You know how on eBay, if you really want to win an auction, you have to snipe in your bids at the very end? Well, something very similar may be happening in the ongoing government auction for wireless spectrum. The FCC set up the rules of the auction to try to prevent such last-minute sniping, but some deep-pocketed bidders may have found another way to hold back their true bid until the very end of the auction.
According to the rules of the auction, bidders in each round (several of which are held each day) must submit an upfront payment to be eligible in that round. And to remain eligible, they have to either bid each round (except that everyone gets three waivers to sit out a round), or remain the highest bidder (in which case they don’t have to beat their own previous bid).
There are dozens of blocks of spectrum companies can bid on, but the one that has gained the most attention is the so-called nationwide C-block that pulled in a bid of $4.7 billion yesterday, and then saw no more action. Because of the pattern of previous bidding, and the eligibility rules, some of us watching concluded that the bidding war was over for that block and that an unknown winner existed, perhaps Google or Verizon.
But there is another possibility. Companies can also bid on parts of the C-block on a regional basis (Northeast, Southeast, Great Lakes, Mississippi Valley, Central, West). Although there have been bids on these regional blocks, none of them have shown up as “provisionally winning bids” because the $4.7 billion for the whole country is still more than the sum of the regional bids. But a company can stay eligible by placing new bids for one of the regions, and then make a bid for the national block at the end.
And that may be exactly what is happening. If you look at bids for the Mississippi Valley region over the last few rounds, for instance, there was a bid for $884 million in Round 24, $1.2 billion in Round 25, and $1.4 billion in Round 26. That is a big company (or companies) with a lot of cash making those bids. One theory is that this big company is just biding its time until it makes a bid for the national block. The longer it waits, the less competition it is might encounter because other bidders will be more likely to have used up their waivers or stopped bidding altogether. Unless, of course, the other big potential bidders are pursuing the same strategy. So this ain’t necessarily over yet.
Anyone can watch the auction electronically as it occurs. Go to this FCC Web page for Auction 73, click on “View Auction Result,” then click on the Results tab. Round 26 just finished, and the FCC is currently due to collect $18.6 billion in provisional winning bids across all blocks.
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I don’t really understand this. What is a spectrum? and how will it be used and monetized by these bidders? Someone help a dumb ass.
Could RLJ Equity Partners & Carlyle Group be behind the Mississippi Valley mystery?
We know its not Bernie Ebbers of MCI. His Mercedez was recently spotted at the detention center were he parked it before going into the slammer.
Erick ran out ideas!!! This is very poorly written article. Another Techcrunch Spam.
Yahoooo…. Another Techcrunch Spammer!!!
Horse Whip on Erick.
Techcrunch spam! Techcrunch spam! Techcrunch spam!
@Dumb Ass A spectrum is referring to a certain part of the electromagnetic spectrum up for sale. The 700mhz range is the range that Analog TV runs on, which will be phased out in 2009. This is C-block, and is hotly contested due to the ability to transmit lots of data quickly and broadly on this frequency. Basically, every electronic item you use uses a part of the EM spectrum, such as cell phones, cordless phones, wi-fi, etc. All of those are transmitted on a particular frequency range, and the FCC regulates who has the right to broadcast on those frequencies. Thus, companies need to be able to have their cell phones work, or to provide wireless internet, or produce consumer electronics with wireless functions, etc, so they must purchase that right. This is a very desirable spectrum that is up for bid now.
If you could just ban the illiterate guy that continually makes multiple comments with insane logic and sub-human insight most of us would heartily appreciate it.
thnx
p.s. it was so peaceful for the short time he was occupied
p.p.s. Immigration, please take his green card immediately
My prediction is that the winner will be a group that is unexpected and unpredicted, a Private Equity firm perhaps. Why not?
http://nobosh.com/
Please no Techcrunch Spam like this….
I’m thinking a power company? Maybe Southern Co.?
Nice catch Erick…
I have absolutely no doubt that after the auction is over we will completely understand all the rules. Good theory - I know that Saul Hansell in Bits put together a very eloquent case originally for the auction being over but the snake in the grass you bring up is certainly possible. That said, Occam might have something different to say. According to the same logic, bidding on the regional allocations may be just as it seems, as enough bids would push the regional total past the national total and companies only interested in the regions may yet get their share.
#6: For the love of Christ–THIS!111!