If Your Cell Phone Starts Bidding, Hang Up

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At the Federal Communications Commission today, the beginning of an auction that could bring in as much as $15 billion. The government is selling the rights to a huge chunk of wireless spectrum, a swath of the airwaves that can be used by mobile phones and other devices. Wireless phone companies are bidding hard, and so are satellite television providers.

To help us sort out what this auction might mean for consumers and businesses, we're joined by Chris Kraueter. He's a senior technology reporter for Forbes.com. Chris, let's start off here by just trying to figure out exactly what we're talking about here. What are the bidders actually trying to buy?

Mr. CHRIS KRAUETER (Forbes.com): Okay, well this is the lifeblood of any sort of wireless technology, from AM radio to FM to satellite radio to broadcast TV, satellite TV and cell phones. So what this means is the more these companies can get, the more capacity they have. That means there will be fewer dropped calls for cell phone providers, better coverage for these people, and they can offer more services, and that's really what this is all about, offering up more services.

So cell phone companies want to offer video and data. Cable companies, they want to offer voice and data. And satellite companies, well they want to offer voice and data, as well.

NORRIS: Satellite companies are interesting. It makes sense that the cable companies and the wireless-phone companies would be in the race here, but it's curious that satellite television providers are lining up. I guess they want to somehow deepen the service packages they can offer.

Mr. KRAUETER: Yeah, that's exactly right, and they are some of the most interesting bidders in this auction. They need to compete better with cable companies and cell phone companies that are kind of offering some of the same things that satellite companies offer. I mean, satellite companies offer great, you know, video packages, but they don't necessarily offer Internet service, and they don't really offer voice services.

And if you think about where satellite companies are most utilized, it's in very rural areas, and this could be very key for them if they can offer some sort of voice and Internet services out to these areas that typically aren't well-covered as far as cell phone coverage goes and don't really have a lot of options as far as Internet service goes, either. So by them picking up this extra spectrum and this wireless capacity, they'll be able to meet some new needs through that.

NORRIS: So beyond the services, what does this mean for consumers in terms of hardware, the kind of products that might be available in the future?

Mr. KRAUETER: Well firstly, this is going to take a while. I mean, this auction will go on for a few months, and then it could be up to a couple years before the licensees get equipment deployed to operate on these new frequencies.

But I think what you're going to see is just a general trend toward higher-functional devices, you know, devices that can do more things. They can get video over their phone, and Internet over the phone, and you can sit and watch TV and surf the Web at the same time that you're on the TV, and that sort of thing.

NORRIS: I'm wondering if this increased capacity might render some of the small electronic devices that we now rely on, eventually render them obsolete, the radios in our cars or the iPods, which seem so new right now, but with this increased capacity, will they change in just two, three short years?

Mr. KRAUETER: Yeah, I think they will change, but I think one thing that is important to realize is that this is all about kind of evolution, you know. Some of the devices that you're used to using will go away, but the ones that you'll be left with should combine a lot more of these functions. So you won't have an iPod and a phone and a radio all to carry on your same person. It'll hopefully all be one device.

NORRIS: Chris Kraueter, thanks so much for talking to us.

Mr. KRAUETER: You're welcome. Thank you for having me.

NORRIS: Chris Kraueter is a senior technology reporter for Forbes.com. Transcript provided by NPR, Copyright NPR.