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Friday, March 14, 2008: Bidding at the end of Round 234

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 $3,961,174,000 219% $1.16 2
B 12 734 $9,143,082,000 665% $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 $1,266,885,000 140% $0.74 0
Total 62 1099 $19,591,502,000 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 $0 0 0 $0 0.0 0
B $240,000 42 1,267,600 $24,000 4.2 126,760
C $0 0 0 $0 0 0
D $0 0 0 $0 0 0
E $900 3 10,200 $90 0.3 1,020
Total $240,900 45 1,277,800 $24,090 4.5 127,780
Graph of FCC Auction 73 New Bids at the end of Round 234

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Graph of FCC Auction 73 New Bidding Units at the end of Round 234

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In a shocking announcement, the FCC declared Auction 73 to be over and all results to date to be invalid. They further announced that all of the 1,099 licenses, including the D block license, will be re-auctioned in Auction 76. All this is due to a data processing error in Auction 73 that gave some bidders more bidding eligibility than they actually should have been entitled to under the FCC's published rules. According to FCC's announcement, the error "created an unfair advantage for certain bidders, and the results generated under these conditions cannot be justified and must be discarded."

OK, just kidding, but given today's events, we don't think the auction will make it to April Fool's Day, so we had to slip a joke in early. We certainly hope readers look at more than just our first paragraph. But seriously...

The auction slipped down another notch as just six licenses received bids today. The number of bids was down slightly, the value of new bids was down another 30% from yesterday, and the overall gain was a new daily low of just $241K. Three licenses in Puerto Rico saw some bids, with the Rincon license receiving eight bids and Culebra and Vieques receiving two bids each. But these are the three smallest licenses in the auction, and the "big" money today came as a result of the continuation of three bidding wars from yesterday, led by Crawford PA which completed its third day of receiving a bid in every round. The other two were continuing battles for Putnam FL and Garrett MD, each of which also continued through all ten rounds today.

The FCC has finally announced an increase to 14 rounds per day starting Monday, and has also made some changes to the formula used to calculate minimum acceptable bids which will increase bid amounts and hopefully speed the auction along. This FCC announcement is definitely not a joke, and is a very welcome change.

Finally, recall that in 2006 during Auction 66, after bidding had ended on Friday September 15 the FCC announced an increase to 14 rounds per day to start on Monday September 18, and the auction ended in the tenth round of that Monday. So if history decides to repeat itself, we may see the end on St. Patrick's Day. We suspect that Auction 73 will survive to see the sun rise on Tuesday, but we will find out next week. Have a great weekend!

Thursday, March 13, 2008: Bidding at the end of Round 224

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 $3,961,174,000 219% $1.16 2
B 12 734 $9,142,842,000 665% $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 $1,266,884,100 140% $0.74 0
Total 62 1099 $19,591,261,100 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 $0 0 0 $0 0.0 0
B $316,000 54 1,787,000 $31,600 5.4 178,700
C $0 0 0 $0 0 0
D $0 0 0 $0 0 0
E $1,300 5 17,000 $130 0.5 1,700
Total $317,300 59 1,804,000 $31,730 5.9 180,400
Graph of FCC Auction 73 New Bids at the end of Round 224

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Graph of FCC Auction 73 New Bidding Units at the end of Round 224

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As shown in the table and the first graph, the number of bids placed today was slightly more than yesterday and actually increased as the day progressed, but the value of those bids has decreased by about 30 to 40%, as shown in the second graph. Obviously this means that the overall focus has switched to smaller properties, and the reduction in the value of new bids implies that some of the remaining bidders may have dropped out or had their eligibility reduced today. In addition, the net proceeds have decreased substantially since yesterday, with the auction gaining only $317K today, a 73% drop from yesterday's $1.16M. This was mainly due to the fact that most of the larger, sustained bidding wars ended (namely Hunterdon NJ and Yuba City CA) and new battles were started on smaller licenses with much smaller price tags. For example, other than the single $1.8M bid placed on Hunterdon NJ in the first round of the day, the highest bid today was $262K for Crawford PA. By the way, it appears that the Hunterdon NJ license has now changed hands.

New bidding wars broke out in Garrett MD and Franklin MA today and there was sporadic bidding for three different RSAs in Puerto Rico. The American Samoa E license survived a second take-over attempt in as many days, and a third may have started in today's last round. The battle for Crawford PA went round-for-round for the second straight day, and a take-over attempt that started yesterday for Lewiston-Auburn ME was short-lived and ended early. Putnam FL and Amelia VA were also involved in heavy bidding today.

