FCC Spectrum Auction Update: Prices Going Down, Who's Bidding And What Is It?

The Federal Communications Commission (FCC) has reached the final stage of an auction of wireless spectrum licenses for television airwaves. The auction has attracted about $18.2 billion in bids, far less than was expected compared to previous auctions thanks to weaker demand.

It is believed that AT&T, Verizon, T-Mobile, Comcast, Dish Network and others all may be potential bidders according to the Street, though participants are barred from talking about the auction.

The final stage of bidding will come to a close on Thursday, with the auction set to carry on until there is no longer any demand. However the winners of the auction likely will not be announced for several weeks, until specific blocks of the spectrum are assigned to bidders.

The winners will gain access to blocks of 600 Megahertz wireless spectrum, which was previously used by local television stations but has been repurposed for use by cellular providers.

The low-band spectrum is important for wireless carriers—and subsequently to consumers—as it allows wireless signals to be transmitted over long distances and through barriers, allowing data to travel. It’s an important part of the airwaves, especially in densely populated areas where demand can become a strain on networks.

According to the Wall Street Journal, analysts believe the auction has produced less interest than expected because the low-frequency television airwaves aren’t as capable as other airwaves that can carry more data over short distances.

On the opposite side of the auction are broadcasters, including CBS, Univision and PBS. The companies sold their licenses for the wireless spectrum to the FCC in a reverse auction, in which the commission lowers its offer through several rounds in hopes limiting payments while still offering enough to get station owners to sell their licenses.

The FCC will pay the TV station owners about $10 billion, down from the $86 billion it offered to pay when the auction launched in June 2016. At the end of the third round of bidding, the station owners were seeking $40 billion.

“There is still a long road ahead to successfully implement the post-auction transition of broadcast stations to their new channels and bring the new wireless and unlicensed spectrum to market,” FCC chairman Tom Wheeler, who will l eave the post on Friday, said in a statement.

At CES 2017 FCC Commissioner Mike O’Rielly said he is unsure what the future holds for the spectrum/airwaves auction but that he hope it will be fair and efficient for both consumers and the business impacted.

“I honestly don’t know about spectrum incentive watch,” O’Rielly said at CES. “We don’t have any secret info. I’m a cheerleader, I’m rooting for a successful auction.”

The auction results are expected to be finalized as early as the end of February. Shortly after the spectrum blocks have been assigned and the auction finalized, the FCC could drop the ban on strategic talks between bidders designed to prevent collusion.

“When we embarked on this, there were a lot of unknowns, but it was worth the risk,” FCC Commissioner Mignon Clyburn said at CES. “It was a marketplace mechanism, getting spectrum on the market, ensuring that we’re getting the most spectrum bang for our buck. I’m excited about what’s to come.”

It is unclear how the FCC under the Trump administration will approach regulating the behavior of telecom companies and broadcasters, though indications from current members of the commission board suggest it will likely lift many of current regulations.