WASHINGTON-After 235 rounds of bidding, Nextel Communications Inc. ended up paying $88.8 million for 475 licenses covering 97 percent of the country in the 800 MHz specialized mobile radio auction.
North Sight Communications Inc. came in a second, monetarily, pledging $1.5 million for the A-block Puerto Rico/Virgin Islands SMR license.
Nevada Wireless, which has a petition for reconsideration pending regarding this auction, won 16 licenses at a price of $1.067 million. It is not known at this time if the company will ask for any waiver of payment until the issue is resolved.
The Federal Communications Commission was left with three licenses that either will be reauctioned or offered to the next highest bidder-the B-block of Guam & Northern Marianas, the Honolulu A block and the Reno, Nev.-Calif., A block. High bids for those markets were withdrawn by Communications Pacific Inc., Mountain SMR Group and Nextel, respectively. Those companies will be liable for penalties.
Net revenues reached $96.2 million, and down payments are due at Pittsburgh’s Mellon Bank by Dec. 23. At that same time, FCC Form 600s are due at the commission, and the 30-day period to submit petitions to deny will begin. Licenses will be awarded in January to any bidder with no legal action pending; others will be awarded when any petitions to deny are resolved.
Once again, the commission reiterated, “If a winning bidder fails to submit the remaining balance by the payment deadline, the bidder will be deemed to have defaulted, its application will be dismissed, and it will be subject to the default payment specified.”
Ending Dec. 8 before the FCC could jump the number of rounds to 24 a day, the 800-MHz SMR auction, which began Oct. 29, ended as most industry players-and the FCC-thought it would, with Nextel paying whatever it took for slivers of encumbered spectrum to fill out its nationwide footprint. According to a company release, “Nextel won the rights to almost 10 megahertz of spectrum in areas covering all 50 states.”
Dan Akerson, Nextel’s chairman and chief executive officer, added, “As a result of the auction, Nextel has enhanced its overall spectrum position in three ways. First, it has gained flexibility in licensing and reusing its existing owned frequencies, which enables Nextel to more efficiently design, deploy and operate its network.
“Second,” Akerson continued, “Nextel will have the ability to re-tune all other licenses currently operating in the license blocks won by Nextel in order to achieve a contiguous spectrum position. Contiguous spectrum also increases operating efficiencies and provides Nextel with the flexibility to potentially access digital transmission technologies that require contiguous spectrum.”
Akerson concluded, “Third, Nextel gained an estimated 30,000 additional usable frequencies throughout the United States as a result of the auction. This results directly in additional capacity to serve Nextel’s growing subscriber base.”
Also acknowledging that the auction’s outcome “was not unforeseen,” Alan Shark, president and chief executive officer of the American Mobile Telecommunications Association added, “With this outcome, it becomes even more important that the FCC carry through on its pledge to create real opportunities for the rest of the business wireless industry-and those who would like to become a part of the industry-in future wireless spectrum auctions. There must be a continued place for small businesses to grow as they serve the needs of their millions of customers across the country.”
Wireless Telecommunications Bureau Chief Dan Phythyon asserted that the commission has been trying to make as many opportunities available to small businesses as possible, including releasing auction dates earlier enough for businesses to formulate plans and accumulate capital. “There were opportunities in this auction for non-Nextel bidders; you have to put this in a broader context,” he said. “This is an industry in a state of evolution. Nextel and the mama bear and baby bear operators both have to be accommodated. Operators can partition and disaggregate spectrum, and we want to provide people with the maximum flexibility to acquire spectrum.”
Fourteen players survived the auction, which started out with 63. Rounding out the Top 10 (according to dollars spent) include: Southern Co. (seven licenses, $1.5 million), High Tech Communications (one license, $1.1 million), Porta-Phone Paging (three licenses, $1.03 million), Communications Pacific (one license, $478,000), Mountain SMR Group (one license, $308,100), Hawaiian SMR Co. (one license, $279,000) and Jamestown Communications (two licenses, $102,000).
Porta-Phone wrangled with Nextel over several A-block licenses in Georgia and Florida, but in the end won three A blocks when Nextel “decided to stop resisting entirely,” commented Taylor Simmons, a Washington, D.C.-based analyst.
The rest of the winners were Cellutech (eight licenses, $43,485), Silver Palm Communications (four licenses, $74,100), Mid-States (three licenses, $56,250) and Supreme Radio (one license, $42,900).
Looking back on the two aspects of auction procedure instituted during this frequency sale-click-box technology and minimum bids-Phythyon told RCR, “On both fronts, we learned certain things that will be used in subsequent auctions. There were some glitches with the click box that were fixed while the auction was ongoing, and there could be some changes with minimum bids.”
The bureau has scheduled a Jan. 22 open forum with bidders to discuss the pros and cons of this past auction, but it is a sure bet that minimum bids will continue as a staple. “We were a little anxious prior to the start of the auction that we had set minimum bids to the correct level, but our anxieties disappeared in Round One, when bids were made on every license,” Phythyon said. “This first application of minimum bids was a success. In the future, we will evaluate the levels for the first minimum bids, but the world should expect that they will be standard, unless there is good reason for us not to use it.”
Auction Division Chief Kathleen O’Brian-Ham said some bidders relayed concerns regarding minimum bids, in that they wanted to reach top values sooner. The division is considering allowing bidders in future auctions to bid in multiples of bid increments during the course of a round to reach final high bids in less time.
