WASHINGTON-The first week of the D-, E- and F-block broadband personal communications services auctions moved along without much fanfare, either at the beginning of Round 1 or with the end of Round 4.
Spectrum auctions have turned out to be much like the recent political conventions-not much news. The consumer press is ignoring this round of PCS sales; instead, it is concentrating on heady financial issues, including the issuance of junk bonds, impacting C-block winners. The daily trade press may print as little as a paragraph, just to keep current. What needs to be remembered, however, is that it’s still early in the D-, E- and F-block game.
“There was a big hoopla when the auctions were first launched. Does anyone [other than bidders] know when the last auction started? What was it for?” said Jay Kitchen, president of the Personal Communications Industry Association. “It’s gotten to the point where it’s pretty passe. Auctions come and go now. It’s become routine. Everyone is a little shocked at some of the prices people are paying, but on the whole, people think it’s a good way to get licenses out there.”
Aside from a few post-round printout problems, the Federal Communications Commission has fine-tuned the bidding process to the point where Auction 11 appears to be on autopilot, with players coping well with one round per day for each of the three blocks; a public notice was expected late last week or today concerning a bump up to two rounds per day. At the end of Round 4, net revenues stood at $37.4 million, with 258 new bids and 190 new high bids; all 153 qualified participants still were active.
Current bidders break down into the following categories: 105 small businesses, 16 minority-owned businesses, eight women-owned businesses and five rural telcos.
So far, most bidders are holding tight to their money, waiting for someone else to make a move. Major markets that went for small fortunes in early PCS markets have garnered only measly $1 high bids, even after four rounds. F-block bidders overall are spending more money on the entrepreneur’s block licenses, perhaps attributable to generous-albeit tiered-bidding discounts. One auction watcher believes that because of the size of this auction-1,479 10-megahertz licenses in three blocks-some markets will remain in FCC custody after the last bid is registered. The planned applications for these licenses have changed somewhat as well, with many bidders looking past the me-too-cellular services to wireless local loop applications. Others are in it only to aggregate or to protect territories.
The hottest market so far in all three auctions is New York City, with newcomer Norwich Communications Inc. bidding $45 million each for the D and E blocks, and Aer Force Communications B L.P. right behind it with $41.9 million in the F block. Chicago ranked next, with Rivgam Communicators L.L.C. bidding $6.6 million for the D block, SprintCom Inc. forwarding $5.8 million for the E block and Telecorp Holding Corp. Inc. committing $2.5 million for the entrepreneur’s block.
The three Philadelphia licenses at the end of the fourth round were earmarked by Comcast PCS Communications Inc. (D block, $1.3 million), AT&T Wireless PCS Inc. (E block, $1.1 million) and Purcell Wireless Inc. (F block, $1.9 million). Los Angeles-exhibiting an extremely strange bidding pattern-followed with AT&T Wireless again (D block, $145,498), U S West Communications Inc. (E block, $1) and NextWave Power Partners Inc. (F block, $1 million). Another top A-, B- and C-block market-San Francisco-while still in the top five high-bid markets, is being low-balled by its three bidders: West Coast PCS L.L.C. (D block, $415), AT&T Wireless (E block, $64,210) and NextWave Power Partners (F block, $963,750).
