Bidding in Clock Phase of Incentive Auction Ends at $19.6 Billion; $6 Billion to Treasury
Bidding in the clock phase of the FCC incentive auction ended Friday after round 58, with forward auction bidders having bid $19.63 billion for 600 MHz spectrum that will be vacated by TV broadcasters, according to the Public Reporting System. Roughly $10 billion of those funds will go to pay broadcasters for winning bids in the reverse auction, more than $2 billion will go for reimbursement to repacked broadcasters and to cover the costs of the auction, and more than $6 billion will go to the federal treasury, Incentive Auction Task Force Chairman Gary Epstein and Deputy Chair Jean Kiddoo said in a blog post. The $19.63 billion raised in the forward auction means the incentive auction generated “the second highest total proceeds of any Commission spectrum license auction in its 20-plus year history,” said the blog post.
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With the clock phase complete, the auction will move into the assignment phase, in which wireless bidders get assigned blocks of spectrum, and when that's complete, the FCC will release the closing and channel assignment public notice that kicks off the 39-month repacking period for broadcasters, Epstein said. “The participation of these broadcasters and wireless carriers will enable the Commission to release 84 megahertz of spectrum into the broadband marketplace,” said FCC Chairman Ajit Pai in a release. “These low-band airwaves will improve wireless coverage across the country and will play a particularly important role in deploying mobile broadband services in rural areas.”
While Commissioner Mike O'Rielly is "pleased that the forward auction has closed and we don’t have a failed auction on our hands, significant review is necessary to understand how the FCC rules and auction design impacted the results," he said in a statement. "Although Congress provided a strong statute to utilize market forces to ensure spectrum is put to its most efficient use, including for necessary wireless voice and data licenses, the previous majority’s implementation appears to have been based on some assumptions that were far off the mark."
The FCC will release a PN “within the next few business days” with scheduling details for the assignment phase and an accompanying preview period and mock auction, said the PRS dashboard. In the assignment phase, forward auction bidders “will have the opportunity to bid for frequency-specific licenses,” instead of the generic blocks of spectrum they've been bidding on until now, the blog said. “This will be useful for winners seeking to deploy service using the same frequencies across multiple markets or regions.” Bidding in the assignment phase isn't mandatory for winning bidders, wrote said Epstein and Kiddoo. “They will still receive the number of license blocks they won regardless of whether or not they bid in the assignment phase.”
When the assignment phase ends, the FCC will issue the closing and channel reassignment PN, which begins the repacking timeline, the blog said. A “smooth and orderly post-auction transition," “uninterrupted access to over-the-air television” and “a timely clearing of the new wireless band” will be top priorities for Pai's chairmanship, he said. The closing PN will contain a wealth of information on the auction, including winning bidders and bids for both the reverse and forward auctions, channel assignments for repacked stations, and the deadline by which they must clear the purchased spectrum, the blog said.
“With the help of a market-based mechanism to stimulate greater participation, the auction successfully allocated seven blocks of prime beachfront spectrum while meeting Congress's directive to promote deployment of new technologies, products, and services to all Americans, including 'those residing in rural areas,' without the threat of market dominance thwarting competition,” said Competitive Carriers Association President Steven Berry in an emailed statement. “My carrier friends will regret the prime spectrum they left on the table," said incentive auction consultant Preston Padden, who advised broadcasters on the proceeding.
“Now that the clock phase in the forward auction has concluded and the FCC prepares for the assignment phase, the Commission can turn greater attention to developing a transition plan that will protect viewers and treat all stakeholders fairly," said an NAB spokesman in a statement.
The spectrum cleared in the auction will ensure the U.S “remains the global wireless leader” but work should now begin on “scheduling the next auction,” said CTIA President Meredith Baker in a blog post. “It takes 13 years on average to bring spectrum to consumers, but after successful auctions in 2015 and just now, there is no future auction scheduled.”
Following the lead of other broadcasters that have released information about their auction proceeds, Scripps made its own disclosure on its auction gains Friday: nothing. “We pursued several channel-share arrangements with ourselves and other broadcast partners that would have allowed us to continue to operate our stations and serve our local communities while supporting the government in its attempt to recapture some broadcaster spectrum,” said Brian Lawlor, Scripps senior vice president-broadcast. “However, none of the spectrum we or our partners offered was selected during the auction process because the prices available in the auction fell below the value we ascribed to it.” Fox Television Stations and Sinclair announced auction proceeds of more than $300 million each, while Gray Television announced a yield of $90.8 million and Tribune Media $190 million. Scripps said it will “continue to serve each of our local communities using our full spectrum capacity as allocated by the FCC.”