LMDS Auction Reaches End Game
WASHINGTON, DC, U.S.A.
1998 MAR 24 (NB) -- By Bill Pietrucha, Newsbytes.
Final refining bids have nudged the Federal Communications Commission's (FCC) local multipoint distribution service (LMDS) license auction to just over the $576 million mark, with only one company out of 104 eligible contestants entering bids in the latest round.
At the end of 117 rounds of bidding, the FCC has netted just under $576.3 million. The 117th round produced only $592,000 in new revenue from seven bids, all from Eclipse Communications Corp. Eclipse is the eight highest bidder by total dollar value of net bids, spending so far some $12.9 million for 59 licenses.
The auction, which first broke through the $500 million mark after only 24 rounds, has taken almost four times as many rounds, 93, to add the additional $76 million in revenues.
The $576.3 million figure, however, exceeds government estimates of $500 million for the entire auction. Excluding discounts offered to certain bidders, the FCC would have grossed $829.9 million at this point in the bidding.
The auction, which started February 18, is accepting bids by telephone and computer, and will continue until there are no new bids on licenses.
The 986 LMDS licenses being put up for bid by the Federal Communications Commission (FCC), two each in 493 markets, still are being chased by 104 companies, down from the original total of 139 bidders who deposited around $350 million with the FCC in upfront payments. The FCC instituted the upfront payment requirement last year after a number of firms winning personal communications services (PCS) licenses went bankrupt. The new rules also require bidders to pay for any licenses they win immediately.
Thus far, the bidders have targeted some 379, or about 76 percent of the 493 1,150 MHz "A" band licenses, and 98 percent, or 484, in the 150 MHz "B' license auction.
The bidding figures for the major markets in particular have been stagnant since the early weeks of the auction, as the major players, including WNP Communications Inc., Nextband Communications, WinStar, Cortelyou, and Alta Wire locked up the top 20 markets by the 35th round of bidding.
WNP Communications Inc. remains dominant bidder by total dollar value, currently leading in 40 markets, with net bids totaling more than $186.8 million. WNP's top bids include $23.7 million for the New York City market, $30.3 million for the Chicago market, $18.8 million for the Boston, Massachusetts market, and $13.2 million for the Dallas-Ft. Worth, Texas license. WNP is financed in part by Chase Manhattan and Norwest Capital venture funds, In terms of total net bids, Nextband Communications, , a joint venture between Craig McCaw and Nextel Communications, continued to hold second place, with 43 high bids totaling some $136 million. Nextband currently leads in bidding for the Los Angeles market, at $36 million and the Seattle-Tacoma, Washington market at $9.0 million.
WinStar LMDS LLC, at $43.59 million, Baker Creek Communications, at $25.6 million, and Cortelyou Communications Co., at $25.2 million, round out the top five bidders by total amount of net bids. WinStar's bids are for 15 markets, including San Francisco-Oakland, at $23.3 million; Baker Creek is the high bidder in 232 markets; and Cortelyou's bids are for 15 markets, including Cleveland-Akron, Ohio, at $9.4 million.
The top five high net bids by market are: Los Angeles, at $36 million; New York, at $23.7 million; Chicago, at $30.3 million; San Francisco, at $23.3 million; and Philadelphia, at $17.6 million.
LMDS will offer services that compete with local telephone and cable companies, including high speed telephone, video programming distribution, video teleconferencing, wireless local loop telephony, and high speed data transmission, including Internet services. Unlike mobile licenses, however, the microwave band making up LMDS requires small receiver dishes to transfer information between two points.
Although LMDS will generally be offered to small and medium- sized business at first, the service could offer residential competition to such technologies as asymmetric digital subscriber line (ADSL), which is expected to deliver high-speed modem communications to consumers over existing phone lines.
The larger of the two licenses in each market, 1,150MHz, could carry the equivalent of 16,000 telephone calls and 200 video channels simultaneously, the FCC said. The smaller license in each market is for 150MHz.
Although the FCC required upfront payments to forestall any bankruptcies, the Commission is offering discounts of between 25 percent and 45 percent for new and small companies. Bidders with $15 million or less in gross revenues will get a 45 percent discount; companies with $16 million to $39 million get 35 percent off; and companies between $40 million and $75 million get to knock off 25 percent.
Of the leaders, WNP and Baker Creek will receive a 45 percent discount, and WinStar and will receive a 25 percent discount. Cortelyou and Nextband do not qualify for the discounts.
In order to promote competition, the FCC prohibited local telephone and cable companies from owning LMDS licenses in their own areas for three years. Those companies, however, can own up to 20 percent of a company that owns a license in their area, or can own an LMDS license outside their service area. |