Given the licenses that appear to be active today, the following can be said about the number of licenses in the B block that may still receive new bids if remaining bidders consider only licenses of comparable or smaller size:

  1. If price tag is the driver, there are still 133 licenses that are less expensive than the most expensive license still in play (Crawford PA at $262K).
  2. If the value in bidding units is the limiting factor, there are still 348 licenses that are less valuable than the most valuable license still in play (Crawford PA again at 71,000 bidding units).
  3. And if the current cost per MHz-pop is attracting remaining bidders to potential bargains, there are still 213 licenses with a lower normalized cost than the license with the highest cost that is still in play (excluding the Puerto Rican island of Culebra whose pop count is less relevant because of tourists, the highest cost per MHz-pop is currently Vieques PR at $0.28).

In other words, there are still a lot of choices for remaining bidders to consider from now until the end of the auction.

So far the FCC has elected not to increase the number of rounds, so bidding tomorrow will follow the ten-round format again.

Wednesday, March 12, 2008: Bidding at the end of Round 214

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 $3,961,174,000 219% $1.16 2
B 12 734 $9,142,526,000 665% $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 $1,266,882,800 140% $0.74 0
Total 62 1099 $19,590,943,800 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 $0 0 0 $0 0.0 0
B $1,158,000 51 2,872,600 $115,800 5.1 287,260
C $0 0 0 $0 0 0
D $0 0 0 $0 0 0
E $1,500 6 20,400 $150 0.6 2040
Total $1,159,500 57 2,893,000 $115,950 5.7 289,300
Graph of FCC Auction 73 Daily Proceeds at the end of Round 214

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Graph of FCC Auction 73 New Bids versus Auction 66 New Bids at the end of Round 214

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The "Whack-a-Mole" pattern resumed today, as bidding wars in Albany GA and Imperial CA ended and new battles for RSAs in Michigan and Pennsylvania immediately replaced them. Then in the last round of the day, the battle for the Michigan RSA was abandoned and replaced by a potential battle for an RSA in Maine. A brief bidding war also sprang up for the American Samoa E license, and a late-day bid for the third smallest license in the auction, the B license for the Rincon PR RSA, started a small bidding war there. But the money drivers today were two of the three B block bidding wars that carried over from yesterday and continued throughout the day today: the Yuba City CA MSA and the Hunterdon NJ RSA. These two helped push daily proceeds higher than yesterday, to $1.16M. Note that this is the second day in a row that the auction's daily proceeds have increased - not a good sign for those of us who are looking for a quick ending.

The auction has entered a phase in which the most interesting analysis is the prediction of when it will end. As stated yesterday, the conditions are such that it could theoretically go on for a very long time, perhaps another 100 rounds or more. There are still hundreds of licenses within reach that bidders may consider to be undervalued compared to others, and the duration of the auction depends on how many of these licenses are desired by bidders who do not currently hold them, and how many remaining bidders are adamant about systematically pursuing them. Without this knowledge, we can only base a prediction on the events of Auction 66, but clearly, Auction 73 has been carving a very different path as it approaches its end, as can be seen in the second graph. Regardless, more rounds per day would be helpful, since based on recent events and the information from Auction 66 we are now predicting at least another 25 to 35 rounds. At the current rate of ten rounds per day, this will almost certainly push the end date into next week, unless the number of rounds is drastically increased for Friday's bidding.

To be fair to our friends at the FCC, the day before Auction 66 transitioned from ten rounds per day to 14, that auction was averaging just two bids per round. Since Auction 73 is still averaging five to six bids per round, one could argue that an increase is not overdue. But we would still maintain that it is, given the possibility that this auction could drag on well into next week. We had warned that the ending may appear asymptotic, but the past few days have not brought the line any closer to zero. So in our opinion, it's time for a change.

Tuesday, March 11, 2008: Bidding at the end of Round 204

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 $3,961,174,000 219% $1.16 2
B 12 734 $9,141,368,000 665% $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 $19,589,784,300 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 $0 0 0 $0 0.0 0
B $1,045,000 50 2,870,000 $104,500 5.0 287,000
C $0 0 0 $0 0 0
D $0 0 0 $0 0 0
E $0 0 0 $0 0 0
Total $1,045,000 50 2,870,000 $104,500 5.0 287,000
Graph of FCC Auction 73 New Bids at the end of Round 204

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Graph of FCC Auction 73 Cost per MHz-pop for B Block Licenses at the end of Round 204

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As shown in the first graph, the bidding today could not have been more consistent. In fact, it was more consistent than the graph conveys since each of the five bids per round were placed on the same five licenses, rather than the "Whack-a-Mole" scenario of bidding wars moving around, as we discussed yesterday. So five existing bidding wars in the B block continued today, and as a result the auction netted more today than it did yesterday, gaining just over $1M. And because of the sustained patterns, no bidder could have had their eligibility reduced today, meaning that we are not much closer to the end than we were yesterday.

