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Interview of Michael Deboer from SpecEx, the “Ebay of Spectrum”
- Can you briefly introduce yourself and your company ?
Sure. My name is Michael DeBoer, a Marketing Manager for a company called Spectrum Bridge. What we’ve done is develop an online marketplace which brings together buyers and sellers of licensed spectrum and generally leverages the advantages of the secondary spectrum market.
- Can you tell us how the spectrum market is organized between the primary and secondary Market ?
The markets could be compared to the real estate industry. In order to make a purchase on the primary market, you’d have to buy a new home from a builder or developer. If you then sold the house a few years down the road, you’d be selling it on the secondary market, and the person buying your house would be buying on the secondary market.
In the spectrum business, the primary market is the one we are most familiar hearing about; 700 MHz, AWS-3, cellular and PCS auctions: i.e. getting spectrum directly from the FCC [ Federal Communications Commission ].
The secondary market is where, to me, the more exciting moving and shaking takes place. It was solidified in 2003 when the FCC adopted new regulations which allow spectrum to be bought, sold or leased to third-parties. It was called the Secondary Market Initiative. On top of opening up a new market for reselling spectrum assets, the new rules also opened up the possibility for a company like ours to exist.
A secondary market transaction would be defined as one in which the license transferred or leased was not acquired directly from the FCC, rather it was acquired from a current holder. That being said, the secondary market is what ensures businesses can still get spectrum they need, even without forking over billions of dollars to win spectrum in a major FCC auction.
- And how Spectrum Bridge is adding value into it ?
What we’ve created is a marketplace called SpecEx as a resource where people can find out what frequencies are available on the secondary market; basically leveraging the FCC rules to establish a viable and beneficial market for everyone. We make it easy to market your excess spectrum or find spectrum for sale with a few clicks of your mouse. It’s a lot like how the Multiple Listing Service (MLS) works for houses.
Let’s say you’re a utility company or government agency who would like to buy some spectrum for a meter reading or video surveillance application… with SpecEx, you can easily find the needed frequencies in your area which are for sale or lease. Before our site, it would be a time consuming endeavor to search through government databases to find who has spectrum. Then you would have to manually call or email every person or company on the list to see if it was even available, and then who was willing to sell to you and at what price, etc.
- The FCC took several key steps to encourage a secondary market in licensed spectrum. Why this shift by regulators ?
Over the past 50 years the FCC had assigned almost all of the available radio frequencies. For decades they handed out spectrum through lotteries or to people who simply filled out the right paperwork. As the market and technology shifted, it lead to companies leaving somewhere around 80% to 95% of the spectrum they owned sitting unused. This obviously began creating problems for organizations which needed spectrum for new applications, but the FCC also realized if a whole fluid market was created which allowed the re-distribution of already allocated frequencies, they could satisfy demand for spectrum without having to issue new licenses. Spectrum holders would benefit by getting paid for their unused spectrum and American companies, consumers and the FCC would benefit from new wireless services and applications.
- In September, Spectrum Bridge announced “promised spectrum listings with a total current value of $250 million” (Network World). What about now ?
During the time the Network World article ran, we were already adding new inventory on SpecEx. When we announced the $250 million figure, we had around 500 licenses on SpecEx , today we list over 1,000. We have frequencies across the entire continental US, Puerto Rico, over the Gulf of Mexico, even some in Guam.
- Can we consider SpecEx as the “Ebay of spectrum” ? How does it work for sellers and buyers ?
I would say we welcome being called the eBay of spectrum because it gets the secondary market idea across instantly. The differences being eBay is essentially a secondary market for practically anything and everything, whereas we stick to spectrum only. EBay uses PayPal, while we’re working financials though major banks and brokerages. We also have dedicated Sales and Marketing teams who actively work with buyers and sellers if necessary.
But, in relation to how difficult getting your hands on spectrum was in the past, our site is like finding exactly what you need in a single search on eBay instead of going to 50 yard sales with your wife 
Our site also works well for holders of spectrum because now they have a highly marketed online website available to offer their unused frequencies to thousands of potential buyers.
- Will consumers be the “winners” as there will be less unused spectrum ?
With less spectrum sitting idle, everyone can be considered winners. The spectrum holders are able to monetize unused assets, people in need of spectrum are able to find it, and the average consumer will benefit from enhanced wireless services in public safety, enterprise, education, carrier, utility and other sectors.
The more spectrum being utilized, the better for all of us.
- What are your goals for 2009?
We have just completed the finishing touches on our plans for ’09, and we don’t plan on relaxing this year. Our obvious goal is to increase traffic and transactions on the SpecEx marketplace. But more than that, we are keeping the big picture in sight, which is higher spectrum utilization in the U.S. and ensuring the secondary market is open to everyone. We are also beginning to look at expanding internationally since most countries are facing the same underuse of spectrum we see here. Finally, we are developing technologies that can help the improve the efficiency of the new TV white space, so we’ll be working on providing solutions in that space as well.
We also have quite a few spectrum experts on staff, so one of my own goals is to promote Spectrum Bridge, Inc. as the company to partner with for spectrum and secondary market solutions.
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