WASHINGTON-The long-awaited advanced wireless services auction, with its high-rolling bidders expected to account for much of the $10 billion to $15 billion in anticipated license sales, could occur largely in the dark.
The Federal Communications Commission, acknowledging the auction’s high stakes and concerned about the potential for anti-competitive bidding behavior, plans to veer from previous practice and keep secret key information about bidders and their bids until after the auction closes.
The only information about bids the FCC plans to publicly disclose during the auction, which is currently scheduled to begin June 29, is the gross amount of winning bids, the agency said. However, the FCC said after each auction round bidders will be able to find out whether they had winning bids.
“This proposed approach will strike a balance between withholding information that is likely to foster anticompetitive behavior and making essential information available to bidders so that the multiple round structure of the auction enables efficient outcomes to emerge,” the FCC noted.
The FCC said the amount of bidder information it discloses could depend on whether it conducts one auction or two. The FCC may hold just one simultaneous multiple-round auction, or it may hold one simultaneous multiple-round auction and one auction that would include package bidding.
Last week, Reuters America L.L.C., which has reported round-by-round auction results in the past, criticized the FCC for essentially calling for a news blackout of the AWS auction.
The June auction could go on for months, with bidders, industry, Wall Street and news media having to wait until bidding ends before learning about winners and their bids. If the upcoming AWS auction is anything like the last mobile phone auction of this magnitude, it could be a long wait before anyone-except the FCC-knows the complete results. The last major mobile phone auction began Dec. 5, 1994, and ended March 13, 1995, netting more than $7 billion on the sale of 99 licenses. More than 1,100 licenses in the 1710-1755 MHz and 2110-2155 MHz band will be on the auction block in June.
“Reuters respectfully suggests that this proposal sets up a false choice and does not strike an appropriate balance,” the news service said. “The marketplace has come to depend on the flow of public information that has characterized the FCC license auctions for the past decade. To stop the flow of information now would undermine rather than promote market efficiency. In addition, it would reduce public confidence. To do so on the basis of theoretical constructs of bidder behavior rather than on actual instances of collusion would seem to incur real costs in pursuit of phantom benefits. Before taking such a step, the commission should further evaluate its ability to detect, deter and punish anti-competitive bidding behavior without sacrificing transparency.”
The FCC argues the benefits of ongoing, real-time bidding information may be less significant in the AWS auction than they were in previous auctions.
“With respect to the argument that bidders will have more confidence in their bids if they know against whom they are bidding, we note that the evolving market for wireless services and a record of spectrum license sales gives bidders far more information about how they should value spectrum licenses than bidders in early spectrum auctions had,” the FCC’s public notice stated.
The FCC pointed out that despite limiting bidder information, some useful data will be available to bidders, such as the number of bids placed on a license in a given round and the amount of each winning bid.
“With respect to the benefit of knowing bidders’ identities to account for technical information,” the FCC added, “we expect that the flexible and sophisticated technologies employed by successful bidders for the [AWS] spectrum licenses will make any technical information conveyed through bidder identities of limited value relative to its value in certain other services or at an earlier state in the development of the wireless industry.”
The agency predicted confidence in its management of auctions would only be enhanced by incorporating safeguards against anti-competitive bidding activities.
The cell phone industry and others urged the FCC to keep the auction simple and straightforward, rejecting the idea of holding two auctions contemporaneously-one a simultaneous multiple-round auction and the other a package-bidding auction.
There appears to be more support for a single, simultaneous multiple-round auction.
“Auction 66 should not be treated as an experiment based on economic theory,” Alltel Corp. said.
Small and rural telecom firms said the FCC should ensure 3G auction procedures-such as those governing the level of minimum bids-encourage meaningful small business participation.
On a related front, the FCC is considering rule changes to prevent national mobile phone carriers and other large telecom companies from joining forces with individuals or smaller entities in order to qualify for 25 percent small business bidding discounts.
