Stage three of the forward portion of the FCC's spectrum auction began and ended Monday when forward auction bidders again refused to up their prices for reclaimed broadcast spectrum.

In fact, the total after stage there was lower -- $19,676,240,520 -- because the FCC reduced the amount of spectrum and the bidders simply reduced their demand along with it. That means the FCC will lower its spectrum-clearing target and proceed to stage four of the reverse auction, likely in only a few days.

Stage three of the reverse auction ended last week with broadcasters new asking price now $40,313,164,425 for 108 MHz of spectrum. In stage two, the price was $55 billion for 114 MHZ, but forward auction bidders, who had only ponied up $22 billion in stage one toward an opening price of $86 billion for 126 MHZ did not budge, simply reducing their demand rather than up the price.

They did the same Monday, signaling broadcasters will have to drop their prices yet again, and wireless companies will get access to even less spectrum, in stage four.

The FCC has nine different spectrum targets. Stage three of the reverse auction launched Nov. 1 at a 108 MHz clearing target. The next target is 84 MHz, which some see as the potential equilibrium point between broadcasters' asks and forward bidders' offers, perhaps around a $30 billion number.

The lower the clearing target goes without wireless bidders covering the reverse figure, the more broadcasters question wireless bidder cries of a spectrum crunch necessitating the auction in the first place.

The auction was designed for multiple rounds since it is bidders on both sides, not the FCC, that is determining the price point at which the spectrum is more valuable to wireless bidders for broadband than broadcasters for over-the-air service.

According to the FCC, the second stage of the forward portion of the FCC’s broadcast incentive auction—which only launched Wednesday—went only one two-hour round, is now closed and the FCC will have to move to yet another round of reverse auction broadcasters bidding at a lower clearing target.

There was no one immediately available for comment, but the FCC's website said that "Bidding in the forward auction has concluded for Stage 2 without meeting the final stage rule and without meeting the conditions to trigger an extended round."

That one round of the forward auction ended with only $21,519,907,210 bid. That is below the closing bid total for round one of the forward, not surprising given that there was less spectrum up for bid, though that could also have boosted the price if demand stayed the same given the reduction in supply.

Clearly the $56.5 billion broadcasters were asking—this time 114 MHz (90 MHz minus the guard bands) down from 126 MHz (100 MHz minus guard bands)—was still too rich. Forward auction bidders weren't ready to up their bids from last time, and they took no time in making that clear.

The closing after one round means that demand for spectrum in the top 40 markets (actually top 40 geographic areas dubbed PEAs) was not sufficient for the bidders to up their price for the decreased supply.

Once that happens, even if there is bidding still going on in markets below the top 40, the FCC closes the stage, as happened in this case, and now moves to stage three of the reverse auction, at what will likley be the 108 MHz clearing target.

"This is a complicated auction design and no significance should be attached to interim steps.  As supply contracts in future stages I am confident that the auction will become more competitive leading to a successful conclusion," said Preston Padden, former executive director of the Expanding Opportunities for Broadcasters Coalition.

The FCC said it would issue further guidance next week on when stage three of the reverse auction would begin, and at what clearing target.

The FCC has eleven different spectrum targets, the next being 108 MHz. Some see the 84 MHz as the potential equilibrium point between broadasters' asks and forward bidders' pocket books.

The second stage of the FCC's reverse portion of the spectrum incentive auction closed last Thursday (Oct. 13). It took 53 rounds for broadcasters to come up with their selling price, but only one for forward auction participants in teh top markets to come up with their counter.

“NAB is surprised by the results of wireless carrier bidding in the second stage of the FCC’s TV auction. Broadcasters look forward to the third stage of bidding and a successful completion of the auction," the National Association of Broadcasters said in a statement.

NAB has been primarily focused on stations remaining in the broadcasting business, so is eager for a resolution so the FCC can focus on repacking stations post-auction and helping those broadcasters roll out a new, interactive, ATSC 3.0 transmission standard.

Scott Bergmann, VP of regulatory affairs for CTIA, which represents the wireless carriers, did not sound surprised by the auction lightning round.

