FCC releases list of eligible bidders, which includes Verizon, T-Mobile and AT&T, with the forward-auction process set to kick off Aug. 16
The Federal Communications Commission said 62 companies have qualified to participate in the forward-auction portion of its 600 MHz incentive auction process, which is scheduled to begin Aug. 16.
Qualified bidders include three of the nation’s four largest operators, as well as a number of rural operators and designated entities. Those qualified include Verizon Wireless, AT&T, T-Mobile US, U.S. Cellular and C Spire, as well as some international interest in the form of Japan’s NTT DoCoMo, which is expected to bid on FCC controlled licenses covering Pacific islands.
The FCC previously said it will set aside 30 megahertz of the repackaged spectrum for carriers that do not already control a significant amount of sub-1 GHz spectrum holdings, which is predominately made up of AT&T and Verizon Communications.
T-Mobile US is expected to be the most aggressive bidder for the set-aside spectrum, with some predicting the carrier could spend up to $10 billion on licenses. While not eligible for the set-aside licenses, analysts predict AT&T could bid between $10 billion and $15 billion for licenses – having committed to at least $9 billion in bids as part of gaining approval of its DirecTV acquisition – while Verizon is predicted to bid around $10 billion. Verizon Wireless is also expected to bid up to $10 billion on spectrum.
Sprint, which has sat out all of the FCC’s recent spectrum auctions, announced last year it would again sit out the competitive bidding process. The carrier noted a need to focus on improving its network and that it already had sufficient spectrum due to its vast portfolio in the 2.5 GHz spectrum band.
The FCC recently wrapped up the first stage of the proceeding’s reverse auction portion, which resulted in television broadcasters setting an $86 billion clearing target to free up the maximum of 126 megahertz of the 600 MHz spectrum. That amount came in well above expectations, leading many to note the FCC will likely need to conduct additional bidding stages in order to hit financial levels in line with bidding demand.
FCC Chairman Tom Wheeler last week acknowledged that the government agency may need to conduct further reverse auction stages should forward auction bidding not meet the current $86 billion clearing target. Those additional stages could result in less spectrum being transitioned from television broadcasters to mobile telecom operators.
“The auction is a market-based mechanism for matching supply with demand,” Wheeler explained. “Until the forward bidding concludes, we will not know whether the demand meets the large supply offered by broadcasters. 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.”
Along with the list of qualified bidders, the FCC noted 42 entities failed to qualify at this point, although it is possible they could be granted qualified status ahead of the auction start. Those so far not qualified include bidding entities for cable giant Liberty Global and Silicon Valley startup Social Capital Rama Spectrum Holdings.
Rama, which is headed by former Facebook exec Chamath Palihapitiya, came out last fall claiming it planned to spend up to $10 billion on spectrum to back a microcell-based cellular network.
Analysts had been predicting the forward auction could generate up to $50 billion in total bids on 100 megahertz of post-packaged spectrum.
“The FCC will need to attract big bucks and several new bidders if the 600 MHz forward auction is going to be completed before the end of 2016,” noted Berge Ayvazian, senior analyst and consultant at Wireless 20/20. “Carrier war chests have been stretched in recent years and together AT&T, T-Mobile and Verizon may bid as much as $30 billion. So it may be up to newcomers such as Comcast to reach the clearing cost of more than $86 billion, and a second stage of the reverse auction may be needed later this year.”
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