The five B block licenses that saw bidding action today were the Yuba City CA and Albany GA MSAs and the Hunterdon NJ, Imperial CA, and Ashtabula OH RSAs. The battles for Albany GA and Ashtabula OH started yesterday and the other three started on Friday. The current cost per MHz-pop for these licenses ranges from $0.12 for Ashtabula OH to $0.83 for Hunterdon NJ. All are well below the $2.68 average for the block, but then 90% of the B block licenses are below the average, as one can see in the second graph. This graph shows the distribution of the cost per MHz-pop of B block licenses in increments of 20 cents (10 cents plus or minus the value on the X axis). Looking at this graph one can see that roughly two thirds of the B block licenses are under $1.00 per MHz-pop, and although bidding units are not shown, it is clear that a large number of licenses are still potentially in play.

Since the FCC uses an activity-based formula to calculate the minimum acceptable bid (MAB) for each license in the subsequent round, the delta between the MAB for the next round and the PWB for the current round increases when there is a back-and-forth bidding war for a license. Therefore, since bidding activity today was limited to five bidding wars that were sustained for all ten rounds, the net proceeds per round gradually increased as the day went on. The net per round started at $85K in Round 195 and worked its way up to $125K by Round 204, for a total over ten rounds of $1.1M.

Our prediction for a March 12 end date is now at risk due to two factors: 1) The FCC still has not increased the number of rounds per day from ten to 12 or 14, as one might have expected based their actions in Auction 66, and 2) the sustained interest in handful of small licenses keeps bidders alive to bid on progressively smaller licenses, and as our second graph shows, there are still many of these from which to choose. We will see what happens tomorrow...

Monday, March 10, 2008: Bidding at the end of Round 194

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 $3,961,174,000 219% $1.16 2
B 12 734 $9,140,323,000 665% $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 $19,588,739,300 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 $1,000 1 6,900 $100 0.1 690
B $756,000 56 2,862,600 $75,600 5.6 286,950
C $0 0 0 $0 0 0
D $0 0 0 $0 0 0
E $0 0 0 $0 0 0
Total $757,000 57 2,869,500 $75,700 5.7 286,950
Graph of FCC Auction 73 New Bidding Units at the end of Round 194

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Graph of FCC Auction 73 New Bidsat the end of Round 194

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As suggested on Friday, the auction stepped down to a new level as bidding in the A and E blocks has essentially ended. Nearly all bids placed today were in the B block for licenses that are among the smallest in the auction, so the net proceeds were a mere $757K, our first day in the sub-$1M range. Unbelievably, the FCC has not yet announced an increase in the number of rounds per day, so tomorrow's bidding will follow the current ten-round bidding schedule.

Several bidding wars continued in the B block today, with two in California (Yuba City and Imperial), one in Hunterdon NJ, and one in Burlington NC. Most of these licenses saw activity in all ten of today's rounds and most battles were a continuation of ones that started on Friday. The exception was the Burlington NC battle which started several days ago and may have ended today, since bidding on it stopped in the last round and was replaced with bids on Albany GA and an RSA in New Mexico. We don't know when these battles may end, and even when they do, other battles may spring up in their place, reminiscent of "Whack-A-Mole." This seems to have been the case with Burlington NC, and another example occured today when two bidding wars in Tennessee suddenly ended and a new one started in Ohio in the following round.

The only bid on a license outside the B block today was a bid on the A block license for American Samoa, but in fact this was related to activities in the B block. The B block license for American Samoa had been involved in a bidding war since Round 170, but when one of the bidders paid a price for the B license that exceeded the minimum new bid price for the same license in the A block, the other bidder placed a bid on the A block license, and the bidding activity abruptly stopped. So our guess is that both bidders are now happy and that each holds one of the 12 MHz licenses.

The auction is now back to just nine licenses held by the FCC, as a bidder picked up the previously held B block license for Sherman-Denison TX in Round 175 on Friday. The nine remaining unsold licenses are the A block licenses for Wheeling WV and Lubbock TX, and the B block licenses for Steubenville OH, Fargo ND, Grand Forks ND, Bismarck ND, and one RSA in each of NC, SC, and VA.

Regardless of the metric used, whether it's bidding units, overall price, or price per MHz-pop, the fact is that there are still more than two hundred licenses in the B block that are less expensive than the five or six that are receiving bids now. Therefore, it is very difficult to know exactly when the bidding will stop, but we are still optimistic that the end will come in the next couple days.


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