VERIZON WIRELESS SAYS SPECTRUM ADDITIONS FROM FCC'S AUCTION 73 WILL FURTHER COMPANY'S BROADBAND STRATEGY

BASKING RIDGE, N.J. - Verizon Wireless said today that the spectrum it gained in the FCC's recent 700 MHz auction is a critical piece of its overall broadband strategy to take advantage of the enormous opportunity for growth in data services in the future. The spectrum will allow the company to capture the full potential of its announced plan to deploy a Long Term Evolution (LTE) network and Open Development Initiative and the resulting next wave of wireless innovation. The company's comments were made in a conference call with the investment community this morning.

Verizon Wireless was the winning bidder for a nationwide spectrum footprint (excluding Alaska) in the FCC-termed C-Block group of licenses, plus 102 licenses for individual markets around the country.

In all, the company will pay $9.36 billion for these licenses, which equates to $1.03 per MHz Pop, compared with the auction average of $1.20.

The FCC announced the end of the auction on March 20, but the company was limited in commenting until the Commission's anti-collusion quiet period rules ended late in the day on April 3.

The new spectrum, which will not be completely cleared for use until mid-February 2009, will increase the company's average spectrum depth per market to 82 MHz, from 52 MHz today.

Verizon Wireless plans to launch its LTE network in the 700 MHz spectrum in the 2010 timeframe. The company said the breadth of the national C-block spectrum footprint, all in a single band and with a depth of 22 MHz, provides a speed and performance advantage that will be ideal for connecting a variety of consumer electronics, from wireless phones to medical devices to gaming consoles. In addition, the 102 individual licenses in the A and B-blocks provide additional growth capacity in key markets.

"The spectrum we purchased in this auction, combined with our existing portfolio, provides new flexibility as we execute our high-growth business model," said Lowell McAdam, the company's president and CEO.

"We now have sufficient spectrum to continue growing our business and data revenues well into - and possibly through - the next decade, and this is the very best spectrum with excellent propagation and in-building characteristics. We also believe that the combination of the national, contiguous, same-frequency C-block footprint and our transition to LTE will make Verizon the preferred partner for developers of a new wave of consumer electronics and applications using this next generation technology.

"In all, this spectrum positions us well to preserve our current advantage and reputation as the nation's most reliable wireless network and the leader in data services. This is a wise investment in future data growth opportunities," he said.

Note:

A replay of the presentation webcast can be accessed on Verizon's Investor Relations Web site, www.verizon.com/investor.

So, when's that awesomeness going to happen? Ralph says they "don't need the [new] spectrum tomorrow or even next year" because HSPA (their current 3G standard) has "a lot of headroom." They're going to roll out 4G "when the consumers demand it" (um, I want it now) and when the gear shows up to support it. Feb. 2009 is when the spectrum is clear for use, and beyond that "I think you'll begin to see commercial deployment in select locations." Good news: It's going to be cheaper per megabyte of data. Bad news: You won't really see widespread commercial deployment until 2012. But! They're planning on doubling their 3G speed to 7.2 Mbps downstream in the next year.

Won't comment on WiMax, which presumably, theoretically, maybe will be rolled out sooner than AT&T's 4G network.

He's kind of pooing on the C block which Verizon bought because it's stuck with open access ruleshampered with more regulations, etc. The C block chunk they bought from Aloha earlier wasn't subject to open access rules, and the B block slices they bought to fill in the gaps during the auction wasn't either. Om Malik asks if Ralph's referring to open access rules. Ralph replies that's "exactly correct." He also calls the regulations on the C block "excessive" which gives AT&T flexibility that "other" C block winner won't have.

A dude from the NY Times asks if the open rules kept them from bidding on the C block. Ralph says, "Our strategy in the auction was to complement the spectrum we had already acquired" from Aloha and "we accomplished exactly that." He dodges a follow-up trying to pin down whether they would've bid on the C block if there had been no rules placed on it.

On open access: "I think it's difficult to define what 'open access' is" but AT&T is all about choice, and their networks will be open for applications and development. "It's all about giving customers' choices." Reiterates that you can use any GSM handset "today" while some people are "just talking about it." *Makes dirty eyes at Verizon*

And we're done.

