 functional substi- tute for cellular (a name that, in the United States, formally applied only to the 800-MHz systems) and thus appeared to have the highest profit poten- tial. Given the imperatives of license auctions, an alternative such as low tier with its lower profit potential (even if the capital expenditure were some- what lower, which remained to be seen) would not be economically practi- cal. That first PCS auction, for the so-called A and B blocks of 30 MHz apiece, with a fairly large geographic license area [4], raised close to $7 billion dol- lars-far more than some forecasters had expected. License valuations are typi- cally stated in terms of "$/pop," the number of dollars per person living in the license's footprint. Licenses in some top-tier markets, such as Atlanta and Chi- cago, went for about $25 to $30/pop. Prices were much lower in more rural markets, like Spokane, Wash., and Omaha, Neb., where they were closer to $3/pop-perhaps bidders assumed that the older cellular bandwidth would not be exhausted SO soon. Major bidders included AT&T, Sprint Spectrum (jointly owned with three major cable companies), and PrimeCo, a joint venture of sev- eral RBOCs. The PCS C-block auction, held a year later, yielded even more surpris- ing results. The FCC had reserved two blocks, the 30-MHz-wide C block and 10-MHz-wide F block, for small businesses and other "designated enti- ties." The idea was to reserve some spectrum for newcomers. But it was a farce-what small business could afford to participate in this type of auction? The answer turned out to be that a newly created company called Next Wave bid very heavily. Backed by wealthy investors, including Qualcomm and Global Crossing, but technically a small start-up, NextWave bid an amazing $4.7 bil- lion for licenses in 56 markets, including New York, Washington, and Los Angeles. Several of NextWave's bids went over $50/pop, often paying about three times what winning bidders paid for the same amount of spectrum the year before. And that earlier auction h