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Stage 4 Reverse Auction’s $10B Clearing Cost “Well Within Striking Range”

By Diana Goovaerts | January 13, 2017

The FCC’s Stage 4 reverse auction closed as expected after 53 rounds of bidding on Friday afternoon, posting a $10.05 billion clearing cost that analysts said was “well within striking range” for forward auction bidders.

The new price target for 84 MHz of spectrum marks a steep drop from the $40.3 billion bar set in Stage 3, and is significantly less than the more than $19 billion in auction proceeds generated by wireless carriers in that stage.

As previously explained by FCC Incentive Auction Task Force Senior Advisor Charles Meisch, the much lower clearing cost came courtesy of the addition of channels in the UHF band between Stages 3 and 4, which helped reduce the number of station licenses the Commission needed to buy and the price the Commission needed to pay to purchase those stations. The decline was so precipitous in this go-round because a total of four channels were added, double the number of channels added between Stages 1 and 2 where the cost dropped from $86.4 billion to just $54.6 billion.

Credit: FCC

According to Dan Hays, principal at PwC Strategy&, the new figure is well within reach for wireless carriers bidding in the forward auction.

“The dramatic reduction in the targeted net proceeds of the reverse auction shows just how effective the auction mechanics have been in bringing together supply and demand,” Hays observed, “At just over $10 billion we are confident that the auction is well within striking range of the budgets of mobile network operators.”

With such a low clearing cost, Hays noted forward auction bidding could very well close as early as next week. While a fifth stage is still possible, he said, it is now “far from a certainty.”

In a note on the auction dashboard, the FCC said it expects bidding in the Stage 4 forward auction to begin on Wednesday, Jan. 18.

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Filed Under: Telecommunications (spectrums)

 

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