As bidding on the 700MHz spectrum auction starts to wind down, a group of business school students predicts it will be long time before consumers see any of the promised new services resulting from the auction.
The 700MHz auction, which is reissuing spectrum originally allocated for analog TV, has been touted as one of the most important spectrum auctions the Federal Communications Commission has ever conducted. Not only was it expected to raise a great deal of money for the government, but as the last bit of prime wireless spectrum that will be made available for a long time, many people believed it would pave the way to a brave new world of wireless broadband.
The hope going into the auction was that it would open up the airwaves to at least one new nontraditional player, such as Google, which would help transform the wireless market and introduce more open services.
Now, the auction, which has already raised a whopping $19.59 billion since it began in January, will likely end in the next few days, according to the Reuters news service. Under the FCC's rules, the auction will continue until the bidding stops.
So what's likely to change for consumers after the auction concludes? According to a competitive intelligence war game initiated by market research firm Fuld & Company, not much, at least for the next few years. Carriers aren't expected to even have the new infrastructure built within the next two to three years.
Students from four top business schools--University of Chicago, Northwestern's Kellogg School of Management, Harvard Business School, and MIT's Sloan School of Management--took on identities of four companies with a stake in the auction outcome--Google, Intel, AT&T Mobility and Vulcan Capital. The students then predicted the strategies of the companies post auction. Results of the game were published on Thursday.
Here's a look at some of the other predictions. The Google team, made up of students from University of Chicago, predicted that the search engine giant will partner with a leading wireless service provider, possibly AT&T. And the group believes that it will share 20 percent of its advertising revenue with whoever owns the licenses. Separate from the auction, the group also predicts that Google's new Android handset software will run into resistance among chipmakers and handset manufacturers, who have different business interests than Google.
The Northwestern group, which took on the identity of Intel, believes the chipmaker will attack the wireless broadband market through its WiMax initiative. The company will likely work with PC makers to embed WiMax chips and help them shrink their devices to compete directly with smartphones, the students said.
The teams also said that adult content was likely to be the killer application that will drive wireless broadband adoption.
For the most part, the predictions were not earth-shattering. I've been saying for a long time that Google would be better served if it worked with a carrier rather than build its own network. Intel has also been pretty open about its strategy for putting WiMax chips into PCs. And it doesn't take a rocket scientist to realize that porn sells. In fact, the adult content industry has been at the forefront of most new developments in technology, from the VCR to the explosion in Internet use. So it's hardly surprising that faster wireless broadband would spur people to get their kicks on the mobile Web. In fact, lots of people all over the world are already doing that even on slower-speed wireless networks.
It's still somewhat unclear how much longer the auction will last. Bidding has slowed over the past several days. But some experts have said that it could be over as early as next week. Neither the FCC nor any of the companies bidding in the auction have commented on when it will end. The identity of bidders has been a secret throughout the auction. But the FCC is expected to reveal the names of spectrum license winners within days of the auction's conclusion.