WASHINGTON-The Federal Communications Commission suspended its re-auction of 422 personal communications services licenses on Thursday with bid amounts nearing $12 billion.
The re-auction will resume on Jan. 5 after taking a holiday break.
The FCC doubled the bidding rounds last week from two per day to four per day and bidding increased exponentially.
Twelve billion dollars is nearly triple what bankrupt NextWave Telecom Inc. bid in 1996 for many of the same licenses.
Last January, NextWave offered to pay its $4.7 billion debt in full-instead of the installment plan that had led to its bankruptcy-if the FCC gave up on its litigation. The FCC refused opting instead to cancel NextWave’s C- and F-block licenses and prepare to re-auction them. It has since split some of the 90 licenses into smaller chunks and is allowing large companies to participate in the re-auction which also includes previously unsold licenses.
“I’ve never been a big believer in the theory that the aggregate amount of the bids, high or low, will impact the court case one way or the other. Any company’s licenses would yield more today than what company paid in the first instance, if those licenses were canceled and re-auctioned by the FCC. The legal issue is whether the licenses were canceled lawfully. The FCC already has guaranteed that NextWave will get its licenses back if we win our appeal. We have a strong case and look forward to having the licenses returned,” said NextWave deputy general counsel Michael Wack.
NextWave is vigorously appealing the cancellation of its licenses both in the legal courts and in the court of public opinion. Last week it widely disseminated a amicus curiae-friend of the court-brief filed by members of the House and Senate Judiciary Committee who claim to be concerned the FCC used the regulatory exception in the Bankruptcy Code to take back the licenses. Oral argument in the NextWave appeal is scheduled for March 15 before the U.S. Court of Appeals for the District of Columbia Circuit.
Most of the bidding is following an anticipated pattern with the highest bids going for the New York market. No one bid in round 23 for New York so Cellco Partnership d/b/a Verizon Wireless holds two licenses after bidding nearly $1 billion for each license in rounds 20 and 22. The other license is held by Alaska Native Wireless L.L.C. which bid nearly $581.2 million during round 18. Alaska Native is backed by AT&T Wireless Services Inc.
Bidding has stopped for all of the licenses in three large markets-Cleveland, Houston and Seattle.
Cleveland bidding stopped after Alaska Native bid $72.7 million and Cellco Partnership bid $79.8 million during round 14 and VoiceStream PCS BTA I License Corp. bid $87.7 in round 16.
Houston bidding stopped after Cellco Partnership bid nearly $126.2 million during round 15, DCC PCS Inc. bid more than $121.2 million during round 16 and Salmon PCS L.L.C. bid more than $104.4 million during round 17. Salmon PCS has a bidding arrangement with Cingular Wireless Inc.
The same rounds saw the end of the bidding for Seattle. Cellco bid more than $132.8 million in round 15 and more than $149.5 million in round 17, and Cook Inlet/VS GSM V PCS L.L.C. bid more than $102.5 million in round 16. Cook Inlet has an agreement with VoiceStream Wireless Corp. Deutsche Telekom AG has agreed to acquire VoiceStream and gave VoiceStream additional money to participate in the re-auction.
Nextel Spectrum Acquisition Corp. has dropped out of the bidding for the licenses-the bulk of which it would own today if an August 1999 deal with the FCC had been accepted by the court handling the NextWave bankruptcy.
ING Barings L.L.C. said in its daily analysis Thursday of the C-block auction that the Nextel Communications Inc. subsidiary was “no longer participating.” Nextel spokesman Ben Banta confirmed the withdrawal.
“We went in, we had a budget and the bidding exceeded that. We are comfortable with the spectrum we have at 800 [MHz] and 900 [MHz] and will continue to pursue spectrum in that area,” said Banta.
On Aug. 10, 1999, Nextel said it had reached an agreement with the FCC and the Department of Justice that would allow it to purchase NextWave’s licenses for $2.2 billion, which at the time was more than double what a bankruptcy court had said NextWave owed the FCC for licenses.
Litigation between the FCC and NextWave continued after the bankruptcy court forbid the Nextel deal and the FCC canceled NextWave’s licenses.
