Nextel Spurns Jan. PCS Spectrum Auction
Nextel decided not to participate in PCS Auction 58 starting Jan. 26, the company confirmed Fri. Nextel is among the more spectrum-constrained of the 5 national carriers, with about 28 MHz of spectrum nationally, provided it accepts the FCC 800 MHz rebanding plan. The company was considered likely to bid for licenses in the first major PCS auction in several years.
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The other 4 national carriers -- including Cingular and Verizon Wireless, both of which are relatively spectrum-rich -- are participating through partnerships. T-Mobile is expected to pursue licenses to fill in coverage gaps. Another early read is that participation by small, rural carriers may be unusually strong. One question is how much spectrum is enough once carriers move to offer more broadly a spate of 3G services.
The auction attracted 49 bidders, large and small, based on the first auction documents released by the FCC, which is being viewed as a relatively strong turnout. The FCC said 22 applications were accepted, but 27 were incomplete and needed to address various problems.
The early results show “there is still a need among many of the providers…for spectrum,” said Precursor Group analyst Rudy Baca: “Carriers are amassing the spectrum they need for the long term.” But Baca said he expects to see spectrum prices less than $1.50 per MHz POP. “The spectrum cartel is broken,” he said. Baca also cautioned that some of the applicants may not necessarily want their bids to win. “Even if you don’t necessarily want it, you want to bid the price up because you don’t want your competitors to get it too cheap.”
“There are still some very attractive markets that are being made available in this auction,” said Legg Mason analyst Rebecca Arbogast: “Most of the carriers have stocked up on quite a bit of spectrum lately. I would expect T-Mobile is going to be looking to expand its spectrum position, and I would expect the others are largely doing it in a very targeted way.”
Sources said Nextel had been signaling privately for several weeks it might stay home as it deals with unfinished business. The carrier last week announced a merger with Sprint. The company also will have to spend more than $4 billion on the 1.9 GHz spectrum it will get through the rebanding plan. Both developments dictated caution on the auction, one source said. All the other major carriers are using partnerships to bid. Verizon is using Cellco, and Cingular, Edge Mobile. Sprint is participating through Wirefree Partners III and T-Mobile through Cook Inlet.
The FCC is auctioning off licenses returned to the FCC by NextWave and other licensees. The Commission will sell 234 10-MHz licenses in 117 markets in its first significant PCS auction in several years.
“There were quite a few bidders participating,” said a regulatory attorney. “Forty-nine is quite a good number and it was a combination of both [designated entities] and larger companies.” The source said FCC likely views the number as encouraging: “This auction was put together in a pretty short period of time… It shows there is still a community of smaller wireless licenses and new entrants” interested in spectrum. - Howard Buskirk