The United States of America’s FCC, Federal Communications Commission, is currently conducting an auction for licences allowing cellular network operators access to nationwide 600 MHz wireless spectrum. This particular auction is complicated by the fact that the spectrum is currently in the hand of a number of television broadcasters. The FCC is having to navigate the tricky waters of ensuring these broadcasters raise enough cash to make it worth their while in selling on the licences, whilst simultaneously ensuring that the smaller US carriers are able to afford spectrum without the larger carriers with deeper pockets outbidding them for all available spectrum. In order to manage this, the FCC is staging a complicated auction process and the first round has completed. This consisted of a reverse auction, whereby television broadcasters competed in order to release spectrum back to the FCC. The FCC then repacks the airwaves ready for auctioning off this spectrum to cellular network operators.
The second stage of the auction is due to start in mid-August 2016. Back in June, the FCC stated that it had 126 MHz of spectrum to be resold and the price was a hefty $86.4 billion. However, industry analysts have put doubt on this figure claiming that carriers may not be willing or able to pay this much for the spectrum. Today, the FCC has explained that it has received the upfront payment necessary to bid from 62 companies and individuals, which must amount to half of the opening bid in order to compete. Originally, 100 entities had indicated they were prepared to bid but approximately one third declined to put up the initial sum. Those companies remaining include three USA nationwide carriers, AT&T, T-Mobile US and Verizon Wireless: Sprint dropped out of the auction some time ago. Other companies include Comcast and Dish Network. It is understood that if these 62 companies do not pay the full $86.4 billion, the FCC may hold another broadcaster bidding round and could sell off less spectrum.
How realistic is it that the auction will not raise the full $86.4 billion? Investment analysts have doubts over this and for a number of reasons – some domestic, such as it being an election year in the US. There are other factors at play including the British vote to leave the European Union causing the debt markets to suffer from some instability, which reduces the ability of all companies across the world to raise funds to pay the license fees. Should the $86.4 billion not be raised and another round of auctions is held, the overall process is likely to continue way into 2017.