TV-to-mobile spectrum transfer heads to fourth auction round

by Steve Blum • , ,

Less equals less, when it comes to spectrum auctions. That seems to be the lesson the Federal Communications Commission is learning as it ends its third stage of reverse-and-forward auctions for frequencies currently used by television broadcasters and coveted by mobile carriers.

But not coveted as much as broadcasters think, apparently. The FCC opened the bidding from mobile carriers and closed it couple hours later when it became clear that the price they are willing to pay isn’t anywhere near what broadcasters want in exchange for giving it up.

In the reverse auction phase of the third stage, broadcasters lowered their price to $40 billion (including the FCC’s cut) for 108 MHz of spectrum in the 600 MHz UHF band. The FCC then turned around and put 80 MHz on the block, reserving the remaining 28 MHz for guard bands and unlicensed use. However, the most that mobile carriers were willing to bid yesterday was $20 billion, half the asking price.

In the first stage, the reverse auction produced a selling price of $86 billion but mobile operators were only willing to pay $23 billion for the 100 MHz on offer. In the second stage, the available spectrum was cut to 90 MHz and the price dropped to $57 billion. But with less on the table, carriers offered less money, $22 billion that time. And now the third stage has produced the same result – less spectrum means both a lower asking price and a lower willingness to spend.

So now it’s on to a fourth try. The FCC anticipates “that bidding in Stage 4 of the reverse auction will begin Tuesday, December 13, 2016”. No spectrum target has been announced yet, but the assumption is that it’ll decrease by another 10 MHz to 70 MHz (plus guard and unlicensed bands). Earlier predictions that broadcasters and mobile carriers would eventually meet somewhere around $30 billion now seem too optimistic – mobile carriers appear to have a firm value in mind and it drops along with the amount of spectrum on offer.