The 600 MHz low-band wireless spectrum auction, popularly known as Incentive Auction, kicked off by the U.S. telecom regulator Federal Communications Commission (FCC) on Mar 29, 2016, is progressing smoothly. Low-band spectrum is crucial for wireless operators as the signals can be transmitted over longer distances and through brick-and-mortar walls in cities. These airwaves are being freed by TV broadcasters who no longer have any productive use of the same.
The FCC will resell the acquired spectrums to wireless operators, other cable MSOs (multi service operators) or tech firms through competitive bidding. The freed 600 MHz TV spectrums will instead be utilized by wireless operators to expand and strengthen their 4G LTE (Long-Term Evolution) networks as well as for the upcoming 5G wireless standard. The bidding for these spectrums began from May 31, 2016.
Important bidders include national telecom giants like Verizon Communications Inc. (VZ - Free Report) , AT&T Inc. (T - Free Report) , T-Mobile US Inc. (TMUS - Free Report) , satellite TV operator DISH Network Corp. (DISH - Free Report) and cable MSOs (multi service operators) such as Comcast Corp. (CMCSA - Free Report) and Liberty Global Inc. Completion of the auction process may take more than a year. The freed spectrums cannot be utilized commercially before 2020.
Notably, the FCC had collected a substantial $45 billion approximately from the AWS-3 spectrum auction that was concluded in Jan 2015. The AWS-3 spectrum auction had received 80 applications while the Incentive Auction received 104 applications.
Given the significant number of applications this time, the FCC expects its ongoing low-band airwave auction to be a runaway hit. The Congressional Budget Office has estimated that the Incentive Auction will generate a net value of around $25 billion after compensating the TV broadcasters. However, some highly optimistic estimates see FCC collecting more than $50 billion from the Incentive Auction.
The 600 MHz airwaves auction, was initially supposed to have taken place in 2014. However it was postponed owing to the complexity faced in designing the auction rules and related legal issues. In Jan 2016, FCC chairman Tom Wheeler expressed confidence that the Incentive Auction will be the “world's largest spectrum auction that has ever taken place.”
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