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SMR BIDDING SLOWS AS REVENUES CLIMB PAST $50M MARK

WASHINGTON-The Federal Communications Commission’s first-ever auction of 900 MHz specialized mobile radio spectrum is set to enter its third week of daily, one-round bidding, and there is no indication that auction proctors will step up the pace any time soon.

According to Jerry Vaughan, deputy chief of the FCC’s Wireless Telecommunications Bureau, even though the daily percentage change in net revenues has dropped substantially and steadily since the auction began Dec. 5, the commission probably won’t alter its bidding procedure until the number of new bids falls to fewer than 100 per round. And even with the specter of possible government shutdowns beginning Dec. 15, the 900 MHz auction is scheduled to continue along with today’s highly anticipated start of C-block personal communications services auctions.

Net revenues so far are hovering between $50 million and $60 million and, in certain large and desirable markets, deep-pocketed established carriers continue to spar with unknown startups and individuals for at least one of the 20 10-channel blocks available in 51 markets. Of the 128 bidders who were qualified to enter the auction, five dropped out after seven rounds.

There are no surprises regarding which markets are garnering the top bids. Los Angeles, New York City, San Francisco, Detroit, Chicago, Atlanta and Washington, D.C., jockey daily for a spot in the “top five most-active licenses” category. San Antonio, Texas, Phoenix, Denver, Dallas and Philadelphia comprise the next tier of most-favored markets.

Unlike many participants in previous spectrum auctions Almost all of the qualified bidders for these 900 MHz channels have some ties to wireless communications, either as operators, managers or investors.

It still is too early to tell who the big winners will be; it all depends on point of view. There are some new entrants who will be happy with a single channel block in a single market. Incumbent SMR carriers are trying to make sure expansion space will be there when it is needed, if even in only even in and only is redundant a market or two. Major nationwide players want to beef up existing operations while plugging holes in their current footprints.

Paging Network of America Inc., Motorola SMR Inc., Geotek Communications Inc., FCI 900 Inc. (Nextel Communications Inc.) and A&B Electronics Inc. (Pittencrief Communications Inc.) have been the most active bidders in total dollar amounts. PageNet, the only carrier in this group that does not have SMR interests, plans to use any channels it succeeds in purchasing to forward its PCS business plan nationwide. However, the nation’s largest paging carrier would not comment on any plans to introduce talk-back messaging as a customer option.

Geotek, with only two systems (Philadelphia and Miami) currently online in beta-test mode, has been bidding consistently for multiple channel blocks in such major trading areas as New York City, San Francisco/Oakland, Minneapolis/St. Paul and Houston. Although its strategy includes covering several of the top markets, Geotek acts like it is trying to avoid entering areas in which Nextel and/or Motorola have-or want to establish-a presence.

Even though A&B Electronics is eligible to bid on licenses in all markets, its strategy so far is to go after channels in its own operations area of Texas, Arizona, New Mexico and Oklahoma.

Some 43 entities, including the front-runners, have opted to bid for all available licenses in all markets. But there are a number of entrants who are going head-to-head with major players in many secondary markets on a selected-channel-block basis.

In addition to those bidding on all licenses, there is only one other bidder registered for each of the following MTAs: Honolulu (Barney Peterson), New Orleans/Baton Rouge (T&T Leasing), Kansas City (Commenco Inc.), El Paso/Albuquerque (Comtel II Inc.), Spokane/Billings (TE-MCG Consortium), Puerto Rico/Virgin Islands (Comtec Communications), Boston/Providence (Comtronics Corp.), Louisville/Lexington/Evansville (Davis Electronics Co. Inc.), Portland (Day Management dba Clackamas Communications Inc.), Pittsburgh (Hickory Telephone Co.), Tampa/St. Petersburg/Orlando (Leo Denslow), Cincinnati/Dayton (P&R Communications Service), Phoenix (ProTec Mobile Communications), Milwaukee (Trunking One USA) and Charlotte/Greensboro/Greenville/Raleigh (Two Way Radio of Carolina Inc.)

Of these single-market bidders, Commenco, Barry Walker Trunking ONE USA Inc., Comtec Communications, Comtronics Corporation, Davis Electronics Co. Inc., T&T Leasing and Comtel II Inc. have been able to stay alive, at least through the last few rounds.

Bidders looking to become an immediate near-monopoly should consider such MTAs as Alaska, Guam/Northern Mariana Islands and American Samoa, where bidding has been extremely light. Channel blocks in Guam so far are going for less than $5,000 each.

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