FCC auctions airwave licenses
By Reuters March 26, 1998, 12:00 p.m. PT
WASHINGTON--The Federal Communications Commission closed bidding today in its biggest airwave auction to date, raising a net $578.7 million for the U.S. Treasury.
The Local Multipoint Distribution Service (LMDS) band uses microwaves to send high volumes of information between fixed points. That makes it suitable for replacing cable television, telephone wires, or Internet access, but not mobile phones or pagers.
"LMDS operators have the potential of being the next serious players offering real competition in the local loop," FCC Chairman William Kennard said in a statement. "This can only lead to great things for consumers."
The statement said 864 licenses were sold, of which 142 were to entities claiming rural telephone status, 30 to entities owned by women, and 9 to minority-owned entities. It did not name the winners.
"Potential bidders have been waiting for years for the LMDS opportunity," FCC Wireless Telecommunications Bureau chief Daniel Phythyon said. "Now it is up to the marketplace to determine the best use for these raw materials of competition."
Government budget analysts had estimated proceeds of $500 million from the LMDS auction. The government's take might have been higher, but the FCC revised its bidding rules for the LMDS sale after several high-profile winners in the $10.2 billion 1996 personal communications services auction declared bankruptcy.
The auction was divided into large- and small-capacity license rights in each of 493 distinct markets around the country.
The FCC previously granted the large-capacity license for New York City to a private firm, Cellular Vision, but auctioned another high-capacity permit for some of the surrounding suburbs under the heading "New York, NY."
Most companies that won licenses are initially expected to offer telephone and high-speed Internet connections to small and medium-sized businesses, but once the networks are up and running, residential customers will get linked as well.
The wireless bandwidth provided by a single LMDS license could carry 16,000 phone calls, vast amounts of computer data, or 200 television channels, FCC officials said.
Deregulation of the cable and telephone industries has thus far failed to stimulate much competition to provide residential services, so the FCC is increasingly looking to new mechanisms for breaking the grip of local monopolies.
To ensure competition gets off the ground, the FCC prohibited local telephone and cable companies from owning LMDS licenses in their current service areas for three years. The companies are permitted to hold up to a 20 percent stake in a company that owns a license or to own licenses outside their areas. |
