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Friday, March 7, 2008: Bidding at the end of Round 184

Here is the summary data for the auction to date:

Block MHz Number of Licenses Aggregate Total PWBs % of Reserve Current Cost per MHz-pop FCC Held Licenses
A 12 176 $3,961,173,000 219% $1.16 2
B 12 734 $9,139,567,100 665% $2.68 7
C 22 12 $4,748,319,000 102% $0.76 0
D 10 1 $472,042,000 35% $0.17 0
E 6 176 $1,266,881,300 140% $0.74 0
Total 62 1099 $19,587,982,300 9

And here is the data for today (note we are at 10 rounds per day):

Daily Sums Daily Averages per Round
Block PWB Delta New Bids Value of New Bids (BUs) PWB Delta New Bids Value of New Bids (BUs)
A $1,774,000 16 6,186,600 $177,400 1.6 618,660
B $571,900 63 2,134,400 $57,190 6.3 213,440
C $0 0 0 $0 0 0
D $0 0 0 $0 0 0
E $80,000 11 205,000 $8,000 1.1 20,500
Total $2,425,900 90 8,526,000 $242,590 9.0 852,600
Graph of FCC Auction 73 New Bidding Units at the end of Round 184

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Graph of FCC Auction 73 New Bids versus FCC Auction 66 New Bids at the end of Round 184

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The auction dragged on again today, but actually netted more today than yesterday, as at least one key battle in the A block drove most of the gains. The total for the day was $2.4M which brought the total proceeds to just shy of $19.588M. For much of the day, the value of new bids seemed to follow a pattern similar to yesterday (see first graph), but by the end of the day it appeared that bidding was approaching a conclusion in both the A and E blocks. However, the B block is still seeing six bids per round, and this could keep the auction going for several more days. There's more on our prediction for the auction's conclusion in the last paragraph below.

In the A block, the Albuquerque/Wilmington NC battle described yesterday shifted to Richmond VA in Round 176, a more valuable license than either of these. The PWB for the Richmond license alone increased by over $1.3M, so this one battle was responsible for 56% of the total proceeds today. After three unsuccessful attempts to take over Richmond, the battle moved to two much smaller licenses, Reno NV and Santa Fe NM, but after one failed attempt on these, the disruptive bidder quit for the week, and possibly for the rest of the auction. This resulted in zero bids in the A block in today's last round; the first time this has happened in any of the three active blocks. If this bidder has indeed given up, then the auction will enter a new level on Monday, as the minimal gains in the B block will be all that's left.

In the B block, the battle for the Chicago suburbs appears to be over, and assuming that the same bidder held both Joliet and Aurora back in Round 120, the two licenses are in different hands now, with the original owner retaining Aurora, but losing Joliet. New take-over attempts sprouted up late in the day on licenses in California and New Jersey, and we may see more of this activity on Monday as bidders try to wear each other out.

The only action in the E block today was one bid for the Aberdeen SD license and a day-long battle for the Minot ND license, two of the smallest licenses in the block. It is somewhat interesting to note that there had been activity in the Dakotas in the A block recently, so it's possible that someone has been trying to create an asymmetric pairing in this area using A and E. As stated in previous posts, bidders may have been trying to do this in other areas as well, as it is a reasonable use for the E block in lieu of mobile video.

The second graph shows the comparison to Auction 66 in terms of number of new bids, starting from Round 46. Prior to Round 46, the two auctions tracked very differently, but one can see that there were about 20 rounds or so starting in Round 46 in which the two auctions followed the same track to an almost eerie degree. But since about Round 70, Auction 73 has seen increased activity when compared to Auction 66, and is just now is starting to turn downward. From the graph, it is apparent that Auction 73 closed the day at a level similar to Auction 66 when it was in Round 130 or so. This is why we are projecting Auction 73 to end sometime around Round 215, but this could be a bit sooner due to the effects of Stage 3. The Commission has kept the bidding at ten rounds per day for Monday, so we project that the auction will finally end on Wednesday, March 12th, the same date that we had predicted back on February 25th.

