The Priority Access License auction was meant to be unlike anything the industry has seen before. The sheer number of licenses and their county-level size were designed to attract new types of companies to spectrum-holding and make it feasible for them to compete for and afford spectrum in a scrum with the deep-pocketed national service providers who typically dominate such auctions.
The first day of bidding in an auction is just that — the first day. Ultimately, not much may hold true from the debut of an auction that is expected to last at least a couple of months as the 271 bidders jockey for the 22,631 PALs available. The gross proceeds from Day One are in-line with recent auctions — no great surprises there. At the end of that first round, the auction had raised $357.3 million. That’s less than the $715 million raised in the first day of bidding in the most recent millimeter wave auction, but outpaces the $304 million in first-day bids in the 24 GHz auction before that.
But beyond the first-day bidding haul, some striking differences between this auction and previous ones are already apparent.
For one, the Federal Communications Commission kicked things off with a first day that consisted of one, marathon six-hour bidding period — not its typical approach of multiple, shorter rounds per day and a strategy that gives participants additional time to work through placing their bids on the massive number of licenses available. The auction continues today with two, two-hour bidding rounds.
Which licenses received the most demand held some interesting patterns. When the bidding field is dominated by national players, typically high-density urban areas are the most in-demand — and the licenses most hotly contested tend to also be the most expensive. Once prices are settled upon for the large and mid-sized urban areas, that’s when bidding action typically shifts to smaller cities and suburbs, with bidding on the most rural areas usually left for last as the auction winds toward a close.
The PALs auction is departing sharply from that well-worn path. After the first day of bidding, out of the 10 counties with the most demand (the highest number of interested bids), six of those were in counties with a population of less than 50,000 people, and priced accordingly.
Which county, out of every county in the country, drew the most bidding demand in the first round? Calhoun County, Iowa, with a population of fewer than 10,000 people and a first-round price of $1,900. In second place was Los Angeles county, California, the most populous county in the country, with a price per PAL of $1.9 million. The top 10 counties by aggregate demand and their first-round prices were, in descending order:
- Calhoun county, Iowa (population 9,670): $1,900
- Los Angeles county, California (population 9.8 million): $1.9 million
- Orange county, California (population 3 million): $602,000
- Sac county, Iowa (population 10,350): $2,100
- Andrews county, Texas (population 14,786): $3,000
- Fulton county, Georgia (population 920,581): $184,000
- Maricopa county, Arizona (population 3.8 million): $763,000
- Pittsburg county, Oklahoma (population 45,837): $9,200
- Mills county, Iowa (population 15,059): $3,000
- San Diego county (population 3.1 million): $619,000
While observers still expect the top 50 counties by population to drive most of the auction’s proceeds, it’s worth noting that bidding is already quite broad. Of the 3,233 counties in the U.S., 1,439 had more demand for licenses than the available 7 PALs could satisfy; another 60 had demand equal to the supply of available licenses. Meanwhile, 1,734 counties had a supply of licenses that outweighed the demand. Bidding will continue, with automatic price increases each round, until the demand meets supply in the counties where there is higher demand than supply. Ultimately, the FCC need not sell every PAL in every county in order for the spectrum to be made use of, because the spectrum will revert to being available via General Authorized Access use under the three-tiered sharing framework for CBRS.
While there’s a long way to go before bidding concludes, that diversity in PAL demand could mean that FCC’s compromise of settling on county-level license sizes has succeeded in making room for players for whom those rural areas are their first priority to serve, not their last.
