LMDS auction gets final shuffle: Entrepreneurs, two RHCs in, CellularVision out

The time to put up or shut up has passed for carriers looking to enter the auction for spectrum in the local multipoint distribution services band.

As of late last week, the FCC had yet to release the names of those that have made initial deposits for the licenses. However, based on initial filings, the auction appears not to have attracted much attention from large carriers except U S West and SBC Communications, both of which had little to say about their plans.

"There was a requirement to submit paperwork," said a U S West spokesman. "It's a placeholder."

Southwestern Bell Video Services, which appeared on the verge of extinction after parent SBC shut down its nascent cable operations, also has tossed its name into the ring. "All I can say is that we're involved," said a spokesman.

Last week, the FCC affirmed its auction rules, including a provision that prevents telcos or cable operators from owning the most desirable A-block LMDS licenses in their home territories until June 20, 2000. Under those same rules, though, telcos may own up to 20% of a bidder, and several smaller telcos have said they will bid for spectrum outside their territories.

One big name that opted out at the last minute was LMDS pioneer CellularVision. The company, which offers cable, Internet access and telephone service in New York, instead will provide expertise to other winning bidders and likely will form alliances, said CEO Shant Hovnanian.

The move puts CellularVision in the same position as LMDS vendors such as Bosch Telecom and Alcatel Telecom-with one big difference: "There's a huge learning curve that companies will have to go through, and we've already done it," he said.

For most bidders, LMDS will not be a multiservice platform but an extension of their existing businesses such as wireless voice or data.

"[LMDS] becomes very expensive if you fail to achieve a high penetration rate," said Andy Fuertes, a senior analyst at Allied Business Intelligence, an Oyster Bay, N.Y., research group. Those using LMDS to offer Internet access will have to concentrate on high-density urban markets where there will be gaps in cable modem, digital subscriber line and other high-speed services.

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