TV stations set a startlingly high price in the FCC’s auction that could allow wireless broadband companies to buy some of the airwave spectrum now used for over-the-air programming.
The FCC vowed to pay $86.4 billion for spectrum in the so-called reverse auction to determine the amount stations would accept to give up all or part of the airwaves they control. Analysts had expected anywhere from $35 billion to $60 billion.
The outcome “creates a challenge” for the next stage — the forward auction, where buyers make their offers — Wells Fargo Securities’ Marci Ryvicker says.
She “struggled to see more than $30 billion being spent by the wireless companies,” she says. “This clearly means, to us, that the entire incentive auction will run through multiple stages and could go into 2017 unless the FCC will pursue a quick forward process” allowing multiple rounds of bidding each day.
If buyers offer less than $86 billion, then the FCC will cut the amount of spectrum it acquires. Many stations would then have to decide whether to lower their prices, or continue transmitting over-the-air signals.
The leading wireless services including AT&T, Verizon, and T-Mobile are expected to bid for spectrum. Comcast and Dish Network also may join the fray.
“Given the current financial profile of the industry, this number may have to move significantly lower” than $86 billion, says Dan Hays, principal with PwC’s Strategy&. “A second stage of the reverse auction later this year is likely. Indeed, we could well see the proceedings drag on into early 2017 before coming to a final conclusion.”
For now, though, the ball’s in the buyers’ court.
FCC chairman Tom Wheeler has said that the process will “align the use of the public airwaves to meet America’s 21st century spectrum needs. If broadband Internet service is an engine for economic growth, then mobile broadband has been its booster rocket, creating a platform for innovation, competition and new markets.”