Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, December 5, 1994 TAG: 9412060036
SECTION: NATIONAL/INTERNATIONAL PAGE: A-7 EDITION: METRO
SOURCE: The Baltimore Sun
DATELINE: LENGTH: Medium
Sometime around noon in a former post office building in Washington, after Vice President Gore and a host of lesser mortals orate about the glories of competition, the gavel will fall and 99 precious pieces of the sky will go on the auction block.
The prizes in the auction are licenses to operate personal communications services, often described as a new generation of cellular phones but potentially much more, in 51 huge markets throughout the United States and its island territories. To believers, PCS licenses are the cornerstones of a new era of ubiquitous wireless communication. To skeptics, they are luxury-class tickets to bankruptcy court.
The seller of all this radio spectrum is the Federal Communications Commission, acting as trustee for its debt-ridden Uncle Sam.
This is not the first spectrum auction but this is the big one. Where previous auctions sold off relatively narrow slices of the airwaves for specialized uses, this one involves the broadband building blocks that can be used to construct national wireless networks.
Experts in wireless communications admit that they have no idea how high the bidding will go over the next few weeks, though FCC officials are encouraged by the $1 billion raised in the earlier auctions.
``If the mob mentality maintains, it could raise $20 billion,'' said Herschel Shosteck, a market economist who tracks the cellular industry. ``If there's a mass attack of sanity, it could raise only $2 billion.''
Wrestling for the deeds to these sprawling 30-megahertz ranches are many of the nation's largest telecommunications companies - some going it alone and others teamed up in giant bidding alliances.
Mighty AT&T will be there, with all the wireless expertise of its newly acquired jewel: McCaw Cellular Communications Corp. So will Craig McCaw, the cellular pioneer who sold the nation's largest wireless carrier to AT&T and whose ALAACR Communications Inc. apparently is acting in concert with AT&T. Their FCC-required deposits, $78.4 million and $33 million respectively, are measures of the extent of their ambitions.
Sprint Corp., the nation's third-largest long distance company, is swashbuckling onto the scene in the company of the Three Musketeers of the cable TV industry - Comcast Corp., Cox Cable Communications and Tele-Communications Inc. Their group, WirelessCo. L/P, has plunked down the largest deposit of all, $118.4 million, entitling the partners to duel for more licenses than any of their rivals.
All of the regional Bell companies will be there in one way or another.
Pacific Telesis will be flying solo, and its hefty $56 million deposit could signal ambitions that reach far beyond its California home.
Bell Atlantic, Nynex and US West have teamed up with AirTouch, Pacific Telesis' cellular spinoff, to stitch together a nationwide network of cellular and PCS licenses. Together they've anted $54.7 million for bidding rights.
``Our estimates are that this is going to be a huge market,'' said Bryant Hilton, manager of media relations for the Personal Communications Industry Association, a trade group. He estimated that PCS could attract 8.5 million subscribers by 1998 and possibly could replace wired phone service for some consumers.
But skeptics contend that the footprints you see will be those of lemmings going over a cliff. The biggest losers could be the winners.
``We've been looking for three years and we still can't find a business case for me-too cellular,'' said Shosteck.
The main reason, he said, is that cellular companies have seen PCS coming and already are moving to lower their rates to stave off the expected competition.
Winners also will find that their licenses are only the first of the costs they will incur before they see their first dime of revenue.
by CNB