FCC begins first phase of airwaves auction

Reuters News
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Posted: Mar 29, 2016 3:33 PM

By David Shepardson and Malathi Nayak

WASHINGTON/NEW YORK (Reuters) - The U.S. Federal Communications Commission on Tuesday kicked off an auction of low-frequency spectrum relinquished by television broadcasters to wireless companies and other bidders that are seeking new airwaves to build and improve wireless networks.

The so-called "broadcast incentive" auction is considered one of the FCC's most complex and ambitious spectrum auctions to date.

The first step is a "reverse auction," where the government recovers spectrum from broadcasters that will voluntarily give up airwaves either to go off the air for a payout or be shifted to another frequency band for a smaller sum.

"A successful auction means that spectrum will be repurposed, a huge amount of money will change hands, and technology and spectrum policy will be shaped for the future," said National Association of Broadcasters Executive Vice President Rick Kaplan.

Of the 1,800 eligible broadcasters, an undisclosed number submitted applications to take part. Eligible broadcasters have until 6 p.m. EDT Tuesday to submit a binding agreement to take part.The reverse auction should be completed by summer and will be followed by a "forward" auction, where the government sells to telecommunications operators and other bidders the spectrum, which it will package into new bands. The results of that auction are expected by October.

The government plays the middleman in the auction, which is designed to give broadcasters an incentive to sell at the lowest price and encourage telecommunications companies to buy at the highest price. The government keeps a large part of the difference.

The names of the TV broadcasters that are participating in the reverse auction will not be revealed by the FCC during the auction.

Last week, the FCC said it saw 104 applications for the forward auction, 69 of them complete and 35 incomplete. Participants included wireless companies Verizon Communications Inc <VZ.N>, AT&T Inc <T.N> and T-Mobile US Inc <TMUS.O> and pay-TV providers Comcast Corp <CMCSA.O> and Dish Network Corp <DISH.O>.

Puerto Rico Telephone Company Inc, a unit Mexican telecommunications provider America Movil SAB <AMXL.MX>, rural carriers and financial companies such as Silicon Valley investment firm Social Capital have also filed to take part.

Analysts forecast that the upcoming auction could fetch proceeds in the $15 billion to $45 billion range, but they said they expect bidders to be less aggressive than in the FCC's last auction, the "AWS-3 auction," which ended last year and attracted a record $44.9 billion in bids.

FCC Chairman Tom Wheeler has said the FCC has seen strong interest in the auction and will boost wireless data. "If broadband Internet service is an engine for economic growth, then mobile broadband has been its booster rocket, creating a platform for innovation, competition and new markets," he said.

(Reporting by Malathi Nayak and David Shepardson; Editing by Steve Orlofsky)