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Verizon & AT&T Win 700 MHz Sweeps

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
3/20/2008
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Verizon Wireless has won the majority of the C- band 700 MHz "beachfront property" spectrum, while AT&T Inc. (NYSE: T) has taken the bulk of the B-block, the Federal Communications Commission (FCC) announced this afternoon.

The 700 MHz auction 73, which closed on Tuesday evening, broke records for the government agency, bringing in over $19.5 billion for the spectrum, which is considered desirable for 4G services because of its long range and the ability of the signal to penetrate walls. The spectrum is being freed up as analog TV broadcasters move to digital, something that is mandated to happen by February 19th, 2009.

The C-block spectrum garnered an overall bid of $4.74 billion, enough to trigger the open access rules that Google (Nasdaq: GOOG) lobbied hard to be applied to the bandwidth. Verizon will likely to be able to use the nationwide spectrum footprint to deploy next-generation Long-Term Evolution (LTE) services in the coming years.

AT&T, meanwhile, won 227 licenses from the regional coverage areas in the B-block of spectrum. This will supplement the 700 MHz spectrum that Ma Bell bought from Aloha Partners already. (See AT&T Bags 700 MHz for $2.5B.)

The FCC says that Google bid but didn't win any licenses in the end.

The winners of the auction won't be closing their wallets just yet, however, since analysts estimate it will cost billions to deploy these networks. Although Verizon and AT&T will be able to reduce some costs by using existing towers for 700 MHz deployments.

"If you assume they will have to have a tower every 3 to 5 miles or so, they will likely need at least 200,000 to 250,000 towers to achieve the same coverage as current cellular networks, says Jack Gold at J. Gold Associates.

"At about $50,000 per tower, that’s about $10 billion just to put up towers. Add to that the cost of deploying new devices for the band, marketing ad sales efforts, etc., and you can probably multiply that by at least 10 to 20. So the overall cost is in the hundreds of billions ultimately."

"It will probably take them 2 to 3 years to reach any kind of installed base, in the highly populated areas, and at least 4 to 5 years to spread out to more remote areas," Gold says.

— Dan Jones, Site Editor, Unstrung

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IPobserver
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IPobserver,
User Rank: Light Beer
12/5/2012 | 3:45:18 PM
re: Verizon & AT&T Win 700 MHz Sweeps
Ha! No hat eating for me. Where'd those Google fanbois go?

Just as well really. Google can stick to apps, which is what it's good at.
frnkblk
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frnkblk,
User Rank: Light Beer
12/5/2012 | 3:45:17 PM
re: Verizon & AT&T Win 700 MHz Sweeps
$50K per tower? Sign me up! Honestly, that may pay just for the metal laying on an empty lot. It costs many times that for a new site.

In regards to Jack Gold's comments, the value of 700 MHz is it's propagation. In rural areas the towers can be twice as far from each other than the 3 to 5 miles he states.

Frank
El Rupester
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El Rupester,
User Rank: Light Beer
12/5/2012 | 3:45:13 PM
re: Verizon & AT&T Win 700 MHz Sweeps
Was Jack Gold commenting on these auctions?
Or some parallel universe?

"It will probably take them 2 to 3 years to reach any kind of installed base"....

This is AT&T and Verizon. If he hasn't noticed, they *already* have an installed base.

Maybe I'm being harsh, but it is a dumb way to say things. It might take two years to have handsets that use the new spectrum, and five-plus to really exploit the new asset - but that is not what he said.

$50K. Not for new tower. No way. Maybe for upgrade to existing one.

3 miles. Why would you buy 700MHz and have that dense spacing? I mean, WHY? The whole point, the reason people wanted is this for l-o-n-g d-i-s-t-a-n-c-e. Carriers already have higher frequencies for dense spacing, small cells & capacity. You use this frequency because it is great for coverage.

spc_isdnip
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spc_isdnip,
User Rank: Lightning
12/5/2012 | 3:45:12 PM
re: Verizon & AT&T Win 700 MHz Sweeps
Let's get real. The reason VZ and ATT shelled out that dosh was to keep the licenses away from newcomers. Alltel, for instance, bought nothing -- they were rumored to be thinking of expanding. They are highly regarded, and might have threatened the incumbents. But they didn't like the price.

The value to VZ of keeping out new competition is probably greater than the cost of the licenses. Less competition means higher prices and more control. Control over applications, types of offering, etc. So if they see fit, they can meet the rollout requirements of 700 MHz about the same way that Northcoast met the requirements to build out its PCS network across the northeast. Don't remember Northcoast? They met the FCC standards for deployment (a few big sticks). They just never took on customers. And sold out to Verizon.

ATT and VZ *might* use this as "swing" space to allow them to phase out old 2G technologies and bring in 4G (LTE). But with analog now off of 800 MHz and multiple PCS and AWS-1 licenses, they really don't need additional spectrum. This is just Kevin Martin's way of maximizing revenue while trying to screw the public with his 3-carrier strategy.
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