WASHINGTON-“This is the most exciting day of my life,” exclaimed Allen Salmasi, chairman and chief executive officer of NextWave Personal Communications Inc., which by all unofficial accounts was the winner of 56 30 megahertz C-block broadband personal communications services markets (Chart on p. 11).
Hedging its bets that the auction would be over, NextWave scheduled a press conference last Friday to reveal company strategy and future plans. The company, which plans to be the “carrier’s carrier,” placed high bids in five of the Top 10 and 25 of the Top 50 markets for a total of 93.79 million pops. Now it begins the task of ponying up $4.2 billion to pay for the licenses.
“Despite having acquired 25 of the top 50 markets, NextWave’s average price per pop is nearly the same as the average price paid by all participants [$40] for all 493 markets,” Salmasi added.
On Wednesday NextWave added another 30 investors to its roster of backers. Continuing to counter charges that NextWave’s foreign investors exceed the legal Federal Communications Commission limit, Salmasi said, “Contrary to press reports, the majority of our investments are from U.S. domestic investors, with the foreign investors having less than 25-percent ownership in our company. We are pleased that, consistent with FCC rules, we have been able to fund our small company with the resources it will need to succeed against the powerful A-and B-block companies.”
“We’re very happy about the ways things have turned out,” said DCR PCS Inc. spokesman Kevin Inda. “If the auction ends today [May 3], we will have won 43 BTAs and 33.5 million pops. That makes us the second-largest GSM [Global System for Mobile communications] operator in the United States, the sixth largest PCS operator and the tenth largest overall wireless operator.” DCR spent approximately $1.4 billion for its markets.
Inda added that his company met every objective it set for itself at the beginning of the auction last December, and that all of its markets serve Middle America contiguously. DCR PCS plans to have two markets on line by the end of the year, but declined to name them. The carrier also anticipates playing an active role in the D-, E- and F-block PCS auctions later this year.
“The real work is just beginning,” said Corey Linquist, director of strategic planning for GWI PCS Inc., “but that’s why we got into this business. We’re happy about where we’re at, but there are about 50,000 tasks to do at once now.” GWI, a Code Division Multiple Access proponent, garnered 14 markets for about $1 billion; the first could go commercial in 1997.
The other top bidders-BDPCS Inc. and Omnipoint PCS Entrepreneurs Inc.-were unavailable for comment.
At presstime, in the classic “two steps forward, one step back” scenario, a handful of C-block broadband personal communications services bidders are dragging out the bickering over a few markets, and no one is blinking. And the FCC will not gavel the auction closed until the numbers zero out, preferring instead to let the marketplace decide.
Eight rounds per day continues to be the drill. Rounds 175 and 176 held at two new bids, making participants hold their collective breath for an hour at a time.
Most bidders entered the arena five months ago hoping to win multiple markets-perhaps enough to parlay into a regional network-and many of them achieved that goal. On the other hand, as of Round 170, more than one-fourth of the remaining 85 active bidders were clinging to only a single market-either by design or by default. The highest-priced single market: the U.S. Virgin Islands, tentatively won by designated entity WindKeeper Communications Inc. The lowest-priced market: Dodge City, Kan., tentatively owned by BRK Wireless Co. Inc.
Because the auction has not ended, these bidders would not reveal their decision-making strategy. One can assume, however, that these single-market owners fall into one of two categories. They are operators who are protecting their local turf or they are entrepreneurs who wanted to become a multisystem operator but who now must scale down to a single piece of property. According to Taylor Simmons of Simmons Associates, several of these bidders are rural telcos that want to safeguard their service area and diversify their service offerings.
For the others who don’t have an established business on which to fall back, “We’ll see how they are at bundling or if they can partner with cable companies,” Simmons said.