Thursday, March 6, 2008: Bidding at the end of Round 174

Here is the summary data for the auction to date:

Block MHz Number of Licenses Aggregate Total PWBs % of Reserve Current Cost per MHz-pop FCC Held Licenses
A 12 176 $3,959,399,000 219% $1.16 2
B 12 734 $9,138,995,100 665% $2.68 8
C 22 12 $4,748,319,000 102% $0.76 0
D 10 1 $472,042,000 35% $0.17 0
E 6 176 $1,266,801,300 140% $0.74 0
Total 62 1099 $19,585,556,400 10

And here is the data for today (note we are at 10 rounds per day):

Daily Sums Daily Averages per Round
Block PWB Delta New Bids Value of New Bids (BUs) PWB Delta New Bids Value of New Bids (BUs)
A $1,749,000 24 4,969,600 $174,900 2.4 496,960
B $323,200 74 1,898,400 $32,320 7.4 189,840
C $0 0 0 $0 0 0
D $0 0 0 $0 0 0
E $175,000 27 901,000 $17,500 2.7 90,100
Total $2,247,200 125 7,769,000 $224,720 12.5 776,900
Graph of FCC Auction 73 New Bids at the end of Round 174

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We have to admit, as a good friend put it earlier today, watching the auction now is like watching paint dry. The asymptotic pattern toward the end proved true today, as the auction reached new lows in terms of new bids and the value of new bids, and then stayed at that level for the entire day. The graph at right shows the relative flatness of the new bids, but the aggregate value of those bids (which is more relevant to the remaining eligibility of the bidders), was also extremely flat and consistent with the last two rounds of yesterday's bidding. As a result, the auction netted just $2.25M, less than half of yesterday. The biggest licenses receiving bids today were the A block licenses for Albuquerque NM and Wilmington NC, as two bidders seem to be having a battle that has been alternating between these two licenses since yesterday. This battle does not appear over yet, and today it helped the A block generate about 78% of the day's total proceeds.

The bidding on major licenses in the E block appears to be over, as the biggest action in the block today was a day-long bidding war for the 145th biggest license (of 176), Salisbury MD. Mathematically we can't rule out the possibility that we will see a surprise big bid sometime in the next few days, but given our analysis, we doubt this will happen.

Bidding in the B block actually increased slightly as the day went on, and the Joliet IL license surprisingly received two bids per round in two different rounds today. The Joliet B license has been involved in an off-and-on bidding war since Round 121, and the Aurora IL B license has been involved in a sustained bidding war since Round 145. Since both are suburbs of Chicago, it appears that someone is trying to complete their market footprint. Exciting stuff.

Unless we see a significant deviation from the way Auction 66 ended, Auction 73 will likely exceed 200 rounds and the conclusion will occur no sooner than Tuesday or Wednesday of next week. The FCC has kept the bidding at ten rounds per day for tomorrow, but we may see an increase to 12 or 14 rounds per day by Monday, especially if tomorrow's bidding activity resembles today's.

Wednesday, March 5, 2008: Bidding at the end of Round 164

Here is the summary data for the auction to date:

Block MHz Number of Licenses Aggregate Total PWBs % of Reserve Current Cost per MHz-pop FCC Held Licenses
A 12 176 $3,957,650,000 219% $1.16 2
B 12 734 $9,138,671,900 665% $2.68 8
C 22 12 $4,748,319,000 102% $0.76 0
D 10 1 $472,042,000 35% $0.17 0
E 6 176 $1,266,626,300 140% $0.74 0
Total 62 1099 $19,583,309,200 10

And here is the data for today (note we are at 10 rounds per day):

Daily Sums Daily Averages per Round
Block PWB Delta New Bids Value of New Bids (BUs) PWB Delta New Bids Value of New Bids (BUs)
A $3,588,000 49 12,070,800 $358,800 4.9 1,207,080
B $359,000 58 1,451,000 $35,900 5.8 145,100
C $0 0 0 $0 0 0
D $0 0 0 $0 0 0
E $985,000 43 4,700,000 $98,500 4.3 470,000
Total $4,932,000 150 18,221,800 $493,200 15.0 1,822,180
Graph of FCC Auction 73 Daily Proceeds at the end of Round 164

