The telecom arm of Cantor Fitzgerald is hopes to be the go-to company for anyone looking to buy or sell spectrum

Carmen Nobel

May 8, 2006

3 Min Read
Cantor Aims to Simplify Spectrum Sales

The telecom arm of the financial services firm, Cantor Fitzgerald, is aiming to be the go-to company for anyone looking to buy or sell spectrum rights or tower assets, after those assets have been sold at an FCC auction.

"Once there has been an auction, we believe that it's a very inefficient market," says Darrin Mylet, vice president of wireless services at Cantor Telecom. In other words, he says the idea came up because there's no central place to find out what's for sale and by whom in the post-auction spectrum market.

Earlier this year, Cantor launched an online tool that allows participants to find, analyze, list, and bid for private spectrum via the company's Spectrum and Tower Exchange. Coming soon, the firm will also debut a "legal assistant" tool for designing the myriad legal forms necessary for a spectrum transaction. It will help to lower the considerable legal costs associated with spectrum trades, officials say.

"The exchange does the job of 10,000 brokers," Mylet says.

The exchange is largely powered by software called SiteSync, from a company called Wireless Applications Corp. So far, the exchange sorts through some 13 million FCC records weekly to keep itself up to date. A brief demonstration showed that the exchange is much easier to maneuver than the FCC's Website. [Ed. note: Well, that's not exactly the highest hurdle on the track, is it?]

"We're a matchmaker," Mylet says. "We're trying to match buyers with sellers, and if a deal is done, we're compensated." Cantor is generally compensated with between 2 and 10 percent of the transaction, Mylet says. Participants must sign a non-circumvention agreement, meaning they will stick with Cantor once they list with Cantor.

Mylet declines to name the exchange's customers, but says that the majority have been trading spectrum suitable for paging systems -- paging channels are often used to track containers, he says. A growing set of customers is dealing spectrum suitable for PCS cellular and advanced wireless services in the 700MHz range. Cantor also has seen some play in the 2.3 to 2.5GHz bands, which are considered suitable for WiMax, Mylet says.

Critics wonder whether such an exchange is necessary yet. Some even say it smacks of the bandwidth trading Enron made famous. (See Enron's Empty Bandwidth.)

"The FCC allowed for the leasing of spectrum [three] years ago, and at this point it is not a big business," says Tole Hart, research director at Gartner Inc. "I do not have the impression that there is much spectrum swapping going on, so this will be business for the future, and may come into play when there are more bandwidth constraints with wireless data."

Mylet says that's the point, arguing that today most sales only happen if the buyer and seller happen to understand the rules of the FCC. An easier mechanism encourages more trading of spectrum in underused bands, he says -- the "if you build it, they will come" argument. [Ed. note: And that movie was called "Field of Dreams."]

"We're facilitating a more efficient trading market," Mylet says. "If the whole market isn't aware that your asset is for sale, then how are you certain that you're getting the market place?"

Simplicity aside, the spectrum market is gaining increasing attention from players other than traditional wireless service operators. Mylet reports increased interest from CLECs and cable MSOs. (See T-Mobile, Cable MSOs May Spend on Spectrum.)

"It's been kind of mind-blowing," says Eric Wills, CEO of Wireless Applications Corp. "The traditional ones are there, but we're getting a lot of interest from the industry as a whole."

— Carmen Nobel, Senior Editor, Light Reading

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