As stage 2 of incentive auction starts, it’s unclear whether 600 MHz will be used for 5G or LTE


Stage 2 of the FCC’s ongoing incentive auction of TV broadcasters’ unwanted 600 MHz spectrum started this morning, and the agency said the event’s clearing target is now set at 114 MHz. That’s slightly lower than the 126 MHz clearing target the agency started out with at the onset of the auction earlier this year.

However, the FCC said that, in Stage 2, there are more spectrum blocks that are being offered that are completely unimpaired: 99.6 percent in Stage 2, compared with around 97 percent initially.

“When Stage 2 of the reverse auction concludes, we will announce the new clearing costs and move to forward auction bidding, where prices will pick up where they left off at the end of Stage 1,” the agency wrote on its website.

Indeed, wireless carriers and others likely will be watching Stage 2 of the incentive auction with interest. Stage 2 is a reverse auction where the FCC will work with TV broadcasters to determine how much spectrum, and at what price, they will release to the “forward” portion of the event. During the forward auction, wireless carriers and other registered bidders will bid on those spectrum licenses (Dish Network, Comcast, AT&T, Verizon and others are participating in the auction).

The goal of the event is to reach parity between the reverse and forward portions of the auction – analysts generally expect that to happen later this year or possibly next year, with a total price of $30 billion to $40 billion. The first stage of the event ended earlier this month after bidders offered up only $23 billion for the spectrum through 27 rounds. That figure was far short of the $88.4 billion needed to end the event after a single round.

Interestingly, as Stage 2 begins, it’s unclear what the wireless industry might ultimately do with the spectrum licenses that come out of the 600 MHz auction, according to one analyst.

“Not surprisingly, the FCC’s ongoing, 600 MHz incentive auction was a frequent topic of conversation at CTIA’s Super Mobility Week this year,” wrote Current Analysis analyst Peter Jarich in a recent note. “Where any operator actively involved in the auction wasn’t allowed to talk about it, everyone else was free to discuss anything from how long it might go on to who might win and how much they’d end up paying. One question, however, seemed to generate more debate than any other: what technology – LTE or 5G – would eventually get deployed in the spectrum?”

Jarich noted that there are strong arguments for the wireless industry to use 600 MHz for 5G, including the fact that the spectrum likely will become available at around the same time that 5G technology standards are released. On the other side, there’s also an argument to be made for the spectrum to be used in LTE, including technologies like massive MIMO and NB-IoT that would allow operators to offer a range of services.

“To call this an industry debate is no exaggeration. It’s not that there are open arguments or battles around the topic,” Jarich wrote. “Worse, industry leaders – think silicon vendors, network vendors, the carriers willing to talk abstractly – are proclaiming that the path forward and eventual use of 600 MHz spectrum in the U.S. is clear. Yet, they’re not in agreement.”

For more:
- see this post by Jarich
- see this FCC post

Related articles:
Stage two of incentive auction set for Sept. 13
NAB jabs carriers following sluggish first stage of spectrum auction
Incentive auction moves to stage two after failing to garner $88.4B target
First two rounds of forward auction of 600 MHz airwaves draws over $9B in bids
The forward portion of the incentive auction starts tomorrow, and no one knows what to expect