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Major U.S. telcos are expected to participate in part two or the ‘forward auction’ of the ‘incentive auction’ process.
The Federal Communications Commission (FCC) is due to kick off the second part of the country’s 600-MHz spectrum sale in Washington DC on Tuesday, when 62 bidders are expected to submit their offers for TV broadcasters’ airwaves.
The auction is called the “incentive auction” and the second part is called the “forward auction”. Part one, or the reverse auction, was completed in late June after almost three months.
On Tuesday, participants in the first stage of forward auction bidding in the “incentive auction” will include major telecoms players such as AT&T, Verizon and T-Mobile US, which are all expected to bid aggressively. Sprint has decided to sit out this time, however. Other participants include Comcast and Dish.
In a blog explaining the auction process, incentive auction task force chair Gary Epstein and deputy chair Jean Kiddoo said bidders had the opportunity in July to familiarise themselves with the new bidding system. The FCC also offered a mock auction on 11 and 12 August.
Under the reverse auction, the broadcasters holding 600-MHz airwaves committed to freeing them up for mobile use. The FCC also established the clearing cost for repurposing 126 MHz of licensed and unlicensed spectrum, of which 100 MHz is licensed spectrum, for wireless data use.
The reverse auction eventually placed a US$86.4 billion price tag on the forward auction, naturally raising questions over the telecoms industry’s ability and willingness to commit such a hefty sum to more spectrum.
Should cumulative bids in the second phase of the sale not reach that level, the FCC will be forced to reopen the reverse auction in order to bring the minimum price down. Such a move would also reduce the volume of spectrum available in the forward auction.
As it stands, operators are being asked to pay around $2.15 per MHz per capita; on balance analysts think it unlikely they will do so. It’s not yet clear how long the incentive auction will take to complete.
