FCC charges for online bidding
- By William Jackson
- Jan 27, 1997
The Federal Communications Commission has generated more than $20 billion for the
Treasury in two years, auctioning pieces of the personal communications services spectrum.
Part of the cost of the electronic auctions is defrayed by charging bidders for access to
an FCC server from their PCs over a 900-number telephone service.
Was the agency concerned about backlash against charging for the automated service?
''Always,'' said Jerry Vaughn, deputy chief of FCC's Wireless Telecommunications Bureau.
Bidders also had the option of phoning in bids over a toll-free 800 number or showing
up in person. But it soon became obvious that ''people didn't want to come to Washington
and camp out for two months,''said John Guili, director of technical operations at FCC's
auction center in Washington. They preferred to pay the communications charges.
Four months into FCC's 11th auction of personal communications services (PCS) spectrum
licenses, three-quarters of the 130 participants are opting to bid electronically, dialing
in over AT&T Corp.'s MultiQuest 900 Service. The others place voice bids over the
AT&T began offering MultiQuest 900 on its FTS 2000 contract in September, touting
it as a way to meet the National Performance Review goal of making government more
businesslike. Customer agencies can set the rate callers will pay to access a value-added
service, and the company collects the fees and sends monthly checks to the agencies.
It's part of a federal trend toward user fees, according to AT&T marketing manager
Shari Fisher. ''The idea is to push the cost back to the cost causer, not the
The Centers for Disease Control and Prevention is considering using the 900 service
along with AT&T's InfoWorks information menu to provide public fax-back capability,
Fisher said, and the State Department also is considering possible uses.
MultiQuest 900 requires at least a T1 dedicated line to AT&T's switched network.
The FCC has a 45-megabit/sec T3 fiber-optic line for access to its Sybase Inc. licensing
database for queries or bid submissions. The database resides on a Sun Microsystems Inc.
FCC developers created the bidders' Microsoft Windows front end with PowerBuilder
Desktop from Sybase subsidiary Powersoft Corp. of Concord, Mass.
The front end, tested at the California Institute of Technology's Advanced Computer
Systems laboratory, includes a Point-to-Point Protocol dialer.
The FCC began auctioning licenses for PCS frequencies when the old system of applicant
hearings before administrative law judges became too lengthy and expensive for the large
segments of spectrum being carved up.
The lottery system used to award cellular licenses would have been an improvement over
the hearings, but it wasn't cost-effective for the government because many winners sold
off their licenses. That led to ''years of paper turnover,''Guili said.
''We estimate there was $40 billion lost to the Treasury in the secondary and tertiary
turnover,''he said. ''Auction is the most effective way. We're letting the business people
tell us what [the spectrum] is worth.''
Applicants must pay a fee to engage in the simultaneous, multiround bidding where each
can see what others are offering. The auction continues until a round opens and no one
bids. The current auction, which started in September, is in Round 230, with net high bids
totaling about $2.5 billion.
PC bidding offers additional value over voice phone bids, because access to the
licensing database lets bidders track their competitors' as well as their own bids. Since
the software was introduced for the fourth FCC auction in December 1994, it has been
fine-tuned to keep running accounts by license area and by dollar amounts for each round.
Guili said bidders have been happy to pay the 900 charges in return for the extra
information and the convenience of staying at home. ''We've not had any backlash from it
at all,''he said.
William Jackson is a Maryland-based freelance writer.