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Graph of FCC Auction 73 New Bidding Units at the end of Round 164

Activity in all blocks showed definitive signs of slowing down for good, as today marked the final approach to the end of Auction 73. Yesterday's heightened levels of Stage 3 activity quickly ran out of gas and the result was a net gain of just under $5M, far short of yesterday's $17M. The most notable decline was in the E block, as bidding on the big licenses appears to be effectively over, and bidding was relegated throughout most of the day to a handful of smaller properties. Although the number of bids placed in the B block is still high, the licenses are smaller and their values are less than the other blocks, so net gains are extremely low. Today's net gains for the B block were nearly half of yesterday's, but the block is still seeing six bids per round. Finally, there are now 10 licenses held by the FCC as a bidder withdrew a $152K bid in Round 155 on the A block license for Wheeling WV, and it received no further bids on the day. But despite this, and in contrast to the E block, the A block actually brought in more money today than yesterday, although this could have been caused by events in the E block.

To explain the last statement above, we noticed that as the average value of bids on E licenses went down today, the average value of bids on A licenses went up, implying that a large bidder (e.g., Qualcomm?) could have been trying to "hide" bids in A while plotting a plan to take back the important licenses in E. But in Stage 3, every bidding unit counts, and there is some evidence to suggest that this bidder may have overplayed their hand on the Boise A block license, as there was no counterbid after Round 160. By holding the PWB on Boise, this bidder's power to place new bids was essentially reduced by 279K bidding units, and this may have been enough to force them out the big bid game, thereby losing any chance of regaining San Francisco or Boston. The theory is supported by the fact that at least three bidding wars ended in Round 162 when the instigator failed to place a bid. We shall know for sure in time, but our guess is that Qualcomm is currently holding the Boise license for the A block and that they lost the San Francisco and Boston E licenses to another bidder. But depending on how many PWBs they currently hold, it may still be mathematically possible for them to regain one of the two big licenses, although the likelihood declines with every passing round.

We may find over the next several rounds that the total number of bids will decrease asymptotically, and will make a "soft landing" on the zero activity level that will mark the end of the auction. This could take more time than most would desire, but this was the pattern in Auction 66. On the other hand, the ending here may not be as soft as it was for Auction 66, since the unanticipated Stage 3 with its 98% eligibility requirement will make it more difficult for many bidders to stay in the game. More to come...

Tuesday, March 4, 2008: Bidding at the end of Round 154

Here is the summary data for the auction to date:

Block MHz Number of Licenses Aggregate Total PWBs % of Reserve Current Cost per MHz-pop FCC Held Licenses
A 12 176 $3,954,062,000 219% $1.16 1
B 12 734 $9,138,312,900 665% $2.68 8
C 22 12 $4,748,319,000 102% $0.76 0
D 10 1 $472,042,000 35% $0.17 0
E 6 176 $1,265,641,300 140% $0.74 0
Total 62 1099 $19,578,377,200 9

And here is the data for today (we had 9 rounds today, see below):

Daily Sums Daily Averages per Round
Block PWB Delta New Bids Value of New Bids (BUs) PWB Delta New Bids Value of New Bids (BUs)
A $3,166,000 45 8,522,700 $351,778 5.0 946,967
B $684,000 67 1,988,700 $76,000 7.4 220,967
C $0 0 0 $0 0 0
D $0 0 0 $0 0 0
E $13,236,000 95 27,234,000 $1,470,667 10.6 3,026,000
Total $17,086,000 207 37,745,400 $1,898,444 23.0 4,193,933
Graph of FCC Auction 73 New Bids at the end of Round 154

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Graph of FCC Auction 73 New Bidding Units at the end of Round 154

After a huge spike in activity in the last round of yesterday's bidding, driven by several large bids in the E block, the auction advanced today to an unplanned and unanticipated Stage 3 in which the activity requirement was increased from 95% to 98%. Interestingly, in the FCC's Procedures document for this auction (Public Notice DA 07-4171, released October 5, 2007) they clearly rejected the idea of a three-stage auction, but reserved the right to "further alter the activity requirements before and/or during the auction as circumstances warrant." Apparently, they deemed that this situation indeed warranted a third stage, which had the effect of stimulating bidding activity back to levels that we have not seen in several days, and will speed the auction toward its ultimate conclusion. For this, we commend the Commission's decision.

