The much anticipated FCC auction 73 for coveted 700 Mhz spectrum begins today, and there are a number of competitive implications as a result. The auction hype has definitely lost some steam, primarily due to the current economic downturn. The concept of carriers and new entrants battling it out for spectrum and pushing the price per pop into historically high territory has waned a bit. After all, Stifel, Nicolaus & Co reports that major telcos have collectively lost close to $70 billion in market share since the beginning of 2008. Some are characterizing these amounts of losses in this short amount of time as the largest in history. Even Google, who has been rumored to be a potential wild card for 700 Mhz, has lost 15% of market capitalization this year alone. Safe to say, many potential auction players are licking their wounds right now, which may not bode well for the FCC’s reserve price of $10 billion for the collective spectrum licenses.
Perhaps the largest impact of these negative financial factors will be on the C & D block licenses, which provide national footprint potential. There was much anticipation that maybe Google or Frontline (which has recently folded) would be players in those blocks and create a potential third competitive broadband pipe into the home and beyond. That appears unlikely now. National footprint potential spectrum will probably fall to a “usual suspect” of say Verizon or AT&T. The real competitive action will probably take place in the A and B blocks, with smaller players looking to gain regional and local footprints. While not having national implications, these regional licenses should provide some real competitive opportunity for smaller and even rural carriers to gain a foothold with broadband wireless and compete with established broadband players. There still are a fair number of companies in play for the A & B blocks including Cox, Advance/Newhouse, Bresnan, Echostar, a variety of smaller wireless carriers, and a fair number of IOCs. The end result of the auction may not provide the headline story outlining national competitive implications that many of us anticipated, but it should empower a fair number of smaller and regional carriers to improve their competitive position.