Among the applicants to bid in next month’s FCC wireless spectrum auction: Vulcan Spectrum LLC, a firm controlled by Microsoft co-founder Paul Allen. Allen already owns some 700 megahertz spectrum — the same flavour being auctioned off next year — in Washington and Oregon. Wednesday’s Wall Street Journal ($) considers what Allen could do with more spectrum if he outbids likely participants like AT&T, Verizon Wireless, or even Google. Short answer: who knows! The possibilities include:
- Hold the spectrum licenses for cable TV provider Charter Communications, which Allen owns a controlling stake in. In the article, analyst Tim Sanders says that if Allen’s firm controls the licenses, publicly held Charter (CHTR) could save money on taxes and disclose less information about what it plans to do with the spectrum.
What could Charter do with the airwaves? Any number of things, like selling mobile phone or mobile Web service, offering some sort of wireless “quadruple play” bundle to its cable subscribers, or marketing a wired/wireless broadband bundle to businesses.
- Video broadcasting. TV stations currently hold the spectrum, and Qualcomm uses the same kind of spectrum (700 megahertz) for its MediaFlo mobile-video service. Allen, with or without Charter, could conceivably start some sort of wireless video firm.
Not that there’s much demand for that yet: Research firm M:Metrics estimates just 1.5% of U.S. wireless subscribers watch programmed TV or video on their mobile phones. We expect this to increase as phones get bigger screens and better network connections, and free, ad-supported mobile video offerings pop up. But the economics behind mobile TV could be ugly; Aloha and Crown Castle recently pulled the plug on their trials.
- Sit on it and sell it later, like Allen already does with real estate.
These options, by the way, could apply to most of the 266 auction applicants, which include a slew of wireless carriers, telcos, cable companies, speculators, etc.
Bidding for the 1,099 spectrum licenses begins Jan. 24 and the silent auction could take months. And whoever wins the spectrum has plenty of time to figure out what they want to do with it: Winning bidders might not have access to the spectrum until February, 2009, when analogue TV broadcasters have to vacate the airwaves.
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