Will capital markets support the aspirations of new wireless telecom service providers?
Frontline Wireless, a start-up in the US with an innovative plan to build a network for private and local public safety agencies, collapsed because it was unable to raise enough money to bid in this month’s upcoming FCC auction of spectrum. Frontline was started by former FCC chair Reed Hundt and it had an impressive set of early venture backers. According to a New York Times article, it was a matter of sourcing funding.
Acquiring spectrum is one thing. A new entrant still has to build out a network and establish itself in the market. An analyst quoted by the Times article suggests investors are wary of backing start-ups that will have to compete with the established giant wireless carriers.
The Canadian auction rules require that potential bidders submit irrevocable standby letters of credit for substantial amounts of money with their applications on March 3.
The capital markets have changed significantly over the past 6 months on both sides of the border. What will be the impact on Canadian firms seeking financing of their business plans for the AWS spectrum auction?