The FCC’s spectrum incentive auction surpassed the $13 billion mark this morning during its tenth round as demand continued to outstrip supply in the biggest U.S. markets. But analysts continue to predict the event will slog into next year.
The commission increased the number of daily rounds of bidding today in an effort to speed up the process and spur activity. The first of three one-hour rounds today garnered roughly $570 million, boosting the overall tally to $13.18 billion bid for the 600 MHz belonging to TV broadcasters.
The auction has consistently progressed since it began last week, with the FCC raising prices 5 percent after each round. The event must raise $88 billion to be completed in a single stage – if bidders don’t meet that figure, the FCC must reduce the amount of spectrum it will free up and resume bidding with TV broadcasters in the reverse portion of the auction.
And while demand for the airwaves in markets such as New York remains strong among bidders, onlookers maintain the event will require multiple rounds to match overall supply with demand.
“As the auction proceeds to future stages and the FCC’s need for spectrum is reduced, the highest cost broadcasters will be cleared out of the auction and the reverse auction values could quickly drop to the levels that remaining broadcasters are actually willing to sell,” Walter Piecyk of BTIG Research wrote on his company’s blog. “This might not occur in Stage Two, but by Stage Four and possibly Stage Three, we believe provisional winning bids from the reverse auction should drop to less than half the $86 billion Stage One.”
The FCC discloses market-by-market bidding activity during the forward auction, but it doesn’t disclose the identity of the bidders. Verizon, AT&T and T-Mobile are all expected to spend billions at auction, while Sprint – which continues to struggle financially – opted out of the proceeding. Other major bidders include Dish Network and Comcast.
It's too early to predict when the auction will be complete, and there’s still a chance the event could end after a single stage. But those hoping that the event will wrap up in the next few weeks are likely to be disappointed. Which means carriers aren’t likely to be able to put their new 600 MHz airwaves to use any time soon.
“It’s possible that these stages could be completed more quickly as each Stage builds upon the prior,” Piecyk wrote. “Based on this analysis, it’s now easy to see how the auction could drag into 2017, if we assumed the auction had to proceed to Stage 4 (70 MHz of spectrum to forward bidders) in order to reach a conclusion. This timeline is extended from the one we presented in March.”
For more:
- see this BTIG Research blog post
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Bidding tops $11B in FCC's incentive auction of 600 MHz spectrum, interest turns to small markets
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