Gabelli Emerging as Likely Winner of AWS Licenses
A company owned by Mario Gabelli appears poised to win 3 licenses in the advanced wireless services (AWS) auction, which grinds along in its 3rd week. In July, Comr. Adelstein said the N.Y. financier should have been barred from this and future auctions (CD July 12 p1). Through round 44 late Thurs., total bids were $13.14 billion. No bids have been made on 12% of the licenses.
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Gabelli-backed Lynch AWS Corp. appears to have three 10 MHz economic area licenses well in hand. Lynch has held a high bid of $332,000 for a local license in Topeka, Kan. since round 31. The company made 2 other high bids in round 3, $239,000 for Davenport-Moline in Iowa and Ill. and $81,000 for northern Mich. Three other companies in which Gabelli has a stake finished out of the running for licenses.
Sources predicted Thurs. the auction could run another 2-4 weeks, though some outside projections have it extending into Oct. The major wildcard is the huge number of licenses at stake -- 1,122. The Broadband PCS C-block auction in 1995-1996 took 184 rounds over 83 bidding days to complete, and that was for only 493 licenses. But most auctions since have been considerably quicker. Broadband PCS in early 2005 took 91 rounds and 15 bidding days, to sell 217 licenses. Broadband PCS C&F blocks in 2000-2001 lasted 101 rounds and 24 days, to sell 422 licenses. The AWS auction was only in its 12th bidding day Thurs.
“There have been suggestions it could extend into October, which sounds long to me,” said a regulatory attorney who follows auctions. “I would be surprised if it really went that far… This one could have a longer tail because of the number of licenses.” The lawyer said the action is following the classic pattern for spectrum auctions: “The bidding settles a bit for the big licenses and then starts toward the smaller licenses and the next smallest and keeps going until you're down to the smallest licenses in the smallest markets… But the FCC doesn’t stop the auction until it’s all done. That could be a few weeks.”
Pali Research said the auction appears to be slowing. “The average number of new bids per round for the last 10 rounds has declined from the average of the previous ten rounds,” the firm said after round 40. “Rounds 31 through 40 averaged 298 new bids per round while rounds 21 through 30 averaged 330. This might be viewed as another sign of the auction coming to a close.”
The FCC on Mon. required that participants bid 95% of their bidding credits, up from 80% in earlier rounds, to speed up the auction. The Commission has yet to significantly increase the number of rounds per day, which would also help bring the auction to a close.
In recent rounds, most of the big licenses have shown no movement. SpectrumCo Thurs. outbid Cricket, offering $228 million for a 20 MHz license serving Chicago-Gary-Kenosha. A review of recent auction activity shows that a few of the bigger licenses continue to see assertive bidding. For example, a 10 MHz license for N.Y. and Long Island bounced between Cricket and MetroPCS for 4 rounds, ending in round 41 when MetroPCS bid $363.9 million. Similarly, a 10 MHz license for Dallas-Fort Worth changed hands 3 times rounds 36-39, with Cingular, T-Mobile, Cricket and MetroPCS all contending. MetroPCS lobbed the current high bid of $49.8 million in round 39.
Wireless DBS partners DirecTV and EchoStar, meanwhile, have been mum on their wireless plans since bowing out of the auction in round 15 (CD Aug 16 p1). Analysts said an alternative spectrum play with a mobile satellite services (MSS) operator or a wireless broadband company could be in the works if the DBS operators press ahead with wireless broadband plans. But DirecTV and EchoStar won’t discuss AWS, or disclose anything related to AWS, until the auction is complete, a DirecTV spokesman said, citing FCC rules.
Mobile satellite services firms Mobile Satellite Ventures and Inmarsat are on DirecTV and EchoStar’s short list of potential partners in a wireless play, according to analysts following the firms. Each of the MSS operators holds around 30 MHz of L-band spectrum nationwide -- though that spectrum is interleaved and needs rebanding for advanced services. Officials from both MSS firms, longtime competitors, said in 2nd quarter earnings calls that a strategic spectrum sharing agreement is in the works (CD Aug 7 p2). MSV and Inmarsat representatives couldn’t be reached for comment Thurs. - Howard Buskirk, Adrianne Kroepsch