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Groundhog day in 600 MHz as FCC restarts failed auction process

The FCC is trying to rescue its flagship spectrum auction, returning to broadcasters to try to set a price for a reduced amount of 600 MHz airwaves after the failure of the first reverse auction.

When the terms of the process were being debated last year, concern centered on whether broadcasters would be prepared to surrender enough of their spectrum to make the complex incentive auction viable. In fact, the maximum amount of 600 MHz airwaves targeted by the FCC was put up for sale, but in the second phase of the auction – in which operators could bid for the surrendered spectrum – the required sums of money were not forthcoming, so the cycle must start all over again. The reserve prices demanded by broadcasters totalled $86.4bn.

FCC chairman Tom Wheeler said at the CTIA show earlier this month: “We created a market that made available 126 MHz of prime beachfront spectrum in the 600 MHz band. As you know, however, that market closed when the cost to clear that amount of broadcast spectrum exceeded the bid prices of the carriers. We resume bidding next week a new reverse auction to determine the cost to clear a reduced amount – 114 MHz – of spectrum. Following that, we’ll again turn to the forward auction to determine if the spectrum is worth that cost to you.”

The new reverse auction started on September 13 to set the price for that 114 MHz. The failure to secure $86.4bn, given the unexpectedly high proceeds from the AWS-3 auction last year, suggests that MNOs’ priorities are shifting from the coverage bands to higher frequency, capacity spectrum. They are starting to in-fill their LTE macro networks with targeted capacity using smaller cells and higher bands, and the initial 5G roll-outs are also expected to concentrate on specific locations and use cases – from fixed wireless to IoT – rather than overlaying the whole 4G footprint for many years to come.

Wheeler told Congress last week that there was no date for the second phase of this repeat auction as yet. “Getting the transition right is as important as getting the auction itself right,” he said. “We continue to prioritize planning for an efficient and effective transition with minimal disruption to the viewing public. With the continued engagement of industry stakeholders, that’s exactly what we’ll get.”

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