Was anyone paying attention to the debacle that was the U.S. C-block spectrum auction of 1996? Has anyone been paying attention to what has happened to the C-block “winners” since then? When RCR decided in this issue to look at the C-block winners and losers, the story sure ended up heavy on the latter.
You have to wonder when you watch what is going on in the United Kingdom this month, with its auction for five Universal Mobile Telecommunications System licenses, if any of these players took note of that.
Total bids are over the top and climbing, surpassing the $20 billion mark by RCR press time, with a handful of bidders crying “Too rich for me!” and dropping out. The incumbent U.K. wireless operators seem to be hanging in there, and presumably these heavyweights, unlike the NextWave’s and GWI’s of the United States, have the financial muscle to back their boastful bidding. But at what cost?
Analysts have noted that paying such prices will weaken the “winning” carriers by diverting money from investments and network buildout, hurting the country’s wireless service market in the long run and the ability for these carriers to compete in the worldwide market.
The financial net of the auction will obviously please the government, raising three times the anticipated amount of money by some estimates. Unfortunately, it is the user community that will suffer in the end.
Ironic, isn’t it?
The spectrum is to be used to provide next-generation services, which eventually promise to basically make your wireless phone your own personal remote control for your whole world. The winners will have the spectrum, but possibly not the networks to support these lofty goals. The losers will be left out of the race for next-generation wireless in the United Kingdom but will have resources left to compete for licenses elsewhere in the world-license races the “winners” may have to miss out on.
In this week’s PCS special report, we examine where the U.S. PCS market is and where it is headed.
Part of this includes a look at how small carriers are surviving the consolidation era and what has happened to some of the star-crossed C-blockers almost five years later.
James J. Healy, president of Cook Inlet VoiceStream PCS, sums it up well and maybe has the best advice for the remaining U.K. bidders: “It is a case of bidding with a mind of actually having to pay for it and then [still] having the resources to build out.”
