auction and notes that due to the fact that the FCC has interpreted its anti-collusion rules to include public communications, Google will have little more to say about its bid.

Posted by Cynthia Brumfield on November 30, 2007 7:54 AM to IP Democracy