In a surprise development, the second stage of the forward phase of the FCC’s ongoing incentive auction ended abruptly on Wednesday after a single round, with the FCC explaining that bidding “has concluded for Stage Two without meeting the final stage rule and without meeting the conditions to trigger an extended round.” Bidding during the single, two-hour round generated $21.5 billion in gross bids from the wireless industry. That figure did not reach the $23.1 billion in gross bids set during Stage One of the forward phase in August. Total bids posted Wednesday for the net 90 MHz net spectrum allotment thus fell far short of the $54.6 billion clearing cost set last week by broadcasters during the second stage of the reverse auction. Although FCC officials declined further comment, sources close to the auction told reporters that the FCC was forced to end bidding as equilibrium between spectrum supply and demand had already been reached in the top 40 markets.
With the conclusion of Stage Two of the incentive auction, the FCC will now proceed to Stage Three, during which broadcasters will return to the auction block to set a new, lower clearing cost which wireless carriers will have to pay to gain access to a reduced spectrum allotment of 108 MHz (or 80 MHz net, owing to the reservation of channels for guard bands and unlicensed use). The FCC is expected to announce further details next week on the start date of the third stage of the reverse auction.
Officials of the wireless and broadcast industries, meanwhile, continued to voice optimism on prospects for the ultimate success of the incentive auction process. Emphasizing, “we always expected the incentive auction to be a multi-staged process,” Scott Bergmann, the vice president of regulatory affairs for wireless association CTIA, said, “we continue to believe this auction will produce spectrum for the wireless industry that’s key to our nation’s economy and meeting consumer demand.” Despite admitting surprise at “the results of wireless carrier bidding in the second stage,” National Association of Broadcasters executive vice president Dennis Wharton declared that “broadcasters look forward to the third stage of bidding and a successful completion of the auction.”