By Richard Menta 9/10/07
The news that Apple may or may not enter the upcoming auction by the US government for various pieces of the radio spectrum has the Net all abuzz. There is also quite a bit of analysis going on that insists that the risk is too high for Apple and while they can afford to buy a slice of the spectrum with nearly $14 billion in cash reserves, Apple simply can not afford the expense of building the wireless network to run on that spectrum. But then again who says Apple has to build such a network?
Think of the radio spectrum that is up for auction as electromagnetic real estate. It is chattle. That means Apple can improve it, sell it, lease it, give it away or sit and do nothing with it (as far as the government purchase terms will allow). The bottom line is that Apple gets control of a very desireable piece of property, one whose cost as one large piece is too high for most corporate entities to bid on, but in affordable slices it is. That makes the spectrum worth considerably more for a company that wishes to parse it out for market value as opposed to hording it all for itself as a winning telecom will most likely do.
This doesn't mean that Apple will definitely enter the bidding. It just means that there are many ways to control the risk. For instance, it may make no sense for Disney to enter the auction, but a joint venture if Apple purchases a swatch of frequency is a strong possibility providing they can come up with a fruitful use for it. Maybe Apple will use it to bring Digital Multimedia Broadcasting to the states?
And maybe the rumors of Apple's participation are just rumors. We'll see on January 16 of next year.
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