After 58 rounds, the fourth stage of the clock phase of the forward auction closed last Friday with gross bids of $19.6 billion which represent the secondhighest auction total in the FCC’s history.
Hailed by FCC Chairman Ajit Pai as a “major milestone,” the conclusion of the forward auction clears 84 MHz of spectrum that had been surrendered voluntarily by television broadcasters. During Stage Four of the forward auction, wireless industry bidders had competed for a net spectrum allotment of 70 MHz covering 416 partial economic areas (PEAs) nationwide, with the remaining 14 MHz designated for unlicensed wireless applications that include Wi-Fi. The $19.6 billion bid total is surpassed only by the results of the 2014- 2015 Advanced Wireless Service-3 auction, which tallied record gross bids of $44.9 billion. Out of the $19.6 billion posted by wireless carriers during the forward auction, $10 billion will go to television broadcasters that chose to relinquish their spectrum rights in the reverse auction. In accordance with statutory provisions, an additional $1.75 billion will pay the repacking costs of broadcasters that opt to remain on the air, and another $207 million will cover costs incurred by the FCC in conducting the incentive auction. Remaining proceeds will be paid to the U.S. Treasury which is expected to use the funds for deficit reduction.
With the clock phase now concluded, forward auction winners will proceed to the assignment phase in which they will bid for specific blocks of spectrum covering the markets that they won. As specified in a public notice issued Tuesday by the FCC, the assignment phase—which is slated to begin on March 6 and end by March 30—will consist of 74 rounds that will be “based on the number of PEAs that can be grouped together for bidding.” High demand PEAs will be assigned first, after which bids will be conducted for remaining PEAs within each Regional Economic Area Grouping. Once bidding in the assignment phase is complete, the FCC will issue a public notice to announce the official conclusion of the incentive auction process. That public notice will provide details on (1) the results of the reverse and forward auction, including winning broadcast stations and wireless industry bidders, prices paid and frequencies/markets won, (2) the date by which broadcasters must transition off of their pre-auction channels, and (3) the date by which wireless carriers must submit long-form license applications for the markets and frequencies they won. FCC officials also affirmed that publication of the aforementioned public notice will trigger the commencement of the 39-month transition period in which broadcasters must complete the channel repacking process.
As Pai emphasized that “delivering on the promise of this auction . . . means we must ensure uninterrupted access to overthe-air television and a timely clearing of the new wireless band,” Meredith Attwell Baker, the CEO of wireless association CTIA, applauded the end of the incentive auction clock phase as “a significant win for consumers” that “will support the development and rollout of next generation 5G services.” National Association of Broadcasters executive vice president Dennis Wharton also remarked: “now that the clock phase in the forward auction is concluded and the FCC prepares for the assignment phase, the Commission can turn greater attention to developing a transition plan that will protect [television] viewers and all stakeholders fairly.”