WASHINGTON-The U.S. Treasury will be receiving another auction-related windfall payment sometime in the near future when the Federal Communications Commission, AT&T Corp. and the General Accounting Office decide how much money was made from the 900 number that personal communications services applicants used to place electronic bids, download market information and keep abreast of auction rule and stage changes.
Dialers paid $2.30 per minute during the C-block auctions for access to the FCC’s electronic auction-tracking system. At an average of eight minutes per bidding round multiplied by 184 rounds, bidders’ phone bills got pricey.
According to attorney Dave LaFuria of Lukas, McGowan, Nace and Gutierrez, one C-block client ended up with a $40,000 phone bill, all attributable to the need for 900 access. It was that shock that made the bidder decide against entering the D-, E-and F-block auction, which began last week.
“These charges definitely are a barrier to entry. It’s not like you’re hooked up all day,” he said. “You first go in to place bids for several minutes, then you have the option of printing out your bids, and then you have to check for any FCC messages. It all takes time for the software to properly monitor and download information. If you were on 20 minutes per day, that’s $46 per day, and you usually were on longer.”
LaFuria’s firm itself spent up to $4,000 per month monitoring the auction for its clients, and much of that money was not billable. Like other auction participants, LaFuria had to pay $175 upfront for the commission’s bidding software, “but with 900 numbers, you can charge whatever you want. Is $2.30 the real market-based price?,” he asked, adding, “There really was no way for bidders to get information any other way, except to use the FCC’s bulletin board on the Internet, but that is slower and incomplete.”
NextWave Personal Communications Inc. spokeswoman Jennifer Walsh estimated that her company spent between $2,000 and $3,000 per month during the C-block battle. Kevin Inda of Pocket Communications said the 900 number was used “very judiciously,” and that only $4,000 was spent. Roberts-Roberts & Associates L.L.P., which won C-block licenses in Illinois and Missouri, also spent about $4,000 for 900-number access. “I really watched the bills,” Kay Gabbert told RCR. “There were four or five charges we just didn’t pay because they were so ridiculous. One charge had us hooked up for 12 straight hours. No way. I knew pretty much how long it would take to bid and download. I questioned any charge over 30 minutes.”
Gabbert had a few complaints about the system. She could not access the 900 number away from the office (“No hotel will touch a 900 number”), and she could not access it wirelessly.
Jeff Smith, a principal of Mountain Solutions Ltd., which won licenses in five different states, spent $11,000 on FCC access. “We overspent by about $3,000,” he said. “We knew it was going to be expensive, but we didn’t expect the auction to last as long as it did.”
Smith added, “The FCC definitely made a profit on this. Even if you didn’t use the 900 number to bid, you probably called in at least once a day just to get FCC updates. That would take a few minutes.”
Yes, the FCC and AT&T made money on this deal, said Jerry Vaughan, deputy chief of the Wireless Telecommunications Bureau and one of the key cogs in the auction machine. “But some people just left their machines on all the time, and we adjusted for that,” he said. “We’ve tried to tell people to log in, do their business and then get off.”
Vaughan justified the price per minute by calling 900 access “a value-added service … that also covered Internet costs.” And because the FCC was the first government agency ever to provide such a service, the commission, AT&T and GAO all agreed on the price, which could change under final scrutiny. Network reliability was high, he added, and no one experienced problems logging in and out of the system several times a day, a complaint typically aimed at other Internet service providers.
For those who complained about the set-up time for which they were charged, “the first minute of access is free now,” Vaughan said. And for bidders who really want to cut costs, he reiterated that all FCC auction information is loaded within 10 minutes of its release on the commission’s electronic bulletin board. Vaughan expects D-, E- and F-block bidders to be more cost-conscious in how they use the system.
If bidders brought 900-number cost complaints to the FCC while the C-block auction was active, the commission tried to solve the problem, Vaughan said. If they came in after the fact, charges remained on their bills.