Interestingly, the open access C block was the only one to march past its reserve price of $4.6 billion (courtesy of the Goog), with a winning bid of $4.744 billion, probably by Verizon. The winners can claim their prize in less than a year. Good times for all to ensue! [RCR News]

As Saul Hansell points out, if we see the bidding continue to escalate, it indicates that Google might actually be playing to win (though it's doubtful), as long what we're seeing isn't an influx of bidders locked out of the B block pool by rocketing pricesdriven up, no doubt, by big telcos looking to patch up holes in their 700MHz network.

Like say, AT&T, whose purchase of $2.5 billion worth of 700MHz spectrum licenses back in October finally got the FCC rubber stamp earlier today. Regardless, the picture will start getting clearer a lot quicker as of tomorrow, when the auction moves into the higher stakes phase 2, where entrants are basically forced to bid hard and fast. [Bits, PC World]

WTF Is This 700MHz Deal?
We're not getting into the technical nitty-gritty of the electromagnetic spectrum. Just know that there's only a finite amount of it for broadcasting and telecommunications, so spectrum licensesthe right to use a particular chunkare really valuable. Analog TV is currently broadcast over the 698-806 MHz range of the UHF band: the ballyhooed "700MHz spectrum." But the FCC will kill off analog TV on Feb. 19, 2009, and will auction off the right to use it for other purposes.

Why Would Someone Pay BILLIONS for It?
Every frequency band has slightly different physical attributes. The 700MHz band penetrates walls fairly easily and travels well, making it perfect for either cellular or long-range wireless broadband that could provide an invisible alternative to DSL and cable. It could simply augment a major telco's existing holdings with a powerful wireless network, but it could also mean a lucrative new ISP for Google or some other non-telecom behemoth.

Going Once...
So here's how the auction will work. There are five blocks A-E, divided up regionally. Everyone had to secretly declare their intent to bid to the FCC by Dec. 03, and can't talk about it at all now. Cue Google's not-so-secret entrance last week. The actual auction will take place on Jan. 24 with a minimum bid of $4.63 billion to get at the C block. Winners can pick up their prize in Feb. 2009.

The reason all the excitement's been over what goes down with the C block, is that Google convinced the FCC to load up with "open access" provisions: The winner has to make the network open so any "safe" device use it, plus they have to make their own networked devices open as wellthe exact opposite of what Verizon's handsets are right now. Before Verizon's recent Mitt Romney-likerevelation that open networks are the One True Path, the veteran telecom fought the openness provisions with every trick in the book, from backdoor deals to lawsuits. Verizon actually sued the FCC over this exact provisionthat the C block winner allow any device on the networkthat it is celebrating with pig-in-shit PR glee right now. The rules (thankfully) stuck, and Verizon changed its tune.

The Players
Here's a list of the bidders:
" Google, obviously
" Verizon and AT&T, the other two heavies
" Cox Cable, probably looking to start a wireless internet service
" DISH Network
" Leap Wireless
" Frontline Wireless, a startup

Here's who is not in:
" Time Warner
" Comcast
" Sprint
" Clearwire

Big investments are too risky for all of the above, plus those last two already have their plates full trying to get their busted-ass WiMax deals off the ground.

How It Might Go Down
The educated guess is that Google is bidding to not look like a dick. It may not be playing to win, but after all of the previous big talk and the launch of the OHA business, it needs to show up. Evidence for our skepticism: Google is going it alone, and was already looking for ways to finance just the minimum $4.6 billion bid. Circumstantial evidence: Google's statements of late haven't been very enthusiastic about the prospect of winning; the ol' college reading between the lines says it's not planning to. But, it did get the open access provisions it pushed for, so there's really no need to finance the network on top of it.

AT&T just bought a massive chunk of 700MHz spectrum from Aloha Partners for $2.7 billion a couple months ago, so it's probably going to focus its bidding on the regional licenses to fill in the gaps.

Our feeling has been that Verizon's going to be the juggernaut, even before it gets all lovey-dovey with third-party devices. It's been rabble-rousing over the rules for monthstrying to get FCC chairman Kevin Martin to shitcan the open access provisionsand spitting back and forth with the Google the entire time. Reading between the lines again, it's clear it's always intended to bid win.

In fact, Verizon's 700MHz dreams probably played a significant role in opening up the network, whatever other feel-good reasons their PR department might tell us. Why? For one, to placate Kevin Martin, who's pretty hot on openness and competition. He koshered the open-access rules in the first place. It'll be interesting to see if Verizon tries to go war post-auction to fight the provision requiring unlocked hardware on the C block, since its open-network announcement implied that Verizon's own gear would stay locked down like Guantanamo.

