Commentary
2/28/2007
02:46 PM
Eric Ogren
Eric Ogren
Commentary

Spectrum, Here! Get Yer Spectrum, Heeeere!

According to an analyst over at Pyramid Research, 3G spectrum has been highly overpriced, while



According to an analyst over at
Pyramid Research, 3G spectrum has been highly overpriced, while WiMax spectrum is undervalued. Though companies aren't exactly snapping up WiMax licenses like CrackerJacks, with the looming build-out of WiMax networks, the days of (relatively) cheap WiMax spectrum are at an end.One of the biggest reasons for the price differential is that 3G licenses are national and WiMax licenses are regional. When a network operator sets out to buy 3G spectrum, it doesn't just buy the spectrum in one region, it typically buys the spectrum for an entire country. Conversely, WiMax licenses have been sold on a regional basis, covering metropolitan areas or other similar regions, creating islands of WiMax coverage. Pyramid Research notes that Vodafone paid $9.4 billion for its national spectrum back in 2000. The highest price at a WiMax spectrum auction fetched just $3.2 million to cover Greater London.

Another reason is that mobile network operators have been desperate for 3G licenses, banking on them as a key part of their future. With many mobile operators clamoring for spectrum, it's no surprise that good old supply and demand reared its ugly head and sent prices skyward. In September 2006, the FCC raked in $13.7 billion in 3G and other licenses, which far exceeded the minimum-hoped-for figure of $7 billion.

To date, companies bidding on WiMax are generally smaller players with smaller bank accounts. With the exception of Sprint in the United States, none of the major operators has made a serious push for WiMax licenses. That could very well change depending on the success of Sprint's first two WiMax markets, set to launch in Washington, D.C., and Baltimore later this year.

As regulators across the world -- most notably in Europe -- begin to make more spectrum available, the price per MHz per population will certainly climb. Hopefully it won't reach the scale that 3G licenses have.

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