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If Google did not bid for the spectrum (who could blame Google if it passed on this), who else would step forward for the privilege of spending $10billion to give service away?

Now I Might Have Heard Everything

Wednesday, April 23, 2008

In the wake of the 700-MHz auction, which was a "disappointment" according to Representative Anna Eshoo (D-Palo Alto, CA) and Rep. Christopher Cannon (R-UT), they have introduced the Wireless Internet Nationwide for Families Act (WIN), which would require a nationwide network that would be porn free to be built using the 2155-2175 MHz spectrum. Sounds like a wonderful idea to me, and the requirements of the network build-out are simple: The winning bidder (yes, the spectrum would be auctioned) must cover 95% of our "country" (population or territory?) in ten years and must provide service for free to consumers and public safety users. It would also have to deny access to obscene and indecent material on the free service tier. (Wow, what does THAT do to net neutrality?)

The reason for this new proposal? Eshoo's statement posted on her website says it all: "The cost of broadband service is a barrier for too many families who want broadband, with more than 100 million Americans without broadband at home."

"By every measure, the U.S. is losing the international broadband race and our competitiveness as a nation is at stake. The Innovation Agenda made a commitment to spur affordable access to broadband and this bill will go a long way to providing universal broadband access."

"The results of the 700 MHz auction disappointed many of us who hoped that a new entrant would emerge. 70% of the spectrum auctioned went to only two carriers. While the auction required under this legislation is open to anyone, it is my hope that the bold conditions of requiring free, family friendly service will encourage the entry of a new kind of national broadband service provider."

So let me understand this correctly, to cover 75% of the U.S. population at 2.5 GHz would require 65,000 cell sites, so perhaps it can be done at this spectrum with only 60,000 cell sites, but that leaves 20% of the population uncovered and, according to this proposal, we need to provide coverage to 95% of the population, so we should add in about 20,000 more cell sites to be on the safe side.

Okay, business model here we come. The spectrum goes out to bid and it is won by a company (Google?) that pays $2billion for it? The winner then undertakes to build out 80,000 cell sites, and even if the sites are only $50,000 each, the cost will be another $4billion, and the operational expenses will be, on a per-cell-site basis, about $8,000 per month for a monthly network operations total of $400million. So, what we will have is a free network that cost the winning binder at least $6billion on the low side, and then operational costs just for the sites of $400million a month or $4.8billion per year. And don't forget the cost of the staff, the IP back-end and the connections to the Internet.

The end result is that we will have a network that costs the winning bidder more than $6billion to build and more than $5billion to operate and it will give you and me free access, along with the first responders, who, I assume, would have priority? Perhaps Google can make it back in advertising revenue, but even for Google it would take a while. Meanwhile, it would be negating its stance on net neutrality, since it makes a big deal out of a person being able to access anything on the Internet with no impediments. I wonder how Google would reconcile that?

If Google did not bid for the spectrum (who could blame Google if it passed on this), who else would step forward for the privilege of spending $10billion to give service away?

Any of you who know radio and wireless know I have been very generous here with the number of sites required, the cost per site and the operational expenses. If you want a truly robust network, you need to add in batteries and generators at the sites, and more backhaul that can be used in the event of a problem, and the list keeps getting longer and more expensive.

Unless the Federal Government steps up and funds this project, in which case it should give away the spectrum to a company that signs on to all of the other requirements, I don't see any way in the world that anyone will even consider building such a network. After I give services to the 100 million underserved and the first responders, who am I going to charge, and how much, to be able to recoup yearly costs, let alone my initial investment?

If I live in Representative Eshoo's district, I already have a choice of 15 different wired, cable and wireless service providers, so why would I opt to change my provider and go with this one, especially if all I got was broadband data services instead of voice, data, TV and other services all on a single bill, and all at a discounted price? How would I feel about competing for bandwidth with those who get to use the service for free because they cannot afford it? Yes, I feel sorry for them, but if I am paying for the service, I think I would have a problem competing with them for service (remember that wireless broadband is shared bandwidth).

I guess I should not be so amazed that someone serving us in the capacity of a Representative has no real-world experience when it comes to paying for infrastructure and services. But it does amaze me that anyone can believe someone would simply put down a couple $billion and invest $6billion or more and at the end of the day welcome anyone who wanted to ride for free on the network.

Disappointed with the 700-MHz auction? Okay, but there is still hope. The D block is still out there and could be used for public/private services including first responders and rural America for a whole lot less money.

Andrew M. Seybold

COMMENTS: This is an archived post. Commenting is no longer available.

Laurie Lamberth - 04/23/2008 14:36:29

I share your amazement that a congresswoman who represents a district that is so intellectually rich could have presented such dim-witted legislation. If she consulted with the business leaders in her own constituency, she would have put forward a very different proposal.

Andrew Seybold - 04/24/2008 11:21:36

Laurie--I have to agree, there is a rumor that a company within her district had actually put this plan forward and claims that they could do it for almost free--I am glad I am not an investor or a stock holder in that company.
In addition to the post on this blog I have received a numbe of emails expressing the same basic thoughts--it should be interesting to hear what happens with this. One frustration I have is that I wanted to send both of the Representatives a copy of this blog posting but since I am not in their districts my email is blocked so I have had to resort to U.S. Mail-