WASHINGTON-If bidders in the C-block broadband personal communications services auction have learned one thing, it’s to watch one’s back at any given moment or prized markets will be stolen away. And another milestone has been passed-all C-block BTAs now have been bid higher than their sister properties in the A- and B-blocks. As of Round 52, $8.76 billion has been committed to the Treasury, and where it stops, nobody knows.
Following the spate of accusation-filled letters that have been sent to the Federal Communications Commission lately by top C-block contenders, other quieter entities are positioning themselves as top players before the regulatory dust settles. In a bizarre turn of events, GO Communications Corp. made a gutsy move to take the New York City market away from rivals NextWave Personal Communications Inc. and North Coast Mobile Communications Inc. by placing a $900 million marker on the property during Round 49. GO also tried to maintain its hold on the Miami-Fort Lauderdale and West Palm Beach-Boca Raton venues as well.
However, North Coast pledged $946 million during Round 50 to collapse GO’s balloon; it could remain the high bidder there unless NextWave or venture capitalist-backed General Wireless Inc. (GWI PCS Inc.) want to use up some spare pops. If this wasn’t bad enough, GO-which had tried to add to its Florida plans by placing a bid on Naples-blinked for a moment and lost its Florida holdings to GWI, which is beginning to make some aggressive buys in major markets. However, after GWI topped go a second time, GO bowed out of the Miami bidding.
As of March 20, GWI came into some new financing via an agreement with Hyundai Electronics of America, which had been one of the original investors in U.S. Airwaves Inc., the John DeFeo-led bidder that dropped out of the auction last month.
“GO looked vulnerable, and GWI took their shot,” commented Taylor Simmons of Washington, D.C.-based Simmons Associates.
GWI also made some moves on NextWave by taking over the high bids on San Francisco and Atlanta. As of Round 53, GWI held the high bid on Washington, D.C. According to Simmons, the PCS hopeful is active on 95 percent of its pops, unusual only in that most other bidders are holding fast to about 60 percent. Only North Coast comes close. The entire auction moved into Phase 2 March 22, which will help move this slow train along.
With the extreme amounts of money being bid for C-block PCS licenses, there is no doubt that many winners will end up in default when payment time arrives. Industry sources told RCR that the commission may be considering relaxing its payment structure somewhat to help stem a possible flood of defaults but Auction Division Chief Kathleen Ham O’Brien said that wasn’t part of the mix so far.
Simmons pointed out a few other interesting markets in the post-Round 50 auction environment. Detroit “is sticking out like a sore thumb,” with one of the lowest prices per pop going. “It’s trading at a discount,” Simmons said. PCS 2000 L.P. has dropped its eligibility to only 14 million pops, and Simmons compares its history to that of NextWave-“PCS 2000 has been the inverse of NextWave, with a quick jump up and now a steady decline.”
21st Century Telesis Joint Venture “is interesting, in that they’ve stuck to their bidding plan,” he added. Apparently, 21st Century-made up of 40 cable, pay phone and small telco concerns-was eligible for some 6 million pops, and it has consistently bid them. “They’ve gone after such resort markets as Maui, the Virgin Islands, Tucson, Indiana, Albuquerque and parts of Nebraska,” Simmons said.
Bidder Americall International L.L.C. continues to be strong, with a concentration on the cheaper pops. “It’s spent $45 million so far, and it ranks eighth in active pops and 22nd in dollar-amount risked,” he added.
BIA Consulting Inc.’s Jonathan Foxman has tagged the following as the top 10 most active markets as of Round 52: Salt Lake City-Ogden, San Diego, San Antonio, Denver, Seattle-Tacoma, Indianapolis, Sacramento, Calif., Kansas City, Mo., Norfolk-Virginia Beach-Newport News-Hampton, Va., and Las Vegas.
The 10 highest dollar-value markets as of Round 52 were New York City, Los Angeles, Chicago, San Francisco-Oakland-San Jose, Philadelphia-Wilmington-Trenton, Dallas-Fort Worth, Boston, Houston, Washington, D.C., and Miami-Fort Lauderdale.
With three rounds of bidding per day now the standard in the 900 MHz specialized mobile radio auction, bidders are getting frenzied and just plain tired. As of Round 97, $178.4 million had been garnered.
According to Simmons, some 11 companies vying for pieces of the Denver market switched places like checkers last week. “There was a lot of internal movement, but the players stayed the same,” he said.
Simmons also tapped SGI Communications Inc. as the new up-and-comer, saying that, in recent rounds, the company had graduated from being a minor to a major player. SGI has maintained high bids in Denver and Tampa.
The top five 900 MHz SMR auction players remain Paging Network of America, Geotek Communications Inc., FCI 900 Inc., Motorola SMR Inc. and Fleet Talk Inc.
In other auction-related news, the commission released a notice of proposed rulemaking March 20 regarding the bidding rules for the D-, E- and F-block PCS auctions scheduled to begin this summer. Besides asking the industry when such auctions should begin, the FCC seeks comment on the following issues:
Whether race- or gender-based provisions in F-block rules can survive the “strict scrutiny” judicial standard put in place by the recent Adarand Constructors v. Pena decision. If supporting data is unavailable, the commission will consider making the F-block race- and gender-neutral along with possible changes in license-transfer rules.
Whether small-business installment payments should be extended to all remaining 10-megahertz broadband frequency blocks.
Whether cellular/PCS cross-ownership rules and cellular attribution rules need to be modified.
Whether ownership information disclosure requirements should be simplified.
Comments are due April 15; reply comments are due April 25.
