Depending on who's talking, the wireless spectrum auction that starts on Jan. 24 will significantly change the mobile and wireless landscape in the United States, or it won't have much impact at all.
Some believe it will lead to creation of new nationwide wireless networks and the entry of new wireless operators. That increased competition could benefit users.
"This spectrum auction is the first real chance we've had to see a competitor emerge that could compete with the telephone and cable companies," said Gigi Sohn, president of the Public Knowledge consumer rights organization. Aggressive bidding is expected from several well-funded companies that aren't currently in the wireless business, such as Microsoft co-founder Paul Allen's Vulcan Spectrum and Google.
Others, however, beg to differ. "The auction won't change anything per se," said Jack Gold, principal of J. Gold Associates, a telecommunications consulting firm. "But other pressures in the system -- market forces -- could ultimately change a lot of things." For example, Gold said he expects more competition and more open wireless networks to emerge over time, no matter who wins the auction.
Besides the possibility of new competition, this auction is also receiving a lot of attention because it is likely to be the last time that large chunks of wireless spectrum will become available. Also with this auction, the Federal Communications Commission (FCC) has imposed rules that will, to some extent, open up wireless networks.
However, a lot of confusion about the auction remains. Here are the answers to some frequently asked questions.
What is being auctioned?
The FCC is auctioning off a huge swath of wireless spectrum in the 700MHz range. This spectrum has been used by television broadcasters, which must return the spectrum to the FCC when they switch next year from analog to digital broadcasts.
In particular, the FCC is auctioning many "blocks" of spectrum. Two of those blocks, the so-called C block and D block, have enough capacity and geographical coverage to create nationwide wireless networks. The smaller blocks of spectrum also could receive a lot of attention from bidders. Those blocks are regional in nature, and many small telecommunications providers are expected to bid on them.
How is the 700MHz portion of spectrum different than others?
The physical nature of the 700MHz spectrum makes it attractive to users and service providers alike. Many digital cellular systems in the United States use radio signals in the 1,800MHz and 1,900MHz ranges, although some older analog systems still use spectrum in frequencies as low as 800 MHz. Because radio waves in the 700MHz range are physically longer than higher-frequency radio waves, they travel farther and are better able to penetrate walls and other impediments.
These characteristics are important for several reasons. First, the better penetration makes it feasible to use wireless services indoors. That makes these wireless services competitive with landline broadband services such as DSL and cable.