“We always expected the incentive auction to be a multi-staged process," he said, something the FCC has emphasized. "We continue to believe this auction will produce spectrum for the wireless industry that’s key to our nation’s economy and meeting consumer demand.”

"The rapid close of the second stage of the forward auction shows just how delicate the balance of supply and demand is for the 600 Mhz spectrum in question," said Dan Hays, analyst with PwC Strategy& .

"The lack of upward motion in the total forward auction proceeds may be disheartening to many broadcasters, who were eagerly awaiting a further narrowing of the gap after reducing their own clearing cost by over 35% just last week. However, it is important to remember that this is all taking place very much by design; the auction is working as planned in an attempt to find a level of spectrum clearing where supply matches demand."

The FCC said Tuesday that the forward portion of the broadcast incentive auction has now closed, after round 27, without meeting the conditions necessary to extend it to a Round 28 or to meet the $88.3 billion target bidders needed to to cover the cost of payments to broadcasters.

If fell far short of that, generating only $23,108,037,900 in total bids and netting just $22.45 billion after bidding credits and discounts.

Bidding had slowed appreciably, and showed signs it would clearly not hit the $88.3 billion mark -- the FCC's magic number.

The FCC has not yet announced when it will start Stage 2, which means going back to broadcasters at the lower clearing target.

The auction was planned for multiple rounds, but having to go back to a reverse auction and then a second stage forward auction will add to the time frame and mean fewer broadcasters will get a big payday, though the prices could go up for the spectrum given that supply is being reduced.

The FCC will likely start stage 2 of the reverse auction next week. It has to leave at least five days between stages, but probably won't take much more than that.

The original reverse auction took four weeks, so that is probably a good gauge for the stage 2 reverse. The stage 1 forward auction took two weeks.

In the next five days the FCC will release new information on a new spectrum target and when the reverse auction will begin. It will also put out a refresher tutorial for broadcasters.

The FCC will be buying fewer stations in the reverse auction this time around. Some stations will be getting lower prices, and some of those could drop out, deciding they don't want to sell at that price.

Demand for spectrum in the FCC's forward auction took a big drop in Round 25.

In most of the top markets, supply and demand were on par, suggesting the FCC may have started to find its spectrum price points and may soon have to lower its spectrum sights and return to the reverse auction at a lower clearing target.

The total bid in round 25 was $22,985,963,900, vs $22,704,101,100 in Round 24, or an increase of only a little more than 1%, while the FCC was raising prices by 10%.

The FCC divided the spectrum into 416 partial economic areas, and in only a few does demand exceed supply. The auction won't end until there are no markets with excess demand, so money could still move around.

In top market New York, round 22 had seen 19 licenses bid for with only 10 available. In round 25, only 10 licenses were bid for. The story was the same in many top markets.

In fact, in eight of the top 10 markets, supply no longer exceeded demand, with Los Angeles -- at bids for eight licenses with only five available -- and Houston with bids on 11 licenses with 10 available -- the only exceptions.

But the auction won't close successfully unless the net figure for bids -- the total minus bidding credits and discounts -- meets or beats $88.3 billion. The Round 25 figure was only a little more than a quarter of that at $22,320,000.

One spectrum watcher who conceded a second stage is likely said that prices should go up in the next round when the FCC reduces the supply of licenses.

Broadcasters were willing to give up 126 MHz in the reverse auction, but it looks like wireless buyers won't be covering the FCC's $86 billion clearing cost.

But the auction was always set up for multiple rounds. The next clearing target is 114 MHz. The FCC will go back to broadcasters, continue the reverse auction at that, come up with a clearing cost, then take a second crack at a forward auction. 

With a couple of dozen rounds of the forward portion of the FCC spectrum auction in the books, the bidding stood at $22,704,101,100, up just under $700 million from round 23's $22,077,875,100.

The magic number, which is the bid total minus discounts and bidding credits, stood at an even $22 billion.

