AT&T; Wireless PCS Inc. emerged as the winner of the Baltimore-Washington license to provide a new generation of cellular telephone services as the Federal Communications Commission yesterday ended the largest auction of airwaves since Marconi invented radio.
The AT&T; Corp. subsidiary emerged victorious for the single Baltimore-Washington license in the auction with a bid of $211.7 million. The other local license was awarded previously to American Personal Communications of Bethesda for being a pioneer in the development of "personal communications services" (PCS), a new digital technology that is expected to bring stiff competition and lower prices to the wireless telephone business.
In all, the auction raised just over $7 billion for 99 licenses in 51 markets.
"I'm a little surprised it went that high, but some people were hoping for up to $20 million," said Herschel Shosteck, a Silver Spring-based market economist who follows the cellular phone industry.
The highest bids came in the other two markets where there was only one license available, Los Angeles-San Diego, where Pacific Telesis Mobile Services paid $493.5 million; and New York, where an alliance of Sprint Corp. and three large cable companies paid $447.2 million.
On the basis of population, ATT's bid for Baltimore-Washington was one of the largest -- about $30 per person in the region that extends from the Eastern Shore to the West Virginia mountains.
By winning licenses to provide PCS in the extended Baltimore-Washington region, AT&T; and APC gain the right to challenge Bell Atlantic Mobile Services and Southwestern Bell's Cellular One for wireless telephone customers in the region.
The FCC auction, which began Dec. 5, dragged on through 111 rounds of bidding before the 112th round fetched no new offers yesterday.
Now that the winners have their licenses, they face the daunting tasks of finding sites for their towers over sometimes fierce local opposition, building extremely expensive networks and taking on entrenched cellular companies.
Nevertheless, some telecommunications industry analysts believe their prospects are bright.
Andrew Roscle, chief executive officer of the Washington consulting firm MTA-EMCI, said PCS providers can be significant challengers to the two incumbent cellular companies in each market.
"This is a market that has been a protected duopoly for a long time. We think there is room for additional competition," Mr. Roscle said.
But others expect the winners to curse the day they entered their high bids.
"We can't find a business case for head-to-head competition with cellular," Mr. Shosteck said, adding that cellular companies could cut their prices 40 percent to meet the competition and still be profitable.