The 700 MHz Waiting Game

The spectrum in the 700 MHz band that was auctioned last year is well-suited for rural areas because of its excellent propagation characteristics. Network operators should be able to cover large areas with relatively few towers, offering an economical alternative for delivering broadband to remote areas — once the equipment is available. Some smaller 700 MHz spectrum winners hope to minimize costs by making the same technology choice as dominant carriers AT&T Mobility and Verizon Wireless, even though equipment to support that technology, based on the long-term evolution standard, is not expected to be available until 2010 at the earliest.

“At present we're following the LTE path,” said Mark Steinkrauss, vice president of corporate relations for U.S. Cellular, one of the largest Tier 2 wireless carriers.

Economics clearly were a deciding factor for the company, which won numerous 700 MHz licenses in last year's auction. “Many other global players are moving in that direction, and we tend to follow more or less the direction that Verizon Wireless takes since we have roaming relationships with them and they with us,” Steinkrauss said.

Buggs Island Telephone Cooperative, a much smaller company that operates as an ILEC in rural Virginia, obtained 700 MHz spectrum as a “defensive play,” said Mickey Sims, general manager for Buggs Island. The company has no wireless network at present and sees an opportunity to reach unserved areas, where Sims sees a lot of pent-up demand.

“We may have to wait for LTE,” Sims said. “We definitely want to go mobile, but roaming is still a huge issue. We need nationwide roaming. It gives people peace of mind, even though most don't use it. It's a marketing and PR issue. Currently we haven't had any success at starting negotiations on any sort of roaming. Our business plan is to provide mobile voice and data in our serving area and then work out some sort of roaming agreement for voice.”

Sims has some creative ideas to jump-start deployment, including working with license winners in neighboring North Carolina to use the same equipment. He hopes to put together a buying consortium large enough to capture the attention of some of the large equipment manufacturers. By obtaining commitments for 10 or 15 switches and 250 base stations, Sims hopes to get equipment sooner than he would if he waited for general release. “If equipment was available, I'd buy it today,” he said.

The experiences of Agri-Valley Services, however, illustrate the perils of pioneering a new technology. The ISP, which is based in rural Michigan and owned by a small ILEC, won 700 MHz spectrum in an earlier auction several years ago and has used that spectrum for four years to deliver fixed point-to-point wireless broadband service based on a proprietary technology. The company has 10 competitors, yet some customers cannot get broadband in any other way, said Ed Eichler, president of Agri-Valley Communications, parent company of Agri-Valley Services.