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Broadcasters: Show Us The ($54.6B) Money - Broadcasting & Cable

Broadcasters: Show Us The ($54.6B) Money

Reverse auction second stage closes at substantial discount
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Broadcasters have put a new price tag on the spectrum the FCC is trying to free up for wireless broadband: $54,586,032,836.

The second stage of the reverse auction ended last week with broadcasters indicating that is how much it will cost to get them to give up 114 MHz of spectrum, down from the 126 MHz they were willing to give up at an $86,422,558,704 price tag in the first stage, which wireless operators and other forward auction bidders were unwilling to pay.

The $54.6 billion is a sizable drop in price from stage one, substantially closing the gap between broadcasters and wireless companies, who will get to start bidding on the 114 MHz of spectrum (actually less, since some of that is guard band—buffer spectrum) in their own stage two forward auction starting Oct. 19.

Those 99 bidders—including Comcast/NBCU—will actually have to pony up more than $56 billion to cover the additional $1.957 billion in FCC auction expenses and broadcaster/cable operator repack expenses after the auction.

The FCC purposely opened with high prices to encourage broadcaster participation, but the commission planned for multiple stages of the auction.

If the forward auction bidders cover the new total in their stage two, the auction will have successfully met its criteria and can close, but not immediately. There is a final mini auction among only the winning forward bidders, who won generic blocks and will then get the chance to bid on specific frequencies in an auction that could take a couple more weeks.

Analyst Dan Hays, a principal at PwC, sees the new reverse auction total as progress, but a long way from the finish line.

“At over $54.5B to broadcasters, or roughly $56.5B in total, we believe that the clearing cost is still well beyond striking distance for the budgets of mobile network operators,” Hays says. “A third stage of the auction, and perhaps even a fourth, is now all but a certainty.”

That would push the auction into early 2017 at least.

Broadcasters have put a new price tag on the spectrum the FCC is trying to free up for wireless broadband: $54,586,032,836.

The second stage of the reverse auction ended last week with broadcasters indicating that is how much it will cost to get them to give up 114 MHz of spectrum, down from the 126 MHz they were willing to give up at an $86,422,558,704 price tag in the first stage, which wireless operators and other forward auction bidders were unwilling to pay.

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