Forward Auction Creeping Along

Posted on August 25th, 2016 by

The forward auction part of the FCC’s Incentive Auction Stage One began on August 16, 2016 and has crept along for several days now. Based upon bidding activity, most prognosticators are predicting that the forward auction will not reach the required $88 billion to clear the 126 Mhz the FCC set as the clearing target. That means we are likely headed for stage two, which will begin with a reverse auction (only for those broadcasters that had provisionally winning bids at the end of the stage one reverse auction) to clear 114 Mhz of spectrum, and end with another forward auction to see if enough funds can be raised to hit the new total dollar figure provisionally promised in the stage two reverse auction.

This could go on for a while, folks. The FCC’s explanation – the auction is designed to let the market decide how much spectrum is cleared and how much is paid for that spectrum. We get it, but someone had to decide the first clearing target, and that someone was the FCC. We think the FCC may have been a bit too aggressive in setting that target. Ok, we admit that’s an understatement. We do observe that a requirement for stage two would likely take the auction into 2017.