BIG UPFRONTS IN AWS AUCTION FAVOR ROBUST BIDDING

Sharon Armbrust | July 30, 2006, 10:56 AM

On 7/28 the FCC announced that the AWS Auction #66 would be an open auction after it saw how much money applicants had laid on the table in upfront payments. Upfront payments to cover 1x every license to be sold in the U.S. at this auction equaled about $1.3 bil. The FCC planned to have blind bidding (no information disseminated about bidders' bids) during the auction unless upfronts equalled at least 3x that amount. In fact, at $4.3 bil., they surpassed that hurdle by 13%.

Being able to see who is bidding will make the auction more efficient, allowing bidders to gauge better what will happen competitively in the market if they do/don't win a given market and make intelligent decisions about how aggressively they want to push for a win.

It was the prospective nationwide players who pushed up the upfront totals. No fewer than 42 applicants identified all licenses (each category of all three license groups--CMA, EA, REA)as potential markets they wanted to pursue. But much of that was not serious. Of the 42 applicants who named the EA New York (25.7 mil. 2000 pops) as a prospective license target, 19 didn't put up enough money to even be allowed to bid on it. And another three put up only enough to bid on the 10 MHz EA license, not the 20 MHz license.

Rather, it is just a thin top tier of applicants who have shown via their upfronts that they plan to be active players across the board. The Wireless DBS consortium (DirecTV, Echo, Liberty Media), SpectrumCO LLP (Cable MSOs, Sprint), T-Mobile and Cingular each put up enough to enable them at the start of the auction to bid simultaneously on multiple licences (with an aggregate of 40->50 MHz) in every market in the country.