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Friday, February 1, 2008: Bidding at the end of Round 26

License MHz Aggregate Total PWBs Aggregate Reserve Delta % of Reserve Total Pops Current Cost per MHz-pop
A 12 $3,727,911,900 $1,807,380,000 $1,920,531,900 206% 285,620,445 $1.09
B 12 $8,856,376,300 $1,374,426,000 $7,481,950,300 644% 285,147,791 $2.59
C 22 $4,716,775,000 $4,637,854,000 $78,921,000 102% 285,620,445 $0.75
D 10 $472,042,000 $1,330,000,000 $(857,958,000) 35% 285,620,445 $0.17
E 6 $780,975,400 $903,690,000 $(122,714,600) 86% 279,586,869 $0.47
Total 62 $18,554,080,600 $10,053,350,000
Graph of FCC Auction 73 Cost per MHz Pop at the end of Round 26

(Click to enlarge)

The C block game appears to have been played, but who is the winner? Given the way the final rounds were played, we suspect it is Verizon. Without getting into the details, suffice it to say that it doesn't make much sense to us that Verizon would let a new entrant into such prime spectrum, open access or not. We feel that Google placed the winning bid in Round 13, and Verizon used its waivers to shave $152M off the minimum bid.

The B block is still climbing and has reached an average price of $2.59 per MHz-pop, with Chicago topping the $9.00 mark, Oklahoma City and Seattle topping $7.00 and nine more in excess of $5.00. This could also be the work of Verizon. It makes sense that they would want to block AT&T as much as possible, and after the Aloha purchase, it was very easy to see how much the B licenses would be worth to AT&T. There are a lot of players in this space, given that there are 734 B block licenses, but it's not unreasonable to assume that Verizon slipped in to wreak some havoc for AT&T.

Bidding on the A block is starting to slow down, as evidenced by the flattening curve in the graph. Prices in the A block are much more palatable than in B, with only four licenses currently commanding a higher price than the average price in B (Tampa, Boston, Philly and LA).

Bidding on the 6 MHz unpaired E block is still slow, but got $30M closer to the aggregate reserve price today. The block is still $122M short, so there is definite danger of not reaching the mark. Qualcomm seems to be keeping things alive, although barely.

It's very likely there is only one eligible bidder on the D block and it doesn't appear that the one bidder is going to step up and bid the reserve price. This is very unfortunate for those that are anxious to see the public-private partnership work, but it appears that the block will be getting revamped and will go to reauction.

Thursday, January 31, 2008: Bidding at the end of Round 21

License MHz Aggregate Total PWBs Aggregate Reserve Delta % of Reserve Total Pops Current Cost per MHz-pop
A 12 $3,409,215,900 $1,807,380,000 $1,601,835,900 189% 285,620,445 $0.99
B 12 $6,293,826,800 $1,374,426,000 $4,919,400,800 458% 284,911,555 $1.84
C 22 $4,716,116,000 $4,637,854,000 $78,262,000 102% 285,620,445 $0.75
D 10 $472,042,000 $1,330,000,000 $(857,958,000) 35% 285,620,445 $0.17
E 6 $749,196,400 $903,690,000 $(154,493,600) 83% 270,085,625 $0.46
Total 62 $15,640,397,100 $10,053,350,000
Graph of FCC Auction 73 Cost per MHz Pop at the end of Round 21

(Click to enlarge)

It was another interesting day for the C block: The reserve price was met this morning in Round 17, but this was followed by no further bids. Since the block went four rounds without a single bid, it very likely means that someone has dropped out, most likely Google. We'll see tomorrow if C block bidding is definitely over, but it certainly appears that way.

The average cost of B block licenses is still climbing at a very fast rate, as the graph here shows. At $1.84 per MHz-pop, it is by far the most valued block, presumably driven by AT&T's interest and the lack of any unfavorable encumbrances.

Bidding on the A block continues to be competitive, but the cost is not climbing as rapidly as the B block, presumably due to the B block's adjacency to AT&T's Lower C block assets.

Bidding on the 6 MHz unpaired E block is still slow, but showed some signs of improvement today as it gained roughly $40M in PWBs vs. only $8M yesterday. This increase isn't reflected in the cost per MHz-pop because additional licenses were won today, which increased the covered pops by about 11M. The block is still well shy of its reserve price, which probably isn't good news for Qualcomm as we believe they are anxious to add bandwidth to their MediaFLO mobile video offering.

D block bidding has been non-existent since the minimum bid placed first round, and may stay that way for awhile, at least until the C block game is over and the price of that block has stabilized.

Wednesday, January 30, 2008: Bidding at the end of Round 16

License MHz Aggregate Total PWBs Aggregate Reserve Delta % of Reserve Total Pops Current Cost per MHz-pop
A 12 $2,415,449,900 $1,807,380,000 $608,069,900 134% 283,126,053 $0.71
B 12 $3,680,742,600 $1,374,426,000 $2,306,316,600 268% 282,965,796 $1.08
C 22 $4,296,348,000 $4,637,854,000 $(341,506,000) 93% 285,620,445 $0.68
D 10 $472,042,000 $1,330,000,000 $(857,958,000) 35% 285,620,445 $0.17
E 6 $709,120,400 $903,690,000 $(194,569,600) 78% 259,275,890 $0.46
Total 62 $11,573,702,900 $10,053,350,000

Bidding on the C block licenses covering the 50 states has stopped just shy of the reserve price. The next bid will lock in the open access requirement, but there were no bids in the last three rounds today. One theory is that Google was using its waivers today to 1) try to force its competition to bid above the reserve price and 2) determine whether it had just one or multiple competitors. All appearances suggest that Google has just one competitor (guess who?), and if the theory holds true, Google's hand will be forced in the next round due to the rule allowing each bidder just three waivers.

The B block has not only exceeded its reserve price, but today in Round 16 it surpassed the $1.03 per MHz-pop price tag that AT&T paid for Aloha's lower band C block assets.

In Round 14 today, the A block became the second block of licenses to exceed its aggregate reserve price, although the B block's CMA licenses are commanding much higher prices than than the A block's EA licenses, presumeably due to the B block's adjacency to AT&T's Lower C block assets.

Bidding on the 6 MHz unpaired E block has slowed down considerably, almost leveling off at 46 cents per MHz-pop, but still well shy of its reserve price. Qualcomm may be the biggest player here as it tries to add bandwidth to its MediaFLO mobile video offering.

D block bidding has been non-existent since the minimum bid placed first round, and may stay that way for awhile, at least until the C block game is over and the price of that block has stabilized.

Next Week