Five complete bids received for May 10 FCC auction of 4 MHz in the 800 MHz band: This heavily awaited auction will provide one or two segments of high-quality air-to-ground spectrum for a lucky bidder or two. Twelve bidders have so far submitted their applications, five of which are complete. Boeing (in the form of Connexion by Boeing) will sit this auction out, the Chicago Tribune reports. (Download the public notice and appendixes with bidders here.)
It is somewhat staggering. Boeing played its cards close to the vest for the last year while the auction details reached final form, and it's likely that having run the numbers for this enterprise, they decided they couldn't make money at what they anticipate the bidding would go to. They certainly have the technology and the ability to purchase the technology to make the spectrum work and to integrate with existing and new ground operations.
Boeing may have opted to wait out the process to reduce their capital expense in running an additional network, as it almost 100% certain that whatever winning bidders build a domestic broadband in-flight service will want to have strong ties to Boeing for customer handoff. Some aircraft will likely contain both systems. The weight of the air-to-ground antenna and components is expected to be less than an infant.
Boeing's only satellite competitor, OnAir, didn't submit a bid but was hardly expected to. OnAir hasn't yet launched its full-on offering which relies on Inmarsat's fourth-generation BGAN satellites that offer pinpointed broadband. (Coincidentally, OnAir did put out this press release today noting that Air France will receive the first Airbus equipped with OnAir GSM equipment for in-air cell calling in early 2007. Air France will use the plane for a six-month trial. OnAir previously said two other European airlines plan to launch trials later this year with retrofitted planes. OnAir is a joint venture of Airbus and airline systems integrator SITA with the former assets of Tenzing. Unlike domestic U.S. potential broadband operators, OnAir plans to focus first on GSM service and later on broadband.)
The seven incomplete bids including proposals from AirCell, which already operates a national ground-station network for general (non-commercial) aviation, and is expected to qualify for bidding credits as a smaller business, and Verizon Airfone, which operates the only in-flight phone service that remained after competitors fled the market. Airfone will continue to operate its current service for up to two years following the auction's award. JetBlue's LiveTV division also has an incomplete bid.
Incomplete bidders have until April 17 to rectify the missing components in their applications. That's also the date for a deposit of the required upfront payment of $100,000 for bidders who haven't previously defaulted on payments; $150,000 for that category of bidder.
The spectrum up for auction is 4 MHz total proposed for auction in one of three potential configurations: 3 MHz/1 MHz, 1 MHz/3 MHz, and 3 MHz/3 MHz overlapping. The 3 MHz would be 1.5 MHz in two separate parts of the 800 MHz band to provide separation for uplink and downlink. It's expected that at least a 1:1 MHz:Mbps ratio will work, which makes the 3 MHz options the only reasonable outcome. At least one firm, AirCell, would use EVDO Rev. A for its linkage, which would allow it to use commodity equipment which operates at a rate somewhat above the expected performance for this band.
Five complete bids were received, four of which were from firms of the smallest category which receive a 25% bidding credit. I didn't recognize any of the five firms' names, some of which are obviously consortiums put together for bidding purposes. Each of these five firms have bid on all six licenses, which is likely strategy for all bidders.
My guess at the auction's value? I have zero insider knowledge, and I estimate $40 to $60 million for the winning configuration with Verizon Airfone almost certain to be the winning bidder. If the domestic airline industry were stronger, I'd suspect this could auction could have netted the government $100 to $150 million.