The Reverse Spectrum Auction Yields Low Proceeds while FCC Tries To Recover From Stage 1

Price target

Price target

Stage 2 of the Federal Communication Commission’s reverse spectrum auction is substantially under performing, and the FCC is desperately trying to rescue its flagship auction by returning to broadcasters to set a price for a reduced amount of 600 MHz airwaves.

The clearing target for the second stage auction is 114 MHz, and the target amount needed for proceeds is $88.4 billion. The estimated proceeds for Stage 2 is $22.5 billion, according to the FCC. With this auction going on 15 rounds, broadcasters are hardly closer to the end of this arduous ordeal.

During the Cellular Telephone Industries Association show in Los Vegas, Nevada, at the beginning of September, Tom Wheeler, FCC chairman, explained that the FCC made a market with 126 MHz of “prime beachfront spectrum in the 600 MHz band” available.

“As you know, however,” Wheeler said, “that market closed when the cost to clear that amount of broadcast spectrum exceeded the bid prices of the carriers.”

The bidding resumed on Sept. 13 with the reverse auction determining the cost to clear the reduced 114 MHz of spectrum, covering the slack lost in previous rounds. Wheeler explained that the forward auction will resume after the conclusion of the reverse auction to determine if the spectrum is “worth that cost” to broadcasters.

Rounds 16 and 17 will commence at 10 a.m. and 3 p.m. ET on Friday, Sept. 23.

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