Communications Giants Go After Wireless Licenses
The Federal Communications Commission on Monday begins its biggest airwaves auction ever with the sale of nearly 1,500 advanced wireless communications licenses to some of the biggest names in telecommunications.
AT&T Corp.’s AT&T Wireless PCS Inc. deposited $90 million to qualify to bid on two-thirds of the licenses. Sprint Corp.’s SprintCom Inc. subsidiary anted up $84 million, and Omnipoint Corp. formed a group that paid about $60 million up front.
A total of 153 bidders have put up $763 million for the right to bid.
The licenses for sale give winners the right to provide next-generation cellular phone service known as personal communications services, or PCS. The technology is expected to be introduced in Spokane late this year, or next.
PCS is about 20 percent cheaper than cellular on average, though its transmissions are less powerful and require a greater number of transmission towers. It’s digital, faster, and more secure. It offers services such as call waiting, caller ID and voice mail, and its handsets are smaller.
The licenses auctioned Monday will be the last offered by the government. Unlike three sales before, Monday’s licenses will have a smaller, 10 megahertz airwave band, meaning they have less capacity to handle calls.
“These licenses will probably not go for as high a price” as those previously sold, said Matthew Robison, analyst at Montgomery Securities in San Francisco. “They offer less spectrum, which also means the infrastructure costs to provide the same service will be higher.”
So far, five PCS networks are up and running in the U.S.: Sprint Corp.’s Sprint Spectrum in Washington, D.C.; Western Wireless Corp. in Honolulu; and BellSouth Corp.’s BellSouth Mobility in Salt Lake City, Utah; Charlotte, North Carolina, and Knoxville, Tennessee.
The industry estimates that PCS subscriptions will leapfrog from zero today to 14.8 million in the year 2000 to 39.4 million in 2005.
Two bidders for the Spokane market last year paid a combined $11.9 million for their licenses. One was Sprint Telecommunications Venture; the other, Poka Lambro, a Texas telephone company. Poka Lambro later agreed to sell its license to a group including Elltel Wireless, a subsidiary of Ellensburg Telephone, and GTE Macro Communications Corp.
Some of the stocks that moved substantially or traded heavily Friday on the New York Stock Exchange, Nasdaq Stock Market, and American Stock Exchange.
NYSE
Philip Morris, up 1-1/4 at 88
RJR Nabisco, up 1/4 at 25
The regulatory and legal assault on the tobacco industry continued with confirmation of President Clinton’s decision to declare nicotine an addictive drug and place cigarettes under the Food and Drug Administration. But tobacco stocks, already hit hard by concerns about smoker damage suits, rebounded, possibly because the FDA plan doesn’t include Clinton’s proposed bans on vending-machine and mail-order sales.
AnnTaylor Stores, down 1 at 14-5/8 Chairman and chief executive Sally Frame Kasaks resigned to pursue other interests. The New York-based women’s apparel retailer said J. Patrick Spainhour, president and chief operating officer, was named to fill Kasaks’ posts. The search for a new president will begin immediately.
Nasdaq
Magal Security, up 1-3/16 at 8-7/16
InVision, up 2-1/2 at 23
Stocks in makers of bomb detection equipment rose on news that traces of a chemical residue that may have come from a bomb or a missile were found on wreckage fragments of TWA Flight 800.