mmWave auction at $7.4 billion and counting

As of round 61 of Auction 103, only 11 licenses have more demand than supply

The Federal Communications Commission auction of millimeter wave licenses has now raised more than $7.4 billion in bids, with bidding in the auction’s clock phase drawing closer to conclusion as demand for the licenses draws nearly even with the available licenses.

Auction 103 is using a clock format for the first phase. In the clock phase, bidders compete for the license type they desire, with prices automatically increase each round, until bidders’ demand for licenses at a certain price matches the supply. At that point, the clock phase with end and an assignment phase for specific spectrum blocks will follow.

The number of licenses with more demand than supply has continued to drop over the course of this week, from more than 250 late last week, to fewer than 100 at the beginning of the week and only 11 as of the end of the day Thursday. Of the 832 total spectrum “products” (the MN and P licenses in each of the 416 Partial Economic Areas), another 482 had demand equal to supply, and 339 had more supply than demand. Around 40 licenses have no demand, according to analysis from Sasha Javid, COO at the Spectrum Consortium and former chief data officer and legal advisor on the FCC’s Incentive Auction Task Force.

The FCC is now holding five rounds of bidding per day. The bid total rose this week from about $7 billion to $7.4 billion as of the end of the day Thursday with the completion of round 61. No bidding will be held on Monday due to the federal holiday.

More than 14,100 licenses are up for grabs across three mmWave bands in Auction 103: the upper 37 GHz band (37.6-38.6 GHz), the 39 GHz band (38.6-40 GHz) and the 47 GHz band (47.2-48.2 GHz). The licenses are based on a Partial Economic Area geographic basis which divides the country into 416 sections.

There is more spectrum available at 39 GHz than in the other two bands, with 14 blocks of 100 megahertz available, or 5,824 individual licenses. The 47 GHz and upper 37 GHz bands each have 4,160 licenses available, or 10 blocks of 100 megahertz in each PEA. The FCC has divided the spectrum into two categories of licenses: 24 100-MHz licenses in the 37 and 39 GHz frequency blocks, the MN or M/N licenses, and ten 100-MHz licenses in the 47 GHz frequency block, the P licenses.

The FCC has authorized either fixed or mobile use in the bands, and the commission has emphasized the sheer amount of spectrum available: at 3,400 megahertz, Auction 103 puts up the largest amount of spectrum ever offered in an auction.

However, the large amount of spectrum combined with the fact that this is the third of three FCC millimeter wave auctions in the past year means that prices are relatively cheap, as spectrum goes. According to Javid’s analysis, the nationwide average price per megahertz/POP was $0.007218 as of the close of round 61 of Auction 103. The average price per MHz/POP for MN licenses, which are much more popular, was $0.009486, while prices for the higher-frequency P licenses averaged $0.001041 per MHz/POP.

Still, Auction 103 has already far outstripped the other two millimeter wave auctions in total bids raised. Auction 101 raised only about $702.6 million, because most of the spectrum in the band was already licensed and held  by carriers such as Verizon (which beat out AT&T in a bidding war for Straight Path that was driven by its high-band spectrum holdings) and AT&T (which acquired Fibertower and its mmWave spectrum holdings). Last year’s Auction 102, meanwhile, raised about $2 billion.

Comparatively, the 2017 600 MHz incentive auction raised nearly $19.8 billion, and $19.4 billion was generated in the 700 MHz auction held in 2008; both of those were dwarfed by the more than $44 billion in gross proceeds from the AWS-3 auction that ended in early 2015.

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