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U.S. FCC says 62 bidders make down payments in spectrum auction
July 15, 2016 / 6:31 PM / a year ago

U.S. FCC says 62 bidders make down payments in spectrum auction

WASHINGTON (Reuters) - The U.S. Federal Communications Commission said on Friday that 62 bidders have made upfront payments in a forthcoming wireless spectrum auction, including AT&T Inc, Verizon Communications Inc, Dish Network, T-Mobile US and Comcast Corp.

A man walks past the AT&T store in New York's Times Square, June 17, 2015. REUTERS/Brendan McDermid

The auction is set to begin on Aug. 16. Last month, the FCC said the price of 126 MHz of television airwaves taken from broadcasters to be sold for wireless use is $86.4 billion.

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 additional auction rounds.The so-called “broadcast incentive” spectrum auction is one of the commission’s most complex and ambitious to date.

In the first round, called a reverse auction, broadcasters competed to give up spectrum to the FCC for the lowest price. In the next stage that will start next month, the forward auction, wireless and other companies will bid to buy the airwaves for the highest price.

If wireless companies and other investors 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.

The ticker and trading information for Verizon is displayed on a screen at the post where it is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. June 9, 2016. REUTERS/Brendan McDermid

Wireless firms and other bidders had to put up 50 percent of the opening bid price to participate. Initially about 100 firms and individuals were qualified to take part, but the others declined to put up funds to take part.

Recon Analytics analyst Roger Entner said in June 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 deep pockets would raise more debt to bid in the auction, Entner said, referring to the U.S. presidential election and the British vote to leave the European Union.

A second round of the reverse auction later this year is likely, Dan Hays, principal at audit firm PwC’s consulting arm Strategy&, and could drag on until early next year.

S&P Global Market Intelligence estimated in April that a dozen broadcasters, such as Univision Communications Inc, CBS Corp, Sinclair Broadcast Group Inc and Media General Inc, could generate up to $13 billion in the spectrum auction at the high end of participation.

Reporting by David Shepardson; Editing by Chris Reese and Jonathan Oatis

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