FCC Moves to Second Stage of Spectrum Auction

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By Lydia Beyoud

Aug. 30 — The Federal Communications Commission ended the first stage of the spectrum incentive auction Aug. 30 and announced it would progress to a second stage at a lower spectrum clearing target.

The agency made the move after 27 rounds of bidding in the first stage reached $23.1 billion in auction proceeds, well below the $88.4 billion necessary to close the auction at the first stage. Industry analysts predict that second round bids will likely top out around $30 billion to $35 billion.

The first-of-its-kind incentive auction involves a form of two-step spectrum flipping from the broadcast TV industry into the hands of wireless carriers. Eligible forward auction bidding participants include top national wireless carriers AT&T Inc., T-Mobile US Inc. and Verizon Wireless, as well as regional carriers, satellite carrier Dish Network Corp. and cable provider Comcast Corp.

The FCC started the first stage of bidding at its initial 126 megahertz (MHz) spectrum clearing target after receiving strong pressure from both sides of the auction to try to open up as much spectrum as possible. However, the amount of auction proceeds needed to close at that level proved to be beyond the market's ability to supply.

The FCC's move was widely expected. The commission designed the auction to run through multiple stages at successively lower spectrum targets, based on market demand. Telecom industry analysts had predicted that the auction would progress to at least a second stage, though most had not predicted the first stage, which began Aug. 16, would end so soon (2016 TLN 5, 9/1/16).

The FCC may announce a start date for the second stage of the auction as soon as Aug. 31. Auction procedures require a minimum of five business days between stages.

The next stage is expected to be set at a clearing target of 114 MHz. The cost to clear broadcasters from that amount of spectrum should be several billion dollars below the $88.4 billion target set in Round 1, but will also result in fewer wireless licenses on the auction block.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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