Tag: auction auction

Verizon's “Perfect Storm”: A Reason Why 700 MHz Band's C Block Cleared On the Cheap

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Some critics of the 700 MHz Band Auction (Auction 73) attribute the failure of C Block — which consisted of large Regional Economic Grouping (REAG) licenses — to clear at the kinds of premium over the licenses in the AWS-1 auction that the Economic Area (EA) and Cellular Marketing Area (CMA) in the A, B, and E Blocks did to the fact that C Block had wireless Carterfone service rules attached.

However, careful analysis of the dynamics of the auction suggest that interaction of the auction’s combinatorial bidding, eligibility and activity rules, and the way in which minimum acceptable bids were calculated created a “perfect storm” in which Verizon was able to scoop up the two most populous REAGs for nearly half a billion dollars less than bidders were willing to pay earlier in the auction. This had a seriously depressing effect on the price at which C Block cleared and had nothing to do with the wireless Carterfone service rules.

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The 700 MHz Band Auction, Part IIIc: The Big Guys and the Wild Cards

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Finally, again let’s begin our analysis of strategic options for major actors in Auction 73, 700 MHz Band, with a look at the footprints established by many of those actors in two previous Lower 700 MHz auctions (Auction 44 and 49) and the AWS-1 auction (Auction 66):
Cellular Market Areas (CMA) Map for Auction 44
Economic Area Groupings (EAG) Map for Auction 44
Cellular Market Areas (CMA) Map for Auction 49
Economic Area Groupings (EAG) Map for Auction 49
Cellular Market Areas (CMA) Map for Auction 66
Economic Areas (EA) Map for Auction 66
Regional Economic Area Groupings (REAG) Map for Auction 66

The Big Guys

There are quite a few major actors who qualify as the genuine big guys in Auction 73. Their participation and fundamental interests in this spectrum ensure that the reserve prices will be met and likely exceeded on all blocks (with some caveats on D Block).

QUALCOMM makes the list of the big guys in the auction if for no other reason than it nearly scored national footprint (minus the Western EAG) in a Lower 700 MHz auction. The 700 MHz Band auction provides a source of spectrum entirely compatible with its acquisition for its MediaFLO datacasting enterprise. It may be a C Block contender, but it is more likely that QUALCOMM will concentrate on E Block to flesh out its national footprint and consolidate. This isn’t going to be a QUALCOMM versus the world auction; QUALCOMM will narrowly target specific licenses, go after them tenaciously, and then get out if it looks like the spectrum is going for higher prices than expected.

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The 700 MHz Band Auction, Part IIIb: More Mid-Range Competitors

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Once again let’s begin our analysis of strategic options for major actors in Auction 73, 700 MHz Band, with a look at the footprints established by many of those actors in two previous Lower 700 MHz auctions (Auction 44 and 49) and the AWS-1 auction (Auction 66):
Cellular Market Areas (CMA) Map for Auction 44
Economic Area Groupings (EAG) Map for Auction 44
Cellular Market Areas (CMA) Map for Auction 49
Economic Area Groupings (EAG) Map for Auction 49
Cellular Market Areas (CMA) Map for Auction 66
Economic Areas (EA) Map for Auction 66
Regional Economic Area Groupings (REAG) Map for Auction 66

The Mid-Range Competitors (Continued)

Cablevision is bidding as CSC Spectrum Holdings LLC. In Auction 66 it bid as Dolan Family Holdings and got creamed by incumbent blocking bidding. Cablevision unsuccessfully bid on two EAs, AW-BEA010-B (NYC-Long Is. NY-NJ-CT-PA-MA-VT) and AW-BEA010-C (NYC-Long Is. NY-NJ-CT-PA-MA-VT), and the following CMAs: AW-CMA001-A (New York-Newark, NY-NJ), AW-CMA042-A (Bridgeport-Stamford-Danbury CT), AW-CMA062-A (New Brunswick-Perth Amboy NJ), AW-CMA070-A (Long Branch-Asbury Park NJ), AW-CMA144-A (Orange County NY), AW-CMA151-A (Poughkeepsie NY), AW-CMA551-A (Ocean NJ), and AW-CMA552-A (Sussex NJ). Cablevision unsuccessfully sought all three licenses for the Northest REAG: AW-REA001-D, AW-REA001-E, and AW-REA001-F. The pattern is straightforward: replicate the footprint of their cable service in the NY-CT-NJ region in the A and B Blocks and try for one of the Northeast REAGs. Cablevision didn’t get it in AWS-1 and it has to do well in Auction 73 or its triple play options are seriously curtailed. Anonymous bidding helps Cablevision only a bit, because the chief competitors know exactly where they have to bid and it is prime spectrum in the richest market in America.

