Wireless and Q go after licenses (Thanks to Phillips Telecom)
C-BLOCK REAUCTION; LESS THAN HALF MAKE
IT THROUGH THE FORMS ON THE FIRST TRY
The FCC has received 105 Form 175 applications to participate in Auction No. 22, the upcoming catch-all auction of C- through
F-block licenses. (The official tally, according to the FCC, is 356 licenses including 134 15 MHz C-blocks, 208 30 MHz C-blocks,
three Ds, six Es and 10 Fs.) Of the 105 forms, just under half made it through all the paperwork hoops on the first try. The FCC
accepted 52 of the filings, listed 50 as incomplete, and rejected three. Parties that filed incomplete applications had until today to
correct their filings. The three rejected applications came from Integrated Communications Group Corp., Tri-States PCS
Inc., and Wireless One Network LP.
...Sentimental Favorites and Plucky Newcomers
The list of would-be bidders includes a mix of names familiar to those who have followed the basic trading area (BTA) license
auctions, as well as hopeful unknowns. Even some licensees that threw in the towel in disgust during the restructuring found the
courage to throw their hats back into the PCS ring.
A few major names top the list. Among them are Omnipoint Communications Inc. [OMPT], bidding through an entity called
OPCS Three LLC; Western Wireless Corp. [WWCA], which is going for D- and E-block licenses while its partners at
Cook Inlet Region Inc. pursue a range of the C- and F-block offerings; and Qualcomm Inc. [QCOM] spinoff Leap
Wireless International [LWIN], which signed up for 182 licenses across the board.
Some companies aren't participating directly, but have lined up smaller partners. Powertel Inc. [PTEL], for example, formed an
alliance with startup Eliska Wireless (see PCS WEEK, Feb. 24). Powertel has no equity position in Eliska, but will provide the
company with a credit facility to augment its other financing. Eliska has already said it will use GSM technology, and presumably
will bid to fill in licenses around Powertel markets for roaming purposes. On the other hand, Eliska was among the companies
whose applications were incomplete, meaning the company better scramble to complete its paperwork or it will have a very
unhappy creditor on its hands.
Other familiar names from past auctions include smaller firms that either didn't win licenses, or bailed out during the C-block
restructuring and are back to try again. These include entities like Alpine PCS Inc., Redwood Wireless Corp., Westel L.P.,
and even Vincent McBride. McBride had originally won the C-block license for Williston, N.D., but had several angry scrapes
with the FCC over the following months, including an effort to urge licensees to refuse to sign and return the financial documents
required for their licenses in a dispute over interest on C-block financial obligations (see PCS WEEK, July 9, 1997). McBride
surrendered his license during the restructuring, and at that time did not sound like a man who ever wanted to deal with the FCC
again, but this stuff apparently gets in the blood.
...Next AT&T Will Want Food Stamps
So do discounts. The FCC offers a 15 percent bidding credit to "small" businesses (annual gross revenues averaging under $40
million for the last three years) and a 25 percent credit to "very small" businesses (average revenue below $15 million for the same
period). Thus, there are plenty of good reasons to apply for credit status and nothing to lose by asking.
That was apparently the reasoning behind Omnipoint's chutzpah-laced effort to convince the commission that it should get the
"very small business" discount. Omnipoint presented a barrage of arguments why it should be evaluated based on its average gross
revenues for the three years prior to the original C-block auction instead of current figures-1998 revenues of $162 million
according to one analyst's estimate.
The commission, however, wasn't buying it. Omnipoint is eligible to bid in the reauction since it participated in the original auction.
However, Amy Zoslov, chief of the Wireless Bureau's Auctions and Industry Analysis Division, noted in a letter to Omnipoint's
attorneys that the commission "expressly declined to 'grandfather' eligibility for bidding credits."
Omnipoint also argued that it might as well get the credit upfront, since it could gain the same benefit through a secondary market
purchase from a smaller bidder. The company claimed that the FCC's Fifth Memorandum Opinion and Order established an
exception to the unjust enrichment rules for transfers to entities that hold other C- or F-block licenses. The language Omnipoint
cited reads, "[W]e clarify that between years four and five we will allow licensees to transfer a license to any entity that either
holds other entrepreneurs' block licenses and thus at the time of auction satisfied the entrepreneurs' block criteria or that satisfies
the criteria at the time of the transfer. Unjust enrichment penalties as described above apply if these requirements are not met, or
if they qualified for different provisions at the time of licensing."
Zoslov denied that the claimed loophole exists. "Omnipoint's argument is based entirely on its interpretation of one sentence in the
Fifth Memorandum Opinion and Order discussing the application of unjust enrichment rules in the event a licensee transfers
entrepreneurs' block licenses. However, this interpretation is contrary to the Commission's intent and, indeed, is contradicted in the
next paragraph of the same order."
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