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Spectrum auction makes for strange bedfellows

AT&T and Verizon, the Nos. 1 and 2 wireless providers in America, are always going at one another in the name of business and competition. They’ll surely be rivals once we get closer to the 2008 spectrum auction; the results could determine the No. 1 carrier in America for years to come. Unless, of course, it goes to another party. Since this hypothetical third (or fourth or fifth) party threatens both of them, it would make sense for them to combine forces and eliminate it and then deal with the fallout among themselves. This is exactly why we hate this huge corporate mindset. We truly believe that the spectrum is better off in independent hands.

Anyway, AT&T fired back at Google’s request for open access requirements for the 700 MHz spectrum auction:

Yesterday, AT&T weighed in. In a letter to the FCC, AT&T said Google’s “eleventh hour request” was self-serving because it would encumber licenses in the forthcoming auction “with a laundry list of intrusive ‘open access’ requirements that would, perhaps, entice Google to participate in the auction. By its own admission, Google’s request is intended to diminish the value of those licenses, thus preventing wireless service providers such as AT&T from bidding on them and clearing the path for Google to obtain them at below-market rates.”

Okay, we see AT&T’s point — to an extent. Google wants these requirements, and then would use those requirements to its advantage by buying it on the cheap. Well, isn’t that the same thing, in essence, that AT&T and Verizon are doing, minus the “on the cheap” part? They’re trying to not have these rules imposed so that they can use those rules to its advantage and buy the spectrum.

Once again, it’s the doublespeak of the corporate world. They don’t want Google in, so they accuse Google of doing exactly what they themselves are doing in order to win the auction. We’re actually quite surprised that Google hasn’t released a statement on this issue.

The only place we see AT&T having a point is the “below market rates” portion. Yes, Verizon and AT&T want certain regulations in place — or certain regulations not in place — so that they can win the auction and use the spectrum to build their respective companies. But these rules they want would not drop the price of the spectrum; the big two would still be bidding against each other. However, with the open-access regulation, the value of the spectrum would be lessened in the eyes of Verizon and AT&T, which means its lessened as a whole.

However, if Google obtains this spectrum at a below-market rate, wouldn’t they be able to provide access to the spectrum at a much cheaper rate? That’s how we see it, though we’ve been blinded by business dealings like this before. Still, to us it makes a lot more sense to hand it to a third party and see what comes of it. Worse case is that it goes back up for auction, at which time the major carriers will have a much stronger case.

[Computer Business Review]