That is the number that must be quadrupled (plus a bit) to the $88,379,558,704 that will cover payments to broadcasters and the cost of the auction and post-auction TV station repack.

Demand in the top two markets -- New York and Los Angeles -- continued to drop, though in both cities demand still exceeded supply. In both cases, the FCC was still getting its asking price, which it is increasing by 10% in each round.

Related:Spectrum Auction Bids Up Over $860M After Round 22

If the FCC does not raise enough to cover the $88-plus billion figure, it will move to stage 2 of the auction, where it will lower the spectrum clearing target from 126 MHz to 114 MHz, continue the reverse auction at that lower figure--winnowing out some of the broadcasters that would have been paid at the higher spectrum-clearing total--then try to cover that new figure in a forward auction.

The FCC has nine possible spectrum clearing targets down to a low of 42.

The FCC is doubling the asking price increases for spectrum in the forward auction to 10% per round, up from the 5% per round it has been implementing so far.

The change will take effect as of Monday, Aug. 29. The FCC can raise the increments anywhere from 1% to 15% per round.

The forward auction is a "clock" auction where the FCC increases the price of the 416 available geographic spectrum licenses in each round. Upping the price increase is one way of speeding the process, which is importantly particularly if the FCC can't raise enough to pay broadcasters and has to lower its spectrum target in a second take on the reverse auction then hold a second forward auction after that.

As of the end of Round 16 Thursday morning (Aug. 25), the bidding stood at a total of $17,149,091,000, which net of bidding credits and discounts means the FCC has raised $16.49 billion toward the $88,379,558,704 it needs to cover broadcaster payments and auction costs.

That is up from the $16,391,244,000 and $16,391,244,000 net in round 15, when the FCC met the first of two benchmarks for closing the auction.

Related:Read More Spectrum Auction News

In the forward auction, 62 parties are eligible to bid on 416 PEAs (partial economic areas). Those include Comcast, Dish and AT&T. They are bidding on broadcast spectrum the FCC reclaimed from broadcasters in the reverse auction.

If, as most observers speculate, bidders do not pony up enough to meet that $88.379 billion benchmark at the 126 MHz clearing target in this, stage one, of the auction, the FCC will lower its sights to 114 MHz, pay broadcasters less in a continuation of the reverse auction, and hope to cover that lower figure in a new forward auction.

The FCC has set nine spectrum-clearing targets ranging from the current high of 126 MHz to 42 MHz -- depending on how the marketplace values the spectrum.

If the auction goes to a second stage, it could push into calendar year 2017.

After 15 rounds and eight days, the forward portion of the FCC's spectrum auction has met one of two benchmarks for closing the auction.

With $16,391,244,000 bid in the latest round (which translates to a net $15.730 billion minus bidding credits and discounts), they have exceeded the $15,896,290,987 total the FCC set as the minimum bid price at this clearing target and all clearing targets above 84 MHz.

The Round 14 numbers were $15,717,686,000 and $15.060 billion, and Round 13's were $15,077,767,000

The net $15.730 after Round 15 is still many billions of dollars short of what the FCC will need to close the auction without having to move to a second stage of broadcast bidding.

That second benchmark is the $88,379,558,704 the FCC will have to raise for the spectrum to cover the cost of paying broadcasters for that spectrum, paying for the logistics of conducting auction itself, and paying for TV station relocations so those bidding in the forward auction can get access to the spectrum.

The auction is expected to last a couple of months, so there is plenty of opportunity for that total to continue to rise, particularly given that the FCC is raising the price on the spectrum blocks by 5% a day and requiring bidders to use 95% of the bidding credits they have committed to, though not necessarily on any particular spectrum in any particular market.

If, as most observers speculate, bidders -- including Comcast, Dish and AT&T -- do not pony up enough to meet that second benchmark at the 126-MHz clearing target in this, stage one, of the auction, the FCC will lower its sights to 114 MHz, pay broadcasters less in a continuation of the reverse auction, and hope to cover that lower figure in a new forward auction.

