Could Spectrum Prices Fall in 600-MHz Auctions?

If spectrum is real estate, does spectrum value vary as housing and real estate prices do?

To be more specific, is spectrum a commodity subject to local supply and demand, as is real estate? Some think that is the case.

Spectrum "is not a simple commodity," said Craig Moffett, MoffettNathanson senior analyst.

Moffett said spectrum prices actually have fluctuated over the past decade, making it difficult to forecast what spectrum licenses will sell for in the future.

In some cases, prices for the same spectrum licenses have declined. During the FCC's Auction 35 for the 1900 MHz PCS C and F Blocks in 2001, prices per MHz-POP hit $4.35, said Moffet.

In 2005, when there was a re-auction of that same spectrum, prices only reached $2.65 per MHz-POP.

PCS C and F Block prices reached $0.88 per MHz-POP during the FCC's Auction 58 in 2005, and then they fell to $0.58 in 2010 when those licenses were subsequently sold.

That observation might be especially relevant for the now-postponed auctions of 600-MHz broadcast TV spectrum, which will require two auction processes, possible spectrum set-asides, and possible boycotts by one or two of the biggest potential bidders.

Prices are shaped by supply and demand. And demand could become an issue.