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Spectrum Auctions at the FCC: A Lesson for Utilities?

Fortnightly Magazine - October 15 1997

10 nationwide licenses, 1 license by pioneer's preference (Net bids = $617 million, $33 million for pioneer preference, conducted July 1994);

• Regional Narrowband PCS. 30 regional licenses (Net bids = $392.7 million, withdrawal payments = $2.1 million, October-November 1994);

• Broadband PCS. Blocks A&B, 99 licenses (Net bids = $7 billion, withdrawals = $.7 million, December 1994 - March 1995);

• Broadband PCS. Blocks D-F; 1479 licenses (Net bids = $2.5 billion, withdrawals = $5.9 million, August 1996 - January 1997);

• IVDS. Interactive video and data services; 594 licenses (Total bids = $213.9 million, July 1994);

• MDS. Multichannel/multipoint distribution services, known as "wireless cable"; 493 licenses (Net bids = $216.2, withdrawals = $157,000, November 1995 - March 1996);

• 900 MHz SMR. Specialized mobile radio service; 1020 licenses, blocks A-T, (Net bids = $204.2 million, withdrawals = $132,000, December 1995 - April 1996);

• DBS-110. Direct broadcast satellite; 110 degrees, 1 nationwide license (Net revenues = $682.5 million, January 1996);

• DBS-148. 1 partial nationwide license (Net revenues = $52.3, January 1996);

• DARS. Digital audio radio service; 2 nationwide licenses (Net bids = $173.2 million, April 1-2, 1997); and

• WCS. Wireless communication services; 128 licenses, blocks A-D (Net bids = $13.6 million, April 15-25 1997).

Scheduled and proposed:

• 800-MHz SMR. Specialized mobile radio service (bidding starts Oct. 28, 1997);

• LMDS. Local multipoint distribution service (starts Dec. 10, 1997);

• CCP/PCP. Common-carrier and private-carrier paging services (starts 1998);

• 220-MHz. Private or commercial voice or data communications, as per FCC Order 97-57, Feb. 19, 1997 (starts in 1998); and

• Other Services. General wireless communications services, narrowband PCS, location monitoring service/AVM and 37039 Ghz (proposed, no dates schedules).

(Source: Internet, auction home page, FCC Wireless Telecommunications Bureau: http://www.fcc.gov/wtb/auctions/summary/aucsch.html.)

Rethinking Policy?

Reporting to Congress. By Sept. 30, the FCC was to report to Congress on its experience to date in using competitive bidding to award telecommunications licenses. Mandated by law, the report was to include such information as:

• Revenues. A statement of revenues collected, plus projections;

• Methods. A description of bidding methods employed, comparing advantages and disadvantages;

• Cost-Benefit Analysis. An evaluation of whether competitive bidding has improved efficiency in granting radio spectrum licenses, encouraged new technologies or new entrants, served needs of rural spectrum users, or has boosted participation in the bidding process by certain target groups, including a) small business, b) rural telephone companies and c) businesses owned by women and minorities.

Feedback from Bidders. In July, to gather information for its report, the FCC had sought comments from bidders on the costs they incurred and how bidding methods have affected FCC policies on service-area size and geographic partitioning. It also sought comments on the effects of multiple-round auctions, which the FCC has employed in an effort to faciliatate "efficient aggregation" of licenses that are interdependent or complementary. (See, Competitive Bidding, WT Docket No. 97-150, FCC 97-232, July 2, 1997, 62 Fed.Reg. 36752, July 9, 1997.)

New Procedures. Earlier, in March, the FCC had sought comment on possible changes to its auction procedures, including whether to: 1) modify its installment payment rule, 2) boost the interest rate on installment sales,