The Rich Get Richer

Doug Williams | March 24, 2008, 10:55 PM

That’s kind of an odd title, considering that I’m referring to the fact that Verizon and AT&T just shelled out $16 billion in the FCC’s recent spectrum auction. While the balance sheet may be a little lighter for these companies, it is undeniable that they have acquired very valuable assets in the process.

While the bidding exceeded the threshold for triggering the “open access” standards lobbied for by Google and adopted by the FCC, we’ll all have to sit and wait to find out exactly how this plays out for consumers. The open access standards are certainly beneficial in terms of providing choice for devices, features and content provided wirelessly. Still, the issue of access to the network – the wireless local bottleneck, if you will – means that Verizon and AT&T have only increased their already strong position in the market.

I think a lot of people were hoping for a new entrant like Google to come along and shake up the market, but that was never Google’s intent. Google’s angle is to control the customer experience on the device, which the open access standards will enable, while leaving the heavy lifting of network operation to the operators themselves.

Looking farther down the road, it is realistic to expect seamless integration between wireless services and their wired counterparts in the home. AT&T and Verizon are already strong participants in the home broadband space, which is currently a duopoly market structure between telcos and cable operators. The spectrum auction results make the incumbent telcos even stronger, particularly when taking the longer-term view of the market.

How will the cable operators react to this? How will the auction results affect the smaller national wireless providers, like T-Mobile, Sprint and Alltel?

For now, the status quo remains. I’m anxious to see if WiMAX providers like Sprint and Clearwire can take back the mic.