Featured Story: FCC Spectrum Auction May Give Rise to New Generation of Mobile Devices

Sunday, 05 August 2007 18:00

FCC Spectrum Auction May Give Rise to New Generation of Mobile Devices

The Federal Communication Commission’s July 31 decision regarding a large band of prime radio spectrum could spur a strong US market for telecommunications equipment and infrastructure, not to mention potential new wireless devices.

The FCC auction of licenses for spectrum in the 700 megahertz (700 MHz) band will take place in January, 2008. This spectrum is valuable to mobile telecom providers because signals on the 700 MHz band travel well (some estimate up to 30 miles from a single tower) and are capable of penetrating walls, which would enable excellent indoor mobile phone reception. This spectrum also offers high capacity, or greater bandwidth, which would allow for higher speed mobile connections to facilitate mobile video. Thus, the January auction could make spectrum available to telecommunications carriers for expanded “third-generation” uses in the US – a potential growth driver in telecom infrastructure, equipment, and mobile consumer devices.

Further, the FCC specifically designated a portion of the spectrum for “open access.” Open access means that a customer with a mobile phone from one company would be able to freely use the network of another, without having to pay the high fees associated with exclusive wireless band usage that are today’s industry norm. Customers on these open networks also would have access to applications and services not offered from their mobile phone providers, something that is not possible today. The 700 MHz band's high capacity also could make it the "third broadband pipe," next to cable and DSL. For this reason, many non-traditional communications technology players have expressed interest in this spectrum – companies like Microsoft, Echostar, Intel, Dell, Yahoo, eBay and Google.

The stated purpose of the open access portion of the 700 MHz band is to encourage new service providers to enter the wireless industry and jump-start innovation in wireless devices and applications. FCC Chairman Kevin Martin likened the new rules to a landmark 1968 FCC ruling that for the first time enabled any equipment – not just gear supplied by phone companies – to be connected to phone lines. The decision sparked an explosion of new phone services, the proliferation of devices such as modems, and, ultimately, led to the rise of the Internet. "This auction provides a rare chance to promote [similar] innovation in wireless," Martin said.

Indeed, some major FCC spectrum auctions in the past have ushered in bull markets for new technologies. The PCS auctions of 1994 awarded licenses for spectrum that led to tremendous growth in mobile telecommunications. The satellite radio auction in 1997 led to new services and new a whole new category of consumer electronics. Manufacturers should look forward to the similar benefits from build-out and deployment of next year’s 700 MHz licenses.

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