Sunday, June 11, 2006

US Spectrum Auction

US Spectrum Auction a great news for US mobile consumers

In august this year 90 MHz of valuable spectrum in 1710-1755 MHz band will be auctioned by FCC in US .This would enable at least 2 to 3 new nation wide service providers to enter highly lucrative and growing mobile market. If you look at the present mobile service and player’s landscape it becomes quite apparent why upcoming auction is such a big thing, with potential to really change the mobile service space in favor of consumers.

Today US market is dominated by just 3 nation wide players Cingular, Verizon and Sprint. And couple of regional players. For me for the size and population of US this is totally pathetic condition which is pretty much evident if you look at the pricing structure and powers these players enjoy compared to rest of the world. One example to illustrate my point is the fact that most operators still have concept of airtime charging basically meaning that both the caller and called parties are charged when a call is made. This kind of practice existed is in most part of the world when mobile services were initially launched but consequently abounded except in US where still in continues just because of lack of real competitions.

FCC after freeing the spectrum from other government departments like department of defense etc at an expense of nearly 900 million dollars, plans to auction the much needed spectrum for advanced wireless services like 3G data services etc already some estimates suggest that 90 MHz may fetch government up to 35 billion dollars coming close to year 2000 Europe’s 3G auctions in value terms .My thinking is that this spectrum allows for 2 to 3 new nationwide carriers to enter the markets. Already some rumors are there that some of non traditional mobile players like cable service providers (ex: Comcast) may bid for that spectrum .some of these may bid so that they can build assets so that they can start offering converged bundled services. What ever may be the reason one things is for sure is that there is going to be quite good bandwidth available in the market which will start driving competitions and hence prices down.

Another thing that I think will happen is that more and more MVNO will be launched which will drive the cost down that has been the case in most part of Europe .Today without the new spectrum there are were little bandwidth available for launching mvnos but with new players entering the market with auctions they would be willing to sell part of their network bandwidth to MVNO so that they can recover some initial high capital costs, as they would not be able to immediately acquire huge customer base .There are already some MVNO planned in US who are planning to offer advertisement supported services to customers which by definition either allow to provide free or very low cost services .I hope this is just beginning of these kind of services.

So in short by 2007 I hope to see totally different and consumer friendly mobile service landscape in US.

1 comment:

Amit Bhatia said...

yeah the cost is quite high as compare to asian markets... but then there are plethora options of unlimited night time and weekends.
There are few options available where incoming calls are not counted....
most of the plans have rollover minutes so you can save them and few months down the line.. u have plenty of minutes remaing...

something from the net..