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The 700 MHz Band Auction, Part IIIa: The Classic Pattern and the Mid-Range Competitors

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To begin our analysis of strategic options for major actors in Auction 73, 700 MHz Band, it is useful to look at the footprints established by many of those actors in two previous Lower 700 MHz auctions (Auction 44 and 49) and the AWS-1 auction (Auction 66):*
Cellular Market Areas (CMA) Map for Auction 44
Economic Area Groupings (EAG) Map for Auction 44
Cellular Market Areas (CMA) Map for Auction 49
Economic Area Groupings (EAG) Map for Auction 49
Cellular Market Areas (CMA) Map for Auction 66
Economic Areas (EA) Map for Auction 66
Regional Economic Area Groupings (REAG) Map for Auction 66

The Classic Pattern

The classic pattern for an RTC and for most CLECs and WISPs in these auctions is that of Agri-Valley: expansion through Auctions 44, 49 and 66 to attempt to match its landline footprint with CMA acquisitions. In Auction 66 Agri-Valley went for and failed to obtained consolidation in Flint, Lansing, Saginaw, Muskegon, Gogebic, Alger, Cheboygan, Roscommon, and Cass. Expect Agri-Valley to continue this pattern in Auction 73. The same holds true for Whidbey Telephone in Maine in Auction 49, for Hemingford Cooperative in Nebraska, Wyoming, and Colorado in Auction 66, Bluegrass Cellular In western Kentucky in Auction 44, Union Telephone in Wyoming and Colorado in Auction 44 and 66, East Kentucky Network in eastern Kentucky in Auction 44, Fidelity Communications in Missouri in Auction 66, KTC AWS in South Dakota in Auction 66, Public Service Wireless in Georgia in Auction 66, Redwood County Telephone Company in Wisconsin and Minnesota in Auction 44, 44, LL License Holdings in Iowa, North Dakota, South Dakota, Minnesota, and Nebraska in Auction 66, Grand River Communications in Iowa in Auction 44, and Iowa Telecommunications in Iowa in Auction 66. This pattern will continue to hold in Auction 73, and will hold for the vast majority of new entrants in Auction 73: their action will be in the CMAs and to a much lesser extent in the EAs.

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700 MHz, Part I: How Do the Bidders Compare to AWS-1?

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This is the first installment of a three-part essay on the upcoming 700 MHz auction which the FCC will be starting in January 2008. Part I looks at the aggregate data on potential bidders and compares them to bidders in the AWS-1 auction. Part II examines the new entrants and major actors in detail. Part III analyzes potential bidding strategy on the part of the most important actors in the auction.

It is difficult to understand why so much is being made of incomplete applications and the postponement of the final application and upfront payment deadline to January 4, 2008 for the FCC’s 700 MHz auction. This is FCC business as usual as far as auctions are concerned. Auction 44, the Lower 700 MHz auction, was postponed from June 2002 to January 2003, and of 153 original applicants only 125 qualified with upfront payments. The second Lower 700 MHz auction, Auction 49, was postponed to May 2003, and 56 of 60 applicants qualified. The AWS-1 auction, Auction 66, was postponed from June to August 2006 and had 171 incomplete applications (and 81 completed) as of July 2006; ultimately 168 bidders quaified and made upfront payments.

Looking at the applicant pool, the potential 700 MHz bidders differ somewhat from the AWS-1 bidders in the aggregate:

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