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<p>First the headline: <a target="_blank" href="http://www.reuters.com/article/businessNews/idUSN2042023420080320?feedType=RSS&feedName=businessNews">Verizon and AT&T win big at airwave auction</a></p>
<p>Now the details:</p>
<p><em>Verizon Wireless, a joint venture with Vodafone Group Plc, won the nationwide "C" block of the auction, giving it control of a major piece of the airwaves being vacated by television broadcasters as they move to digital signals in early 2009.</em></p>
<p><em>The 700-megahertz spectrum is considered valuable because it can go long distances and penetrate thick walls.</em></p>
<p>Here is why it matters:</p>
<p>The lower the frequency, the farther it travels. This reduces the number of cell towers needed and the battery power need to keep a connection with the tower; better connections and longer talk times with lower infrastructure cost. But wait...there's more! </p>
<p>Last November, Verizon announced a major shift in it's future plans. They are moving away from their CDMA-based network in favor of a new GSM-based standard for 4th generation wireless technology (4G) called LTE. This brings them in line with Vodafone and will finally allow their phones to work internationally as the other GSM phones can. This will raise their average revenue per user, allow them to agressively court enterprise level business, and provide cable-like data speeds over their cell network, and all at a lower cost since they are sharing the R&D costs with Vodaphone. But wait... there's more! </p>
<p>This block of airwaves comes with a requirement that any device be allowed to "hook" into it, ending the need for you to chose a company specific device to use their service. This means that you can buy the European versions for use here, and vice-versa. That kind of freedom also means companies are free to develop phones for use on Verizon's network without having to pay any kickbacks or make any exclusivity deals. More choices for the customer means more people are likely to stay with Verizon and just buy a new device from where ever they want.</p>
<p>Add that all together and 2010 looks like a banner year for Verizon. Right now the stock is off it's 52-week high by about $10. While the wireless industry may have been part of the "nice-to-have" sector a decade ago, people have dropped their landlines in favor of cell phones at increasing rates. The industry is far more recession proof now than it was then. Sprint-Nextel probably won't survive because they just suck on all levels, and AT&T has more issues than I care to list but the biggest one is that they lost this spectrum. So, based on the fundamentals as I have laid them out, Verizon is going to have a large competitive advantage when they roll this network out and the price of it's stock hasn't been this low in two years which means the profit potential for a long-term hold is there.</p>
<p>Now the details:</p>
<p><em>Verizon Wireless, a joint venture with Vodafone Group Plc, won the nationwide "C" block of the auction, giving it control of a major piece of the airwaves being vacated by television broadcasters as they move to digital signals in early 2009.</em></p>
<p><em>The 700-megahertz spectrum is considered valuable because it can go long distances and penetrate thick walls.</em></p>
<p>Here is why it matters:</p>
<p>The lower the frequency, the farther it travels. This reduces the number of cell towers needed and the battery power need to keep a connection with the tower; better connections and longer talk times with lower infrastructure cost. But wait...there's more! </p>
<p>Last November, Verizon announced a major shift in it's future plans. They are moving away from their CDMA-based network in favor of a new GSM-based standard for 4th generation wireless technology (4G) called LTE. This brings them in line with Vodafone and will finally allow their phones to work internationally as the other GSM phones can. This will raise their average revenue per user, allow them to agressively court enterprise level business, and provide cable-like data speeds over their cell network, and all at a lower cost since they are sharing the R&D costs with Vodaphone. But wait... there's more! </p>
<p>This block of airwaves comes with a requirement that any device be allowed to "hook" into it, ending the need for you to chose a company specific device to use their service. This means that you can buy the European versions for use here, and vice-versa. That kind of freedom also means companies are free to develop phones for use on Verizon's network without having to pay any kickbacks or make any exclusivity deals. More choices for the customer means more people are likely to stay with Verizon and just buy a new device from where ever they want.</p>
<p>Add that all together and 2010 looks like a banner year for Verizon. Right now the stock is off it's 52-week high by about $10. While the wireless industry may have been part of the "nice-to-have" sector a decade ago, people have dropped their landlines in favor of cell phones at increasing rates. The industry is far more recession proof now than it was then. Sprint-Nextel probably won't survive because they just suck on all levels, and AT&T has more issues than I care to list but the biggest one is that they lost this spectrum. So, based on the fundamentals as I have laid them out, Verizon is going to have a large competitive advantage when they roll this network out and the price of it's stock hasn't been this low in two years which means the profit potential for a long-term hold is there.</p>