Spectrum Auction Total Nears First Benchmark

Bids top $15 billion after Round 13
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Update:In Round 15, Bidders Hit First Spectrum Auction Benchmark

The forward part of the FCC's spectrum incentive auction continued to pick up steam Wednesday (Aug. 24), with the latest round -- No. 13 -- bringing in $15,077,767,000 in bids.

That's $14.450 billion net of discounts and bidding credits for various parties (and up more than $500 million from the $14,440,301,000/$13.820 generated in round 12) . It is also nearing one of two benchmarks for closing the auction, while the second remains a distant figure on the horizon.

The FCC cannot close the auction until the forward portion net amount (the amount above $14.450 billion) equals or exceeds the $88,379,558,704 (that figure on the horizon) the FCC will need to cover the cost of paying broadcasters for that spectrum, paying for the logistics of conducting the auction itself and paying for TV station relocations so those bidding in the forward auction can get access to the spectrum.

But there is also another benchmark to closing the auction, which is the one that could be met today (Aug. 24).

In order to assure that the government is getting fair value for the licenses relative to what has been paid in similar auctions, the FCC generally sets a benchmark minimum price, in this case a formula based on multiplying "the price benchmark of $1.25 per MHz-pop, by the forward auction spectrum benchmark of 70 megahertz by the total number of pops associated with the Category 1 blocks in high-demand [top 40] PEAs [partial economic areas, which is how it divided up the 126 MHz of spectrum reclaimed]."

That comes to a total of $15,896,290,987.

So, when that number is met, as it likely will be by the end of today, the FCC will have met one of its two benchmarks for closing the auction.

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