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FCC reveals 62 bidders will battle it out in 600 MHz auction

The FCC has published its final list of bidders for the much-anticipated 600 MHz auction in the US, totaling no fewer than 62 bidders. These will enter the bidding war in just a few weeks’ time, and they include all the usual suspects, but with a few surprise names in the hat.

However, the whopping total of $86.4bn requested by the broadcasters who are selling the spectrum, for the full 126 MHz available, has sparked concerns that telecom operators won’t be overly keen on spending such a sum on low band spectrum – which may result in a second round of reverse auction bidding for less spectrum at reduced prices.

“The auction is a market-based mechanism for matching supply with demand. Until the forward bidding concludes, we will not know whether the demand meets the large supply offered by broadcasters,” FCC chairman Tom Wheeler said last week. “Depending upon that response, it’s possible that we would need to move to additional stages to find the level where demand meets supply.”

“The Commission intentionally designed the auction to account for the possibility that supply and demand might not match at the initial clearing target. It’s something we planned for, and we’re fully prepared to implement if the need arises,” said Wheeler.

The incentive auction is set to kick off on August 16, and will see the US become the first country to distribute a sizeable piece of spectrum for next-generation ‘5G’ networks.

Back in March, the FCC completed the original reverse auction phase as broadcasters agreed to free up 126 MHz of spectrums in the 600 MHz bands. This list included 104 applicants, and now the FCC has announced it has received upfront payments from just 62 of the 99 approved applicants.

Industry giants such as AT&T, Verizon, T-Mobile US, Dish Network (as Wireless), Comcast (as CC Wireless Investment), and Liberty Global have all submitted upfront payments.

A surprise approved bidder is Docomo Pacific, a wholly owned subsidiary of Japanese mobile operator NTT Docomo. However Docomo Pacific may not bid on continental USA licences, focusing instead on Puerto Rico, as BTIG analyst Walter Piecyk speculated in a client note. Another potential foreign player, America Movil, which was also expected to be interested in Puerto Rico to complement its Latin American networks, is actually absent from the final list of qualified bidders. .

A selection of regional and rural wireless providers have also made the cut, including NE Colorado Cellular, Northeast Nebraska Telephone, East Kentucky Network, and Iowa RSA 2 Limited Partnership.

There were some absentees too. Fourth-placed US operator Sprint has already made it clear that it isn’t interested, focusing instead on its high capacity spectrum for densification. Also, potentially disruptive venture firm Social Capital, headed up by Chamath Palihapitiya, a former Facebook executive, failed to submit a payment by the deadline on July 1 despite stating plans to invest billions. Sinclair Broadcast Group was another company which pulled out of the running.

In the run-up to the now-finalized auction date, the FCC said it will be holding mock auctions to prepare the 62 bidders. It noted that 13 of those are eligible for the rural service provider bidding credit of 15% – meaning a discount of 15% on a winning bidder’s bid.

“The scenarios that will be used for the practice auction are designed so that within several rounds of bidding, bidders will experience key forward auction events or benchmarks,” said the Public Notice.

The auction details follow hard on the heels of the FCC’s historic vote, last week, to open up selected millimeter wave bands, which are expected to complement 600 MHz coverage spectrum in the early 5G deployments. “By not getting involved in the technologies that will use the spectrum we’re turning loose the incredible innovators of this country,” noted Wheeler when unveiling the new frequency framework. “This is a big day for our nation.”

However, trials in 28 GHz may, ironically, kick off before those in the more familiar sub-1 GHz band. Earlier this year, Wheeler stated that the 600 MHz spectrum would take years to repurpose for mobile broadband, and the “transition will be a complex, multi-disciplinary effort that will span several years”.

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