Our money is on Verizon for the total C block win.

The Afterglow
Verizon winning the C block pretty much kills previous utopian notions of a mythical third pipe, outside the grasp of the vested telcos, bringing glorious open internets to us all. However, coupled with Verizon's recent announcements it could spell progress. The FCC probably won't let it go back to its evil ways. And you can expect Google to be all up on that, pushing search, services, ads and eventually hardware. The little guy might just get his crack at putting his dream device on the network too. We're warming up the soldering iron!

McAdam dismisses the idea that being a "founding" member of the OHA would have been anything more than a press-release opportunity for the carrier. Once the dev kit went out, though, he says his engineers were impressed.

"Clearly the Android system gives a lot of developers the opportunity to develop applications for a wide range of handsets."

The result has been what we have reported over the past week: Verizon declared its network open to all phones and devices that share its network technology, following an easy security and functionality verification process. Furthermore, Verizon will migrate to the 4G standard co-developed in Europe by its parent company Vodafone, Nokia and the 3GPP, a standard that would be in line with much of the world's wireless data network.

Though this could be showboating for the FCC in the period leading up to the 700MHz spectrum auction, BusinessWeek points out the same impression that we've had, that the openness model is inevitable, and that "market demand for open networks would be impossible to hold back indefinitely." You hear that, AT&T? [BusinessWeek]

Google's coming out statementessentially "whoever wins, everybody does" was noticeably limp. No fire in their words probably signals no fire in their bid, basically.

On the other hand, Verizon throwing open its network is a decidedly hard throwdown with regard to its auction intentions. The winner of the 700MHz's contentious C Block is required to have such an open network (though only on that chunk), meaning Verizon may be strongly signaling its intent to bid and win. Gird your loins for endless "It's the Network" catchphrases, just in case. [MocoNews, CNN]

The RTR6570 will support the following technologies:
" Upcoming 700MHz wireless networks
" CDMA network from Sprint or Verizon (1900MHz EV-DO)
" HSPA or UMTS data network from AT&T or T-Mobile (850MHz, 1700MHz and 2100MHz)

Now that you're all excited, the bad news is that chip samples won't be ready until the middle of next year, and phones themselves won't hit the market potentially until 2009. But these will certainly be worth the wait: the ability to roam on all three networks means that you will never have to worry about coverage againthough God only knows what the roaming charges will do to your phone bill. [Electronista]

Consumers deserve more competition and innovation than they have in today's wireless world. No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet.

Google Will Apply to Participate in FCC Spectrum Auction

MOUNTAIN VIEW, Calif. (November 30, 2007) - Google (NASDAQ: GOOG) announced today that it will apply to participate in the Federal Communications Commission's upcoming auction of wireless spectrum in the 700 megahertz (MHz) band.

As part of the nationally mandated transition to digital television, the 700 MHz spectrum auction  which begins January 24, 2008  will free up spectrum airwaves for more efficient wireless Internet service for consumers. Advocacy by public interest groups and Google earlier this year helped ensure that regardless of which bidders win a key portion of the spectrum up for auction (the so-called "C Block"), they will be required to allow their users to download any software application they want on their mobile device, and to use any mobile devices they would like on that wireless network. The winner must ensure these rights for consumers if the reserve price of $4.6 billion for the C Block is met at auction.

"We believe it's important to put our money where our principles are," said Eric Schmidt, Chairman and CEO, Google. "Consumers deserve more competition and innovation than they have in today's wireless world. No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet."

Schmidt also praised the leadership of FCC Chairman Kevin Martin and his fellow commissioners for adopting the new rights for consumers earlier this year.

Google's formal application to participate in the 700 MHz auction will be filed with the FCC on Monday, December 3, 2007  the required first step in the auction process. Google's application does not include any partners.

About Google Inc.
Google's innovative search technologies connect millions of people around the world with information every day. Founded in 1998 by Stanford Ph.D. students Larry Page and Sergey Brin, Google today is a top Web property in all major global markets. Google's targeted advertising program provides businesses of all sizes with measurable results, while enhancing the overall Web experience for users. Google is headquartered in Silicon Valley with offices throughout the Americas, Europe and Asia. For more information, visit www.google.com.