Individual Bidders Flock to Auction

A California cellular communication tower. Data and voice signals to cellphones travel over airwaves. ENLARGE
A California cellular communication tower. Data and voice signals to cellphones travel over airwaves. Photo: Justin Sullivan/Getty Images

A coming government auction of wireless airwaves has attracted an unusually large number of individuals to an affair typically dominated by corporate giants such as AT&T Inc. T 0.44 % and Verizon Communications Inc. VZ 0.14 %

Every few years the federal government sells rights to use slices of the nation’s airwaves to deliver data and voice signals to cellphones. While such auctions usually draw a few outsiders, nearly 30 of the 104 applications submitted by this year’s potential bidders are from individuals without corporate ties.

No other auction in the past decade has drawn more than nine individuals, according to Federal Communications Commission records.

In the previous sale, which ended in 2015, the government raised nearly $ 45 billion bids, with the big wireless carriers accounting for two-thirds of that sum. Just five of the 80 applicants were individuals.

The individual bidders in the current auction include an elected official in California, a young Wisconsinite, and a retired school principal in Chicago. They all are asking for a 25% discount, an incentive that Congress encouraged the FCC to create more than two decades ago to attract new entrants to the wireless industry.

That incentive plan backfired last year when Dish Network Corp. DISH -0.58 % worked with two smaller companies to claim a $ 3.3 billion price break on $ 13.3 billion worth of airwaves. The FCC later denied the discount, saying Dish violated the rules by effectively controlling the two smaller entities. Dish said at the time it complied with the rules.

The unusual number of individuals among this year’s would-be bidders has raised questions within the FCC.

“It is difficult to see how many of the individuals who have filed to participate in the auction would have the resources to purchase spectrum,” said one agency official.

This is the first auction since the FCC changed the discount rules last year.

While the agency prohibited bidders from collaborating with one another in the auction and capped the discounts at $ 150 million per bidder, it also gave small players more leeway with the airwaves they win.

Successful bidders who qualify for discounts are allowed to lease all their airwaves to larger companies.

Previously, they could lease out only a portion of them. The agency kept a rule that allows successful bidders to sell the spectrum after five years and pocket any profit.

Most potential bidders contacted by The Wall Street Journal declined to explain their plans. Some, like 20-year-old James Hulce of Wisconsin, said they planned to build their own wireless operations.

While it can be tough to outbid the national carriers, some licenses are relatively cheap. In the previous auction, dozens of licenses sold for less than $ 100,000 each. But individuals typically account for less than 1% of the total accepted bids, according to auction records.

Among those seeking to participate in this year’s auction is Barbara Parker, the city attorney of Oakland, Calif. Other applicants include one of her colleagues, Dianne Millner, and two of Ms. Millner’s relatives.

Ms. Parker declined to comment on the auction, citing FCC rules requiring a quiet period. Her chief of staff said the bid has nothing to do with the city of Oakland. Ms. Millner declined to comment.

Booker T. Wade Jr., who worked for the FCC decades ago and contributed to Ms. Parker’s election campaign in 2011, is participating with a newly formed company. At least four of Mr. Wade’s relatives also applied to bid.

“We are in a quiet period and may not communicate about bidding strategy with other applicants directly or indirectly through the press,” Mr. Wade wrote in an email. “Some could argue that any communication bears upon strategy. Thus, I can’t make any comment.”

More than a dozen individual applicants, including Ms. Parker, appear to have a connection with one another, according to FCC filings, campaign contribution records, an obituary and Facebook FB 0.30 % connections.

All of those individuals indicated on their applications that they aren’t working with other bidders or outside parties.

An FCC spokesman declined to comment on individual applicants. The agency reviews bids after such auctions to ensure compliance with the rules. US Business

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