US Govt. rakes in $44.9B

The FCC’s latest wireless auction brought in far more money than anyone expected. The Chairman, Tom Wheeler, set a goal of raising $10.6 billion by selling off 1,600 licenses to blocks of wireless spectrum. In the end, the government not only blew past its goal, but also its previous record of raising $19.1 billion in 2008, when it auctioned off significant pieces of the 700Mhz band that delivers LTE for a number of carriers. This auction ended with the government raising $44.9 billion, which surprised many observers, especially since even smaller markets like Portland, ME received sizable bids worth tens of millions of dollars.
Who won which pieces of spectrum in the 1,700Mhz and 2,100Mhz bands is unknown right now, but we do know that 70 different companies and organizations submitted bids. Obvious players were involved, like AT&T and Verizon, but Dish also participated, as did some private equity firms, like Grain Management LLC. Interestingly, Sprint sat this one out, though the company does have what the Wall Street Journal calls, “largest stores of spectrum” in the industry
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Terrence O’Brien
on engadget.

This story fascinates me from a number of perspectives:

  • Access to spectrum provides CSPs with a pseudo-monopoly for their coverage areas
  • I can’t help but wonder when/if community WiFi will reach sufficient coverage to counteract this monopoly, and severely disrupt the CSP business models that justify the amount spent at the auctions
  • If WiFi does disrupt, how will governments seek to change legislation so that they don’t lose the major cash injections that frequency auctions currently deliver
  • $44.9B is a huge amount to recover from services delivered to customers. It also makes the CSPs even more CAPEX-intensive
  • Content will continue to be consumed via mobile devices at an increasing rate for the foreseeable future
  • Mobility will continue to become an increasingly important domain for OSS products to support (and help their customers derive revenues from)

I’m fascinated to watch from afar as these factors play out. What are your thoughts?

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