Chamath Palihapitya Launches Rama Corp to compete with AT&T and Verizon

They aren't perfect by any means but I'd much rather see DISH or t-mobile get this for reasonable pricing with the proviso that roll out happens in x amount of time.

Unless they have some game changing wireless technology than I don't see it happening and investors may as well put their money down a black hole.

BI says "Part of his plan involves installing microcells in customer's homes to blanket the nation, but also making it as easy as buying a cellphone to sign up for it. Another key to the plan is a portfolio of zero-rated apps that won't cut into your data, Palihapitiya said."

^That does not sound like a very good plan. Carriers like AT&T and T-mobile already have microcell options, and most people won't opt for it especially if other people get use the microcell at the cost of the person's personal bandwidth with their ISP.

What is Zero-rated apps? Isn't it similar to what T-mobile is already doing with their video and audio streaming; whitelisting Apps that will not count against data. Most carriers also have WIFI calling.

That auction that he wants to participate in, isn't that for low band spectrum like 600Mhz. That is good of extending coverage but will not increase your download speeds. Carriers like to have both low band and high band.

But it would hardly help him "overtake" AT&T and Verizon with no network and probably only 10-20MHz of spectrum, possibly missing large markets like New York and San Francisco entirely due to the high price licenses in those markets fetch.

The auction is generally seen as most beneficial to T-Mobile who has a network, but lacks low-frequency spectrum in a lot of markets.

There have been many companies that have dreamed of entering the US wireless business. Many have bought spectrum only to let it languish for years and then sell it to an incumbent carrier. Looking at 700MHz-A licenses, a lot of them are owned by companies such as "C700-Salt Lake City-A LLC", "C700-Jacksonville-A LLC", "Cavalier Louisville, LLC", and "Cavalier Albany NY, LLC". Part of the issue is that it is expensive to build out a wireless carrier requiring lots of money and consumers demand a high level of perfection when it comes to their wireless carriers. The American market isn't one that tolerates even small carrier issues.

Some of it will depend on what licenses go for. I think most people are expecting licenses to run T-Mobile in the range of a couple billion given the 30MHz set aside, but T-Mobile is planning for up to $10B. Verizon just paid around $10B for around 10MHz of AWS-3 spectrum and the 600MHz licenses are a lot more valuable. But 30MHz is set aside with less competition from the big two.

Given that the licenses will likely cost $2B+ and cap-ex can often run $3-8B per year for carriers, $4-10B seems a little low to launch a compelling service. Part of the issue with the US is that it's such an expansive place and people don't want to be told "this service is only available in Maryland, DC, and Northern Virginia".

I guess the question is: what does he think he can do better. If it's cost, I can get 2-5GB of data with unlimited talk and text from Boost for $30/mo, taxes and fees included, on Sprint's nationwide network. His network will be worse than Sprint's so how much of a discount can he offer off $30 to make a much worse, completely new network compelling? He won't have loads of spectrum to offer really high data caps. And if he starts offering 100GB for $25, that will have to come down fast as people start actually using it and the network becomes capacity constrained. And customers are very used to being grandfathered into plans in wireless. If he were just competing against AT&T and Verizon, he might have an opening. But even AT&T has their Cricket brand where I can get 2.5GB for $35, taxes and fees included, on AT&T's network.

The question is: what does his entry bring to the scene? It seems unlikely that he can greatly undercut prices. It seems unlikely that microcells in people's homes will "blanket the nation". With so little spectrum compared to competitors, he won't be able to offer the speed and capacity they're offering. Without a reliable network, customers will want a steep discount to move to his service. So, how much below $30/mo can he go to grab customers? Is there something else compelling? T-Mobile already offers microcells for your home and zero-rates music and now video streaming.

I'm all for increasing competition. It just seems unlikely that this will increase competition. It seems way more likely that Dish will buy some 600MHz licenses and start rolling out a network. They already have substantial spectrum holdings and the low-frequency licenses would allow them to get broad coverage without spending too much while using their higher-frequency spectrum to supplement capacity where needed. Dish also seems to think that wireless data is going to be their salvation. As we inch closer to 5G, it's likely that fixed mobile broadband from an antenna in your home could serve as competition to wired internet services. That would allow Dish to offer on-demand services and home broadband plus mobile services in an era when more people are forgoing pay-TV services.

To me, that seems like something with a strong chance of happening. The company already has a huge spectrum investment and they need wireless for their future. Rama would be competing with way less spectrum and starting from scratch. Seems like a much easier way to be profitable would be to bid on the spectrum that AT&T and Verizon can't bid on, use the big FCC discounts for new players, hold it for 4-5 years, and then re-sell it for a profit.

Best of luck, Chamath.

What a time to be alive.