FCC sets top opening price to pay broadcasters at $900M for incentive auction, will ask carriers to bid $135M for NYC

The FCC released a list of final opening bid prices for broadcasters for next year's incentive auction of 600 MHz spectrum and said the top opening bid price in the reverse part of the auction, where broadcasters will sell spectrum to the FCC, will be for a station in the New York City metropolitan area at $900 million. The commission also released its opening bid prices for the forward auction, in which wireless carriers will bid on the spectrum broadcasters give up, with the top opening bid price also for New York City at $135 million. The prices for smaller markets are lower, with major urban markets commanding the highest opening bid prices.

​"For potential Incentive Auction participants, today is a watershed moment," FCC Chairman Tom Wheeler said in a statement. "For all practical purposes, we've fired the starting gun: the release of final opening bid prices -- combined with the detailed application procedures and other data released yesterday -- provides broadcasters with all of the information they need to decide whether to apply to participate in the auction. Stations that miss the December 18th deadline will not be able to participate in this historic auction. Commission staff stand ready to educate and assist applicants as they prepare."

With the release of the documents, the FCC is starting to flesh out the opening economic stakes for both broadcasters and carriers as the agency moves toward the start of the highly complex auction in March. The opening bid prices for the broadcasters are based on a formula the FCC adopted in August after a great deal of public comments from broadcasters, carriers and other stakeholders.

Speaking in a briefing with reporters, a senior FCC official said the commission has not yet received any concrete feedback on the final opening bid prices for broadcasters. However, the official noted that when the FCC adopted the formula in August, it did so to set the prices at a healthy and robust level designed to encourage lots of participation from broadcasters. The National Association of Broadcasters said it is reviewing the figures and declined to comment further. 

The FCC will start accepting applications from broadcasters on Dec. 1 and close the window for accepting applications on Dec. 18. After the application deadline, the FCC staff will review the applications for completeness and accuracy. Broadcasters will be able to make minor modifications or corrections necessary to complete their applications, and then, by March 29, 2016, each participating broadcaster that has completed an application must commit to whether it wants to sell all its spectrum, engage in channel sharing or move to a lower channel or from a UHF to a VHF channel.

Meanwhile, carriers that want to participate in the forward auction will have from Jan. 14 until Jan. 28 to do so. Once everything is set by March 29 it will take the FCC a few weeks to set the initial clearing target for how much broadcast spectrum it is going to receive and the band plan. Then the reverse auction will begin and will have a maximum of 52 rounds, with the prices broadcasters get for their spectrum declining with each round. That will continue until each broadcaster giving up spectrum is placed in a band or is declared a provisional winning bidder. After a brief break, the forward auction will begin, though it's unclear how long that lasts. A senior FCC official said the whole process could take two to three months with the auction closing in the second or third quarter of 2016.

Meanwhile, in other auction-related news, the FCC released a market-by-market list of where Tier 1 carriers will be able to bid for the "reserved" 600 MHz spectrum. AT&T (NYSE: T), Verizon (NYSE: VZ) and any other carrier will be excluded from bidding in many reserve-eligible markets where they hold more than 45 MHz of low-band spectrum below 1 GHz. 

However, as Multichannel News noted, AT&T can bid in the majority of smaller, rural markets. Since Sprint (NYSE: S) has decided not to participate, it appears T-Mobile US (NYSE:TMUS) will be the only Tier 1 carrier that can bid on reserve-eligible spectrum in the top five largest U.S. markets.

The top 10 markets have spectrum that covers around 70 million POPs. Since Verizon and AT&T control around 73 percent of the country's low-band spectrum, Verizon will not be able to bid on reserve-eligible spectrum until markets No. 8 and 9, which are Dallas and Miami, respectively, Multichannel News reported, and AT&T can't bid until market No. 14, which is Cleveland. However, because of its relatively minimal holdings in many rural areas, AT&T will be able to bid on reserve-eligible spectrum in those markets, and could outbid smaller carriers with fewer financial resources.  

For more:
- see this reverse auction public notice (PDF)
- see this reverse auction opening bid price list (PDF)
- see this application procedures public notice
- see this forward auction opening bid price list (PDF)
- see this TV Technology article 
- see this Multichannel News article 

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