How Low Is The New Incentive Auction Clearing Price?


It’s official: Round 53 was the last round of bidding in Stage 4 of the reverse auction.

The 30-minute session concluded at 3:30pm Eastern.

After the round 53 bidding results have been processed, clearing costs were posted to the Public Reporting System.

So, what’s the Clearing Cost as of Stage 4?

It’s exactly $10,054,676,822.

The new Clearing Target is 84 MHz, representing 70 MHz of licensed spectrum.

That’s a huge step toward reaching the end of the incentive auction. However, there’s no guarantee that the auction won’t reach a Stage 5 — or fail to conclude, as some analysts have warned.

Stage 3 of the FCC’s Reverse Auction concluded Dec. 1, following 52 rounds of bidding, with a new clearing cost of $40,313,164,425. The clearing target was set at 108 MHz, representing 80 MHz of licensed spectrum.

Four days later, Stage 3 of the Forward Auction came to a halt after just one opening two-hour round.

The result of Stage 3 bidding in the FCC Forward Auction:  $19,676,240,520.

This means that wireless companies need to bid more than $9.62 billion in order for the auction to conclude.

In the eyes of Dan Hays, principal at PwC Strategy&, the end of Stage 4 is indicative of the actual climate for wireless services companies, compared to what had been hyped prior to the start of the incentive auction.

“The dramatic reduction in the targeted net proceeds of the reverse auction shows just how effective the auction mechanics have been in bringing together supply and demand,” he said. “Such a move was hoped for, given the 24 MHz reduction in the spectrum clearing target for Stage 4, and at just over $10 billion we are confident that the auction is well within striking range of the budgets of mobile network operators.”

In fact, Hays is hesitant to predict that the auction will reach Stage 5.

“It could well close as early as next week,” he says, “maintaining smaller operators’ access to the 30 MHz of spectrum set aside for companies with relatively little spectrum below 1 GHz. While a fifth stage of the auction is still not out of the question, it is now far from a certainty. For broadcasters, this is a clear indication of extremely strong competition to relinquish their spectrum, even at dramatically lower prices. The ball is now squarely in the court of the wireless industry to bring things to a close.”