By David Shepardson
WASHINGTON (Reuters) – The U.S. Federal Communications Commission said on Wednesday the price of 126 MHz of television airwaves taken from broadcasters to be sold for wireless use in an ongoing auction is $86.4 billion.
But analysts said wireless providers may not be willing to pay the staggering amount for the airwaves to expand their networks, which could prompt the FCC to hold another round of auctions.
The FCC disclosed the price in a statement after completing the first part of an auction to repurpose low-frequency wireless spectrum relinquished by television broadcasters.
“Strong participation from broadcast stations made this initial clearing target possible,” Gary M. Epstein, chair of the FCC’s incentive auction task force, said in a statement.
The so-called “broadcast incentive” spectrum auction is one of the commission’s most complex and ambitious to date.
In this round, called a reverse auction, broadcasters competed to give up spectrum to the FCC for the lowest price. In the next stage, the forward auction, wireless and other companies will bid to buy the airwaves for the highest price.
If wireless companies are unwilling to pay $86.4 billion, the FCC may have to hold another round of bidding by broadcasters and sell less spectrum than had been expected, analysts said.
Recon Analytics analyst Roger Entner said the results confirm that broadcasters have “significantly inflated expectations.”
“In an election year, with a lot of uncertainty with Brexit making the debt markets jittery,” it is unlikely that wireless operators with deeps pockets, such as AT&T Inc
A second round of the reverse auction later this year is likely, Dan Hays, principal at audit firm PwC’s consulting arm Strategy&, said in an email statement.
“Indeed, we could well see the proceedings drag on into early 2017 before coming to a final conclusion,” Hays said.
“Now it’s up to the wireless industry to demonstrate the demand is there for low-band TV spectrum,” National Association of Broadcasters spokesman Dennis Wharton said in a statement. Companies that have applied to bid for spectrum include wireless providers Verizon, AT&T and T-Mobile US Inc
(Reporting by David Shepardson Additional reporting by Malathi Nayak in New York; Editing by Richard Chang and Diane Craft)