Bidders seeking C-block personal communications services licenses will bring mixed sentiments to the table tomorrow, when the Federal Communications Commission plans to resume the auction.
“The way this is being handled is absolutely ludicrous,” exclaimed Hank Lucas of Houston-based Texas PCS Inc. He is furious about the FCC’s conduct regarding the entrepreneurs’ block PCS auction.
Interest accrues daily on Lucas’ investments. “It makes me angry. The auctions ran for four days, then shut down for two weeks over Christmas,” said Lucas. “That cost me a thousand bucks.” Lucas added the delay caused by the early January snowstorm, hailed as “the blizzard of ’96,” was too long, considering bidding is conducted electronically. (At RCR deadline, more snow was falling in Washington, D.C.)
Lucas is an independent consultant and long-time cellular industry player. He and partner Chris Wade, also a consultant, have wagered bids in several Texas markets. But now they want out. Unfortunately, that will take five rounds. Bidders are given five waivers to maintain eligibility through rounds where they don’t bid. However, said Lucas, parties also must use each waiver before they can withdraw from the auction and get back their deposits.
Further, Lucas suggested deep-pocket players, already bidding aggressively in smaller markets, are squeezing the little guy out. To top a current high bid, said Lucas, a company must commit a minimum of 60 cents per pop above the standing bid. “These little markets aren’t worth $2 a pop,” said Lucas, and the high bids already have exceeded $3 or $4 per pop, or potential customer.
Allan Rappaport-doctor, lawyer and self-funded entrepreneur-disagrees on the bidding climate. “Small markets are not being hotly contested.” He heads National Telecom Holdings Inc., located in the San Francisco Bay area. Lead bidders actively are targeting larger cities, explained Rappaport. After these markets are won, probably next month, Rappaport expects the auction focus will shift to smaller markets.
Why did Rappaport jump into PCS? “Well, I own two cell phones, with four lines,” he said. On a more serious note, Rappaport said he’s banking on PCS challenging wireline telephony as an alternative means of communications 10 or 15 years down the road, in both personal and business sectors. National Telecom has been bidding in about five markets so far, planning to become involved in a half dozen more, said Rappaport.
Another lone contender is John Dolan of North Coast Mobile Communications Inc., currently the high bidder in New York at $225 million. Previously director of wireless communications for New York-based Cablevision Systems, Dolan left the company last fall and formed North Coast, based in New York, to participate in PCS. At present, Dolan is the venture’s sole financier, but he noted the company is in discussions with a number of potential investors. Dolan said the delay hasn’t really affected his company. He is confident of North Coast’s course. “A strategy is a strategy. It’s going to work whether it’s the last week in January or last week in February.”
Like others, Dolan remains quiet on the company’s game plan. The company has bid in several other large markets in addition to New York.
“Compared to the delay getting started, this is almost a picnic,” said Cory Linquist, director of strategic planning for General Wireless Inc., referring to the early January snowstorm. He said the company is making the best use of the time.
“I think the FCC generally has done everything they can to keep things on track,” added Linquist.