FCC Spectrum Auction Draws Some Major Participants While Others Skittish

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Screen Shot 2016-07-17 at 9.25.11 PMIn the high-stakes auction house that is the FCC, 62 bidders have put down their ‘earnest money’ in anticipation of obtaining more spectrum.  Major wireless names such as Comcast, Verizon, AT&T, T-Mobile and Dish have taken their seats, paddles in hand, for the airwaves auction that begins on August 16th.
The FCC said the price of this particular 126 MHz ‘lot’ obtained from broadcasters to be sold for wireless use is up to $86.4 billion.
Analysts, according to Reuters, have called this secondary round of auctions, the “broadcast incentive” round, one of the FCC’s “most complex and ambitious to date” as wireless providers, may not be willing to pay the exorbitant price even though it means expanding their networks.
If not, analysts say, the FCC would be forced to hold additional auction rounds of bidding by broadcasters resulting in the availability of less spectrum than anticipated.
The opening round, the ‘reverse auction’, consisted of broadcasters giving up spectrum to the FCC for the lowest price. The forward auction in August, will focus on major wireless providers bidding on and buying those ‘gifted’ airwaves at the highest price.
Out of the 100 firms invited to participate, 62 have put up a 50% stake toward the opening bid price.  Recon Analytics analyst Roger Entner told Reuters the level of participation is understandable.  “In an election year, with a lot of uncertainty with Brexit making the debt markets jittery, it is unlikely that wireless operators with deep pockets would raise more debt to bid in the auction,” he said.
Reuters said S&P Global Market Intelligence estimated in April that a dozen broadcasters, such as Univision Communications Inc, CBS Corp, Sinclair Broadcast Group Inc and Media General Inc, could generate up to $13 billion in the spectrum auction at the high end of participation.
Recon’s Entner is not so sure. The broadcasters have “significantly inflated expectations,” he told Reuters.
Analysts say the second round could continue into early 2017.