PLDWWW: beachfront+property

mmazur mmazur at pld-linux.org
Tue Sep 11 02:24:50 CEST 2007


Author: mmazur   Date: Tue Sep 11 00:24:50 2007 GMT
Module: PLDWWW   URL: http://www.pld-linux.org/beachfront%2Bproperty?action=diff&rev2=2&rev1=1
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- Talk of the government's pending auction of valuable wireless spectrum has focused largely on one intriguing newcomer to the bidding: Google (GOOG). But another tech powerhouse has considered joining the bidding as well: Apple (AAPL). 
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- Two sources tell BusinessWeek that Steve Jobs & Co. have studied the implications of joining the auction, which will be held Jan. 16. The winners will get rights to use the spectrum that analog TV broadcasters are handing back to the government in 2009, given their mandated move to digital television. 
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- Dubbed "beachfront property" by the Federal Communications Commission, it's the last swathe of wireless spectrum likely to become available that would have the attributes necessary for a new mainstream broadband network (BusinessWeek.com, 8/1/07). Signals at the 700Mhz spectrum, for example, could provide far faster Internet access than today's cellular or even Wi-Fi networks, and the signals can easily pass through buildings and work glitch-free, even in lousy weather. 
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- Risk for Apple's Margins
- At this point, says one of the sources, Apple is leaning against participating in the auction. It's not the money. With nearly $14 billion in cash, the company can clearly afford the $4.6 billion minimum bid required by the government, and could probably come up with the $9 billion that's expected to win a portion of the spectrum to be made available for a nationwide network. 
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- There will assuredly be stiff competition from phone companies and other potential bidders such as Google, DirecTV (DTV), and eBay (EBAY), which owns Skype's Net calling software. 
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- Rather, the risk for Apple is in entering the generally low-margin, hardscrabble world of running a massive-scale network. Rather than focus all of Apple's entrepreneurial instincts on creating the next innovative gizmo,
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- the company would be on the hook for the massive operational headaches that go with provisioning traffic, activating new subscribers, and fielding their angry calls when service glitches occur. 
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- As with Google, becoming a network operator would drag down Apple's margins—and could pose a cultural drag on an innovative company. And other than iTunes, Apple has not stood out for its Internet services. Only 1.7 million people pay the $99 annual fee for its .Mac service, disappointing given Apple's success in so many other areas. 
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- "Even for companies like Google, the economics [of owning a network] are barely intelligible," says Amol Sarva, chief executive of Txtbl, a mobile e-mail company. "For Apple, this seems highly implausible." 
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- iPhone Network Solution
- Still, even the possibility of an Apple bid is intriguing. For starters, it would mean Apple would no longer need to rely on a phone company to deliver songs, TV shows, and other digital fare purchased at its iTunes Music Store. 
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- As it is, the major complaint of iPhone shoppers isn't with the phone, but with the pokey Net access from Apple's exclusive U.S. partner, AT&T (T). 
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- If it owned its own spectrum, Apple could provide the network service itself, possibly for far less than the $1,440 iPhone owners must now fork out over the course of the cheapest two-year contract. For example, Apple could hold down costs by letting users choose a Net telephony program such as Skype rather than develop its own voice software, say analysts. 
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- Apple might even be able to give away network service for free, and make its money off services such as iTunes and possibly by selling subscribers advertising space. "With the kind of cash position they have and the kind of push they just made into the handset space [with the iPhone, 
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- and now with the iPod touch, which also has Apple's Safari Web browser built in], it makes a lot of sense for them," says one former Apple executive. 
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