FCC 600-MHz Auction: Much Less Demand Than Expected

The fourth stage of the Federal Communications Commission’s incentive auction to repurpose former 600-MHz TV broadcast spectrum has begun. Three earlier efforts to match buyer and seller expectations failed to “clear,” and each time a smaller amount of spectrum and lower minimum prices have been set.

At stake in the present auction is 84 MHz of spectrum. The FCC originally hoped to auction off about 126 MHz worth of spectrum. Some observers predict the auction ultimately will sell for only about $20 billion. Originally, many believed the auction would raise $88 billion.

In addition to other ways to secure required spectrum, the auction design, which generally limits AT&T and Verizon from bidding on about 30 MHz of spectrum, also means those firms have some incentive not to trigger the set-aside spectrum, which kicks in once 70 MHz of total spectrum are sold.

Because the two biggest potential bidders cannot acquire that 30-MHz of set-aside spectrum, other bidders, such as T-Mobile US, Comcast or others, stand to get their spectrum at lower prices than will AT&T and Verizon.

As much as either AT&T or Verizon might like to pick up some 600-MHz spectrum, their interests also are served by the auction process not reaching the 70-MHz of “cleared” spectrum.