YOU ARE AT:Archived ArticlesPCS AUCTION OVER, NETS $2.5 BILLION

PCS AUCTION OVER, NETS $2.5 BILLION

WASHINGTON-Raking in a net total of $2.52 billion, the D-, E- and F-block personal communications services auction closed Jan. 14, bidding farewell to the last of the broadband spectrum that will be sold by the Federal Communications Commission.

“With the A, B, C, D, E and F auctions behind us, we’re almost a quarter of the way through the alphabet, but well on our way to new competition and services that will run the gamut from A to Z,” said Chairman Reed Hundt in a written statement. “Today’s winning bidders could be bringing new and different services to market before the end of the year. That speed to the market is one of the many important benefits of auctions.”

During this bidding cycle, which began last August and ended after 276 rounds, l,479 licenses were won by 125 successful players. One-third of the entrants, according to Wireless Telecommunications Bureau deputy chief Jerry Vaughan, had never entered a wireless auction; 70 very small businesses gained markets along with 23 small businesses and 32 other entities that did not meet the special small-business strictures.

Fifty licenses were won by women, 70 by minorities and 167 by rural concerns.

Even though net revenues were much lower than those that were garnered by the A-, B-and C-block auctions, Vaughan characterized the D, E and F rounds as successful because “we allowed the marketplace to decide. There also was a difference in bandwidth-10 megahertz licenses compared with 30 megahertz licenses,” he continued. “Some were playing to get additional spectrum and some to get new.”

The big winners in this auction were Alltel Mobile Communications Inc. (73 licenses), AT&T Wireless PCS Inc. (222), BellSouth Wireless Inc. (39), NextWave Power Partners (32), Northcoast Operating Co. Inc. (49) OPCSE-Galloway Consortium (109), SprintCom Inc. (160), U S West Communications Inc. (53) and Western PCS BTA 1 Corp. (100).

The three licenses in the top six basic trading areas were won by the following:

New York City-OPCSE-Galloway (D block, $50.7 million), AT&T (E block, $58.8 million) and Northcoast (F block, $75.2 million);

Los Angeles-AT&T (D block-$37.5 million), Rivgam Communicators L.L.C. (E block, $31.9 million) and Aer Force Communications (F block, $4.4 million);

Chicago-SprintCom (D block, $49.9 million and E block, $62.7 million) and NextWave (F block, $23 million);

San Francisco-AT&T (D block, $13.6 million), Western PCS (E block, $10.7 million) and NextWave (F block, $4.3 million);

Philadelphia-Comcast PCS Communications (D block, $12.1 million), Rivgam (E block, $12.7 million) and NextWave (F block, $22 million); and

Detroit-NextWave (D block, $3.8 million) and OPCSE-Galloway (E block, $3.8 million and F block, $6.3 million).

Commenting on his company’s $406.8 million purchase, Steve Hooper, chief executive officer of AT&T Wireless Services, said, “We are pleased to acquire licenses as they give us important flexibility in meeting our network needs of the future and serve as another milestone of our continued leadership of the wireless industry.” In 1985, AT&T spent $1.7 billion to buy 21 PCS licenses in the A block and also acquired an additional two licenses from Southwestern Bell Corp. that year.

SprintCom was able to fill in its holes left from the A- and B-block auction by spending $544.2 million. “Providing one wireless service, using one technology, marketed under one brand on a national scale is unprecedented,” commented William Esrey, Sprint’s chairman and chief executive officer.

According to Taylor Simmons of Washington, D.C.-based Simmons Associates, “Sprint was a good auction citizen; it didn’t have to win both (D and E) blocks everywhere. AT&T was adamant about taking both blocks wherever it could.”

Allen Salmasi, chairman and chief executive officer of NextWave, said that his company has now “achieved our goal of establishing a national wireless footprint. As a result, the company will be able to provide wireless services in all top 10 U.S. markets and 23 of the top 25 markets.” NextWave also was to have made its initial down payment on its C-block licenses last week, thus clearing another milestone.

According to Omnipoint Corp., which bid for licenses during this auction as part of OPCSE-Galloway, it now owns licenses in five of the top 10 markets and nine of the top 20. The carrier, which recently began providing service in the New York City area, will be able to cover the Northeast region from Maine to Virginia. “We were successful at aggregating spectrum in certain key cities, giving us 20 megahertz to 40 megahertz over most of our pops, particularly in our most densely populated markets,” said President and Chairman Douglas Smith.

Winners must make their 5 percent down payments by Jan. 23, and Form 600s are due Jan. 31, at which time the 30-day petition cycle will begin. “We promise prompt processing of the licenses in these blocks,” commented bureau chief Michele Farquhar. “We have streamlined our licensing process and expect to grant licenses within 90 days. We will not let the petition to deny process hamper our efforts to get these licenses into the hands of financially viable service providers and would discourage parties from filing frivolous petitions designed to postpone licensing.”

There is another auction going on, one that is offering 14 unserved cellular licenses in Arizona, Nebraska, Colorado, Montana, New Mexico, Oregon, Wyoming, Hawaii, Maryland and California. So far, understandably, the revenues raised for these licenses are lagging far below those for the D-, E- and F-block. At the end of Round 1 last Monday, $26,612 was raised; as of Round 14 last Thursday, that number had been raised to $610,621.

Northeast Colorado Cellular Inc. was leading the pack in the bidding, committing $240,000 by the end of Round 14; it held the high bids on Nebraska 8 and Colorado 5 during that round. Following behind was Metacomm Cellular Partnership, with $211,110; it held high bids on Montana 8 and Wyoming 3. Western Wireless Corp. has bid $68,000 thus far and is pursuing Nebraska 2, Hawaii 3 and Nevada 4. Oregon RSA #3 L.P. weighed in with $37,000, with the high bid on Oregon 3.

Other unserved cellular auction players in the money so far include Triad Cellular L.P. ($30,000 and holding New Mexico 2 at the end of Round 14); Cumberland Cellular Partnership ($11,000 and a high bid on a Maryland license); Constance L. Pollard/ETA Trust Partnership, with $7,100 for California 6; Christel Anderson/CHI Trust Partnership, with $5,301 for New Mexico 1; and Coconino Arizona RSA L.P., with $1,000 for Arizona 2.

There will be no bidding today in observance both of the Martin Luther King Jr. federal holiday and of President Clinton’s second inauguration. Bidding will resume Jan. 21.

The Wireless Telecommunications Bureau and the Office of Communications Business Opportunities will host a joint workshop Feb. 19 at the Washington Marriott for small businesses interested in participating in other spectrum auctions scheduled for 1997.

ABOUT AUTHOR

Editorial Reports

White Papers

Webinars

Featured Content