FCC Halts Auction Mid-day to Drop Spectrum Clearing Target…Again


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auction gavel (4)The FCC’s spectrum incentive auction will go into a third stage. That’s because the second stage closed after one round yesterday, more than $35 billion short of the $56.5 billion goal. The total bid was $21,519,907,210, according to the Commission.

The results play into what was expected to be “tepid carrier interest,” according to Bloomberg analysts John Butler and Matthew Kanterman. They predicted earlier the total bid for airwaves would only reach around $28.2 billion, reports Bloomberg BNA.

AT&T has committed to spending $9.4 billion, and the pair estimate Comcast and Verizon will spend half that, with T-Mobile likely bidding about $5.5 billion.

The first stage of the auction ended August 30, after reaching $23.1 billion in bids, well below the $88.4 billion in total clearing costs the FCC targeted for the stage, Inside Towers reported. The Commission lowered the amount of spectrum it freed up from 126 MHz to 114 MHz.

Now, the agency will lower the clearing target again. The FCC said it expects to release a public notice next week announcing details about the next stage, including the clearing target for Stage 3, and the time and date when bidding in Stage 3 of the reverse auction will begin. 

For Pillsbury Communications attorney Scott Flick, a big question now is whether the FCC will continue to slowly reduce the clearing target (126 MHz in Stage 1, 114 MHz in Stage 2, and now 108 MHz in Stage 3?) as it previously indicated, or whether the agency can make a more significant reduction that brings the forward and reverse auction dollar figures closer. “Bidder fatigue is definitely beginning to set in,” he notes in a blog.  

Broadcasters were startled Stage 2 of the forward auction closed after only one round of bidding. NAB EVP Communications Dennis Wharton stated: “NAB is surprised by the results of wireless carrier bidding in the second stage of the FCC’s TV auction. Broadcasters look forward to the third stage of bidding and a successful completion of the auction.”

Preston Padden, former head of the Equal Opportunities for Broadcasters Coalition and now a consultant for television broadcasters taking part in the auction, remains upbeat. “This is a complicated auction design and no significance should be attached to interim steps. As supply contracts in future stages I am confident that the auction will become more competitive leading to a successful conclusion,” he told Inside Towers.  

October 20, 2016

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