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The Great Cable Spectrum Speculation

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
3/24/2008
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Let the guessing games begin.

After nearly a handful of parties with ties to the cable industry bid for and won some valuable spectrum in the Federal Communications Commission (FCC) 700 MHz auctions, the next question is: What might they do with it?

The first, most likely answer is that they will spend the necessary dollars for a wireless network buildout and then offer wireless services to their cable TV customers.

Cox Communications Inc. , bidding as Cox Wireless Inc., won 14 Block A and eight Block B licenses for bids totaling just north of $304 million. (See Cox Waxes Wireless .) The locations of those licenses match up well with the operator's traditional hardwired cable footprint in markets such as San Diego, Phoenix, Las Vegas, and New Orleans. (See table below for a complete breakdown.)

Table 1: Cox's Spectrum Lineup

Market Frequency Block Winning Bid
Norfolk/Virginia Beach, Va. A $18.8M
Macon, Ga. A $2.6M
Pensacola, Fla. A $19.4M
New Orleans, La. A $15.1M
Baton Rouge, La. A $9.5M
Fayetteville, Ark. A $6.1M
Omaha, Neb. A $5.7M
Wichita, Kan. A $7.8M
Topeka, Kan. A $1.7M
Tulsa, Okla. A $15.6M
Las Vegas, Nev. A $30.9M
Phoenix/Mesa, Ariz. A $53.04M
Tucson, Ariz. A $5.5M
San Diego, Calif. A $84.1M
Virginia (Caroline) B $619,000
Louisiana (Iberville) B $1.4M
Arkansas (Madison) B $979,000
Ocala, Fla. B $6.1M
Gainesville, Fla. B $8.06M
Fort Smith, Ark./Okla. B $5.7M
Roanoke, Va. B $2.3M
Lafayette, La. B $2.96M
Source: FCC data




Vulcan Spectrum LLC, an outfit linked to Paul Allen, the chairman of Charter Communications Inc. , netted two Block A licenses in the Pacific Northwest (Portland-Salem; and Seattle-Tacoma-Bremerton) for a total of $112 million.

But winning bids weren't limited to major MSOs or companies that also happen to be corporate cousins of major MSOs.

Bresnan Communications LLC put up a total of $3.8 million to obtain Block A licenses in Billings and Great Falls, Mont., and a Block B license for the state.

BendBroadband of Oregon also locked in a Block B license for $6.74 million.

Now what?
None of these companies have said what they might do with the spectrum and when they might act on those plans. For this article, officials for Cox and BendBroadband declined comment.

Based on the amount of spectrum it bid for and won, Cox is positioned to make the most significant moves in this group. But what Cox might do is still anybody's guess, and right now the guess is that the company will build out a wireless network of its own and turn it into a launching pad for wireless broadband services, at least for starters.

"Data is their biggest advantage," Alan Breznick, senior analyst for Heavy Reading, says of Cox. "I think they want to be the total broadband provider in their markets, for both wired and wireless."

If Cox does opt to build out a wireless network, it's likely that it will first concentrate on its larger markets and those areas where it had to put up the most money to win spectrum. In order, the top five in those combined categories are: San Diego, Phoenix, Las Vegas, Pensacola, Fla., and Norfolk/Virginia Beach, Va. New Orleans also fits into Cox's higher profile properties.

How rapidly and broadly Cox might act is still unknown. While Cox is among the most active MSOs when it comes to wireless backhaul services, it, along with some partners, has not expressed any concrete plans concerning some spectrum won almost two years ago.

Cox is a member of SpectrumCo, a cable consortium that won a batch of Advanced Wireless Services (AWS) spectrum in the fall of 2006. The other active members are Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), and Bright House Networks parent Advance/Newhouse. (See SpectrumCo Gets Licenses .) Cox is also a partner in the Sprint Corp. (NYSE: S)-cable joint venture, but the long-term potential of the JV has been questioned ever since expansion of the "Pivot" service was halted last November. (See Sprint Halts 'Pivot' Expansion.)

With this new spectrum, Cox "can control its own destiny in its own markets without having to kowtow later," an industry observer says.

As a privately held company, Cox can apply money to this project without having to worry about Wall Street's objections to increased spending. To the relief of those who feared a capital-intensive wireless infrastructure buildout, Comcast and Time Warner Cable stayed clear of the 700 MHz auction.

But that doesn’t mean an operator like Comcast is out of the 700 MHz picture, thanks in part to stipulations tied to the "open" C Block. A top industry analyst, following a meeting with Comcast CEO Brian Roberts and CFO Michael Angelakis, suggested recently that "in an open access world, Comcast would envision itself as a network-agnostic application." (See Trading Places .) That approach could eventually open up mobile access opportunities for Internet-based content services like Fancast. (See Comcast Fires Up Fancast.)

— Jeff Baumgartner, Site Editor, Cable Digital News




Interested in learning more on this topic? Then come to the Tower Technology Summit, a conference focused on the infrastructure that drives technical innovation in the wireless industry. Collocated with the industry's largest wireless event, CTIA, in Las Vegas, April 1-2, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.


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