Bidding War for High-Tech Rights Resumes : Telecom: FCC moves to enliven second round of license auction for new generation of communications services.
The world’s biggest auction of government property resumes today as officials from 27 companies closet themselves in war rooms around the country to continue bidding for licenses to a new generation of mobile telephone technology.
After a sluggish start and a two-week hiatus, bidding for the airwave rights for so-called personal communications services is expected to quickly escalate from the current $1.7 billion, thanks to new procedures that double the number of rounds and force contestants to escalate their wagers.
“So far it’s been a lot of left jabs, but no one has thrown a right cross,” said Reed Hundt, chairman of the Federal Communications Commission, the agency that is conducting the auction. Nevertheless, Hundt said, the FCC is “extremely pleased” with the bidding.
Government officials and bidding representatives agree that the auction has gone smoothly from a technical standpoint, despite its reliance on a complex electronic bidding system that utilizes nearly 100 phone lines and a massive, fault-tolerant computer system.
The auction site, a vacant U.S. Postal Service room near the capital, stands nearly empty most of the day because participants have recalled their on-site representatives.
“We were concerned about the process in the beginning and had a couple of people on site in case anything went wrong, but it’s gone pretty smoothly,” said Evan Richards, vice president of PCS planning at Ameritech Corp. He said the lack of glitches means Ameritech executives in the Chicago war room can concentrate more on bidding strategy than worrying about whether bids were received in a timely fashion by the FCC.
But the complex auction rules, which permit bidders to compete for several licenses at the same time, initially produced a slower-moving contest than some had anticipated, and the FCC has moved to speed things up.
Initially, contestants were required to bid on only one-third of the PCS licenses for which they had registered to compete. Since mid-December, bidders have been forced to bid on at least two-thirds of the markets for which they are eligible. When the FCC implements the third and final phase sometime in the next few weeks, contestants will have to bid on nearly all the licenses for which they’re eligible. (Eligibility was determined in advance by upfront cash deposits for each of the available markets.)
The auction of 99 licenses for the mobile phone technology known as broad-band personal communications services is by far the largest in a series of controversial license sales that began last summer. Broad-band PCS technology promises go-anywhere communications that will enable users to fax, phone and transmit computer data with devices as small as a wristwatch.
John McMillan, an auction consultant to the FCC and an economics professor at UC San Diego, said the “auction rules are doing their job.
“The pace of the bidding is being driven by the activity rules the FCC designed,” McMillan said. “Most of the bidders are bidding not much above (minimum) . . . increments and on as few properties as the rules require. That being the case, I don’t think anything much can be inferred from the current bid levels, other than that there is a long way to go yet.”
So far, the license for New York City has drawn the highest bid, a $221-million offer from Wireless Co., the huge bidding consortium of long-distance carrier Sprint Corp. and three of the nation’s largest cable TV operators. That’s more than double the $95 million offered for one of San Francisco’s two licenses by ALAACR Communications, a company headed by one-time cellular telephone magnate Craig McCaw. Pacific Telesis offered nearly $88 million for the other San Francisco PCS license.
The huge Southern California market, which includes Los Angeles, San Diego and even parts of Nevada, has so far drawn bids of only $57.4 million from Pacific Telesis.
