C-Block action could slow: Reserve reached, open access becomes reality

Following a few tense rounds without any bids, the nationwide package of eight C-Block licenses picked up a new bid during round 17 to push the potential winning price for the block past the $4.6 billion reserve mark, thereby triggering the spectrum’s open-access provision. The package did not pick up additional bids during rounds 18 and 19, continuing to stand at $4.7 billion with the minimum bid for round 20 set at nearly $5.2 billion.
Bidding for the C-Block license stalled just under the $4.6 billion open-access trigger yesterday, sitting below the threshold for three rounds. At the time, analysts speculated bidders were unwilling to trigger the spectrum’s open-access provision.
However, now that the reserve price has been reached, the eventual winner of any C-Block license will be required to provide access to any compatible device.
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Previously, Google Inc. said it would bid at least the reserve price for the C Block; the Federal Communications Commission, in a departure from past practice, is not identifying the names of top bidders at the close of each round. Instead, only the amount of the top bid for particular licenses in each round is disclosed. The anonymous bidding technique is intended to prevent anti-competitive activity during the auction.
C Block slowdown?
Analysts continue to think there are only a couple of bidders going after the C-Block licenses. However, recent C-Block action indicates bidding may well slow.
“Based on our analysis of the bidding pattern, we believe that if there have been two active bidders for the C Block, the second bidder has lost sufficient eligibility to bid again, and thus, we believe the bidding for the C Block is likely over,” noted research firm Stifel Nicolaus after round 17.
If that does prove to be the case, the winning bidder picked up 22 megahertz of 700 MHz spectrum covering the 50 states for 76 cents per megahertz/potential customer covered, according to tracking information from Optimal Markets Inc. By comparison, regional licenses won during the advanced wireless services auction fetched between 9 cents per MHz/pop covering Alaska to $1.21 per MHz/pop covering the Northeast.
A and B Blocks
There was also a change among the most desirable A- and B-Block licenses as the top potential winning bid for the B-Block license covering the Chicago area hit $562 million — and an auction-leading $5.79 per MHz/pop — surpassing the previous high bid for the B Block covering the New York City area, which remained at $484 million, or $2.50 per MHz/pop. The A-Block license covering the Los Angeles area also swept past the Big Apple B Block, hitting $527.4 million, or $2.44 per MHz/pop, during round 19.
The national commercial-public safety D-Block license again remained fallow ground as no new bids were placed on the license.
Overall, the FCC’s 700 MHz auction picked up 945 new bids totaling $1.2 billion in potential winning bids during round 17, 930 new bids totaling $905.3 million in potential winning bids during round 18 and 920 new bids totaling $616.8 million during round 19. Total potential winning bids sat at $14.3 billion at the end of round 19, nearly matching the high-end of pre-auction estimates.