FCC Airwaves Auction Size Drops Nearly 40% in Second Round
October 13 2016 - 12:30PM
Dow Jones News
The amount the U.S. government could spend to buy up airwaves
from local TV stations dropped nearly 40% in the second round of
complex bidding that is designed to free up spectrum for wireless
services.
The Federal Communications Commission said Thursday it agreed to
spend $54.6 billion to acquire airwaves from broadcasters, down
from the initial round of $86.4 billion in June. The dramatic drop
is likely the result of the government buying fewer licenses and
paying less for those it agreed to acquire. It will sell 10% fewer
licenses than in the first round.
The FCC, which is functioning as a matchmaker, must now try to
sell those airwaves to bidders such as cellphone operators. After
the first round of bidding, companies such as AT&T Inc. and
Verizon Communications Inc. only offered to pay $23.1 billion for
the airwaves. Bids in all phases of the auction are anonymous until
it is completed.
As smartphone use has expanded beyond mere phone calls to
everything from streaming video to sharing photos, the government
saw the need to open more airwaves to wireless capacity. The
airwave frequencies in the auction are ideal for sending cellular
signals great distances and penetrating deep into buildings.
This is the second go-round of the auction for the FCC after the
first time failed to draw enough bids for wireless use to cover the
price sought by the broadcasters.
The initial bidding round for 100 megahertz of licenses wasn't
expected to succeed because the price was so high. The government's
previous sale of spectrum in 2015 produced almost $45 billion in
bids.
The process restarted last month with the agency looking to
clear 90 megahertz of licenses. To complete the sale, wireless
carriers and other bidders will need to cover that $54.6 billion
amount plus almost $2 billion in transition and administrative
costs. Bidding will resume on Oct. 19.
If the wireless bids fall short again, the government may have
to continue with more rounds. FCC officials have said the auction
designed to run multiple rounds to match supply with demand. The
auction isn't likely to close until late this year or in 2017.
In addition to the wireless carriers AT&T, Verizon, and
T-Mobile US Inc., Comcast Corp. and Dish Network Corp. are also
participating in the auction. Some bidders may not win licenses.
Among those that have filed to sell stations are CBS Corp. and
Univision Communications Inc., as well as local PBS stations and
investors such as billionaire Michael Dell.
Write to Thomas Gryta at thomas.gryta@wsj.com
(END) Dow Jones Newswires
October 13, 2016 12:15 ET (16:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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