WASHINGTON-No one was more surprised at the eventual outcome of the most recent Federal Communications Commission spectrum auction as was Thomas Jones, president of WNP Communications Inc., who walked away with the right to build in 30 of the top 50 markets.
Auction 17, which determined winners for local multipoint distribution service licenses, ended March 25 after 128 rounds and garnered $578,663,029 for the U.S. Treasury. Of the original 139 bidders, 104 survived, with WNP Communications Inc., Nextband Communications, WinStar LMDS L.L.C., Baker Creek Communications Inc., Cortelyou Communications Corp., BTA Associates, Alta Wireless Inc., Eclipse Communications Corp., Arnet Inc. and CoServ L.L.C. spending the most money on spectrum, said Taylor Simmons of Taylor Simmons Associates, Washington, D.C.
According to some figures, bidders paid between 28 cents and $2.25 per pop for 384 A-block licenses; 109 A blocks still are owned by the FCC and will be reauctioned; a public notice with that auction date is planned for release. Down payments are due by 6 p.m. April 9; down payments equal 20 percent of a bidder’s net winning bids plus any withdrawal payments. Final payments for the licenses are due 10 days after the public notice granting conditional licenses is issued. An FCC forum to discuss the LMDS auction has been scheduled for April 29 at 2 p.m. at commission headquarters.
WNP may have gotten the best bang for the buck.
“WNP spent 32 percent of the (total) money to get 37 percent of the (total) spectrum, while Nextband spent 23 percent of the money to get 15 percent of the spectrum,” explained Simmons. WinStar spent 7 percent of the total dollars put up in the auction for 6 percent of the spectrum.
Because licensees still are under the commission’s anticollusion rules until their Form 600s are submitted, no one could comment in detail on what types of services they plan to offer to business and residential subscribers, what markets would be rolled out first and who key financial supporters and equipment suppliers will be. WNP’s Jones, who spent $186.8 million on 40 licenses, went into the auction not expecting to put together a nationwide footprint nor winning spots in 11 of the top 12 markets; the company will cover two-thirds of the pops in the top 75 markets.
“Our first customers will be business users, with some residential users being included when prices go down,” Jones said. While not detailing whether voice, data or video will be offered individually or as part of a mix, there is company expertise in all three areas, and WNP’s business plan is being revisited now that the auction is over.
“The thing LMDS offers that nothing else does is speed. The fact that it’s wireless also is an issue,” he told RCR. “It can’t compete with fiber optics in every way, but there is a place for it.” In a written statement, Jones added that the 1,150 megahertz of capacity in the A-band licenses “allows speeds that no other wireless license can approach, and of our winnings, 98 percent is in this large band.”
Washington, D.C., attorney Carri Bennet, who worked with 15 rural telcos during the auction (all successful), said, “Bargains were to be had as the 15 companies were able to acquire more spectrum than they had originally anticipated. The FCC’s elimination of the installment-payment program kept the prices for spectrum reasonable. Additionally, the FCC’s use of smaller geographic license areas and significant bidding credits helped smaller companies acquire spectrum.” Bennet’s clients will roll out service to both urban and rural customers.
Licensees now will be considering vendors for voice, data and video services, and the process could be overwhelming for some. According to a Forrester Research Inc. report released in February, “many LMDS auction winners will alter their plans when presented with such a multitude of unanticipated opportunities. Internet service providers, competitive local exchange carriers, TV broadcasters, cel.l.c.os, utilities and others will court the license holders to construct network services specific to their needs that the LECs and cable operators won’t provide. When all is said and done, LMDS will end up a patchwork of unrelated networks across the country, without one dominating carrier or application deployed, As a result, LEC and cable monopoly positions will be dented but not toppled.”
The LMDS Multimedia Showcase, sponsored by Bosch Telecom Inc. and Frazier/King Media, is scheduled to run from early April through September in Irving, Texas, and its aim is to show what can be done with LMDS spectrum. Other companies participating in the showcase/model system include Newbridge Networks, Hewlett-Packard Co., Stonehouse Technologies, SBA Communications Corp., TDI Inc., Virtual Information Systems, General Instruments, WorldCom Inc. and Learnstar Inc.
“With joint efforts of these nine industry leaders, the LMDS showcase will demonstrate a network and operations infrastructure that can deliver the most advanced and cost-effective wireless telephony, data and video services to businesses and residents,” said Ed Cantwell, Bosch’s president and chief executive officer.
According to the developers, broadband services, CLEC applications, high-speed data and multichannel video offerings will be highlighted along with digital platforms for video conferencing, telemedicine and distance-learning. The use of LMDS in such situations as small office/home office, medical and school venues will be demonstrated.
