Cable Firms Seen Selling Video, Broadband on AWS Spectrum
Cable operators bidding on AWS spectrum will probably use it to provide wireless video, access to home PVRs and improved VoIP service, helping the industry fend off video competition from telcos, said industry lawyers and analysts. SpectrumCo had $2.38 billion in high bids in round 148 of the FCC auction, which analysts said is winding down. Consortium members including Comcast and Time Warner are nearly certain to use the spectrum to beef up broadband wireless offerings to existing customers, said 4 lawyers and analysts.
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“If you've got a chunk of spectrum, you can give customers mobility for lots of content and data,” an attorney said: “What goes into it is going to be driven by consumer demand, so I don’t think it’s just a spectrum hedge.” Early in the bidding, which began in early Aug., analysts said cable was participating in the AWS auction to price out DBS rivals and hedge its bets against their own wireless joint venture with Sprint ending. Sprint, owner of 5% of SpectrumCo, stands to gain from the auction by adding cellular customers lured by cable’s wireless offerings, said analysts including Medley Global’s Jessica Zufolo. “It is a low risk option for adding mobility to [cable] broadband offerings,” wrote Bank of America’s Douglas Shapiro. The auction could still be a “hedge” to the Sprint venture, he added.
Sprint may sell basic phone service such as bundles of voice minutes through the joint venture, said a lawyer whose firm represents another large cable provider. Cable operators may sell other products including WiMAX service, he said. “It may be that cable operators want to allow you to move seamlessly from your house down the road” using PCs or other devices with broadband connections, said the attorney. Cable companies “want to be able to provide -- or at least have the option to provide at some point in time if the technology allows them to -- mass networking in your area.”
Comcast quashed recent speculation it would use the AWS proceeds to start a 5th nationwide cellular provider that would compete against the likes of Verizon Wireless and T- Mobile, also active bidders. “We've said before and we repeat today we have no interest in being the 5th cellular operator,” Comcast Co-COO John Alchin told a Merrill Lynch investor conference Tues. “Any spectrum that we acquire really provides us with long term flexibility and many strategic options that wouldn’t otherwise be available to us… What you may see us do is test in certain markets to integrate that functionality back into the other platforms we have.” A Time Warner Cable official speaking at the same conference said he couldn’t say much about the bidding because of Commission anticollusion rules.
Total AWS bids hovered at $13.88 billion late Fri., with no new activity of any significance. On Wed., the Wireless Bureau sped bidding up to 8 rounds a day, in an effort to force an end. Beginning today (Mon.), the FCC will hold 14 daily bidding rounds.
There was little activity. T-Mobile bid $1.1 million in round 149 for a 10 MHz economic license for Anchorage. Space Data Spectrum, meanwhile, emerged as the high bidder for three 20-MHz cellular market area licenses in Alaska. “Everyone is pretty much waiting for this end in the next couple of days,” said a wireless lawyer. A 2nd lawyer said the auction remains a distraction: “When you talk to people about other issues they say, ‘Can we wait until the auction is over?’ It’s exhausting.”
All winning bidders face hurdles to using the spectrum commercially, said Zufolo. Govt. agencies must be moved off the AWS band so companies can use their new licenses, she said. Handsets and chipsets may also need to be tweaked, Zufolo added: “We do not expect that spectrum to be used for a while.”