Use It or Lose It


Comcast continued to take some
hits this week over chief financial officer
Michael Angelakis’ comments to analysts two
weeks ago that the company never intended to
build out the wireless spectrum it got at auction
in 2006, but Comcast’s CFOs have been
nothing if not consistent about not planning to
create a standalone national wireless service.
Comcast was signaling even before it bought
the spectrum that it was not planning to the be
the Fifth Coming of a wireless network.

That’s not to say that suggesting the spectrum
play was speculative was the best signal
for Angelakis to send, but I have long opined
about the ability of companies to say one thing
to Washington while making news they would
rather not when playing up their business acumen
to analysts.

Anyway, I am not here to be an apologist for
Comcast. It doesn’t need my help.

In fact, I’ll let its statement about Angelakis’
statement speak for itself. Comcast called
it “shorthand for saying that after examining
many possibilities and opportunities and working hard to
clear the spectrum of incumbent users (and spending millions
of dollars to do so), and with the changes in the market (like the
iPhone, iPad, explosion in smart phone usage), it didn’t make
sense to build out as a nationwide network.” Sounds like an argument
for speaking in “long hand.”

And, according to quotes from Comcast detailing Angelakis’
statements going back several years, Comcast has always
been careful to frame its spectrum play as a work in progress,
and speculative in the sense that the company wasn’t quite
sure what to do with it, but figured it needed it. That includes
a 2008 quote in which Angelakis said: “We have no intention
of building [our AWS spectrum] out right now. We continue to
clear spectrum, which we think enhances the value … It could
actually be an excess asset that we don’t particularly need.”

But the “right now” qualifier is different from Angelakis’
statement at the Citigroup investor conference, where Comcast
confirmed he told his audience that the company never
planned to build out the spectrum.

Another point is that, regardless of what Comcast’s stated
plans were afterward, was it up front about that plan not to
build out a competing service when Spectrum-
Co was bidding on it at the FCC?

That issue was raised last week at the International
Consumer Electronics Show by Republican
FCC member Robert McDowell. An
aide said that what McDowell said at the convention,
and to Comcast directly, was that some
folks may be asking whether the company took
its AWS licenses under false pretenses if indeed
it never intended to build out the spectrum. The
license conditions required a buildout within
15 years — Comcast is selling it after just five
and a half years.

According to a report from Multichannel
’ Mike Farrell back in September 2006,
even before SpectrumCo.’s winning bid had
been finalized, Comcast’s then co-CFO John
Alchin also told analysts that the plan was not
to build out a network in competition to established
wireless companies.

As Farrell reported, Alchin — who couldn’t
say much about the auction due to FCC anticollusion
rules — still said publicly there was no intention
to become a cellular carrier in competition with Sprint
Nextel, Cingular, T-Mobile or AT&T Wireless.

With the auction still ongoing, and speaking at a Merrill
Lynch conference, Alchin said: “Any spectrum that we acquire
really provides us with long-term flexibility and many strategic
options that wouldn’t be otherwise available to us. … We have
no interest in being the fifth cellular operator.”

In fact, he said, Comcast would likely use the spectrum
to integrate wireless into its other platforms, perhaps
in conjunction with its then wireless service joint
venture with Sprint,which at the time was a partner in

“This is all about giving us long-term strategic options while
remaining very, very involved in the Sprint JV that we have
now,” Alchin told analysts in 2006.

Comcast, along with SpectrumCo partners Time Warner
Cable and Cox Communications, exited the joint venture in
2008, deciding that strategic option wasn’t panning out.

So, Comcast never planned to build out a national network,
but apparently did think the spectrum might fit into its Sprint
venture wireless plans. Until it didn’t.