As a result of going to Stage 3 and ten rounds, the auction today netted over $17M, more than double the daily take of any of the previous seven bidding days; and averaged nearly 50% more bids per round than yesterday. The biggest gains were in the E block, where a higher level of bidding had already been initiated in the last round yesterday, and bidding levels in E remained high throughout the day, whereas the levels in A and B dropped dramatically as the day progressed.

In the E block, the war for the big licenses raged on today and involved San Francisco, Boston, Seattle and Portland. The focus on the Pacific Northwest has us wondering if Paul Allen's Vulcan Spectrum is involved, but no one can be sure. The biggest news is that of those licenses, it appears for the moment that San Francisco, Boston, and Portland have changed hands, as the "victim" (whom we have assumed is Qualcomm) has not yet retaliated on these.

We would guess that blood pressure levels in the war rooms of the remaining bidders rose with the bidding activity today, as there seemed to be many frantic bids on licenses that have been idle for days or weeks in an attempt to retain bidding eligibility, and several bidding wars were sustained throughout the day. It seems that bidding in the B block is down to a handful of the smaller licenses, whereas in the A block a few medium-sized properties such as Greenville NC, Reno NV, and Boise ID received some interest today.

Due a data processing delay after Round 152, the auction was slightly delayed and only completed nine of the planned ten rounds, so tomorrow's bidding will start with Round 155. It seems all but certain that Auction 73 will exceed 161 rounds, the duration of the AWS auction in 2006.

Monday, March 3, 2008: Bidding at the end of Round 145

Here is the summary data for the auction to date:

Block MHz Number of Licenses Aggregate Total PWBs % of Reserve Current Cost per MHz-pop FCC Held Licenses
A 12 176 $3,950,896,000 219% $1.15 1
B 12 734 $9,137,628,900 665% $2.68 8
C 22 12 $4,748,319,000 102% $0.76 0
D 10 1 $472,042,000 35% $0.17 0
E 6 176 $1,252,405,300 139% $0.73 0
Total 62 1099 $19,561,291,299 9

And here is the data for today (note we are at 8 rounds per day):

Daily Sums Daily Averages per Round
Block PWB Delta New Bids Value of New Bids (BUs) PWB Delta New Bids Value of New Bids (BUs)
A $1,067,000 32 6,353,000 $133,375 4.0 794,125
B $878,000 57 3,023,900 $109,750 7.1 377,988
C $0 0 0 $0 0 0
D $0 0 0 $0 0 0
E $3,872,300 40 13,943,800 $484,038 5.0 1,742,975
Total $5,817,300 129 23,320,700 $727,163 16.1 2,915,088
Graph of FCC Auction 73 New Bids at the end of Round 145

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In the last round of the day, Round 145, two big licenses in the E block that had changed hands several rounds ago were regained by the original bidder: Boston had changed hands way back on February 20 in Round 90, and New Orleans had changed hands yesterday in Round 132. It appears the E block bidding war "victim", probably Qualcomm, is trying to get these licenses back. In addition, two new big licenses received bids today, Cleveland and St. Louis. Both received quick counterbids in the subsequent round.

Bidding in the A block continued to be the slowest of the three blocks in terms of new bids, but attempts to gain control of Harrisburg PA, Greenville NC, Augusta GA, and Reno NV helped increase the average PWB delta per round to a bigger margin than we've seen the past few days, with the exception of Friday. In the B block, several bidding wars continued through the day, including Joliet IL and a Virginia RSA outside of Norfolk.

After just two days, the eight-round schedule is being abandoned in favor of ten rounds per day starting tomorrow. In addition, the auction will transition to Stage 3 tomorrow, meaning that bidders must be active on 98% of their bidding eligibility in each round. The additional 3% of required activity may force a few more bids per round starting with Round 146 tomorrow morning. It seems that the Commission is now quite serious about ensuring a speedy conclusion to Auction 73, but it could take several more days, since we are still averaging over 16 new bids per round.


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