At stake are licenses for several large slices of the wireless spectrum scheduled for auction Sept. 6 by the Federal Communications Commission. The agency wants companies to use those licenses for high-speed data services, such as the next-generation wireless technologies planned by mobile phone companies. Already companies ranging from Microsoft to BellSouth have expressed a interest in the sale.
But there's a catch. About 100 television stations are already broadcasting their shows using this wireless real estate. They will have to leave before any new owners of the spectrum can use it nationwide. And figuring out how to clear the old guard to make room for the new high-speed data services is proving difficult.
In hopes of speeding this process, the FCC late yesterday released a new set of rules governing how the stations can make deals with wireless companies to give up their territory.
"These actions will provide more certainty to parties preparing to bid for this spectrum, as well as encourage development of this valuable spectrum in a manner that best serves the needs of consumers," said FCC chairman William Kennard, who has recently become a vocal proponent of new wireless data services.
But many of the bidders say this "certainty" is still simply the promise of expensive legal and business headaches.
"We're still looking at (the decision)," said Jim Gerace, a spokesman for Verizon Wireless, the biggest mobile phone company in the United States. "But it's looking like too little. We're hoping it's not too late."
The slice of spectrum set for auction is receiving close attention across the wireless industry. It has even drawn some interest from technology and content companies, ranging all the way to Disney and Intel. Although not all of these companies will wind up bidding on the spectrum, all are desperate to find new ways to deliver voice, data or entertainment services over high-speed wireless connections.
That level of interest is likely to drive prices sky-high and could create opportunities for new wireless giants to emerge. In its action authorizing the sale of the spectrum, Congress said it expected to raise about $2.4 billion from the auction. Recent signs of corporate interest in spectrum sales elsewhere in the world have shown that the spectrum could be even more valuable.
But that's only if the wireless companies can use it in the near term. And that's not the case, if the scores of television stations that now occupy large pieces of that wireless real estate don't agree to pick up their stakes and move elsewhere.
The TV stations will have to do this in the long run anyway, in order to move to digital broadcasting. But wireless companies, such as Verizon, and others have argued that the television stations should be given a push. Otherwise, the wireless companies worry that the stations will be able to charge them huge fees and drag their heels on the timing of the move.
"The TV channels that are occupying the spectrum are going to say, 'Boy, these guys really want this stuff, and we're going to make them pay for it,'" said Herschel Shosteck, who heads the wireless consulting company Herschel Shosteck Associates.
The FCC's order yesterday, which laid out rules for "voluntary" agreements between broadcasters and wireless companies, doesn't do anything to give the TV stations that push. And that means problems, say some of the would-be bidders.
"It doesn't do anything to alleviate our concerns about the encumbrances on the spectrum," Verizon's Gerace said.
That doesn't mean that the bidding process is doomed, however.
The value of the spectrum, as well as companies' need for more airwave space to offer everything from more voice services to high-speed downloads of music or video, virtually guarantees that interest will be high. Start-ups such as the Sony-backed ArrayComm have intensified their interest in recent months, and even Gerace notes that Verizon is "still very interested."
Without a fast way to clear the spectrum of the broadcasters, however, the value could drop dramatically. Some analysts say that could even be a good thing for the industry, which has started paying sky-high prices for scarce slices of the airwaves across the world.
"The price of spectrum has been overbid to obscene levels," Shosteck said. "The interest has gone beyond the level of irrational exuberance to certifiable insanity."