Frontline Wireless, a company that lobbied the FCC hard to change the rules in an upcoming wireless auction, suddently shut its doors this week.
IA statement on its Web site says: “Frontline Wireless is closed for business at this time. We have no further comment.”
Now that some of the dust has settled since the closure was widely reported on Tuesday, let’s put the announcement into some context by seeing what was also going on right before and after its closure.
Some background: The company pushed hard for new rules in the Jan. 24 700 MHz spectrum auction. It said it wanted the FCC to tweak the spectrum so it would encourage an open access network, spur competition and set aside some dedicated spectrum for public safety.
Google went public shortly after that with a very similar platform, encouraging the auction to increase access and competition. I think Google got most of the credit for the steps the FCC ended up making, but it was likely the early efforts of Frontline that pushed it past a topic of conversation.
In an AP story, a company spokesperson wouldn’t say whether Frontline it would still participate in the auction. But now that it’s out of business, I think it’s safe to say it’s unlikely.
The reason it is dropping out is widely assumed to be a financial one.
Last week, the deadline passed for companies to make upfront payments to ensure they had the money behind them to buy the spectrum they were bidding on. And, after that, the costs were only going to balloon.
The AP reported that the minimum bid on the spectrum Frontline was most interested was $1.33 billion; Frontline further estimated that it would cost as much as $10 billion to be built out; and the winner would be required to cover 75 percent of the population within four years and 99.3 percent within 10 years.
To be sure, Frontline had an A-list executive team and was backed by some very well-known VCs, including John Doer of, Kleiner Perkins Caulfield & Byers and Jim Barksdale of Barksdale Management. The AP reported that other partners included Ram Shriram, a founding board member of Google, and bidding partners included a company backed by Fortress Investment Group, a $40 billion private equity and hedge fund.
So it doesn’t seem money was the only reason.
Perhaps it had more to do with all the doomsday talk about how Sprint Nextel, Clearwire, and WiMax and wireless broadband were not meeting expectations?
Or maybe Frontline was initiated to only start the open-access conversation, but wanted a big-brand name company like Google to be the public face and actually buy the spectrum?
In any regard, the closure seems to have odd timing.
My colleague Ben Romano covered a speech by an upbeat and confident FCC Chairman Kevin Martin at about the same time the company was shutting down.
And, oddly enough, Martin cautioned during his speech that the FCC will require companies that win the auction to build it out rather than sit on it.
In the story he was quoted as saying: “We want to make sure that that’s being put to use as quickly as possible. … That’s really going to be the ultimate test of [the auction’s] success,” he said.