Rumors were abound all day about the possibility of Apple bidding on the 700 MHz C block spectrum that the FCC will auction off on January 16th of next year. Articles appeared in BusinessWeek, Wired, C|Net, and TelecomTV about a possible bid by Apple. Up to now, all of the rumors and discussion have been about Google bidding on this spectrum. Google's successful play to have some of the spectrum open to any device or application opens up the rumor mill beyond the usual suspects of carriers. With the launch of the iPhone and complaints about the AT&T network it was only time before Apple was identified as having ambitions in acquiring this chunk of coveted spectrum. Although the rumor is plausible, does it have any legs to it or is it just hopeful speculation?
Apple can certainly afford the minimum bid of $4.6 billion required to participate, but does it make business sense for them? The short answer is yes and no. The obvious application is to use this spectrum for access to the iTunes Store to sell music, TV programs, and movies without sharing revenue with wireless carriers. Also, Apple can retain control over the complete user experience which is why the iPod has been so successful. Breaking the connection to the PC will allow the Apple to create an iPod Touch and iPhone that can access content over-the-air without depending on cutting in another carrier to use their network. Even iTV could benefit from access at 700 MHz.
What does not make sense is for them to get into the business of operating a voice network. Creating a voice network is an expensive proposition beyond building a radio access network. Voice services are best left to the ones that already have a network.
Remember that the C block is a 22 MHz slice of spectrum that is to be open to devices and applications. This means that Apple could invite a selection of voice and application providers to resell their services over the network. Apple could partner with a carrier like T-Mobile or Sprint to provide voice service in this or another frequency block. Sprint is very comfortable selling capacity to MVNO, and they could certainly use a boost.
Another option would be for Apple to partner with Google to provide a collection of applications. Google could provide Internet and voice services to the iPhone while Apple retains control of the entertainment services. Apple could even create a version of iTunes to run on the Google phone. I am sure that Eric Schmidt and Steve Jobs have had discussions on the topic since Schmidt sits on Apple's board.
The wildest option would be for Apple to work with eBay to provide Skype's voice service over this network. Skype has the user base and network to deliver a quality voice service.
The most likely scenario appears to be a consortium with Apple, Google, and eBay to bid on the spectrum block with an experienced network operator not already in the business; maybe DirectTV or Echo Star. The satellite provider will not only run the network but offer services to their customers over it. Skype/eBay can sell voice services to the other partners while Apple sells devices, music, and video and Google sells ads through all outlets. It is much easier to share the cost of this multibillion dollar network across four or more partners than go it alone.
I am sure that in the months to come that many more rumors will surface as the bidding gets closer. I like the idea of these companies getting together to create new and exciting mobility opportunities. Their success could open even more spectrum to innovators.
Note to Steve Jobs or Eric Schmidt: Feel free to call me if you need leadership with this venture.