FCC’s estimated bids for upcoming 600MHz auction “undervalues” spectrum according to broadcasters

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Last Friday, the FCC updated information on its upcoming 2016 broadcast incentive auction, increasing the estimated opening bids from an estimate released in October. However, the Expanding Opportunities for Broadcasters Coalition, a broadcaster group, believes that the value predicted is far too low.

These opening bid estimates are in relation to the first part of the two-part auction, due to take place in early 2016. This first part will be a “reverse” auction in which broadcasts agree to sell the rights to their spectrum. In this reverse auction, the maximum opening bids are as high as they go.

This reverse auction will work on what’s called a descending clock format whereby bidding prices fall in each round. Broadcasters can exit without penalty, and prices continue to drop until the number of willing broadcasters meets a number set by the Commission.

In New York City, the maximum opening bidding price is set at $870 million, with the second most valuable market (LA) being set at $630 million. Median average prices for those two markets are $660 million and $560 million respectively. And it’s these prices that have seemingly upset a group of broadcasters.

“Since the auction goes only down from the starting prices, stations in these markets have no chance of ever seeing the original Greenhill expected values,” Padden said, according to Broadcasting & Cable. “That is why the starting price formula has to be changed as suggested by the coalition.”

It’s the second part of the auction that most interests T-Mobile and its fans. Because, once the reverse auction has taken place, a more traditional auction unfolds in which carriers and other companies can bid on spectrum licenses. The spectrum on auction is 600MHz frequency, and offers the opportunity for T-Mo to acquire more low-band airwaves to bolster its network and improve indoor LTE coverage further that it will have done with its current band 12 network.

This is the auction initially planned to take place at some time this year. But after legal-hold ups between the Commission and the broadcasters, the FCC only expects to start accepting applications towards the end of 2015. This inevitably meant that the auction itself was delayed.

Of course, this delay buys T-Mobile a little more time to raise extra funds necessary to buy the spectrum, and could prove to be a blessing in disguise. There’s a lot more detail to read in the sourced articles below, so be sure to give them a read.

Sources: Broadcasting Cable,  Fierce Wireless, WSJ (sub. required), Wireless Week, FCC (PDF)

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  • Joe

    What band will we need to use the 600mhz? Or is TBD?

    • Mike

      TBD

      • Joe

        Ok thanks.

  • UMA_Fan

    Wasn’t T-Mobile lobbying recently to NOT have this auction delayed?

    Hopefully devices sold this year will support that spectrum even though they have yet to acquire any.

    • Mike

      Nothing made currently does.

    • MastarPete

      IMO It’s way too early to even worry about 600mhz support because of the turnaround time between TMO and others figuring out what they’ve won and when they can start deploying. I mean look at how long ago the 700mhz auction was, there are still stations operating on the spectrum that T-Mobile bought from verizon.

      We’re still up to a year before auction and the auction itself could take a couple months. Carriers could need 6mo-1yr before deployment starts then 6mo-1yr for devices once deployment starts.

      Under ideal conditions, meaning broadcasters get off the airwaves ASAP and don’t drag their feet. Factoring in some lag time for devices to become available and we could be looking at 2 to 3, possibly 4-5 years before it’s worth worrying about 600mhz support.

      • Jay Holm

        By then, rollable & foldable smartphones will be out! Besides, with the deployment of the 700 band, and carrier aggregation being deployed, and eventually Tmobile can allocate less spectrum to HSPA+ and use that for LTE, data speeds shouldn’t suffer in the foreseeable future.

  • Nebraska has people too

    T-Mobile needs that in Nebraska like Omaha and lincoln

  • DagoWAP

    Will my Nokia Astound work on this frequency? I generally don’t have issues with my phone, but my company recently gave most employees the boot off the wifi network. Seems too many people were facebooking and youtubing. As a consequence I no longer have access to wifi calling which works well.

    PLEASE advise

    • Mike

      No.

    • guest

      Nokia Astound. OMG. Buy a new phone already.

    • TechHog

      *squints*

    • TMOTECH

      There is no phone on the market at this time that will work on the 600MHZ band. They haven’t been produced yet. They will probably not even be on the drawing board until the auction is complete and the carriers start making requests for them.

  • gmo8492

    I can only imagine how much T-mobile is willing or able to spend.

  • KingCobra

    T-Mobile is going to have to bet the farm on this 600 Mhz spectrum. At a minimum they need to obtain a nationwide 5 mHZ slice of it in order to put themselves in position to compete with the Big 2 in the long term.

    Honestly Verizon doesn’t even really need it at all but I’m certain they will buy a good chunk of it in order to keep it away from Sprint and T-Mobile.

    • Laststop311

      thats exactly what I was saying. They need a nationwide 10×10 slice at the minimum with 15+15 slices in the areas where they already had 5×5 700 mhz low band.

      Or even better buy 15×15 slices where they have no low band existence and 10×10 slices in areas where they already do. If this happens T-mobile then just needs to build out all the towers as they already have a superior amount of aws presence, this would make them scary contenders for at&t and verizon if they started chucking towers all over that extra rural area verizon says they have over t-mobile. Would take a big advantage away from them. Plus the indoor coverage would jump so high in metro areas with 15×15 low band penetrating the walls without losing a ton of speed dropping from the larger 20×20 aws channels.

      T-mobile already has awesome capacity capabilities in dense area with short band aws, the best in the business actually. If they can end up with 15×15 low band everywhere combining the 700mhz A block they got with the 600 mhz auction, the will be poised to really make a run at it as number 1 carrier or at the very least look like a very yummy target for a good US company with deep pockets to buy (cmon dish you just won a bunch more aws imagine combining with t-mobile).