A study released Wednesday by SNL Kagan and commissioned by the Expanding Opportunities for Broadcasters Coalition (EOBC) cites wireless carrier hunger for low-band spectrum resources, access to capital, and an anticipated seven-fold surge in mobile data traffic as key factors that are likely to drive total bids as high as $80 billion in next year’s incentive auction of broadcast television channels to the wireless industry.
The EOBC represents television broadcasters that have confirmed their willingness to surrender their channels for sale to the wireless industry, contingent on the likelihood of robust bidding that would result in high compensation for their spectrum. During a conference call with reporters, EOBC Executive Director Preston Padden noted that his organization commissioned the study in response to suggestions that the FCC should delay the start of the incentive auction to give the wireless industry (which spent a record $44.9 billion on spectrum acquisitions at the recently-concluded AWS-3 auction) extra time to raise needed capital. Dismissing this concern, Sharon Armbrust, the Kagan media consultant who wrote the study, stressed: “whenever the incentive auction takes place, the combination of surging wireless usage and demand, the desire to protect . . . franchises, the added foreclosure value of getting control of limited spectrum resources, the lure of low-band spectrum and the plans for generating new and lucrative cross-platform revenue streams should be irresistible drivers for the carriers to be there and bid hard.”
Armbrust also told reporters that her estimates of incentive auction revenues of between $60 billion and $80 billion are based on assumptions that the FCC will reclaim between 84 MHz and 100 MHz of spectrum from broadcasters that will be offered for sale in the auction. The study also anticipates that the incentive auction will generate double the average paired spectrum price achieved in the FCC’s sale of 700 MHz band channels in 2008. Notwithstanding Verizon’s announcement that the company’s short-term spectrum needs have been satisfied, the study contends that all four national wireless carriers and “very possibly, others” will be “fully engaged and sufficiently capitalized bidders” during the incentive auction process. As such, Padden proclaimed: “this analysis . . . should put to rest the false notion that the auction needs to be delayed because of carrier financial considerations.”