Most analysts expected the Federal Communications Commission’s auction of 422 personal communications services licenses to finish up late last week. Instead, there were 37 eligible bidders placing 27 new high bids on licenses during round 70 of the auction. The new high bids brought the total gross bids to just more than $17.5 billion.
While the number of bidders is down from the original 82 bidders, the surprising number of new bids placed showed the auction still has some life left.
“I am a little surprised the auction is still going on,” said Larry Swasey, senior vice president of communications research at Allied Business Intelligence. “But with the number of bidders still active, it could go on for some time.”
The FCC did what it could to speed the process last Wednesday, increasing the number of bids each day from four to six. But all that did was excite the participants, who increased the number of new high bids per round.
“We believe the end is near,” Michael Rollins, an analyst at Salomon Smith Barney, noted last Thursday. “New York remains the hot spot.”
With three licenses up for grabs in New York City and three companies aggressively bidding for those licenses, the escalation in price for a 10-megahertz slice of air in the Big Apple seemed a bit odd. But then again, it is New York that’s at stake.
The problem with splitting up the licenses evenly between the three bidders is that Verizon Wireless, bidding through Cellco Partnership, appears to be very interested in two of the licenses, constantly outbidding any attempt on the pair of open licenses up for grabs. Cingular Wireless, bidding through designated-entity Salmon PCS L.L.C., and AT&T Corp., bidding through DE Alaska Native Wireless, are left trying to outbid Verizon for one of the open licenses, or each other for the lone DE-only license.
Cingular looked to be the first to blink in the contest, after the company refused to pony-up any additional funds for the market late last week. Verizon placed high bids totaling almost $4.1 billion for the two open New York licenses, with AT&T placing a $1.4 billion bid on the DE-only license, leaving Cingular the odd-company out.
Instead, Cingular focused its bidding out West, placing new high gross bid of $545.6 million for a Los Angeles license that was not touched for weeks, $114.2 million for a Pittsburgh license and $128.8 million for a Salt Lake City license.
“It looks like they are focusing their attention to other markets outside of the Northeast,” Swasey said. “Even if they don’t get a license in New York, they could still do a spectrum swap after it’s all done if they need that market.”
Swasey said he thought the auction could still last a couple more weeks, with bidding possibly reaching the $20-billion mark.
After 70 rounds of bidding, Cellco Partnership maintained its large advantage in markets and money, with high bids totaling $8.7 billion in 114 markets. Verizon Wireless’ backers, Verizon Communications and Vodafone Group, have stated they would help cover the costs of any licenses won in the auction.
Salmon PCS and Alaska Native remained distant competitors, with Salmon maintaining total high bids of $3.1 billion on 75 markets, and Alaska Native with high bids totaling $2.9 billion covering 45 markets.
Other notable high bidders include VoiceStream Wireless with high bids of $479.4 billion on 17 markets, and $503.5 million on 22 markets through its partnership with DE Cook Inlet.
Only two bidders dropped out last week, including DE Ah! Wireless L.L.C. and Pioneer Telephone Cooperative Inc.
