It's being called the "last beachfront property" in wireless. But for businesses, the chunk of the radio spectrum up for auction may end up more like a shanty.
In January, the Federal Communications Commission will take bids for the 700-MHz frequencies being abandoned by television stations that, by Congressional mandate, must shift from analog to digital broadcasting by 2009. What happens with those bands--particularly, who wins them--could change the face of wireless communications.
The most striking possibility on the table is the potential for an open wireless broadband network--on about a third of the available spectrum-- that will let users operate any device with any software they choose. That would smash the historical control of major telecom players, who hold a vise-like grip over what devices can be used on the networks they've built.
The winner will have to build out a network, which could cost billions. Then users would pay a fee to use that network, but they wouldn't have to subscribe to any service.
While Verizon and other conventional telecom players are expected to be heavy bidders, the hype is being stoked by the potential entry of outsiders like Google, Yahoo and Apple, all of whom are said to be contenders in the Jan. 16 auction.
The FCC, much to the ire of the telecom giants, passed the "open access" rule pushed by eager entrants including Google and Frontline Wireless, a startup stacked with former FCC officials, telecom executives and prominent venture capitalists. Verizon is challenging the constitutionality of the ruling. Frontline has fired back, charging Verizon with violating lobbying rules and demanding the company be barred from the auction.
Beyond the squabbling, industry watchers are calling a potential winning bid by a newbie like Google "revolutionary." Google CEO Eric Schmidt has said the company is prepared to spend $4.6 billion, the minimum price set by the FCC for the choicest pieces of the spectrum. For consumers, the idea of open networks means the choice of using any wireless devices they want--with whatever software they want--without having to deal with those nagging contracts. In other words, freedom to roam far and wide.
But for CIOs, the potential changes could have a different impact. Roger Entner, senior vice president of IAG Research's communications sector, says that in the free wireless world, service-level agreements, crucial insurance policies for many companies, won't exist. "Part of the exchange of being free of charge means being free of reliability," Entner says. "If that system goes down and you don't have e-mail for three days, what are you going to do, sue Google?"
And a Google foray into the wireless world could give the company a new vehicle to deliver contextualized ads. That, Entner believes, could also be a problem for business. "When was the last time you saw a CEO willing to be interrupted by ads while trying to get e-mail?" he says.
There are upsides to a possible Google win, too, though. For example, businesses could quit paying for an e-mail application like Microsoft Exchange and use Gmail, Google's free e-mail program, which offers more storage than some paid applications. And it could presage the launch of a phone by Google, something industry watchers have speculated about for months.
The auction is still a couple of months away. Court battles will continue, as will buzz about potential bidders and their intentions. Despite any tradeoffs, though, it's tough to see more choice and innovation in communications as a bad thing.