Yesterday, broadcasters closed Stage 3 of the reverse phase of the incentive auction after 52 rounds, setting a new clearing cost of $40.3 billion, which wireless carriers must bid to gain access to 108 MHz (80 MHz net) of surrendered broadcast industry spectrum in the 600 MHz band during the upcoming forward phase of the auction. Stage 3 of the ongoing auction commenced on November 1 after Stage 2 closed abruptly following one round of activity in the forward phase, which generated $21.5 billion in gross bids. That amount fell way short of the Stage 2 clearing target of $54.6 billion for 114 MHz, or a net allotment of 90 MHz after factoring in allocations for guard band and unlicensed spectrum. During the first stage of the incentive auction in late August, the wireless industry offered $23.1 billion for 123 MHz of spectrum (100 MHz net) for which broadcasters had set an initial clearing price of $88.4 billion.
Although an official announcement is not expected until later today, FCC officials said the agency is likely to commence the forward phase of Stage 3 this coming Monday, December 5. If wireless industry bids fall short of the Stage 3 clearing target and fail to provide sufficient additional revenues to cover the FCC’s expenses plus $1.75 billion in broadcast station repacking costs, the auction will move to a fourth stage during which broadcasters would be required to set a new clearing cost for a gross spectrum allotment of 84 MHz. While some analysts believe the auction will require a fourth stage to reach a state of equilibrium between the broadcast industry clearing cost and wireless industry demand, Preston Padden—the founder and former director of the now defunct Expanding Opportunities for Broadcasters Coalition—characterized the new $40.3 billion clearing cost as “a genuine bargain for the [wireless] carriers and other bidders.”