Company to Create Airwaves Exchange
Spectrum Bridge Acts
As a Frequencies Broker
In Secondary Market
By AMOL SHARMA
September 5, 2008; Page B6
Vibrant financial markets exist for trading everything from bushels of corn to barrels of oil. Now a new company is hoping to do the same for the nation's airwaves, with an online trading exchange for radio spectrum.
The company, Spectrum Bridge Inc., will match buyers and sellers of spectrum licenses used for wireless communications. Its Web site, specex.com, will go live on Friday with an initial inventory of about $250 million of spectrum.
The Federal Communications Commission during periodic auctions doles out licenses to use particular radio frequencies. While most of the prime spectrum used by cellphones, two-way radios used by first responders and other communications gear has already been allocated by the agency, much of it isn't actually in use at any given moment. Spectrum Bridge hopes to create an organized secondary market to help recycle those "fallow" frequencies.
There already is an informal secondary market. Big carriers like Verizon Wireless and Sprint Nextel Corp. routinely purchase small slices of spectrum from other parties, such as universities, religious broadcasters and small spectrum-holding companies, with the FCC approving the transfers. Entire companies, such as startup wireless Internet provider Clearwire Corp., have been built by cobbling together spectrum through such deals. Public-safety agencies are also active buyers in the secondary market.
But Rick Rotondo, vice president of marketing at Spectrum Bridge, of Lake Mary, Fla., says the informal secondary market is inefficient. Sellers often don't have a clear idea of the value of their spectrum, and buyers often aren't aware of who all the potential sellers are. Spectrum Bridge, he says, could solve both problems by showing what spectrum is available -- he likens it to real-estate listings -- and then publishing data on the prices of deals without naming the companies involved. Spectrum Bridge, which will vet buyers and sellers, will take a cut of each transaction.
Spectrum Bridge, whose management includes four former Motorola Inc. executives, including Mr. Rotondo, raised $2 million of seed financing and is in the middle of a second round. Its backers include the Telecommunications Development Fund, which is financed by the federal government and has FCC Chairman Kevin J. Martin on its board.
The FCC would have to approve the transfers of spectrum licenses being bought and sold through Spectrum Bridge. "Chairman Martin has always been supportive of secondary markets and generally sees this as a positive business framework," said an FCC spokesman.
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