Yesterday, I was lucky to get the Federal Communications Chairman Kevin Martin to talk to BusinessWeek about the recently completed wireless spectrum auction. I was keen on interviewing Martin since he was so vocal about the importance of the auction and its ability to spur more competition in wireless broadband services. Here’s the story I wrote for BusinessWeek.
I wanted to get Chairman Martin’s thoughts following the cover story I wrote last year, Telecom: Back from the Dead, in which I wrote a sidebar on the auction called “A Scramble for the Perfect Wave.” In the story, I correctly predicted that the “auction could generate as much as $20 billion.” The final tally was $19.6 billion–the biggest wireless auction of all-time. And I also was correct in writing that “despite the fervor for a new entrant, most analysts believe it’s unlikely one will materialize.”
Last summer you told me you were “hopeful about a new entrant if we set [up the auction] right. Were you satisfied with the auction results?
When I talked about the auction last summer I said we would end up with a more competitive platform from a broadband standpoint.
Thanks to the auction, we will have more wireless broadband services that could compete with cable modem or DSL service. The auction was a success. The auction will be used to create a third broadband pipe into people’s homes. And that service will be offered by companies that are different than your local phone or cable company.
Are you disappointed that Google didn’t end up with any spectrum?
No. Would I have liked to see a new entrant on a nationwide basis? Sure. I also do think there are examples of other new entrants. There was another bidder who won a license in every market of the country.
Of all of the bidders who won, there are still 99 companies other than the national incumbent providers who won 754 licenses, or 69% of the 1090 licenses sold in the auction. It means you are going to see these 99 companies that are all going to be offering wireless broadband service. It won’t be on a nationwide basis but it will be offered in each market.
Do you think the auction will allows AT&T and Verizon Wireless to become even more dominant?
We were auctioning off multiple licenses in each area. There were five licenses in each area. In every market there is someone else who won. There’s no question they will follow through on offering service.
How much can those small players impact the market?
They will be able to come in and compete.
Why didn’t a new nationwide competitor in broadband wireless emerge?I think we set it up to be as conducive as possible. In the end there was still an incumbent willing to buy the spectrum. I don’t think people anticipated an incumbent would purchase the spectrum with an open access provision. It’s a good thing because it will make all of the wireless industry allow for additional innovation.
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