FCC Spectrum Rules Favor New Entrants Over Incumbents -- Source

The rules of a federal government airwaves auction to be held in January 2008 are unfavorable to incumbent wireless companies, an unnamed "senior figure at a large wireless carrier" told Dow Jones. In an apparent attempt to broaden competition, the FCC is attaching two open-access conditions to 22 of 62 megahertz of airwaves to be sold. Incumbents will not be able to integrate that portion of the spectrum into their existing networks. Whoever wins that portion will have to build a network to access the frequencies -- an expected hurdle for a new entrant, but a burden for incumbents who will then have to operate two networks in parallel. The rules will also require the purchaser of the 22 megahertz portion to permit any handset, software or Web application to be usable on their network. (Providers usually keep strict control over which applications are used on their networks.) The auction is widely viewed as the last chance for new entrants to establish themselves in the wireless broadband market. Google, which has lobbied for open-access conditions, has expressed interest in buying a piece of spectrum. AT&T has said it accepts the new rules. Verizon has said that though it disagrees with them, it will comply.

Sources: Dow Jones
Commentary: FCC to Announce Rules for Wireless Spectrum Auction • Google Dangles $4.6 Billion Bid For FCC Wireless Platform • Can Google Convince Wireless Carriers That It Is A Partner And Not A Foe?
Stocks/ETFs to watch: GOOG, T, VZ, VOD. ETFs: PTE, WMH
Earnings call transcripts: Google Q2 2007, AT&T Q2 2007, Verizon Q2 2007

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