The FCC has announced prices and detailed procedures for next year’s incentive spectrum auction, with the highest opening price to pay-TV broadcasters set at US$900m.
The FCC has announced prices and detailed procedures for next year’s incentive spectrum auction, with the highest opening price to pay-TV broadcasters set at US$900m.
The U$$900m reserve is for 600 MHz spectrum owned by WCBS-TV, the flagship station of the CBS Television Network (NYSE:CBS.A), in the New York City metropolitan area, however opening prices in other markets are lower.
The ‘reverse’ part of the auction will see broadcasters sell spectrum to the FCC and the starting prices represent the highest amounts they can expect to receive. It is up to individual broadcasters to decide how much, if any, of their spectrum they will sell.
The highest starting price for the ‘forward auction’, which will see wireless operators bid for the airwaves sold by broadcasters, has been set at US$135m for the New York City market. The next two most expensive markets are Los Angeles and Chicago, with starting prices of US$100m and US$49.5m respectively.
Number four carrier Sprint (NYSE:S) has already announced that it intends to sit out the auction, saying it has decided its existing spectrum is sufficient, but its three bigger rivals have said they will take part. AT&T (NYSE:T), however, which spent some US$18.2bn in the AWS-3 spectrum auction earlier this year and recently closed its US$48.5bn takeover of DirecTV, has called the incentive auction figures unrealistic.
Verizon (NYSE:VZ), which spent about US$10.4bn at the last auction, has also made significant acquisitions such as AOL and Vodafone’s share of Verizon Wireless. It has, however, also agreed to offload US$15.5bn worth of assets to Frontier Communications and American Tower in two separate deals.
T-Mobile US (NYSE:TMUS) CEO John Legere has said the company intends to be an “aggressive bidder at the incentive auction. Wells Fargo analyst Jennifer Fritzsche described Sprint’s decision to abstain from the auction as “very positive” for T-Mobile as it should face significantly less competition for the30 MHz of spectrum reserved for smaller players.
Broadcasters must file applications to participate in the auction between 1 and 18 December, while potential bidders have until 28 January 2016 to submit their applications.
Broadcasters must commit to a final initial bid option by 29 March.
An FCC spokesperson told reporters the auction is likely to be completed in Q2 or Q3 next year.
