A One-Man Ma Bell
As a letter carrier for the U.S. Postal Service for nine years, Vincent McBride is used to delivering messages from one person to another. Now the Santa Monica man is taking on a more high-tech communications delivery role.
McBride was one of only two individuals in the country to win wireless licenses during the Federal Communications Commission’s $10-billion entrepreneurs-only auction of airwaves for personal communications services, or PCS. With his license he will be able to provide wireless digital phone service in a 4,800-square-mile patch of rural North Dakota.
While many of the 89 winners overbid and are now facing bankruptcy, McBride is eager for the snow to melt in Williston, N.D., so he can begin installing transmission towers and turn his network on this fall. By this time next year, McBride hopes his start-up, igo Wireless Telecom, will have 500 customers.
“Wireless is the absolute future,” said McBride. “This is potentially a $100-billion-a-year industry. In the year 2020, you won’t have a cord on your phone. It’s something we’ll tell our grandkids about.”
McBride traces his interest in wireless telephony to a magazine article he read in 1981 about cellular pioneer Craig McCaw, who would later sell his company to AT&T; for $11.5 billion. Soon after, McBride joined several partnerships to bid for FCC licenses but ended up losing more than $5,000 when the groups dissolved after making unsuccessful bids, he said.
But the entrepreneurial McBride was just getting started, and so was the wireless industry.
In 1995, McBride learned that the FCC had set aside some licenses specifically for entrepreneurs. He logged on to the agency’s World Wide Web page and within two weeks was in possession of the 1 1/2-inch-thick handbook for the so-called C-block auction. McBride said he was hardly discouraged by the arrival of the 700-page volume.
“Actually, it got me excited to pursue it even further,” he said. “The harder it got, the more I figured people would drop out, and fewer bidders is better for me.”
To be eligible to bid, McBride had to fill out a six-page application and decide which of the country’s 493 markets he wanted to pursue. He went to the Santa Monica Library and investigated each of the 10 smallest--and cheapest--markets in an atlas before settling on Williston, N.D., the smallest of them all.
Williston appealed to McBride because the territory includes Theodore Roosevelt National Park and is home to about 1,000 oil-producing wells. He said he plans to sell PCS service to the 27,000 people living in the Williston territory, but he figures “the roaming fees alone could be tremendous.”
Bidders must pay an upfront deposit, the size of which varies depending on the territory. Those seeking to win the license to serve New York City had to shell out more than $8 million, while the deposit for those going after the Los Angeles market was $6.5 million. To bid on Williston, McBride had to pay $12,380.
McBride’s first bid--placed over the phone--was $2. But the bids soon went up in $2,500 increments. McBride hoped he could win the North Dakota territory at a price of $1 per potential customer, but he was willing to go up to about $16, the average price in the A- and B-block auctions.
Each morning by phone and each evening on the Internet, McBride checked in to make sure he was still the highest bidder. When the auction closed in May 1996, he won the license with a bid of $617,007, which--after a 25% discount for small bidders--worked out to $16.82 per potential customer (well below the C-block average of $39.88). Under revised FCC rules, McBride plans to return half of his spectrum--still enough for his system to operate--in exchange for eliminating half of his debt, he said.
Succeeding as an individual bidder against deep-pocketed rivals such as NextWave Telecom and General Wireless is no small feat, said Amando Madan, a consultant at BIA Consulting in Chantilly, Va., who helped McBride develop his business plan.
“If you were a single guy going after a couple of markets, it was easy to get squeezed out,” Madan said. “It’s an expensive dream, and the dreams are easily shatterable by better-financed competitors in the auction.”
To pay off the roughly $200,000 he still owes the government for his license, McBride is working with investment bankers to find partners interested in purchasing a minority stake in his firm. McBride said he will buy infrastructure equipment from AirNet Communications, and the Melbourne, Fla.-based firm will help McBride find investors as well, said Glenn Ehley, AirNet’s vice president of sales and marketing. McBride also plans to hire Quantum Communications Group of Eden Prairie, Minn., to manage his PCS system.
In the meantime, McBride has been dreaming up marketing plans from the dining room table in his two-bedroom Santa Monica apartment. He envisions three pricing plans and an ad campaign that, of course, will include direct mail.
Peter Nighswander, director of the cellular and PCS division of Strategis Group, a Washington, D.C.-based telecommunications consulting company, talked to McBride after he won his license and was impressed by the postman’s instincts. One of McBride’s biggest advantages is that the competitors in his territory--Sprint and Aerial Communications--will be much more focused on building networks in larger markets.
“I don’t see this as a rags-to-riches story necessarily,” Nighswander said. “But it can be a nice little cash cow for him.”
Aside from the 50 hours a week he works at the post office, McBride says his waking hours are consumed by his telecom venture. If all goes well, he said, he would like to buy other rural PCS licenses several years down the line.
“When I joined the auction, people said I was crazy to go up against AT&T; and MCI,” McBride said. “You know what I said? Who was WorldCom 10 years ago?”
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Times staff writer Karen Kaplan can be reached at Karen.Kaplan @latimes.com
