Getting wired Recent FCC auction assigns broadband space in Maine

There is a strong and growing demand for wireless high-speed Internet or what is known as broadband service in Maine. Phone and cable companies are gradually expanding their coverage areas, but they are simply not able to reach many remote areas or communities with low population densities. Or they are not expanding their coverage quickly enough.

Regardless, the need for increased broadband services was much in evidence in November, when 150 private citizens, local government officials and business representatives met on the topic in Bangor at a conference sponsored by the Bangor Daily News and the Rural Development agency of the U.S. Department of Agriculture.

Late last summer the Federal Communications Commission held an auction for 1087 Advanced Wireless Services licenses nationwide. The auction known as AWS-1 or Auction No. 66, ran from early August to mid-September. By the time it ended, 104 companies had submitted winning bids which amounted to more than $13.7 billion. Once approved by the FCC, these companies will be able to use their new wireless spectrum to either expand existing wireless broadband services – broadband is a term for high speed Internet – or launch new services.

SpectrumCo LLC which is a consortium involving Sprint Nextel and four cable companies including Time Warner Cable and Comcast, spent more than $2.2 billion for licenses in lots of areas nationwide. Their winning bid included AWS spectrum in both Bangor and Portland.

According to Maureen Huff, a spokesperson for Time Warner Cable, these licenses provide many options and significant flexibility as Time Warner Cable develops its plans for wireless, “including the ability to test new products and services such as wireless Internet access, digital voice, mobile content and other high-speed information and entertainment services.

“The members of SpectrumCo did not approach this investment with the intent of becoming the nation’s fifth wireless voice provider, but to obtain greater flexibility in developing options for more advanced wireless services,” says Huff. “While no plans have as yet been finalized, including no specific plans to build out the networks at this time, in coming months the members of SpectrumCo will fully evaluate all options including possible testing in limited markets.”

Barat Wireless L.P., which obtained licenses in Bangor, Lewiston and Washington County, has US Cellular as a limited partner and significant investor. Overall, Barat Wireless bid more than $127 million for its licenses nationwide.

“This auction in particular was attractive because the entire country was available for bid. For those who wanted to buy nationwide spectrum, it was the first time in a very long time that this amount of wireless spectrum was available,” says company President Allison Cryor DiNardo. “Markets all over the U.S. were highly sought after, including markets in Maine. The Portland, Bangor and Lewiston areas were especially competitive with multiple companies bidding for this spectrum.”

She describes AWS as a different kind of spectrum than PCS or cellular, saying that: “It will need new equipment to be able to use the spectrum [including different kinds of handsets].

“It will take some time for all of us to develop our building plans and for small businesses, we will need to wait and see how the larger companies take their first steps in using AWS spectrum. The vendors in the wireless industry are still in the development stage for this new spectrum as well.

Barat is a typical small business and it will be cautious in assessing its opportunities in the wireless business in the 15 markets where it purchased spectrum, including [Maine],” says DiNardo.

AWS Wireless Inc. acquired frequencies in Portland as well as Oxford, Somerset and Kennebec counties. Overall, AWS Wireless, a wholly owned subsidiary of NextWave Wireless LLC, obtained 154 AWS licenses covering 63 million people nationwide for $115.5 million. Besides Maine, these licenses include Pittsburgh, Indianapolis and Anchorage, to name a few.

“The availability of AWS spectrum will accelerate the development of next-generation wireless technologies designed to support the delivery of bandwidth-intensive multimedia content to both fixed and mobile devices,” says Roy Berger, a spokesman for NextWave Wireless. “Wireless technologies have evolved significantly over the past decade. Wireless broadband standards such as WiMAX are examples of new technologies that vastly improve the economics of delivering fixed wireless broadband services including Voice over Internet Protocol to consumers.” WiMAX is designed to increase the range or distance that signals will travel with an emphasis on reliability.

The processing of all winning bids and the issuance of new licenses by the FCC is well under way. By late November, the FCC had granted 550 of the 1087 licenses representing $12.2 Billion in total net high bids.

In addition, the FCC working with the National Telecommunications & Information Administration at the Department of Commerce must coordinate the transfer of the 1710-1755 MHz portion of the AWS spectrum – AWS also includes a frequency bands in the 2100 MHz range – so that new AWS licensees and existing federal government users do not interfere with each other.

The auction involved both regional and smaller, zone-specific licenses. Bidders participated in numerous rounds of bids for three separate categories or blocks of wireless frequencies. As far as Maine is concerned, a total of about a dozen new AWS licenses emerged from the auction.

FCC Chairman Kevin J. Martin said the AWS-1 auction was “the biggest most successful auction in the Commission’s history, and noted that it made available “the largest amount of spectrum suitable for wireless broadband ever offered in a single FCC auction.”

“Although we cannot envision our lives without access to the Internet, I believe we are only beginning to imagine the way mobile broadband networks will impact our lives, changing the business and entertainment possibilities available to consumers,” added Chairman Martin.

Northeastern regional licenses, which also include Maine, were obtained by MetroPCS AWS, T-Mobile License LLC, and New Jersey-based Cellco Partnership, which is the nation’s second largest cell phone company doing business as Verizon Wireless.

“The starting point to the development and growth of a wireless network is the purchase and licensing of spectrum,” says Michael Murphy, a spokesman for Verizon Wireless.

“For Verizon Wireless in particular, the importance of adding spectrum is to stay ahead of rapid customer growth, and the increasing demand for products and services, including data products which require additional bandwidth,” Murphy said. “Data products include nonvoice communications and multimedia content, everything from text messages, to Web browsing, to downloadable video clips and music.”

Murphy explains that customer data usage now accounts for nearly 14 percent of Verizon Wireless’s total quarterly revenue, a figure nearly twice that for the same period in 2005, and that more than 30 million or half of all Verizon Wireless customers send and receive data. A total of 14.4 billion text messages were exchanged in the third quarter of 2006 by Verizon customers, Murphy said.

“Locally in Maine, we have undertaken significant network expansion activities benefiting residents and visitors with the addition of 75 cell sites just this year,” says Murphy. “[In November], we announced expanded coverage in Hancock, Kennebec, Oxford and Penobscot counties, adding to previous enhancements to Androscoggin, Lincoln and Sagadahoc counties.”

Besides the above-mentioned cable, phone and wireless companies which participated in the AWS auction, satellite TV companies, DirecTV and EchoStar, formed their own partnership known as Wireless DBS to bid on AWS licenses. Early on, it appeared to be making an aggressive move into the wireless broadband services arena by submitting an up-front payment of more than $972 million. However, only a few days after the bidding commenced, Wireless DBS abruptly ceased bidding and withdrew from the auction.

Given the significant presence of satellite TV in rural America, Wireless DBS drew immediate attention from proponents of expanded rural broadband services in particular. In Maine, for example, almost 140,000 homes – almost a quarter of all TV households – subscribe to satellite TV services today, according to data provided in early November by CentrisBRIDGE, a joint project of Centris and Colorado-based The BRIDGE Data Group,

But despite the evaporation of Wireless DBS, DirecTV, for example, is still pursuing other options when it comes to delivering wireless broadband services.

“We do have a deal with Earthlink in which we’re buying its municipal Wi-Fi capacity and offering it to our customers in the city of Anaheim, California. Obviously a localized offering right now, but we do have the ability to do this in other markets where Earthlink sets up a Wi-Fi network,” says DirecTV spokesman Robert Mercer.