The FCC has set nine spectrum-clearing targets ranging from the current high of 126 MHz to 42 MHz -- depending on how the marketplace values the spectrum.

In spectrum auctions, the FCC traditionally sets some benchmark spectrum price it will accept. This one was calculated by multiplying the target price for a unit of spectrum, in this case $1.25 per unit (called "MHz pops"), by 70 MHz (how much spectrum would be sold with an 84 MHz clearing target -- some of the spectrum in all the targets won't be sold but is reserved for guard bands), by the population covered by the category 1 blocks (those with the least impairment due to interference) in the top 40 PEAs (PEAs are the geographically-based partial economic units the FCC has divided the spectrum into).

At clearing targets below 70 MHz, the $15,717,686,000 benchmark would be reduced since the 70 MHz multiplier will decrease.

Update:In Round 15, Bidders Hit First Spectrum Auction Benchmark

The forward part of the FCC's spectrum incentive auction continued to pick up steam Wednesday (Aug. 24), with the latest round -- No. 13 -- bringing in $15,077,767,000 in bids.

That's $14.450 billion net of discounts and bidding credits for various parties (and up more than $500 million from the $14,440,301,000/$13.820 generated in round 12) . It is also nearing one of two benchmarks for closing the auction, while the second remains a distant figure on the horizon.

The FCC cannot close the auction until the forward portion net amount (the amount above $14.450 billion) equals or exceeds the $88,379,558,704 (that figure on the horizon) the FCC will need to cover the cost of paying broadcasters for that spectrum, paying for the logistics of conducting the auction itself and paying for TV station relocations so those bidding in the forward auction can get access to the spectrum.

But there is also another benchmark to closing the auction, which is the one that could be met today (Aug. 24).

In order to assure that the government is getting fair value for the licenses relative to what has been paid in similar auctions, the FCC generally sets a benchmark minimum price, in this case a formula based on multiplying "the price benchmark of $1.25 per MHz-pop, by the forward auction spectrum benchmark of 70 megahertz by the total number of pops associated with the Category 1 blocks in high-demand [top 40] PEAs [partial economic areas, which is how it divided up the 126 MHz of spectrum reclaimed]."

That comes to a total of $15,896,290,987.

So, when that number is met, as it likely will be by the end of today, the FCC will have met one of its two benchmarks for closing the auction.

With round three under its belt, the forward portion of the FCC's spectrum incentive auction has now generated $9,700,723,000 in bids.

Actually, net of discounts and bidding credits to eligible entities including minority and women-owned businesses, the figure is $9,210,000,000.

The FCC will need at least $88,379,558,704 to cover the cost of (1) paying broadcasters for their 126 MHz worth of spectrum; (2) paying them to move off that spectrum; and (3) paying for the auction itself. The bidding also has to meet certain price benchmarks in the top 40 PEAs if the FCC is to close the auction.

The round three total is up about $660 million over round two, when $9,038,042,000 was bid (net $8,570,000) for the formerly broadcast spectrum, offered in 416 partial economic areas, or PEAs.

It is a marathon, not a sprint, and the auction is expected to take up to several months before the FCC knows whether it can cover that figure or will have to lower its spectrum sights to 114 MHz and resume the reverse portion of the auction. The FCC designed the auction for multiple spectrum clearing targets if the first is not met.

Currently the FCC is conducting two rounds per day of two hours apiece, 10-12 a.m. and 2-4 p.m., but that number could be increased and the length shortened as the auction progresses as a way to speed the bidding process.

With two rounds finished in the forward part of the FCC's broadcast spectrum incentive auction, a total of $9.038 billion has been bid on the available 416 geographic markets where licenses are being offered.

That's up from the $8,490,410,000 bid in round one, which began Tuesday (Aug. 16).

The auction is in its earliest stages -- it is expected to last a couple of months -- so auction watchers aren't gleaning much from the early returns.

The FCC is raising its prices by 5% in each round. For example, in top market New York, the opening price for the 10 MHz available -- 5 MHz uplink and 5 MHz down -- was $135,000,000. The round-two price was $141,750,000. The round three price will be $148,383,000.

