US broadcasters want $86.4 billion for their 600 MHz spectrum

The ‘reverse’ phase of the US 600 MHz incentive auction has concluded with broadcasters offering up 126 MHz of low-frequency spectrum, but they want a lot of money in return.

The ‘clearing cost’, which represents the minimum price that must be met from the proper auction, was set at $86.4 billion, which equates to around $686 million per MHz. This is at the high end of the anticipated range and calls into question the likelihood of US operators meeting the price.

“Today, bidding concluded in the reverse auction, establishing the cost for clearing 126 MHz in the TV band for wireless use,” said Gary Epstein of the FCC. “Strong participation from broadcast stations made this initial clearing target possible. Now the action shifts to the forward auction, which will give wireless bidders the opportunity to compete for this beachfront spectrum to meet America’s growing mobile data needs.”

“Broadcasters have done our part; now it’s up to the wireless industry to demonstrate the demand is there for low-band TV spectrum,” said National Association of Broadcasters EVP of Communications Dennis Wharton.

So we now move to the conventional (forward?) auction phase, in which operators can bid for spectrum in the time-honoured fashion. If the likes of AT&T and Verizon decide the price is too right for their blood then we will revert back to another reverse auction, with less spectrum, presumably in a bid to arrive at a clearing cost, and so on. This process could take us well into 2017.