700 Mhz Spectrum Valuations

We are on the verge of witnessing history in Telecom Sector. Many Years later, we would be able to tell our future generations, that "I Was There when it all happened".

With just a couple of days left for the auction to start, there has been a lot of hype about how the non traditional players will value the spectrum.. What will be the foundations on which they will build a business case ?? Google has come out openly and said it is going to bid at cut-off and wont go agressive (remember building a network is very capital intensive, it may rather focus on applications than managing a network). In such a scenario, it is easy to assume that as always the traditional telecom operators will sideline a huge chunk of spectrum at lower valuations. But is not as easy as it sounds. Here's why

• A Huge chunk of available spectrum is sidelined for Public safety communications. Not quite sure how prfitable would the Sprint's and Verizon's of world think of it.
• AT&T is not expected to be very agressive thanks to the acquisition of ALOHA Partners (where it got about 10Mhz of spectrum in this band)
• The Cable Companies are still not sure of the kind of revenues they may realize by providing wireless with their triple play bundle. They may just sit back, bid at lower levels and gauge the seriousness of other Cable companies before they actually get agressive in the auction.
• The Talk of a Economic Slowdown & Subprime Crisis couldnot have come at a worse time for FCC. The Banks are more averse than ever to lend to companies and companies are sceptical because of a general dampening of public sentiment.

The Non Traditional Telecom operators have been a huge influence behind FCC changing the auction regulations and including open access and public safety provisions. But the the Question is will these companies actually bid agressively and will they help realize what FCC hopes is the realistic valuation of 100 Mhz of spectrum in 700 Mhz band (close to US$ 20 Billion) . Although only time can answer this question, my Answer would be a big "NO". FCC intentions were clean and clear but somehow the business case behind the auction doesnt seem sound. As they say, lack of clarity work for the advantage of some but disadvantage of mane. I Guess this is a just a scenario where Operators will be at an advantage(paying less and walking away with more) and the FCC & US Coffers in general will be at a disadvantage.