Chamath Palihapitiya wants to bid billions in the 600 MHz incentive auction to challenge Verizon, AT&T

Investor Chamath Palihapitiya is backing a company called Rama that intends to bid as much as $4 billion to $10 billion in next year's incentive auction of 600 MHz broadcast TV spectrum in the hopes of winning enough airwaves to start a new carrier to shake up the U.S. wireless industry.

Rama is only a small firm right now -- six or seven people, according to Re/code -- but it has outsized ambitions to compete with Verizon Wireless (NYSE: VZ) and AT&T (NYSE: T). Palihapitiya's venture capital firm, Social Capital Partnership, has already made waves in the telecommunications market in Asia by backing LotusFlare, a software startup that plans to partner with the likes of Facebook (NASDAQ: FB) and Google (NASDAQ: GOOG) to expand access to the mobile Internet in emerging markets.

Rama itself has already secured 10 MHz worth of spectrum in Sri Lanka and is negotiating a deal in the Philippines, according to Palihapitiya, a former Facebook executive. "Now we are going to come in and bid for spectrum in the U.S.," he said yesterday at the Mobile First Summit in San Francisco.

Carriers and other companies that want to participate in the "forward auction" portion of the incentive auction will have from Jan. 14 until Jan. 28 to do so. After the March 29 deadline for the auction to commence, it will take the FCC a few weeks to set the initial clearing target for how much broadcast spectrum it is going to receive and the band plan.

How does Rama intend to crack into the U.S. wireless market? Palihapitiya said Rama will be the carrier but will use software from LotusFlare to manage and organize the network, according to Re/code. LotusFlare has also developed an application that lets users see how much data they are using from different apps and suggests how they could get the data cheaply as possible, Fortune notes. Rama intends to be the carrier and to use spectrum microcells in customers' homes and elsewhere to offer better coverage than traditional carriers. Rama also plans to allow the use of any device and provide simpler billing.  

Rama wants to make it easier for people to buy phones and sign up for service and also plans to have a portfolio of apps that are zero-rated and won't use customers' data buckets. "There's a whole bunch of issues that carriers aren't trying to solve. All these things are now just totally broken," Palihapitiya told Business Insider.

"It's not a lot of people; it's more a lot of cash," Palihapitiya said. Social Capital is investing a lot of money but other unnamed companies that are "recognizable names" will be investing in Rama. Those will be disclosed next year. LotusFlare has previously raised seed funding from Google's venture capital arm, Google Ventures, among other investors.

Palihapitiya noted that for this plan to take off, first Rama would need to win spectrum and then come up with billions more in capital before it can even launch service. Rama would definitely face an uphill climb, though if it had backing from Google and Facebook, that might help. Still, there are many challenges to launching a greenfield wireless network, not the least of which is the need to build out a wide-area network with extensive coverage from scratch. Dish Network (NASDAQ: DISH) has spent billions on spectrum in recent years but has not launched its own network or even a network hosted by another carrier.

Moreover, the 600 MHz spectrum will likely not be available for commercial use until 2018 or 2019, since broadcasters need to be moved off and into new channel assignments, and industry standards for network equipment and devices for the band need to be developed.

Yet Palihapitiya is undaunted. "The first country was Sri Lanka. The second country was the Philippines, and now we've said, 'F--- it!' Let's come back to the U.S. and try to f--- this country up,'" he said.

For more:
- see this Re/code article 
- see this Reuters article
- see this Business Insider article
- see this Tech Times article

Related articles:
Analysts: Comcast, Charter, Dish and Google might bid in 600 MHz auction - but won't be building out networks
Sinclair, CBS, Gray voice support for FCC's 600 MHz incentive auction, other TV broadcasters on the fence
Comcast, Charter may participate in 600 MHz auction, while Time Warner Cable plans to stay home
T-Mobile seen as favorite to win spectrum in 600 MHz auction, but smaller carriers likely to jump in as well
FCC's Wheeler: Carriers are engaging in normal pre-auction positioning and 'shenanigans' ahead of 600 MHz auction
FCC sets top opening price to pay broadcasters at $900M for incentive auction, will ask carriers to bid $135M for NYC

Correction, Nov. 11, 2015: This article incorrectly stated that the Mobile First Summit took place in New York City. In fact, it took place in San Francisco.

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