Forward bidding in Stage 4 of the FCC’s incentive auction came to an end Friday afternoon with bidders committing $19.63 billion for TV broadcasters’ airwaves.
Which is a lot less than they were expected to spend on the 600 MHz airwaves when the event opened last spring.
Bidders will gain access to 70 MHz of spectrum and TV broadcasters will receive about $10 billion for their airwaves, while the government will receive roughly $7 billion. The remaining amount will cover administrative costs of the auction, and the extra 14 MHz of spectrum will be used for guard bands to address interference concerns.
Verizon, AT&T and T-Mobile were among the dozens of bidders—Sprint opted to sit out the event—and others included Comcast, Dish Network and smaller wireless carriers. Walter Piecyk of BTIG Research noted via Twitter that only 3% of available spectrum was left on the table.
The event will now move to an assignment phase, during which bidders will haggle over specific blocks of spectrum in each market. (Previous bidding was limited to generic chunks.) The FCC won’t release the names of winning bidders for a few more weeks, and the quiet period remains in place, preventing bidders from discussing the results as well as barring them from negotiating deals based on the spectrum.
“Congratulations to the winners in both the reverse and forward auctions,” FCC Chairman Ajit Pai said in a press release (PDF). “The participation of these broadcasters and wireless carriers will enable the Commission to release 84 megahertz of spectrum into the broad marketplace. These low-band airwaves will improve wireless coverage across the country and will play a particularly important role in deploying mobile broadband services in rural areas.”
Successful bidders won’t be able to put their new spectrum to use for at least a while, though, as the airwaves are “repacked” for wireless use and TV broadcasters are moved to other frequencies.
“The wireless industry supports a seamless repacking process for our broadcast partners, and we are committed to working collaboratively with broadcasters to achieve the 39-month transition that Congress enacted,” said CTIA CEO Meredith Baker Atwell, who used the occasion to plug for a new auction. “It takes 13 years on average to bring spectrum to consumers, but after successful auctions in 2015 and just now, there is no future auction scheduled. Congress and the new administration need to help identify the next bands to auction now. Creating a regular pipeline to identify future spectrum will help maintain America’s role as the wireless leader.”
Last June, the FCC set a “clearing cost”—the price that bidders needed to meet—at $88.4 billion for 126 MHz of TV broadcasters’ spectrum in the first round of the incentive auction. Both the clearing cost and the amount of spectrum available were lowered through four rounds, as the agency went back and forth between bidders and broadcasters to strike a balance between supply and demand.
Analysts had predicted the auction would fetch somewhere in the range of $25 billion to $35 billion, or roughly $1 to $2 per MHz/POP. Bidders ultimately committed to spend $1.25 per MHz/POP.
“My carrier friends will regret the prime spectrum they left on the table,” said former TV executive Preston Padden in a statement to the media. "5G is a futuristic sound bite. 600 MHz is reality today."