FCC Auctions
Today at 10am, the Federal Communications Commission began the second round of the auctioning process to sell the licenses of parts of the broadcast television spectrum. Companies such as AT&T, Verizon, T-Mobile, Comcast, Dish and others are bidding on this wireless spectrum. The acquisition of these licenses would be incredibly beneficial for the progress of these companies.
In June, the FCC completed the first round of the incentive auction by approaching the television station owners and wireless carriers to determine the prices of these licenses. Each auction has a reverse and forward auction.
https://www.fcc.gov/about-fcc/fcc-initiatives/incentive-auctions/how-it-works
A reverse auction determines the minimum price at which the broadcasters are willing to give up their broadcasting licenses at. For the reverse auction, the FCC started the bidding high and lowered the price until they reached the lowest price that the station owners were willing to sell at. The price they settled on was $86 billion dollars, a price that the wireless carriers did not put forward in their forward auction. This auction is an example of a descending-bid auction, or Dutch auction. In the case of a descending-bid auction, the seller begins the bidding at a high price and gradually lowers the price until a bidder accepts.
The FCC defines a forward auction as the part of the auction that determines the price that the companies would pay for the wireless licenses. The bid from the first round of the first auction was $23.11 billion dollars. The FCC had to return to the station owners in today’s auction for another round of bidding because the price the wireless carriers put forth was less than what the television station owners were willing to sell for. In general, if the price the station owners request is reached, the forward auction bidding keeps going until there is no excess demand. When this happens, the incentive auction closes.
Because the second round of the auction occurred today, there have not been many articles published about the outcomes yet. My prediction is that the price the companies will come up with will still be substantially below that of the television station owners. The auction will continue to run until the companies and station owners come to an agreement.
http://www.bna.com/fcc-spectrum-auction-numbers-b73014447367/
https://www.fcc.gov/about-fcc/fcc-initiatives/incentive-auctions/how-it-works
http://transition.fcc.gov/Daily_Releases/Daily_Business/2016/db0831/DA-16-990A1.pdf