Round 20: AWS-3 Rocks On

Additional $1,603,216,600 offered in latest bidding
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With 20 rounds under its belt, and into day six of the FCC's AWS-3 auction of 65 MHz of spectrum for wireless, the new total is $25,772,018,500.

There were 1,211 new bids for 1,614 licenses available, all of which have drawn at least one bid. There are 50 MHz of paired spectrum, which has exceeded the $10.07 reserve, and 15 MHz of unpaired, which at last count had met between 75% and 80% of the reserve price.

The auction is not over until there are no more bids or waivers. The FCC is trying to goose the auction a bit by setting a $50 million cap on the minimum bid amount it sets for the next round. It had been set by a percentage figure when meant some minimums in the biggest markets, like New York, were in the hundreds of millions.

Analyst Craig Moffett, who had predicted the auction would end up at the low end of estimates—$15 billion or so—conceded that he had been "dead wrong" in reading those tea leaves. Moffett suggested that given the big bucks the AWS-3 spectrum was commanding, and given that the auction is not over yet, it could signal even higher valuations for the even-more valuable broadcast spectrum to be auctioned in 2016.

If 65 MHz is worth at least $25 billion, the FCC's $45 billion high-end estimate for 125 MHz of 600 Mhz broadcast spectrum may not be out of line. "That should make it more attractive to broadcasters to participate, increasing supply and potentially reducing their incentive to further delay the process," said Moffett. There is another line of thinking that there might not be as much left over to bid for that broadcast spectrum after the AAWS-3 bill comes due. If so, moving the incentive auction back deeper into 2016 than the first-quarter target could provide more recovery time.

Moffett assumes that AT&T and Verizon will wind up with the lion's share of the AWS-3, with Dish and T-Mobile getting some of the balance—there are 70 qualified bidders