The second stage of the TV spectrum incentive auction in the US has closed at a clearing target cost of $54.6 billion.
The first leg netted $23.1 billion for broadcasters from wireless providers bidding on 126MHz of spectrum. Broadcasters were put on the block for more than $88 billion. Now, they’re asking more than twice that for 114MHz.Now US regulator the FCC has just completed the second leg of its incentive auction of unused analogue TV spectrum, left over from the digital TV transition. The hope is to free up more spectrum for 4G and advanced wireless services, like mobile video. Thus, it will be a two-sided auction for the spectrum in an effort to pay broadcasters a fair value for their assets before selling them to the highest-bidding mobile carriers.
“The conclusion of the second stage of the reverse auction is an important waypoint for the auction proceedings,” said Dan Hays of PwC's Strategy&. “While the first stage started with an ambitious 126MHz spectrum clearing target and sky-high opening bids, forcing the FCC to lock in many stations at high costs early on, the second stage is clearly different, as shown by today’s results.”
He added: “The significant reduction in the targeted net proceeds of the reverse auction shows just how effective the auction mechanisms can be in bringing together supply and demand. However, at over $54.6 billion to broadcasters, or roughly $56.5 billion in total, we believe that the clearing cost is still well beyond striking distance for the budgets of mobile network operators. A third stage of the auction, and perhaps even a fourth, is now all but a certainty. For broadcasters, this is a clear indication of a rapid decline in interest at lower prices, effectively calling the bluff of the wireless industry and demanding that they come to the table ready to pay up.”
Those broadcasters choosing not to participate will have their spectrum 'repacked' into other bands to protect their signals from neighbouring interference and ensure uninterrupted TV service. The FCC last autumn proposed setting aside up to two UHF channels in every US TV market for Wi-Fi and other unlicensed wireless services.
