First Stage of 600MHz Auction Closes at $86.4B Spectrum Cost

Advertisement
Advertisement

The Incentive Auction for the 600MHz spectrum, has been a pretty popular topic in the last couple years. Mainly because this is the last auction for low-band spectrum (under 1GHz) for about another decade. Low-band spectrum is important to carriers because it can cover more space, penetrate buildings and walls while higher-band spectrum has more bandwidth, but doesn't cover as much space. Verizon and AT&T already own the majority of the low-band spectrum in the US (a big reason why their coverage is much better than Sprint and T-Mobile), making this a pretty big deal for T-Mobile. Even though they have been acquiring 700MHz spectrum in the last few years, from Verizon and other regional carriers.

Now this auction isn't just a case of auctioning off licenses to carriers and everyone else in the auction. There's a reverse auction and then the forward auction. The reverse auction is when the broadcasters auction their spectrum to the FCC. That is the phase that completed today, and the FCC cleared 126MHz of 600MHz spectrum for about $86.4 billion. Next up is the forward auction, where T-Mobile, Verizon, AT&T, Comcast and nearly a hundred others, will bid on the spectrum.

Advertisement

While the FCC has completed this portion of the auction, it is possible that they may have to resume the auction, if the forward auction comes out to less than $86.4 billion. We've seen estimates of around $60 billion, being spent on this auction by the carriers, from analysts. So it's quite possible that the auction does get restarted. If the carriers don't meet the $86.4 billion cost, the FCC will have to reduce the amount of spectrum it acquires from TV broadcasters, and also reduce the amount that they are going to pay broadcasters. This will delay the auction, and delay the spectrum going out to the new license holders. We could see the forward auction end in just a few months. However, if the carriers don't meet the $86.4 billion cost, then it could take us into 2017 before all is said and done.

Currently, the carriers and other companies that are taking part in the spectrum auction, are in a quiet period. Meaning that they can't say much of anything about the spectrum auction. But if all goes well, we could know the results before the end of the year.