WASHINGTON—The Congressional Budget Office estimates that broadcasters’ cut from incentive auction proceeds could range from 25 to 75 percent, depending on the market. The CBO also hasn’t moved far from its original estimate for how much the auction is likely to net for the fed, from $24.5 billion in 2011 to a median of $25 billion now, according to correspondence between the CBO and a lawmaker.
“On the basis of the information available when CBO developed its March 2015 baseline budget projections, CBO estimates that the net proceeds from the incentive auction will probably be between $10 billion and $40 billion, with an expected value of $25 billion, the middle of that range,” the CBO said in a letter to Nevada Republican Sen. Dean Heller, who queried the agency about the auction.
The CBO said the estimated range takes the known unknowns into account.
“That estimate reflects a wide range of possible outcomes,” the letter said. “It is based on the expectation, for example, that the quantity of spectrum made available by broadcasters could range from 20 megahertz to more than 100 megahertz; that the portion of auction proceeds paid to broadcasters could range from about 25 percent to 75 percent; and that the prices paid by wireless firms will be similar to those paid in the AWS-3 auction, but will vary according to the number, location, and characteristics of the licenses.”
The mid-range figure—$25 billion—isn’t far from the CBO’s 2011 estimate that the TV spectrum incentive auction would generate $24.5 billion.
“CBO estimates that enacting those provisions would reduce direct spending by $24.5 billion over the 2012-21 period,” it told Congress in 2011. “That estimate reflects the expected value of offsetting receipts—based on the outcomes of various scenarios regarding the quantity and quality of frequencies likely to be auctioned over this period—net of direct spending to compensate existing licensees affected by the auctions.”
The CBO letter answered a list of question from Heller, including where proceeds would go if earlier auctions fulfilled the statutory amount designated for the Public Safety Trust Fund for funding FirstNet, a proposed nationwide broadband network dedicated to public safety communications.
“Because the amounts deposited into the PSTF from auctions completed in 2015 or earlier are expected to equal $28 billion, CBO anticipates that the proceeds from the incentive auction that are not deposited into the [TV Broadcaster Relocation Fund] or used for auction expenses will be deposited into the general
fund and will have the effect of reducing the deficit,” the CBO told Heller.
Heller also asked when the money would start rolling in. The CBO said that “if the incentive auction begins in the calendar year, 2016, the bulk of the receipts will probably be recorded in fiscal year 2017.”
The CBO’s high estimate of $40 billion is $5 billion short of a figure proffered last October by a sellers’ coalition that pegged the top end at $45 billion. The group has since raised their estimate to as much as $80 billion in gross receipts in light of the AWS-3 auction generating nearly $45 billion.
The AWS-3 auction comprised 65 MHz of spectrum in the 1.7 and 2 GHz ands. The fed hopes to reclaim 84 MHz in the TV incentive spectrum auction, but the final tally will not be known until after the fact, since participation is anonymous and TV station licensees can drop out during the bidding.
The auction is tentatively schedule for June of 2016.
October 2, 2014
“$45 Billion Auction Projection Rests on AT&T’s DirecTV Acquisition Pledge”
The $45 billion being proffered as potential incentive auction proceeds was derived from AT&T’s commitment to spend $9 billion on 20 MHz of TV spectrum if its bid to buy DirecTV goes through.
September 12, 2011
“Reclaimed TV Spectrum Valued at $28 Billion in Obama Jobs Bill”
President Obama’s proposed jobs bill assumes that incentive TV spectrum auctions will bring around $28 billion in proceeds.
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