Executive Summary: The WiMAX Band (2.5 GHZ) Report

THE “WIMAX BAND” (2.5 GHz)

Characteristics, Technology, Major Spectrum Holders in the BRS-EBS Service

And Prospects for Auction 86

A Report by Dr. Gregory Rose, edited by Harold Feld

Prepared for Strength-to-Strength Develop-Ed

EXECUTIVE SUMMARY

Wireless providers and the Federal Communications Commission (FCC) have long looked to the 2.5 GHz band, home of the Broadband Radio Service (BRS) and non-commercial counterpart the Educational Broadband Radio Service (EBS) to provide spectrum for significant commercial WiMAX deployment. Although WiMAX technology is and will continue to be deployed in other bands in the United States, the presence of two major commercial carriers with significant spectrum holdings in the band, combined with international designation of 2.5 GHz as a home for WiMAX services and the FCC’s continued efforts to transition the band to maximize commercial WiMAX make this band critical for the success of the WiMAX industry in the United States.

This Report includes the most comprehensive commercially available analysis to date of the 2.5 GHz “WiMAX Band.”  The Master Database included with the report contains the information from the FCC’s Universal Licensing System (ULS) on the band rendered in an easily searchable Excel spreadsheet. Additional spreadsheets break out the direct licensed holdings and leased spectrum holdings of the two largest operates in the band, Clearwire and Sprint, as well as coverage maps for these two providers. Additional spreadsheets provide valuable information on the distribution of licenses to other holders. The spreadsheets also hold significant information on the licenses the FCC will auction in Auction 86, scheduled to begin October 27, 2009.

Section 1: Overview of the Nature of the BRS-EBS Band. This Section provides a short history of the band and the ongoing effort of the FCC to transition the band to maximize commercial WiMAX use.

Section 2: Clearwire Corporation. Analysis of Clearwire’s holdings indicates Clearwire intends to follow a standard pattern of national wireless providers to avoid the most rural regions due to their high cost of build out and low rate of return. This creates opportunities for other, more rural wireless providers in Auction 86, and has long-term implications for Clearwire’s build out and national wireless broadband deployment. In addition, the fact that Clearwire leases several of its licenses to other wireless companies – including its license covering New York City – indicate its probable build out strategy and hint at the licenses it will target in Auction 86.

Section 3: Sprint Nextel Corporation. Sprint, in contrast with Clearwire, uses its 2.5 GHz network primarily for wireless backhaul to support its existing 3G Network. The Report looks at the extent of Sprints holdings to suggest where its network overlaps with Clearwire’s, suggesting possible future transfers of capacity between Sprint and Clearwire.

Section 4: Commercial Holders of Five or More Licenses. This section profiles the top 35 other holders of spectrum licenses or leases in the band other than Sprint and Clearwire.

Section 5: Auction 86 and the Broadcast Radio Service. Looking at the licenses available and the rules set for the auction, the Report concludes that the aggressive build out requirements will likely discourage new entrants. The level of encumbrances on the licenses from pre-existing license holders are substantial and provide another disincentive. This is born out by the fact that only 24 potential bidders applied, eight of whom did not qualify for the auction.[1] However, several existing companies have opportunities to expand their existing footprint. The section lists the most likely licenses of interest to Clearwire based on its apparent deployment pattern, as well as potential bidders for other licenses. In addition to Clearwire, Utopian Wireless and DigitalBridge appear likely to be the next most active bidders. (Although submitting an initial short form Xanadoo did not qualify; none of the licenses available align with Xanadoo’s existing footprint and Xanadoo appears to have decided that it is not worth the cost to stay in to hunt for bargins.)  The nature of the licenses suggests that the auction will produce relatively little revenue despite the high interest in WiMAX deployment in the band.

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[1] Companies that submit applications and do not qualify generally do not qualify because they decline to submit the necessary upfront payment or fail to submit required documents or both. The most likely explanation for failure to qualify is that the company was either unable or unwilling to finance its participation in the auction. The most likely explanation for the 8 potential bidders that did not qualify is that they simply decided to abandon the application because they ultimately deemed the possible prizes as not worth the cost of participation.

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