WASHINGTON-If statistics and probability are indicators, the auction of 525 800 MHz specialized mobile radio services licenses that began last Tuesday could be over sometime this week, with Nextel Communications Inc. the clear winner. At press time, net revenues for the licenses following round 12 had reached $19.6 million, with Nextel responsible for $13.1 million of that number.
Round 12 net revenues dropped some from those in round 11-$20.2 million-because a seventh bidder pulled out of the sale and other bidders reduced their pledges.
The A block of licenses constituted 12.5 percent of the total net revenues thus far, the B block garnered 29.6 percent and the C block was responsible for 58 percent.
According to information supplied by Simmons Associates in Washington, D.C., less than one quarter of the spectrum being bid has been contested by more than one bidder, and about half of the money available for bidding still is in play.
As of round 12, new bids for the SMR frequencies had dropped from 755 in round 1 to 153; new high bids dropped from 525 to 126.
Also as of round 12, prices for the three licenses in the top five economic areas looked like this: New York City (A block-$179,000; B block-$358,786; C block-$1.1 million), Los Angeles ($119,000; $358,000; $715,000), Chicago ($46,590; $139,770; $349,000), San Francisco ($60,000; $120,498, $240,995) and Washington, D.C. ($37,274, $111,820, $280,000).
The top five bidders as of that round by total dollars were Nextel License Acquisition Co. ($13.1 million), Southern Co. ($1.07 million), Mobex Communications Inc. ($1.04 million), North Sight Communications Inc. ($570,050), and Hawaiian SMR Co. ($442,000).
At the start of round 12, six bidders had dropped out of the original 62-player pool: Adams Telecom Inc., Airlinx G.P., Atlantic Communications Inc., David P. Diffley, Qualicom Systems Inc. and ZipWave L.L.C. ZipWave’s demise was unexpected, as it had submitted the second-largest upfront payment-$800,000-prior to the auction’s start.
Unlike previous auctions, due to the nature of the SMR business, bidders in this sale apparently are not moving their money over to other markets if they have failed to secure high bids in their original choices. They just leave.
There were factions that were trying to stop the 800-MHz auction at the court, but they apparently were thwarted at the 11th hour. On Oct. 28, the day before the auction began, the Federal Communications Commission continued to trade paperwork with the U.S. Court of Appeals for the District of Columbia Circuit and with Chadmoore Communications Inc. regarding the SMR’s emergency petition to delay the start of bidding.
Calling Chadmoore’s petition “frivolous,” the FCC told the court that the operator had presented no showing that the commission’s delay in solving Chadmoore’s two-year-old finder’s preference filing against Nextel would affect the auction or Chadmoore’s standing as an incumbent, and that Chadmoore was not even participating in the bidding. The agency added that there was no “emergency,” and that Chadmoore waited until the last minute to file with the court, even though it knew months ago that the start date for the auction was Oct. 28.
The court dismissed Chadmoore’s petition on procedural grounds. However, the petition did force the FCC to back up in writing that it will back Chadmoore’s standing as an incumbent.
