Incentive Auction: Stage Two

So, we’ve reached stage two. The stage that follows the one that did not match supply with demand (by a long shot) and therefore became necessary. Stage Two of the Incentive Auction, that is, meaning that the TV broadcasters that remained after stage one must make it through round two of a reverse auction, with the FCC offering a declining sum of money for their spectrum, and then seeing if the wireless companies will buy it at that overall price in round two of a forward auction. What a mouthful. The FCC is trying to clear 114 Mhz (the equivalent of nineteen 6 Mhz TV channels) in stage two.

At the moment, we’re getting to the end of the reverse auction portion of stage two, after which the FCC will announce the total amount offered for the spectrum, and then flip to the stage two forward auction to see if bidders will bid that high. The stage two forward auction probably won’t end until mid to late October. In case you’ve forgotten, the FCC’s Incentive Auction began back in July, and is projected by many to be headed to at least stage three, and probably stage four.

The next sentence of this paragraph is – admittedly – a repeat of a line from the last paragraph of our last newsletter auction article. Ready? This could go on for a while folks. Our guess is that a stage three could finish as early as the end of November, and if a stage four is needed, it’s debatable as to whether that could be completed in December. That would roll us into 2017.

Meanwhile, the TV world holds its breath and no one buys or sells stations because values are distorted in the absence of clarity on what the post-auction TV landscape looks like. Sounds harsh, but that’s the reality.

Hey FCC, we agree that patience is a virtue. But no one ever quantified patience quite the way you do. We think your definition of patience makes us all very, very virtuous.