Verizon outlines how open-access, LTE and new spectrum fit together. AT&T plans Evolved HSPA and later LTE. Google comes clean. Cyren Call fights back

With Auction 73’s anti-collusion rules lifted, the big 700 MHz license winners began detailing their plans for the spectrum. The two lead bidders AT&T and Verizon Wireless are doing exactly what everyone expects them to do with their spectrum, deploy future Long Term Evolution networks, but Verizon also detailed how its open-access and fixed mobile convergence plans would fit into its 4G plans. AT&T had a surprise of its own, announcing it would deploy advanced 3G services in the new frequencies.

In an analyst call today, Verizon officials said the company would it begin field trials with VZW’s part-owner Vodafone and international partner China Mobile in 2008, network. In 2009 it would select vendors and begin rolling out networks in the second half of the year in preparation for a full commercial launch in 2010. But a lot of the groundwork for the business case of that new network is going on today as Verizon pursues its open development initiative, which would open its current 3G networks to third-party devices and applications, Verizon Wireless CEO Lowell McAdam said.


Verizon already sees data comprising 20% of its wireless revenues, but McAdam said the company could easily see that growing to more than half of its business as new demand for VZW’s current data services grow, as more and more things become embedded with radios under the open development roadmap and as Verizon’s business and wireline units integrate with the wireless network. Verizon plans to make LTE a bridge between its FiOS broadband network and traditional mobile services and as recently as CTIA Wireless, Verizon Business began pushing services beyond the enterprise into the mobile footprint. Its open access developer program will create mobile business cases for myriad currently unconnected electronic devices as well as integrate connectivity into appliances, cars and homes, McAdam said. Instead of shooting for 100% penetration of mobile phones, the industry can now aim for multiple wireless date connections for each person.

“The industry for us is really not just about people anymore—it’s about a broad array of connections,” McAdam said. “In electronics, digital media players come into play, gaming consoles come into play. In homes, all of your appliances, your energy management for your home. … It is the entire population we can look at, but now moving into connecting everything and anything together. So places to places, people to places, people to people, people to devices and even devices to devices.”

Verizon won the lion’s share of the Auction’s C block, giving it 22 MHz of coverage (11 MHz up and 11 MHz down) in the lower 48 U.S. states and Hawaii. It also picked up additional spectrum in key metro areas. All of the C-block spectrum has the FCC’s open-access requirements attached, meaning that Verizon Wireless must let outside service providers and their devices and applications on the new LTE network. Google was the big instigator of those provisions and stood enough to gain from them that it participated in Auction 73 in order to ensure that the minimum bids for open-access were met.

In a posting on Google’s official blog on Thursday the company came clean to what most people following the auction had already surmised. It admitted it never had any intention of winning any spectrum, and simply bid up Verizon past the open-access threshold. While Google was prepared to take ownership of the licenses, it was fairly certain of what the outcome would be.

“Based on the way that the bidding played out, our participation in the auction helped ensure that the C Block met the reserve price,” Google lawyers and auction bidders Richard Witt and Joseph Faber wrote in the blog. “In fact, in ten of the bidding rounds we actually raised our own bid--even though no one was bidding against us--to ensure aggressive bidding on the C Block. … But it was clear, then and now, that Verizon Wireless ultimately was motivated to bid higher (and had far more financial incentive to gain the licenses).”

Verizon chairman and CEO Ivan Seidenberg made no attempt to hide his annoyance with the FCC and Google for imposing those open-access provisions on its spectrum, but he added that Verizon’s open developer program had now made the issue moot. “Our thinking about this open development initiative and architecture goes much beyond anything that commission might have been thinking about with Google,” Seidenberg said. “I think what will happen is the FCC’s expectations will be more than met by the kind of things we’re doing.”

While AT&T didn’t go into as much detail as Verizon on the services and business models for its LTE network, it did say it planned to use its 700 MHz spectrum for both LTE and Evolved HSPA, an upgrade to UMTS that uses higher order modulation and smart antenna techniques to achieve theoretical speeds of 42 Mb/s on the downlink and 22 Mb/s on the uplink over 5 MHz channels. AT&T bid selectively in Auction 73, acquiring B-block spectrum in key markets, but paying a per-POPS premium over Verizon’s much broader licenses. AT&T, however, still owns a 700 MHz very similar to Verizon’s due to its acquisition of Aloha Partners. Aloha also owned C-block spectrum, but it won it in a previous auction before the open-access requirements were imposed—something AT&T was quick to point on Thursday.

“With fewer costly and complex regulations, we have the certainty and flexibility needed to move faster in rolling out new mobile technology and more customer choices in devices and applications," AT&T Mobility president and CEO Ralph de la Vega said in a statement.

AT&T gave no timeline for when Evolved HSPA—also known as HSPA+--would be rolled out, but Kris Rinne, speaking at a FierceMarkets conference at CTIA, said that AT&T would mostly likely deploy LTE in the 2010 timeframe, which may put it slightly behind Verizon if it makes its deployment goals.

While the FCC announced the winners of the 700 MHz auction two weeks ago, it enforced a quiet period until Thursday to prevent anti-competitive collusion between the winners. Once that silence was lifted though, several companies that didn’t even win spectrum stepped forward to speak their minds. Google was the biggest of them, but Cyren Call put out its own statement out about the controversial D-block, which failed to meet its reserve price and was thus separated from the final auction results for some unknown future action.

The C-block was intended to power the first shared broadband network between public safety and a commercial provider, but the company assumed to be the most likely winner of the spectrum, Frontline Wireless, folded before the auction began. Qualcomm placed the sole bid on the nationwide license in Round 1. After the auction closed though, several consumer advocacy groups stepped forward to accuse Cyren Call, a consultant for the public safety agencies, of demanding payments from potential bidders. Today Cyren Call minced no words in denial of that accusation.

“Anyone stating or implying that I or any member of Cyren Call or the Public Safety Spectrum Trust Corporation (PSST) ‘demanded’ a spectrum lease payment is lying,” Cyren Call chairman Morgan O’Brien said in the statement. “Furthermore, anyone
suggesting that any spectrum lease payment would be paid to Cyren Call is lying.”


Cyren Call said that in the bidder information document it prepared for three potential bidders, Verizon Wireless, AT&T and Frontline, it laid out expectations for any future negotiation with PSST and the ultimate D-block winner. One of those expectations would be that the winner make an annual payment to the PSST to lease public safety’s portion of the spectrum when it was not being used for emergency purposes. Cyren Call said it estimated the annual payment at $50 million, but like all aspects of the public-private spectrum sharing agreement it would have been subject to negotiation.

Though Qualcomm was the only bidder it didn’t walk away with the D block. It did, however, pick up several E-block licenses to compliment its already substantial 700 MHz holdings. It plans to use those licenses to expand MediaFLO TV services to key markets: San Francisco, Los Angeles, New York City and Boston. Qualcomm also picked up B-block licenses covering areas near key Qualcomm offices in southern California. It plans to use those to create a test bed for future 4G services and technologies.