So far, demand is exceeding supply in nine of the top 10 markets, and all markets have at least one bid on at least some of their available spectrum. Only American Samoa had lacked a bid in the first round.

The FCC will need to raise at least $88,379,558,704 in total to cover the cost of paying broadcasters for giving up 126 MHz of their spectrum, 100 MHz of which is being auctioned (the rest is for guard bands between broadcast and wireless users).

The licenses in the top 40 markets will also have to draw sufficient dollars to meet what the FCC has set before the auction as competitive price for those: $15,896,290,000.

If the FCC does not meet those goals, it will reduce the spectrum clearing target to 114 MHz and resume the reverse auction.

Currently, the forward auction consists of two, two-hour rounds per day, but more rounds could be added if the FCC wants to goose the activity.

Bidders are also required to bid on most of the spectrum they have indicated interest in or face having their eligibility "irrevocably reduced," the FCC has pointed out to bidders.

With one round in the books in the forward portion of the FCC's spectrum incentive auction, bidders have so far ponied up $8,490,410,000 toward the 100 MHz of spectrum up for grabs in 416 geographic areas, though with bidding credits and discounts that figure drops to $8,040,000,000 toward meeting the final stage rule.

That is according to the FCC's online auction tracker, which is providing some real-time data on bids and prices after the close of each round.

Bidding began today (Aug. 16) at 10 a.m. and closed at 4 p.m. On Aug. 17, the FCC will hold two, two-hour rounds per day.

The FCC will have to generate $88,379,558,704 in bids -- after bidding credits and discounts -- during the likely months-long process to cover the $86.4 billion in promised broadcasters in the reverse auction, plus the almost $2 billion for broadcasters moving expenses following the auction and the cost of administrating the auction itself.

There are 62 eligible bidders, including Comcast, AT&T, Verizon, Dish and T-Mobile.

The FCC's "mock auction" to familiarize spectrum bidders with the forward auction bidding process started Thursday morning (August 11) and will continue on Friday (Aug. 12), in anticipation of the official start of bidding on 600-MHz band licenses for mobile broadband use. That bidding will start on Aug. 16.

Gary Epstein, chair, and Jean L. Kiddoo, deputy chair, of the FCC's Incentive Auction Task Force, discussed the auction agenda and details in an FCC blogposted today.

Using the tempting opening line, "Who says nothing happens in Washington in August?" Epstein and Kiddoo wrote, "Because this is a new auction design, we wanted to give you a preview of how the process will unfold and how the public can keep track as the auction moves through the bidding rounds."

The blog/tutorial explains that throughout the forward auction, the public will be able to "obtain information about the results of bidding on our Public Reporting System." The Forward Auction section of the PRS will provide a Product Status screen that will offer details on bidding activity for each "product" (the pairing of a license category and a partial economic area (PEA), which refers to the 416 geographic markets).

The Epstein/Kiddoo blog emphasizes that "unlike the reverse auction ... forward auction bidding rounds for a stage can continue without limit so long as demand outpaces supply for any product."

"As such, we cannot predict when the forward auction will conclude," they wrote.

It could be a very long summer, autumn and possibly year.

Potential participants in the forward portion of the FCC's spectrum auction have until today (April 6) to submit their "cured" defective applications to the FCC.

On March 18, the FCC revealed the applicants to bid on TV broadcast spectrum after it is reclaimed and re-auctioned. That included 35 applications that were in some way incomplete or defective.

Those included names like BlueBird America and Teleguam Holdings, but also Liberty and AT&T.

Liberty has signaled it won't be bidding, but AT&T has signaled it was an easy fix and the application would be repaired. The window for fixing those applications opened March 21 and closes at 6 p.m. on April 6.

FCC staffers have been available to talk them through the deficiencies.

Only the 69 complete applications--which include Comcast/NBCU, Sinclair and Mediacom's Rocco Commisso--and whichever of the 35 defective applications are "cured" can participate in the auction, but they must still make upfront payments--in the millions--to be qualified to bid.