Executive Summary

The 700 MHz band includes the spectrum occupied by UHF TV channels 52
through 69 (698 MHz - 806 MHz). As a result of the 1996 amendments to the
Communications Act, this band was re-allocated for use by other
communications services, including Public Safety and Public Commercial use.
Although development of Public Safety use in the 700 MHz band began in 1997,
few systems have actually been deployed due to concerns with interference from
the incumbent broadcasters.

In accordance with the Balanced Budget Act of 1997, public use of the 700 MHz
band was mandated via the FCC Auction process. At the onset of this process,
the FCC announced that commercial licensees in this band would be permitted to
provide fixed, mobile and broadcast services. Suggested uses of the 700 MHz
commercial spectrum included mobile and new digital broadcast operations, fixed
and mobile wireless broadband services (including FDD and TDD based
systems) as well as fixed and mobile wireless uses for private internal radio
needs. Commencing in September 2002, followed by a second auction in
May/June 2003, 735 licenses were awarded in these auctions, raising over
$144M.

Two companies, Aloha Partners and Qualcomm, have emerged as the major
license holders and are currently developing businesses utilizing their 700 MHz
spectrum. Aloha Partners intends to provide fixed and mobile wireless
broadband internet access services but the company is still undecided about
what technology to deploy. Qualcomm plans to establish and market a mobile
video service under the MediaFLO® brand name to cellular and PCS operators.
MediaFLO® will support real time video streaming as well as 'Clip Casting' to
mobile handsets.

Both Aloha Partners and Qualcomm have sufficient spectrum to support nationwide
footprints.

In Canada, a similar regulatory process has been underway for almost a year,
beginning with Public Safety systems that will be closely harmonized with those
in the U.S. Over the next year or so, Industry Canada is expected to follow a
similar process as the U.S. in developing commercial operations in the 700 MHz.

What makes 700 MHz spectrum exceptionally attractive for wireless broadband
operators is the cost dynamics of system deployments: the lower the frequency
of operation, the farther signals propagate and penetrate through trees and
buildings and bend around obstacles. This has a dramatic impact on the cost of
deployments compared to systems operating at higher frequencies. As a seat of
the pants rule, a doubling of frequency at which a wireless system operates,
equates to a doubling of deployment costs and at least a doubling of cell sites or
halving of each cell's coverage area.


Of course there are other factors to consider such as available spectrum bandwidth
and subscriber density, but all else being equal, lower spectrums provide
unique competitive advantage compared to similar bandwidth spectrum at higher frequencies.
Digital video broadcast and mobile broadband services can be made very cost effective despite
relatively narrow spectrum bands.

The 700 MHz spectrum is increasingly being developed for use of OFDM based
technologies: Qualcomm has shifted from use of CDMA to OFDM as the core
technology in MediaFlo. Similarly, Airspan, Intel and other companies are
pursuing development of systems based on OFDM/WIMAX. Migration of TV
broadcasters away form the spectrum and licensing of the vacated spectrum
could become the decisive factor in how quickly and extensively development
unfolds.

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