The FCC is forcing bidders in the AWS-3 spectrum auction to place new bids on 95 percent of the licenses for which they are eligible or face the prospect of not being able to make any more bids. The shift to "stage two" of the auction process, with the attendant change in bidding rules, is another indication that bidding is starting to wind down in the auction, which has gone on nearly a month.
The FCC said the change would go into effect with the start of round 68. Previously, bidders needed to place new bids on 80 percent of the licenses for which they are eligible or risk not being able to make additional bids. The change comes after the FCC last week moved to six 30-minute bidding windows per day for the auction instead of the four, one-hour bidding rounds, another step taken to speed up the auction process and hasten its end. The auction started Nov. 13.
As of the end of round 68, the auction has raised $41.954 billion in provisional winning bids. However, there were only 155 new bids in round 68 and the total provisional winning bid amount increased by just 0.60 percent, an indication that bidding activity is slowing to a trickle. The auction will end when there are no new bids or waivers in a given round.
Most of the bidding activity that is still ongoing is for paired spectrum in mid-sized or small markets as well as for unpaired uplink spectrum (1695-1710 MHz). The vast majority of the bidding has taken place over different blocks of the paired spectrum (1755-1780 MHz for uplink operations and 2155-2180 MHz for downlink), especially in major markets.
For example, the 10x10 MHz J-Block in New York City and Long Island garnered a provisional winning bid of $2.76 billion, which hasn't changed since round 64, while the same block in the Los Angeles area attracted a provisional winning bid of $2.11 billion, which hasn't inched up since round 43.
Since the bidding is confidential, it's impossible to know which companies have been bidding for what blocks of spectrums. Still, analysts speculate that Verizon Wireless (NYSE: VZ) and AT&T Mobility (NYSE: T) will likely spend anywhere from $15 billion to $20 billion each. Dish Network (NASDAQ: DISH) has been seen as an actor that has driven up prices in the auction, which are now nearly four times the aggregate reserve price of $10.587 billion. T-Mobile US (NYSE:TMUS) and smaller carriers are also likely to win smaller licenses.
Once the bidding ends, there is a down-payment deadline after the FCC issues a public notice announcing the close of the auction, which will be Jan. 7 or 10 days after the auction ends, whichever is later. That down payment, along with an upfront payment bidders made before the auction started, will combine to form 20 percent of the winning bid prices. Winning bidders will need to file a long-form application for the licenses they won within 10 days after the end of the auction. The FCC will then review those applications, issue a public notice on the review and allow the public to file petitions challenging specific licenses.
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