Limited US airwaves fetch US$34B and counting

Nov 25, 2014 News

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– but Jagdeo gives away Guyana’s to friends and family

A multi-billion US dollar auction for six blocks of airwaves has attracted huge interest in that North American country.
It has also starkly highlighted how Guyana deliberately set about giving away what is one of its most valuable assets.
According to the New York Times online news, a government auction of airwaves for use in mobile broadband has exceeded expectations, becoming the biggest auction in the Federal Communications Commission’s (FCC) history.
The demand for the electromagnetic spectrum or frequencies as they are known would signal how phone companies expect demand for internet will soar in face of rising popularity of smartphones.
FCC collected bids of more than US$34B as of Friday afternoon for six blocks of airwaves, totaling 65 megahertz of the electromagnetic spectrum. That total is more than three times the US$10.5B reserve price that the FCC, as the US regulators, put on sale.
US authorities are now expecting prices for these precious assets, which are limited, to rise further, because the auction has no definite end and could continue for days or weeks.
The previous record was US$18.9B raised in a 2008 sale of airwaves that, because of their lower frequency, are considered more attractive for wireless phone use than the current batch.
The spectrum is so expensive that a group representing broadcast television stations is considering giving up theirs for sale in the FCC.’s next auction, scheduled for 2016.
The success of the auction has been fuelled largely by the pent-up demand for years without an auction and which coincided with the explosive popularity of smartphones and mobile broadband.
The response to the FCC auction is more surprising, given that the airwaves’ high frequency makes them less attractive for wireless use than those sold in the last auction or scheduled for the 2016 sale.

Benefit to country
About US$7B of the proceeds will be used to finance the building of a nationwide public-safety communications network, known as FirstNet, with the remainder going to the Treasury.
What makes the auction more interesting for onlookers, is the fact that the frequencies up for auctions are currently occupied by Government agencies, including branches of the military, which had to be cajoled to agree to move out or to share portions of them.
The relatively high position on the electromagnetic spectrum of the blocks being sold also cast doubt on their attractiveness.
Higher-frequency waves generally have more trouble passing through buildings, making them less desirable for mobile phones, although they are able to carry lots of data, increasingly important to wireless broadband.
Frequencies, according to the New York Times report, are being sold include two blocks in the 1695-1710 megahertz band, and four paired sets of frequencies at 1755-1780 and 2155-2180 megahertz.
The next scheduled broadcast spectrum auction, in 2016, involves frequencies in the 600 megahertz band.
The last such sale was in 2008, when the iPhone was barely a year old and demand for mobile broadband was at a relative trickle. “Today, as consumers’ stream video and share photographs with many more phones, tablets and other devices, demand for bandwidth has exploded.”
Some analysts have also speculated that because the auction of broadcast television bands currently scheduled for 2016 has already been delayed twice, buyers might be skeptical that those frequencies will come to market on schedule — giving them extra incentive to buy now rather than wait.
Verizon Wireless and AT&T are assumed to be among the big bidders in the sale. But Dish Network could also be in the running.
Some prices are truly eye-popping. The price for licenses in a 20-megahertz block of paired frequencies covering New York and Long Island, and portions of adjacent states stood at US$1.96B Friday afternoon. In the bidding round that starts Monday morning, the minimum bid is more than US$2B.

Nothing For Guyana
The US auction will have huge significance for Guyana as it will continue to highlight how valuable the airwaves are considered for some countries while Guyana gives it away to friends and family.
Closer to home, Jamaica has been moving to auction its electromagnetic spectrum, while places like India, Canada, the US, Europe and Australia have all been fine-tuning the allocation of the frequencies under auctions.
The bottom line for the countries is that there is big money to be made from the telecoms companies who are willing to spend to acquire the spectrums.
The issue of the airwaves became a burning issue following an announcement by Government in late 2011 that former President Bharrat Jagdeo doled out several frequencies before he was due to step down in November of that year.
The radio frequencies went mainly to his best friend, Dr. Ranjisinghi ‘Bobby’ Ramroop, the ruling party, and to an overseas-based sister of sitting Natural Resources Minister, Robert Persaud.
These three were given multiple frequencies allowing them countrywide coverage.
Others were granted single frequencies, giving them limited range in their transmissions.
It will also be recalled that frequencies were given by Jagdeo to E-Networks and Quark Communications Inc., two companies he has close links with, to go-ahead to run cable TV services.
Quark, E-Networks and Global Technology’s iNet Communications are now standing at the head of the line for telecoms licences that will be automatically granted to them once new laws before the National Assembly are passed. Jagdeo and Ramroop are linked to all three companies.
These licences and the frequencies will also allow the companies to offer telephone services, mobile services, internet and a host of other high demands services.
As can be seen, one can only presume the value of the frequencies Guyana has given away as against what it could have received.

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