Two weeks and 27 rounds after the commencement of the forward phase of the incentive auction on August 16, the FCC announced Tuesday that bidding in the forward auction “has concluded without meeting the final stage rule.” The gross bid tally of $23.1 billion set in Round 27 falls far short of the $86.4 billion required to satisfy the clearing cost set by broadcasters for wireless industry access to the maximum spectrum clearing target of 126 MHz, out of which 100 MHz would have been made available to wireless carriers.

After total bids in the forward auction reached the $15.9 billion benchmark set by the FCC as the first prong of the final stage rule on August 24, activity dropped precipitously with supply outstripping demand in many markets. A consultant with Telecom, Media and Finance Associated, Inc. wrote that, in the top two markets of New York and Los Angeles, “bidding levels . . . dropped dramatically in Round 25 (to 10 and 8 blocks, respectively), with total bidding units placed (2.096M) now below the supply of licenses.” At the end of Round 26, total bids—which had surged by an average of $560 million per round the previous week—trickled upward by a mere $70 million or by a fraction of a percentage point over Round 25. Detecting no appreciable change in these conditions during Round 27, the FCC concluded that the forward auction no longer met “the conditions to trigger an extended round.”

In a statement on the FCC’s incentive auction web page, the agency confirmed that the incentive auction “will continue with Stage 2 at a lower clearing target,” and a public notice issued by the FCC on Wednesday indicates that bidding in the reverse phase of the Stage 2 incentive auction will begin on September 13. While the forward auction is slated to recommence at the next lower clearing target of 114 MHz (which would leave 90 MHz for wireless industry use), broadcasters must set a new clearing cost for those spectrum assets during the reverse auction clock phase. The FCC also affirmed that “forward auction bidders that have eligibility after the last round of Stage 1 will have access to the Auction System for Stage 2” starting on September 8. Forward auction bidding is expected to resume on the next business day following the close of the reverse auction. The auction could continue through subsequent stages at lower clearing targets until the clearing cost set by broadcasters in the reverse portion of a particular stage is met in the ensuing forward auction.