FCC Reaps Bounty From Blue Sky

Few knew what to expect when the Federal Communications Commission (FCC) embarked on its ambitious program to auction the airwaves for narrowband and broadband personal communications services (PCS) earlier this year. Until now, frequencies had either been assigned or distributed through lottery, including those for the now-popular cellular services in the mid-80’s.

Following the cellular bonanza, the FCC had good reason to modify its procedure. Most notably, they hoped to temper the rampant speculation that followed the cellular lottery, while at the same time bringing much needed revenue into the Federal Treasury to reduce the perennial budget deficit.

In the first series of auctions for narrowband PCS licenses, analysts and officials together were stunned when the final tally added up to $617 million, far in excess of the $50 million most had projected earlier. Narrowband PCS enables a broad range of new services including two-way paging, message and data transmission, and wireless voice-mail.

The auction, held in the ballroom of the Omni Shoreham Hotel in Washington, was itself a step into the future with participants voting electronically in small booths throughout the hall.

While new rules adopted by the FCC encouraged minority and women-owned businesses to participate, the winners of the important nationwide licenses turned out to be companies already offering a range of wireless services and looking to expand their spectrum holdings to offer enhanced services such as two-way messaging and wireless voice-mail.

The winning companies include the following: Paging Network of Virginia (a unit of Paging Network, Inc.), McCaw Cellular Communications, Destineer (controlled by Mobile Telecommunication Technologies Corp.), BellSouth Wireless, AirTouch Paging, and Pagemart II Inc.

Another service that should become more popular following the auction is known as acknowledgment paging. This enables a pager to automatically respond with a signal indicating that a message has been received.

Broadband PCS Coming

With the auction for broadband PCS coming later this year, analysts are already reconsidering their estimates for the more valuable spectrum. Broadband PCS, which enables advanced voice and data communication features using mobile handsets, has been allocated 160 MHz in the 2 GHz band.

In fact, some analysts are now raising their forecasts from $10 billion to as high as $20 to $30 billion. However, FCC Chairman Reed Hundt has been quick to down play such speculation stating that there is little reason to extrapolate the current frenzy to future auctions.