FCC spectrum auction fails at $23bn
August 31, 2016
By Chris Forrester
The US auction of 100 megahertz of spectrum in the 600 MHz band has abruptly ended, with the FCC saying the auction had failed to meet the required conditions.
Unsaid was the lack of enthusiasm from bidders. Observers had said that their willingness to stump up ever-higher amounts had waned.
There had been 27 individual rounds, and since Round 22 the incremental bids were obliged to rise from 5 per cent to 10 per cent, and this was designed to shake out the less courageous bidders.
With Round 23 the bids reached $22.1 billion (€19.8bn) with a batch of ten New York City slices of bandwidth generating 19 bids of $433.3 million each suggesting – at that time – that there was plenty of cash on the table for the right opportunity. Round 22 had added $867 million into the pot.
This week (Week 3 of the process) the experts had planned 14 new Rounds to be made, and something in the $29-$32 billion range to be settled. But that’s not now going to happen.
With the $88.4 billion target having no chance of success the FCC will now be forced to lower the amount of spectrum available, and for the process to start all over again. “Bidding in the forward auction has concluded for Stage 1 without meeting the final stage rule and without meeting the conditions to trigger an extended round. The incentive auction will continue with Stage 2 at a lower clearing target,” the FCC said in a statement.
Observers expect this Stage 2 effort to start next week after the Labour Day weekend.