Broadcasters Set New $40B Spectrum-Clearing Price

The third stage of the FCC's broadcast incentive spectrum auction closed Thursday after 52 rounds, with the broadcasters' new asking price now $40,313,164,425 for 108 MHz of spectrum.

That is less than half of the broadcasters' original asking price, though that was for more spectrum.

The FCC has said stage three of the forward auction is likely to begin Dec. 5, with all eyes on whether those bidders—wireless companies and others—will beat, meet, or at least approach that total. Beating or meeting it means the auction can close and the FCC can start the process of repacking TV stations into the smaller space, at least after there is a second mini-auction to allocate specific frequencies to the winning bidders.

So far, forward auction bidders—primarily wireless companies or would-be wireless companies looking to use it for broadband—have failed to come near broadcasters' first two asking prices. Which is one of two triggers for closing the auction. The second is meeting a minimum price for spectrum in top markets, which was already met in the first round of the forward auction.

Broadcasters' stage one clearing price was about $86 billion—the FCC set the prices high to attract those broadcasters. The second stage price was about $55 billion. Forward auction bidders offered only $22 billion in stage one of the forward auction, then stuck with that price in the second stage, which lasted only one round after the bidders essentially lowered their demand rather than raise their prices.

That led some broadcasters to start questioning the wireless broadband "spectrum crunch" that led the FCC to propose the auction.

The less spectrum the FCC reclaims, the fewer TV stations will get the big paydays many were hoping for. The FCC has nine different spectrum targets. Stage three of the reverse auction launched Nov. 1 at a 108 MHz clearing target. If the forward auction bidders don't cover the stage three price, the next target is 84 MHz, which some see as the potential equilibrium point between broadcasters' asks and forward bidders' offers.

The FCC will announce the official date (Dec. 5 unless something unexpected happens) and bidding schedule for the forward auction on Friday (Dec. 2).

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.