Wholesaling wireless spectrum may be on the horizon, thanks to the upcoming 700 Mhz spectrum auction. While virtually absent from the wireless industry, wholesaling bandwidth is commonplace everywhere else in telecom. One could argue that MVNO arrangements are examples of wireless wholesale, but the MVNO reality looks more like a sales and marketing resale arrangement, than true wholesaling. The rules set up by the FCC for auction 73 may bring the reality of true wireless wholesale to the marketplace. If that reality indeed comes true, the competitive landscape could be altered, especially in smaller and underserved markets.
One of the primary reasons that smaller regional carriers can’t match their larger carrier brethren (i.e. Verizon, AT&T) with attractive wireless options is the high cost of spectrum. Additionally, past wireless auctions rules have favored larger carriers because the geographic regions for auction are very large. Auction 73 is attempting to remedy these challenges by encouraging true wholesale players to participate in the D block spectrum band auction. If a viable wholesaler wins the D block auction, they would in turn have the ability to lease spectrum to a variety of service providers who lacked the financial ability to gain 700 Mhz spectrum themselves. Conceivably, there would now be hundreds of service providers anxious to use this leased spectrum to provide wireless service of their own, which more than likely will compete with established services from AT&T, Verizon, Sprint, and others. Companies like Frontline Wireless are leading this wholesale option effort. There are a variety of factors tied to the wholesale rules, including making spectrum available for public safety purposes. But before we get ahead of ourselves, favorable wholesale rules don’t automatically translate into viable wholesale options. Potential wholesalers will have tremendous financial and operational challenges to overcome before they can hang the “We’re Open” sign in the front window. Like anything else, this issue has a variety of concerns unique to special interests. It’s certainly not perfect. All things considered though, wholesaling wireless spectrum is a good thing, providing a method for service providers who normally would not have the means to participate in the wireless spectrum auction process, the ability to launch competitive wireless services.
