Wall Street’s stumbles cast pall over 700 MHz auction: Verizon Wireless plans open-access development conference

On the eve of the 700 MHz auction, the economy suddenly appears to have become a major factor for bidders.
Even before the bidding begins, Frontline Wireless L.L.C. — an ambitious startup that had its sights set on the national commercial-public safety D Block — is out of the picture. The license has a minimum $1.3 billion price tag. Lack of financing has been speculated as a reason for Frontline’s departure.
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The Congressional Budget Office today kept intact its revenue estimate for the 700 MHz auction — between $10 billion and $15 billion — but that figure was constructed before Frontline closed shop.
“[W]e think the current economic climate could cause a lot of assumptions about the auction to prove inaccurate, including about the winning bids meeting the reserve prices and how high the bidding for a number of licenses could go,” stated telecom analysts at Stifel, Nicolaus & Co. Inc.
Federal Communications Commission Chairman Kevin Martin recently conceded that volatile economic conditions — which have caused top telecom and Internet companies (including those vying 700 MHz wireless licenses) to lose billions of dollars in market capitalization — are not ideal for the auction.
Indeed, Stifel said Google Inc. is even less likely to spend big bucks to gain entry into a non-traditional business — wireless — in view of the Internet search engine giant’s 15% drop in market capitalization since the start of the year. Google shares, noted Stifel, have plummeted from a high of $741 in November to a tad under $584 today. Google has shown interest in the open-access C Block, which comprises about a third of the total spectrum up for grabs. The C Block carries a $4.6 billion reserve price.
“We continue to believe that Google is not in the auction to get the spectrum to build out a nationwide wireless operator; the pullback in share value solidifies that view,” Stifel said. “We continue to believe that Google will bid enough to ensure the C Block open-access condition is triggered, though the pullback calls even that into question.”
If the C-Block reserve price is not met, the FCC could re-auction the spectrum without the open-access condition. Verizon Wireless and AT&T Mobility are viewed as the mostly likely competitors for the C Block if it is not captured by Google.
Michael Copps, a Democratic member of the GOP-led FCC, said he would support federal intervention if open access fails to materialize in the 700 MHz wireless space.
Verizon Wireless’ open-access conference
On a related front, Verizon Wireless said it will hold an open-access development conference in New York City March 19-20.
“This initial conference is for developers of devices — because before consumers can have open access, you have to have open development,” said Anthony Lewis, VP of the carrier’s open development initiative. “In hosting this conference, our aim is to jump-start the development community by sharing information needed to develop devices for our network that achieve our network performance goals while making it easy for them to deliver devices.”
Verizon Wireless late last year announced it would open its network to developers and devices.
The mobile-phone industry was initially opposed to open access, but has since warmed to the idea. However, industry experts say it remains unclear whether open access — the attachment of third-party devices and applications to wireless networks — will actually be achieved in the marketplace.