The auction is over, setting new records in auction revenues.

Interested in further auction analysis and wireless strategy? Contact us at auction@wirelessstrategy.com.

Monday, March 24, 2008: Summary of Top 10 Winners by Net Winning Bids

Rank Bidder Number of PWBs Total Net PWB Amount Breakdown of winnings
1 Verizon Wireless 109 $9,363,160,000 7 C block covering 98% of pops
25 A block covering 52% of pops
77 B block covering 16% of pops
2 AT&T 227 $6,636,658,000 227 B block covering 62% of pops
3 Echostar (Frontier Wireless) 168 $711,871,000 168 E block covering 76% of pops
4 Qualcomm 8 $558,142,000 5 E block covering 24% of pops
3 B block covering 0.1% of pops
5 MetroPCS 1 $313,267,000 1 A block license covering 2.8% of pops
6 Cox Wireless 22 $304,633,000 14 A block covering 6.6% of pops
8 B block covering 0.6% of pops
7 US Cellular (King Street Wireless) 152 $300,478,500 25 A block covering 7.6% of pops
127 B block covering 6.6% of pops
8 Cellular South 24 $191,533,000 14 A block covering 4.7% of pops
10 B block covering 0.5% of pops
9 CenturyTel 69 $148,964,000 21 A block ccovering 3.8% of pops
48 B block covering 2.4% of pops
10 Vulcan Spectrum (Paul Allen) 2 $112,793,000 2 A block licenses covering 2.5% of pops

The table above summarizes the winnings of the Top 10 bidders in the auction in terms of their net winning bids on A, B, E, and C licenses. The "net" part only affects one bidder in the Top 10 since only one has applied for Designated Entity (DE) status: US Cellular's King Street Wireless. King Street had $400M in gross bids but will save $100M if their DE status holds up. We will leave it to the lawyers and the FCC to decide whether this structure truly meets the FCC's strict DE rules, but suffice it to say that we expect the King Street / US Cellular relationship to receive significant scrutiny over the next few weeks.

As for specifics in the A and B blocks, Verizon won the two most valuable A licenses, New York and Los Angeles, as part of picking up 9 of the 10 most valuable A block licenses, and 15 of the Top 20. The only Top 10 A license that Verizon did not win was Boston, which MetroPCS picked up with their only winning bid. Verizon also won the B license in LA, as well the B licenses in Chicago and Miami, representing their biggest B block wins. By the way, the Chicago B license was the most expensive license in the auction at $9.19 per MHz-pop. AT&T won the most valuable B block license, New York, as well as 35 of the Top 40 most valuable licenses on the B side. AT&T was also able to fill some 700 MHz holes with B block spectrum in markets where the Lower Band C block spectrum they purchased from Aloha does cover: this includes markets such as Minneapolis, Seattle, Portland, Milwaukee and Salt Lake City. Miami may be a major market where AT&T does not currently own 700 MHz spectrum, unless they struck a private deal with Harbor Wireless, the original winner of the Lower Band C block license. Interestingly, AT&T's short form application with the FCC for Auction 73 shows an "Assett Purchase Agreement" between Harbor Wireless LLC and AT&T Services Inc., although details of this agreement are not readily available. In any case, it appears that AT&T may have addressed this issue prior to the auction.

Among the other big A and B licenses, Vulcan won the A block licenses for Portland OR and Seattle WA, no surprise as this adds to their regional spectrum holdings. In these two markets, Paul Allen has AT&T "sandwiched", as he now owns the spectrum on either side of AT&T's B block. Cox's biggest wins (in terms of bidding units) were the A block licenses for San Diego and Phoenix, and US Cellular/King Street's biggest wins were the St. Louis and Milwaukee A licenses. The A block licenses for Nashville, Memphis and Birmingham AL were Cellular South's biggest wins, adding nicely to their regional footprint, and the A licenses for Rochester NY and Little Rock AR were CenturyTel's biggest prizes.

One last tidbit: It was interesting to find that a whopping 73% of AT&T's winning bids in the B block were placed in Rounds 26 and 27. This is significant because Verizon placed their last bids on A and B licenses in Round 26 in order to start their acquisition of the C block in Round 27, so it's quite clear that Verizon's strategy was a significant contributor to the high cost of AT&T's winnings.

Thursday, March 20, 2008: The D Block has been De-linked and Results Have been Released

Today the FCC released an order stating that the D block will not be offered for re-auction in Auction 76. This will give the FCC and Congress more time to analyze the situation and solve the D block crisis to the benefit of public safety and the American public. This also had the effect of de-linking the D block from the 700 MHz auction, and thus allowed the FCC to release the identities of bidders in Auction 73, which they did this afternoon. Below is a short summary of the results:

As predicted on this website, Verizon won all six CONUS licenses in the C block and AT&T won most of the B block (227 licenses covering 176M pops). Verizon also won the Hawaii C block license, but other bidders won Alaska and the licenses covering the US territories and the Gulf. But Verizon also did well in the A block, winning 25 licenses that cover 148M pops (about half the country), and the B block where they won 77 licenses covering 46M pops. Surprisingly, AT&T won nothing in the A block, and all of their winnings were B block licenses.

We were surprised that Qualcomm was the lone bidder on the D block, and also surprised that they only won five E block licenses, with the majority of the E block going to Echostar (aka Frontier Wireless). It was actually Qualcomm that launched the attack in Round 37 and as a result they were able to take five of the most important E block licenses (New York, Los Angeles, Boston, Philadelphia, and San Francisco), so it will be interesting to see what Echostar will do.

We were also surprised to see that Qualcomm was the bidder involved in much of the late bidding on the B block, and picked up three of the last B block licenses to receive bids: Yuba City CA, Imperial CA, and Hunterdon NJ. It's not clear to us why Qualcomm was interested in these licenses.

As for what each company paid, we were surprised to see that Verizon paid more for their B block licenses than AT&T: VZ paid $3.69 vs. AT&T's $3.15. As expected, the duel in the B block was between these two, since no other bidder paid anywhere close to this on average. Qualcomm paid for their defensive position in the E block, as their five licenses average $1.36 per MHz-pop compared to Echostar's average of $0.55. And Verizon also had the highest average cost in the A block at $1.45 for their 25 licenses, although Paul Allen's Vulcan Spectrum was not far behind paying $1.34 for Portland and Seattle.

King Street Wireless, a Designated Entity (DE) with US Cellular ownership, had gross provisionally winning bids totaling $400M that include 25 A block licenses covering 22M pops and 127 B block licenses covering 19M pops. If their DE status holds up, they will pay just $300M for their winnings. Cavalier Wireless also did reasonably well in the A and B blocks, as did Cox and Cellular South. Alltel, Leap, and Advance Newhouse won nothing, and MetroPCS won only one license: the A block license for Boston.

As expected, the results are extremely interesting. We will have more analysis available over the next few days, so please check back.


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