Mobile carriers buy 70MHz UHF slice for $20 billion

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The auction is over and mobile broadband carriers gained 70 MHz of spectrum in the 600 MHz band, at a cost just under $20 billion. After four cycles of downward bidding by television companies willing to sell their channel assignments followed by upward bidding by wireless companies wanting to buy them, the Federal Communications Commission’s incentive auction ended on Friday.

The downward, selling price auction ended last month, with TV stations willing to accept $10 billion in return for giving up 84 MHz of UHF spectrum. After setting aside 14 MHz for unlicensed use and guard bands, the FCC opened the bidding for the remaining 70 MHz. The final buying price was $19.6 billion, just a bit less than wireless companies were willing to pay for the 80 MHz slice on offer in the third round.

The FCC produced a tidy profit of about $7 billion for the federal treasury, money that’s assumed to be going toward upgrading public safety communications networks. It’ll cost about $2 billion to “re-pack” remaining UHF television channels, in order to produce contiguous mobile broadband frequency assignments. The balance goes towards administrative overhead.

The final bid total was significantly less than hoped. Original estimates were that carriers would pay somewhere in the $30 billion to $40 billion range for 100 MHz. Broadcasters had their eyes on an even bigger payday, starting with a $86 million selling price in the first round, $57 billion in the second and $40 billion in the third – with the amount of spectrum cut each time – before collapsing to $10 billion on the fourth and final try. Carriers, on the other hand, were pretty consistent, bidding a total of $23 billion for 100 MHz initially and walking it back about a billion at a time until the end came on Friday.

The wrangling isn’t over – the next step is to figure out which exactly frequencies TV stations will surrender and which will go to the winning bidders, whose identities haven’t been released yet.