Implications
Well I thought Google would give everyone a headache. Paul Allen is a whole other thing. I am no Paul Allen groupie but you got to give a guy credit where credit is due. Allen is not exactly a wall flower or a do-nothing executive. He may do some serious damage to the other spectrum bidders.
Analysis
Paul Allen’s entry into the 700 MHz auction caught me a bid off guard. I had half expected him to be focused on content development deals. However, when you stop to think about it all, owning spectrum can be a part of content ownership.
700 MHz is touted as a low-frequency variety of spectrum that is valued for its ability to penetrate walls and other obstructions. That is true and that is why 800 MHz was never surrendered by the original cellular carriers. For those investors who need a quick explanation on this, you can read my books.
For now everyone, who is not in Paul Allen’s inner circle, is guessing as to why he entered the auction and what he will do with the spectrum. Allen obtained up twenty four 700-megahertz licenses through his company Vulcan in 2003. Those licenses are based entirely in Washington and Oregon and include major metropolitan areas such as Portland, Ore., and Seattle.
It is true he could be holding the spectrum for his company Charter Communications. Charter does need a hand.
According to analyst, Tim Sanders, keeping the spectrum in the hands of a private entity like Vulcan could save Charter money on taxes. Sanders has also noted that such a structure could reduce the amount of information publicly traded Charter is required to divulge about what it might be doing with those assets.
"Amassing spectrum is a venerable tradition," Mr. Sanders said. "There are tons of spectrum in the U.S. just sitting there waiting for somebody to do something with it. Mostly it is in the hands of big companies. In the cellular frequencies, it is very well utilized and nearing capacity, but in other spectrum ranges it is barely deployed." Yep he is stating the obvious and you cannot blame him. No one knows.
Yes, we are all grasping for straws here. What is going on here? Everyone is worried.
Paul Allen is just one guy but one guy who can kick a carrier’s you-know-what pretty easily. Paul Allen is not the kind of guy to go shooting off his mouth either, hence more uncertainty.
So what could Paul Allen be doing with his spectrum? Maybe he is cutting a deal with Google. He may buy control of Google and add their spectrum to his spectrum. Allen could also be planning on going into the mobile video business like Qualcomm.
Okay. I am letting my imagination run wild.
What is real is Paul Allen’s entry into the auction has caught the attention of the industry.
