WASHINGTON-A paging consortium led by Maceo Sloan, founder of the nation’s largest minority-owned investment firm, late last week appeared headed for a big victory in regional narrowband personal communications services auctions.
Fifty-seven rounds after the narrowband PCS auction began in Washington, D.C., PCS Development Corp. had top bids for licenses in all five regions and sounded determined not to leave empty-handed.
“We anticipate putting together a nationwide network,” said the 45-year-old Sloan. “We looked at narrowband PCS as the last, true great frontier available to minority companies.”
In each region, the Federal Communications Commission auctioned two 50 kHz/50 kHz licenses and four 50 kHz/12.5 kHz licenses, or 30 permits total, for two-way paging and messaging services.
Women- and minority-owned businesses were offered a 40 percent bidding credit and an installment payment option on one 50 kHz/50 kHz license and one 50 kHz/12.5 kHz license in every region. They also get a capital gains tax deferral if they subsequently sell their licenses.
The auction could raise several hundred million dollars for the U.S. Treasury.
Sloan, chairman of PCS Development, is flanked by Vice Chairman Cecil Duffie, former president of Dial Page Inc., and President William deKay, another ex-Dial Page executive and past chairman of the Personal Communications Industry Association.
Other shareholders in PCS Development are A+ Communications Inc., Arch Communications Group Inc. and USA Mobile Communications Holdings Inc., three of the leading paging concerns in the United States.
Sloan, based in Durham, N.C., said that because narrowband PCS technology is new, “we can start out as equals to the big boys.”
In July, nationwide narrowband PCS licenses were bought by McCaw Cellular Communications Inc. (now owned by AT&T Corp.), Paging Network Inc., Mobile Telecommunication Technologies Corp., AirTouch Communications, BellSouth Corp. and Pagemart II Inc.
Pagemart II bid aggressively in the regional narrowband PCS auction and appeared well-positioned to walk away with enough licenses to patch together a nationwide system.
Likewise, MobileMedia PCS Inc., Insta-Check Systems Inc., Air Touch Paging, Lisa-Gaye Shearing, Advanced Wireless Messaging and Benbow P.C.S. Ventures Inc. were in the running for more than one regional license.
After round 57, the highest bid was $31 million for a 50 kHz/50 kHz license in Region 5 (West) by Benbow. The lowest bid was $8.1 million for a 50 kHz/12.5 kHz license in Region 4 (South Central) by Radiofone Nation-wide Paging Services.
The auction began with a field of 28 bidders, made up predominantly of women, minorities and small businesses. However, some dropped out early. Essence Communications Inc., a minority-owned publishing and television production company, withdrew from the auction after the company decided that bidding for women- and minority-owned licenses was actually higher than for other licenses. As such the 40 percent auction credit was canceled out, Essence noted. The company said it still plans to bid on broadband PCS entrepreneur licenses next year.
Sloan agreed with Essence, but continued to bid anyway. He suggested the FCC allow bidding credits and installment payments on any licenses sought by women- and minority-owned businesses in future auctions.
For example, after the 57th round, PCS Development had a high bid of $30 million for the 50 kHz/50 kHz license in Region 5 that is subject to a bidding credit.
The companion license in that region drew $16.7 million from PageMart II in the same round. With a 40 percent bidding credit, PCS Development is still paying more ($18 million) than PageMart for an identical license.
The former McCaw group, which paid $160 million for two nationwide PCS narrowband permits, said it entered this auction only to keep others from getting regional permits for a steal by upping the bidding.
But after a day or so of bidding, the company said it decided to leave when it became apparent that prices offered for regional narrowband PCS licenses were relatively on par with those bid in July.