FCC Reverse Auction Stage II Closes at $54.6B

October 13, 2016
WASHINGTON— The second stage of the TV spectrum incentive auction has closed at a clearing target cost of $54.6 billion, north of twice what the $23.1 billion wireless providers bid in the first stage of the forward auction. The first stage targeted 126 MHz of spectrum, which broadcasters put on the block for more than $88 billion. This time, they’re asking for $54.6 billion for 114 MHz.

“The conclusion of the second stage of the reverse auction is an important waypoint for the auction proceedings,” offered Dan Hays of PwC Strategy&. “While the first stage started with an ambitious 126 MHz spectrum clearing target and sky-high opening bids, forcing the FCC to lock in many stations at high costs early on, the second stage is clearly different, as shown by today’s results.”

“The significant reduction in the targeted net proceeds of the reverse auction shows just how effective the auction mechanisms can be in bringing together supply and demand. However, at over $54.6 billion to broadcasters, or roughly $56.5 billion in total, we believe that the clearing cost is still well beyond striking distance for the budgets of mobile network operators. A third stage of the auction, and perhaps even a fourth, is now all but a certainty. For broadcasters, this is a clear indication of a rapid decline in interest at lower prices, effectively calling the bluff of the wireless industry and demanding that they come to the table ready to pay up.”

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