FCC

Spectrum Auction Stage 3: In and Out

Wireless companies refuse to raise bids, ending forward portion after one round 12/05/2016 12:29 PM Eastern

Stage three of the forward portion of the FCC's spectrum auction began and ended Monday when forward auction bidders again refused to up their prices for reclaimed broadcast spectrum.

 

In fact, the total after stage there was lower -- $19,676,240,520 -- because the FCC reduced the amount of spectrum and the bidders simply reduced their demand along with it. That means the FCC will lower its spectrum-clearing target and proceed to stage four of the reverse auction, likely in only a few days.

 

Stage three of the reverse auction ended last week with broadcasters new asking price now $40,313,164,425 for 108 MHz of spectrum. In stage two, the price was $55 billion for 114 MHZ, but forward auction bidders, who had only ponied up $22 billion in stage one toward an opening price of $86 billion for 126 MHZ did not budge, simply reducing their demand rather than up the price.

 

They did the same Monday, signaling broadcasters will have to drop their prices yet again, and wireless companies will get access to even less spectrum, in stage four.

 

The FCC has nine different spectrum targets. Stage three of the reverse auction launched Nov. 1 at a 108 MHz clearing target. The next target is 84 MHz, which some see as the potential equilibrium point between broadcasters' asks and forward bidders' offers, perhaps around a $30 billion number.

 

The lower the clearing target goes without wireless bidders covering the reverse figure, the more broadcasters question wireless bidder cries of a spectrum crunch necessitating the auction in the first place.

 

The auction was designed for multiple rounds since it is bidders on both sides, not the FCC, that is determining the price point at which the spectrum is more valuable to wireless bidders for broadband than broadcasters for over-the-air service.

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