On June 29, 2016, the Federal Communication Commission (FCC) closed the reverse auction portion of its spectrum auction and announced an $86,422,558,704 final clearing cost. The FCC will need to recoup this dollar amount plus a couple billion dollars more in the forthcoming forward auction to break even.
Revenue from the forward auction will depend on the bids from wireless companies competing for what FCC Incentive Auction Chair Gary Epstein calls “beachfront spectrum.” The reverse auction closed after 52 rounds of bidding. The FCC met its clearing target goal of 126 MHz currently used by the TV band, citing strong participation from TV broadcast stations. While the reverse auction relied on broadcast stations outbidding each other by selling their spectrum for less money, the forward auction will operate like a typical highest bidder wins auction.
If the forward auction revenue misses the $86 billion mark, the FCC will start the process over again with a lower clearing target goal of 114 MHz. The FCC has prepared for up to nine cycles of the auction with progressively smaller clearing targets.
The goal of the spectrum auction is to free up the highly valuable spectrum that is needed by mobile carriers to offer more competitive and higher quality services. The demand for wireless only increases as smartphones and other wireless devices become more integrated in the daily lives of Americans.
To learn more about the auction, take a look at these informative videos created by the Utah Education Network. Follow the link, then locate three videos along the side bar titled, “About the Broadcast Spectrum Auction,” “Reverse Auction,” and “Repacking.”
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