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Spectrum rules may deter big telecoms

The rules for the 700 MHz auction were set at the beginning of the month, but just now we’re hearing about a provision that hasn’t yet really been publicized. We all know that 22 megahertz of the spectrum is reserved for open access. So now you can use the handset that Chuck Schmuck has been developing in his basement for the past 10 years. However, it was feared that the incumbents (Big Four) would bid on the spectrum anyway, integrating it with their existing network and therefore diluting the true effect of open access. However, that simply won’t be the case, according to the rules.

The rules dictate that an incumbent company would not be able to integrate the section of the spectrum into their existing wireless networks.

This would mean the winner of the spectrum would have to build a new network to access the frequencies they acquired.

Ah ha. So this really does pave the way for Google to swoop in and make a bid, since the rules favor a new carrier over an incumbent. If Alltel keeps expanding and T-Mobile continues its pursuit of the Top Three, we could see six major wireless carriers in the US. Choices abound!

Don’t expect AT&T and Verizon to take this quietly, though. They covet the spectrum marked for open access because they think they can use it to lay the groundwork for a fourth generation network. However, setting up a new network is likely not something they’d like to do.

A couple of things could result from this. One is AT&T and Verizon bidding on the smaller blocks of spectrum, which were expected to be bid on by smaller regional carriers like Cricket and MetroPCS — and even Alltel. The other is that we can expect to see those two companies buying out smaller providers, just as they did with Dobson (AT&T) and Ramcell (Verizon). All the sudden, their spectrum has become more valuable.

Us? We’re just loving this. The more the big telecoms squirm, the happier we are.

[CNN Money]