Why 700 MHz matters

The wireless industry's support for a fifth delay in the 700 MHz spectrum auction, which the FCC imposed two weeks ago, stems from the belief that the band will take years to clear. But legal wrangling surrounding NextWave Telecom's C-band licenses and Department of Defense spectrum could make it a near necessity for third generation wireless.

At least one analyst believes wireless carriers will begin considering 700 MHz more seriously for accelerating their 3G plans as other alternatives fade away.

“The more folks need spectrum, the more they will look for alternatives, and there will be more pressure to do 700 MHz earlier,” said Blair Levin, an analyst with Legg Mason.

Carriers would prefer DOD spectrum (2500 to 2690 MHz), which, unlike 700 MHz, matches other 3G bands around the world. With 700 MHz they could have to pay more for equipment, namely handsets. Still, Tole Hart, senior wireless services analyst with Gartner Dataquest, maintains it is one of the more feasible spectrum bands to be auctioned. “700 MHz has nice spectrum characteristics. Because it is a lower number, fewer base stations are needed.”

Distaste for the band isn't universal throughout the industry.

“Nextel has never been scared about going after different frequencies,” Hart said. “They need additional spectrum and it would be good for the company to go after 700 MHz.” Cingular Wireless also might need to secure some of this spectrum for certain markets where it has no spectrum, he said.

“700 MHz should be attractive to carriers if only for technical reasons because the propagation characteristics are better than in PCS bands or others such as 1700 MHz or 2500 MHz. The signal also penetrates buildings very well,” said Kelly Cameron, a former FCC attorney and partner with the Washington, D.C., law firm of Powell, Goldstein, Frazer and Murphy.

For now carriers are at the mercy of the FCC, which must figure out how to remove and compensate broadcasters that currently occupy the spectrum by the FCC-mandated 2006 deadline, Hart said.

“Until related proceedings are concluded, the full value of 700 MHz cannot be realized,” said a spokesman with the CTIA. “If it is auctioned off and there are still questions over it, the wireless industry will not pay top dollar for it, and the U.S. Treasury will suffer for it.”

The FCC also must resolve several petitions from a joint filing of broadcasters and other entities interested in band clearing policies, and from the Spectrum Exchange Group seeking reconsideration of clearing the spectrum.