The Wall Street Journal-20080124-Bidding Set to Begin for Wireless Spectrum
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Bidding Set to Begin for Wireless Spectrum
AT&T Inc., Verizon Wireless and Google Inc. are among the companies expected to begin bidding today for prized radio-airwave licenses in an auction federal regulators hope will give consumers more freedom to choose what wireless services they buy and how they use them.
For the first time, the Federal Communications Commission has said the largest swath of communications spectrum would be sold with "open access" conditions. That means companies that win the valuable airwave licenses must build a cellphone network that allows customers to buy handsets wherever they want and choose their service provider -- the common practice in Europe and Asia. Now, most U.S. cellphone customers are locked into using handsets dedicated to one service provider.
The FCC's conditions are controversial and were initially opposed by AT&T and Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC. Both companies have since dropped their opposition and promise greater choice for customers on their networks in the future. The sale will raise billions for the federal government and see companies acquire airwaves for the construction of high-speed broadband networks.
Google lobbied the FCC to include the open-access conditions and committed to bidding in the auction if open access was included. It remains unclear whether Google wants to be a network operator or just wants to keep the pressure on incumbent carriers. The company unveiled its software platform for mobile phones, called Android, which boasts complete openness of applications and devices.
Analysts, consultants and public-interest groups remain skeptical, asking just how flexible cellphone networks will be in the future.
"I don't think the open-access pledges by AT&T and Verizon Wireless will change the market," said Jean-Louis Carrara, vice president of telecommunications at Gemalto, a digital-security firm. "What will change things is when manufacturers start making phones that work across all networks."
The restrictions in the existing wireless market were perhaps best illustrated by Apple Inc.'s iPhone, unveiled last year. Users of the iPhone must sign a two-year contract with AT&T. Verizon Wireless or Sprint Nextel Corp. customers can't get an iPhone, and customers who buy an iPhone can't take the device to another network.
The large carriers say they will allow any device to be attached to their networks but don't say when. The radio spectrum up for bid is some of the best ever sold to the cellular industry, because it provides a stronger signal through buildings and across long distances. The radio-airwave licenses have been used by television broadcasters to transmit their signals, but they won't be using them with the transition to digital television in February 2009.
