WASHINGTON-The Federal Communications Commission last week was dotting the “i’s” and crossing “t’s” on forms for qualified bidders and their upfront payments to participate in the Oct. 28 auction of 525 800 MHz specialized mobile radio channels.
The auction covers 175 economic areas in the United States.
As of Oct. 3, 55 applications were accepted for filing. An additional 41 were returned to potential bidders for reasons ranging from invalid attachments to invalid social security numbers and taxpayer identification numbers. Many applicants reportedly had problems transmitting their data to the commission in the correct format, a relatively easy-to-solve problem.
“Many of my clients were surprised to see the number of companies willing to put up significant money,” said attorney Elizabeth Sachs of Lukas McGowan Nace & Gutierrez.
If combined, the minimum bids for the aggregate markets total $12.6 million, but the FCC hopes the final tabulation will be much more. However, it could be less, if bidders refuse to accept the minimum bids for some encumbered markets, thus forcing a game of chicken with the commission to lower those bids; or there could be some markets that no one cares to take, and they will be retained by the FCC. Either scenario is likely.
Until the commission completes its work on the upfront payments, an accurate number of bidders cannot be determined. However, it is known that most, if not all, of the participants are incumbent private-radio operators.
“This is a no-nonsense auction, if you can judge by the bidder’s book, which is slim. And this auction is the guinea pig for new rules,” commented auction analyst Taylor Simmons. “People will be bidding on being able to keep what they already have, to keep other bidders honest and to make sure the big players pay like everyone else.”
Simmons agreed that high minimum bid increments could be a challenge to many players, even some of the bigger ones, and that the auction could end earlier than its projected four weeks if the commission doesn’t rethink some of the numbers.
This sale of pieces of the upper-200 SMR channels in the 800-MHz band incorporates the first FCC use of minimum bids and of a new addition to its auction software, the click box. In this auction, bidders will not be able to enter their own bids for a particular market. Instead, the FCC will post the price of the market for that round, and bidders must have their fingers on the trigger to see who can be first for the bid. Then the commission will ratchet up the price again for the next round, with bidders poised to respond. This is not the methodology preferred by those players who are used to following a bidding strategy or for those who are particularly aggressive, but the commission believe the click box will eliminate bidding errors (because there is no manual keying-in of numbers) and any bid-signaling by typing in trailers, a practice allegedly used by bidders in past auctions and now under investigation by both the FCC and the Justice Department. And without individual bidding, rounds should move quicker.
A mock electronic auction will be held Oct. 23 for those bidders who have qualified for the auction; when the software is ready to be downloaded, an announcement will be made via public notice. Orders for the software should have been received by the commission Oct. 15.
