The following auction results indicate the long term strategy is definitely in focus:
WASHINGTON, DC, U.S.A., 1997 DEC 11 (NB) -- By Bill Pietrucha,
Newsbytes. Nextel Communications Inc. [NASDAQ:NXTL] took the lion's
share, and then some, in the recently concluded Specialized Mobile
Radio (SMR) auctions conducted by the Federal Communications
Commission (FCC), winning 90 percent of the 525 licenses auctioned
off in the 800 megahertz (MHz) band.
The SMR licenses will be used by the winning bidders to provide
telephony, paging, voice-mail and remote database access to
consumers. Although SMR systems primarily are used for voice
communications, Nextel and other bidders indicated that some new
systems are being developed to use the SMR licenses for data and
facsimile services.
The auction completed this week raised a total of $96,232,060 for
the US Treasury, of which Nextel's share was $88,805,075, or 92
percent of the total winning bids, for 475 economic area (EA)
licenses.
An auction of 1,020 SMR licenses in the 900 MHz band raised
$204.3 million in April, 1996.
On average, Nextel won rights to almost 10 MHz of spectrum in
areas covering all 50 states and approximately 98 percent of the US
population. In order to gain full use of the license blocks won in the
auction, Nextel would need to relocate certain incumbent licensees
to other portions of the 800 MHz band pursuant to established FCC
rules.
"As a result of the auction, Nextel has enhanced its overall
spectrum position," Nextel's Chairman and Chief Executive Officer
(CEO) Dan Akerson said after the auction results were announced.
Nextel, Akerson said, "gained flexibility in licensing and re-using
its existing owned frequencies, which enables Nextel to more
efficiently design, deploy and operate its network."
The winning bids also give Nextel the opportunity "to re-tune all
other licensees currently operating in the license blocks won by
Nextel to achieve a contiguous spectrum position," he said.
Contiguous spectrum increases operating efficiencies, Akerson
said, "and provides Nextel with the flexibility to potentially access
digital transmission technologies that require contiguous spectrum."
Including the frequencies won this week with other frequencies
owned by Nextel in adjacent 800 MHz ranges, Akerson said the
McLean, Virginia-based company now owns on average 15 MHz of
usable spectrum in major markets in the United States, and
approximately 10 MHz across the country.
Following Nextel's first-place finish in the auction was North Sight
Communications Inc., which stayed close to home and bid slightly
under $1.6 million for one license in its home base of Puerto Rico.
Birmingham, Alabama-based Southern Co. won seven licenses --
costing some $1.2 million for seven licenses across Alabama,
Mississippi, Tennessee and Florida -- while High Tech
Communications Services Inc., looked to compete with North Sight
by bidding $1.2 million for a single license in Puerto Rico.
Nevada Wireless, which paid slightly under $1.6 million for 16
licenses in 14 western markets including California, Washington,
Oregon, Utah, Nevada and Colorado, rounded out the top five.
Small and very small businesses bidding in that auction had high
bids on 38 licenses, with bids of nearly $5 million. Auction rules
for the SMR auction defined small businesses as those entities with
average gross revenues that do not exceed $15 million for the
preceding three years. and the FCC granted them a 25 percent
discount on their winning bids. Very small businesses were defined
as those businesses with average gross revenues that do not
exceed $3 million for the preceding three years, and the FCC
provided them with a 35 percent discount on their winning bids.
Small and very small business winners and winning bids include:
Porta-Phone Paging License, CO., $1.037 million; Communications
Pacific Inc., $478,000; Mountain SMR Group, $308,000; Hawaiian
SMR Co., $279,000; Jamestown Communications Inc., $102,000;
Silver Palm Communications Inc., $74,100; Mid-States Wireless
Inc., $56,250; Cellutech, $43,485; and Supreme Radio
Communications, $42,900.
Small businesses will have the opportunity to bid on additional
spectrum in the lower 800 MHz band and general category channels
in an auction scheduled to be held in mid-to-late 1998.
Due to changes in the 1997 Balanced Budget Act requesting that
the FCC set minimum opening bids or reserve prices on the licenses
to be auctioned, this SMR auction marked the first FCC auction in
which the Wireless Telecommunications Bureau set minimum bids
for a large number of licenses. Bidders accepted the minimum bid
for each license, FCC spokesperson Audrey Spivack said.
Also new to this auction was a simplified electronic auction
bidding process called click box bidding. This streamlined process
eliminated both "trailing digits" and "extra zero" bidding problems.
In previous auctions, Spivack said, some bidders used "trailing
digits" in their bids to communicate market information and
potentially collude in violation of the FCC's rules. Click box
bidding also prevented bidders from placing extra zeroes on their
bid that do not reflect the intended bid amount.
Auction rules require that winning bidders of the 800 MHz SMR
auction provide service for consumers for 1/3 of the licenses'
service area population within 3 years, and for 2/3 of the
population within five years. |
