U.S. ADVANCED WIRELESS SERVICES (AWS) AUCTION: WORLDWIDE IMPLICATIONS FOR TECHNOLOGY, SPECTRUM AND COMPETITION

SUMMARY

When the telecommunications industry speaks of "spectral" value, most speak of the dollar amount operators may pay for spectrum. However, the future value of spectrum such as that which will be auctioned in the U.S. for advanced wireless services (AWS) in June this year will be equally determined by the services that operators - whether established or new entrants - can offer, as well as the prices end-users will pay for those services.

TABLE OF CONTENTS

EXECUTIVE SUMMARY

CHAPTER 1: THE PURPOSE OF THIS STUDY

• 1.1 Introduction
• 1.2 The Doctrine of Technology and Spectrum Neutrality
• 1.3 The Potential Consequences of Non-Standard Spectrum
• 1.4 Summary and Conclusions

CHAPTER 2: AN OVERVIEW OF THE U.S. AUCTION

• 2.1 Introduction
• 2.2 The New Use of "Blind Bidding"
• 2.3 The Impact of Greater Competition
• 2.4 The Flexibility in Network Deployment
• 2.5 The Increase in Mobile Spectrum
• 2.6 The Uncertain Intrusion of Public Safety
• 2.7 Summary and Conclusions

CHAPTER 3: THE BUSINESS CASE FOR AWS SPECTRUM

• 3.1 Introduction
• 3.2 Applications and Services
• 3.3 The Positive Outcome of Increasing Competition Among Operators
• 3.4 Declines in Revenue per Minute -- Increases in MoU and ARPU
• 3.5 Propagation Characteristics of the Spectrum and the Commercial Impact
• 3.6 The Fragmentation of License Assignments and the Implications
• 3.7 Summary and Conclusions

CHAPTER 4: SPECTRUM VALUE -- PAST AND PRESENT

• 4.1 Introduction
• 4.2 Factors Contributing to Loss of Spectrum Value
  • 4.2.1 The increasing spectral efficiency of new RF interfaces
  • 4.2.2 Continuous improvements in conventional technologies
  • 4.2.3 Ever-higher frequencies for mobile services
  • 4.2.4 Network convergence and least cost routing
• 4.3 Quantifying the Impact of Technology Progress
• 4.4 Concepts of Spectrum Value
  • 4.4.1 Market
  • 4.4.2 Competitive
  • 4.4.3 End-user
  • 4.4.4 Technology
• 4.5 Past Values of PCS and W-CDMA Spectrum
• 4.6 The Plausible Prices for AWS Spectrum
• 4.7 Summary and Conclusions

CHAPTER 5: TECHNOLOGY RISK

• 5.1 Introduction
• 5.2 The Limits to R&D and Field Engineering Resources
• 5.3 Spectrum Availability
• 5.4 Infrastructure Availability
• 5.5 Handset/Device Availability/Delay
• 5.6 Summary and Conclusions

CHAPTER 6: A FURTHER ANALYSIS OF TECHNOLOGY RISK

• 6.1 Introduction
• 6.2 Duplex Spacing and Other Technical Inconveniences
• 6.3 Can Japanese Spectrum Allocations Be a Savior?
• 6.4 The Strain on R&D and Engineering Resources
• 6.5 The Further Strain of Performance-Based Contracts
• 6.6 The Cul de Sac of Disadvantage
• 6.7 Quantifying the "Cul de Sac Effect"
• 6.8 An Example: The Implications for T-Mobile
• 6.9 Summary and Conclusions

CHAPTER 7: TECHNOLOGY DISRUPTERS TO THE BUSINESS CASE FOR NEW SPECTRUM

• 7.1 Introduction
• 7.2 Emerging Disrupters
• 7.3 Key Disruptive Technologies
  • 7.3.1 Landline VoIP
  • 7.3.2 Municipal networks
  • 7.3.3 Enterprise networks
  • 7.3.4 Mobile WiMAX
  • 7.3.5 Conventional cellular
• 7.4 Summary and Conclusions

CHAPTER 8: POTENTIAL PARTICIPANTS IN THE AWS AUCTION AND THEIR REASONS

• 8.1 Introduction
• 8.2 Established Domestic Operators
  • 8.2.1 Cingular
  • 8.2.2 Verizon
  • 8.2.3 Sprint Nextel
  • 8.2.4 T-Mobile
• 8.3 Established Global Operators
  • 8.3.1 Vodafone
  • 8.3.2 Telefonica
  • 8.3.4 America Movil
  • 8.3.5 Hutchison
• 8.4 Cable Operators
• 8.5 Internet Service Providers
• 8.6 Internet Portals
• 8.7 Satellite Operators
• 8.8 Summary and Conclusions

LIST OF FIGURES

• Figure 2.1 --- The Assignment Plan for the AWS Auction
• Figure 3.1 --- Average Revenue per Minute, US Market, 1997 - 2005
• Figure 3.2 --- Subscriber Minutes Of Use (MoU) Per Month, US Market, 1997 - 2005
• Figure 3.3 --- Average Revenue Per User (ARPU), US Market, 1994 - 2005
• Figure 4.1 --- The Introduction of More Efficient RF Interfaces and the Decline in Cost per Megabyte of Data Traffic
• Figure 4.2 --- Annual Minutes of Use per Cell, US Market, 1999-2005
• Figure 4.3 --- Annual Revenues per Cell, US Market, 1999 - 2005
• Figure 4.4 --- The Value of US PCS Spectrum, 1994-95 to 1997
• Figure 4.5 --- The Value of European 3G Spectrum, March-November 2000
• Figure 5.1 --- The Change in Ericsson's R&D and Other Employees Between 2001 and 2005
• Figure 5.2 --- The Change in Ericsson's Relative R&D and Related Expenses Between 2001 and 2005
• Figure 6.1 --- The Declining U.S. Dominance of the Global Cellular Market, 1990-2005
• Figure 8.1 --- The Domestic Spectrum Positions of Potential Auction Bidders, February 2006