FCC nets $11 bln in ongoing auction as firms drop out
By Jeremy Pelofsky
WASHINGTON, Dec 21 (Reuters) - The U.S. government has received bids totaling $11.1 billion in its auction of valuable wireless licenses as the sale comes to a temporary stop for the holidays and more companies drop out.
In the most lucrative auction of airwaves ever conducted by the Federal Communications Commission (FCC), 58 companies are vying for critical spectrum that will allow them to deploy more services and expand coverage for mobile phones, pagers and other devices.
Verizon Wireless has led the bidding all week and had offered $5.5 billion, half the total amount bid, after the 23rd round on Thursday followed by Alaska Native Wireless, which has ties to AT&T Wireless Group <AWE.N>, with $2 billion in bids.
"I think people are going to take the next two weeks and think about where they want to start bidding" again after the holidays, said Carr Krueger, a partner in Arthur Andersen's business consulting group.
The auction resumes on Jan. 5 after the holidays.
The last day of the auction for 2000 also marked several more companies dropping out of the bidding, including ALLTEL Communications<AT.N> and Alamosa PCS Holdings Inc.<APCS.O>, an affiliate of Sprint PCS<PCS.N>. Nextel Communications Inc. <NXTL.O> bowed out on Wednesday.
Wireless firms have been bidding for eight days for 422 licenses that will allow them to fill in gaps in their network coverage, improve service in congested markets and launch new products like wireless data and Internet services.
Verizon, the nation's biggest mobile phone company and a joint venture between Verizon Communications <VZ.N> and Vodafone Group Plc <VOD.L>, had the top bids for licenses in several sought-after markets including New York City, Chicago, Boston and Washington, D.C.
"Not surprisingly at this point, Verizon appears to be the most aggressive bidder for spectrum and at this point I think bidding is within a range that investors had been led to expect," said John Hayes, wireless telecommunications analyst for Independence Investment Associates, an investment affiliate of John Hancock Financial Services.
Verizon has the high bid for one license covering New York City, offering $968.6 million in the 22nd round and has the high bid for one license covering Boston offering $212 million also in the 22nd round.
Krueger noted that Verizon bid in two increments for licenses in the 22nd round without other bidders responding, suggesting the company was showing more of its strategy for ultimately winning the licenses it desires.
"Watching round 23, everybody let them sit out there with those licenses. Now they're not going to come back and take them, but nobody responded," he said.
"So Verizon is going to sit on $5.5 billion worth of liability for two weeks and do some serious thinking about that...this is all a poker game," Krueger added.
Licenses in those big markets have drawn the highest bids where consumer demand is the highest for wireless services and companies are trying to improve service by reducing the number of dropped calls and fill holes in coverage.
Analysts expect the auction to draw in $11 billion to $20 billion, which on Thursday topped the agency's previous auction record of $9.2 billion which dates back to the 1996 sale of PCS licenses.
Krueger projected the auction would net about $15 billion and could be over Jan. 12 but not likely any later than Jan. 20.
19:18 12-21-00
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