If money is the root of all evil, PCS is either going to be a very evil service or PCS is going to prove that maxim wrong.
Money is certainly at the root of all PCS plans. The government’s auction of PCS licenses started the money ball rolling, collecting $20 billion for spectrum, which PCS winners were eager to pay.
Less-heeled PCS operators are making technology choices not by which standard they think will best fit with their planned service offerings, but by which equipment vendor can offer the best (or any) financing package.
Already, billions of dollars have been committed by vendors to build PCS infrastructure, with Lucent Technologies Inc. and Northern Telecom Inc. leading the way. Can there be much money left to pick from the vendor financing money tree? And as equipment manufacturers go to the high-yield debt market to finance their financing of PCS operators, PCS operators have one less financing option to explore.
There are hints Wall Street may already have had its fill of wireless opportunities this year. Investors rabid to put money into wireless offerings have had a number of chances to do so. About $2.2 billion of public debt has been sold in the stock market for PCS buildout, according to Kagan and Associates Inc. But five companies-including AT&T and Sprint-accounted for that money. The other three carriers may not be household words-InterCel, Western Wireless and APT-but each has attractive sister cellular companies.
PCS bidders have been adamant the auctions move as quickly as possible, explaining that they needed to build out networks as quickly as possible to be able to compete with established cellular carriers.
While that may still hold true, another reality is that those PCS carriers first to Wall Street may be the ones able to compete with established cellular operators.
But the irony is that the bulk of PCS carriers are established cellular operators. Before you spend too much time worrying about how D-, E- and F-block bidders will be able to get any financing, one should note that Sprint and AT&T are spending the most money in that auction.
PCS is becoming a classic case study in the haves and have nots. For the most part, those that already owned wireless licenses, picked up more wireless licenses. Those that already had deep pockets were able to get deep financing.
And those that dreamed if they only got to go to the dance, they would dance, will leave disappointed. Unless, of course, they agree to dance with a wealthy partner.
