Pinning WiMAX Hopes on EBS Spectrum

South Carolina RFPs Due Feb. 16

In the meantime, there are several independent telcos that already are deploying or plan to deploy WiMAX. One of the larger “small guys,” DigitalBridge Communications, has its eye on South Carolina and is talking with partners about pursuing some of the licenses in the smaller areas. The goal, said DigitalBridge CEO Kelley Dunne, “is to expand coverage throughout the state and not just focus on the larger markets.”

“We’re very, very keenly interested in South Carolina,” Dunne added.

DigitalBridge so far boasts 22,000 subscribers in 15 markets. It’s not yet located in South Carolina, although it serves portions of Idaho, Indiana, Montana, South Dakota, Wyoming and Virginia, where it’s based. In South Dakota, DigitalBridge partners with Sioux Valley Wireless, one of the small companies building WiMAX networks under the radar, and which is doing it well, sources said. Sioux Valley Wireless did not return a request for an interview by press time but sources expect Sioux Valley to go after some 2.5GHz spectrum leases, just as DigitalBridge plans to do.

That brings us to the biggest obstacle of all: money — or the lack thereof. The global recession, which is hitting parts of the tech sector hard, presents almost no bleaker prospect than that of snaring financing. If you’re a rural independent in Minnesota, that could be a pretty big obstacle, even when the spectrum in less-appealing markets is likely to go for about 3 cents per megahertz. And that’s something else to keep in mind, said Chip Spann, the wireless business analyst for ConnectedNation who’s tracked 2.5GHz spectrum trends for years. While 3 cents sounds cheap, companies subleasing the EBS spectrum provision thousands of dollars’ worth of equipment and service to the lease holders on top of the spectrum price. The dollars will add up quickly.

The best shot smaller companies have, then, especially when it comes to the South Carolina spectrum, is to form a consortium, Spann said. If they pool their money and agree on how to divvy up the licenses, they very well could get their hands on WiMAX spectrum.

“Independently, I don’t think many companies out there are going to have the financial bang to bid on this besides Clearwire or Verizon or T-Mobile,” Spann said. “But collectively, the dynamics change dramatically.”

DigitalBridge, for its part, doesn’t expect money matters to get in the way of its expansion. The company has four private investors and two banks, and is in the midst of nailing down more funds — this after it raised debt financing in October 2008, one of the most disastrous months last year for the economy. Dunne said DigitalBridge is keeping its eye on the prize — markets with fewer than 150,000 people, outside of the top 100 MSAs — and will grab 2.5GHz spectrum as it can, deploying within 12-18 months, as it does now.

And that’s the most important point. Once the South Carolina spectrum is leased and put to use, the remaining 2.5GHz space cannot go uncultivated. Otherwise, policy goals of bringing wireless broadband to rural America will fall short, if not collapse altogether. WiMAX is seen as one of the best ways to reach tough geographic areas, but if providers can’t or won’t get ahold of the spectrum, they can’t sell the service.

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