The US Federal Communications Commission (FCC) auction to reallocate broadcast spectrum to mobile operators reached its final stage, with bids totaling $19.6 billion much lower than the $86.4 billion originally floated.
At the end of last week, the FCC formally closed the “Clock Phase” of the auction – which saw companies bidding for generic licences for blocks of cleared spectrum. Winning bidders will now be able to compete for frequency-specific licences in the auction’s final phase.
The identities of the successful companies are yet to be revealed, but in July the FCC announced there were 62 registered bidders including AT&T, Verizon and T-Mobile US. At the time Sprint and Google announced they would not be competing.
Of the $19.6 billion bid during the auction, more than $10 billion will be given to broadcasters which sold the spectrum in the reverse auction phase. The US Treasury will receive more than $6 billion and other broadcasters impacted by the reallocation will receive an unspecified level of capital for investment into their services.
Following the first stage of the auction, where broadcasters bid to sell and clear specific blocks of spectrum, the FCC estimated it would achieve $86.4 billion from wireless providers. The quote was immediately questioned by analysts, who doubted operators would be willing to meet the lofty valuation.
After several stages of bidding by wireless providers failed to reach the reserve, the FCC then reduced the allocation available. Its new reserve was finally met in January and the Commission announced the auction would end during Q1.
FCC Commissioner Michael O’Rielly said: “While I am pleased that the forward auction has closed and we don’t have a failed auction on our hands, significant review is necessary to understand how the FCC rules and auction design impacted the results.
“Although Congress provided a strong statute to utilise market forces to ensure spectrum is put to its most efficient use, including for necessary wireless voice and data licenses, the previous majority’s implementation appears to have been based on some assumptions that were far off the mark.”