Spectrum action prices high... and climbing
The long-planned auction of six blocks of publicly owned airwaves – totaling 65 megahertz of spectrum – has vastly exceeded expectations. As of last week, the FCC reported that 70 companies have submitted a total of $34 billion in bids.
The FCC had put a reserve price of $10.5 billion on the sale, and some critics questioned whether even that low bar could be met – but instead the reserve has been trebled. There is no set end date for the auction, and prices could continue to rise. This is the first auction since 2008, a sale which then raised a record of $18.9 billion.
Whatever the proceeds, it is the American taxpayer who benefits. According to The New York Times, “About $7 billion of the proceeds will be used to finance the building of a nationwide public-safety communications network, known as FirstNet, with the remainder going to the Treasury.”
The names of the bidders are anonymous, but are presumed to include AT&T, Verizon and Dish TV. Paradoxically, the competition for spectrum, and rising prices, have had an adverse effect on stock prices. Investors worried about growing outlays spent for spectrum have driven Verizon down 2.5 percent and AT&T down 1.7 percent following the FCC announcement.
The spectrum up for sale has been occupied by both civilian and military government agencies, but both have agreed to either share them or move to other portions of the spectrum. The auction is offering two blocks of AWS in the 1695-1710 Mhz band, and four sets in the 1755-1780 and 2155-2180 Mhz bands.
And the unexpectedly spirited bidding is bringing different projections “The success of the current auction has raised expectations for the 2016 Incentive Auction, which will be offering the more coveted lower frequency airwaves...The 2016 Auction is expected to be more successful, since it will involve more industry players, and since the demand for the lower frequency airwaves is higher,” wrote the business website Bidness Etc.
Bidding in government auction of airwaves reaches $34 billion (NY Times, Nov. 22, 2014)
AT&T, Verizon Communications Fall As FCC Auction Bids Reach $33 Billion (Nov. 22, 2014)
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