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BIDDING ERRORS IN PCS AUCTION MAY ADD UP TO FINES FOR TWO FIRMS

WASHINGTON-Two participants in the Federal Communications Commission’s C-block broadband personal communication services auctions submitted erroneous bids on two different markets during Rounds 10 and 11. Both bids have been withdrawn, and both bidders have filed waivers to reduce or negate any penalty they may have to pay when the auction concludes.

They also claim that there are problems with the FCC’s auction software that make it difficult to confirm or change an errant bid.

San Juan, Puerto Rico-based PCS 2000 L.P. placed what it thought was a confirmed $18 million bid for the Norfolk-Virginia Beach-Newport News-Hampton, Va., market during Round 11. Instead, it claims an extra zero was added during the course of transmission, changing the bid for the market to $180 million, a difference of $162 million. PCS 2000 principal Javier Lamoso told RCR that all hard copy at the headquarters site continued to show an $18 million figure even as frantic personnel faxed upload records back and forth to the FCC Jan. 23.

“We’ve checked all our files, and our bid was correct when it left here,” Lamoso said. “We don’t know why this happened. The mistake did not show up on our computer. If we had seen this, we would have withdrawn.”

The bid was withdrawn Jan. 24, and lawyers are hoping that the partnership will not be liable for a penalty equal to the difference between what the final bid price for the Virginia market is and what PCS 2000 bid.

During Jan. 22’s Round 10, MAP Wireless LLC, a partnership that includes several employees of the Gabelli investment firm, bid $22.6 million for the Rockford, Ill., market instead of the $2.6 million it had intended. Upon discovery of this $20 million mistake, MAP pulled its bid. When asked if he really meant to bid $22 million for Rockford, MAP principal Christopher Mantle exclaimed, “Are you crazy? There is a glitch in the software. If you don’t physically delete any numbers from a previous bid, they will stay in the system. We could not get rid of the extra `2,’ and there is no way to fix a mistake before or after you send a bid. When it’s gone, it’s gone.”

Mantle plans to move forward with his bidding on target markets, even though the thought of a costly penalty may influence his bids or how long he can remain a player.

The FCC says nothing is wrong with the auction software. “The first one to suggest that there is a problem has been PCS 2000,” said Jackie Chorney of the Wireless Telecommunications Bureau. “Our auction division staff checked it out. There is no reason to believe there is a problem. And when you take into account the volume of bidding that has been successful, three errors do not mean there is something wrong.”

Regarding any built-in failsafe measure that would prevent a bidder from making a mistake, Chorney said the software was designed in such a way that almost any mistake would have to be attributable to human error.

“First, you have almost two hours to make a bid,” she said. “You type in your bid and press the `send’ button. The system asks you three times if you are sure of the bid. Then it asks if you want to print out the bid. Only after that do you send in the bid for real.”

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