Frontline Shuts Down; Spectrum Buying No Place For Startups Apparently
from the can't-upset-the-world-without-some-money dept
There was tremendous hype and a number of big names behind the wireless startup Frontline, who was talked up as a possible upstart bidder (and potential winner) for a segment of the spectrum that the FCC is auctioning off later this month. However, if one thing has become clear over the years, spectrum auctions are not a game for startups to play -- as unfortunate as that may be. On Tuesday, the news came out that Frontline had shut down after it was unable to find financial backers to pony up all the money it needed. There are some questions about this, as some of the company's early supporters represent a ton of money, but some are noting that this could actually cause something of a domino effect impacting all of the spectrum being auctioned off. There are a variety of rules and hurdles that various bidders need to meet, and if those hurdles aren't cleared, then the FCC can cancel the auction and try again -- with different rules that could toss out the open access requirements the FCC put in place. It's not clear if that will actually happen, but it appears to increase the likelihood significantly.
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Too Bad
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Absorbed?
Our theory is that Google wants to bid the minimum $4.7B to trigger the open access requirements, but Google does not actually want to win and be forced to build/run a wireless network (its simply not as profitable as being the advertising engine for the wireless world). Yet, Reed Hundt and the other Frontline execs DO want to build and operate a wireless network, but lack the capital to do so.
Could there be some kind of quiet partnerships connecting together behind the scenes? The Frontline crew, Google, SK Telecom, Vodafone, MSOs, private equity? There are plenty of companies who DO want into the US wireless market, and as Mike said, it's no place for startups. Perhaps a coalition is a better way of spreading risk and underwriting investment.
I'm just stoking the ashes here to see if there's an ember in there.
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