by David Dixon,  FBR & Co.

On December 1, the FCC broadcast incentive auction reached another milestone but still tracks below expectations. We believe AT&T is showing less-than-expected interest in the auction. AT&T is one of only two public companies in a three-company bidding process for the FirstNet RFP to build a nationwide, 22,000-site, interoperable wireless network for first responders.

We surmise that, absent the required SEC filing for a public company when being advised of rejection, AT&T has won the FirstNet RFP, providing access to 2×10 MHz of 700 MHz spectrum.

Yesterday, the reverse auction portion of Stage 3 ended with broadcasters setting a clearing cost of $40.3B for 108 MHz of spectrum, equivalent to $1.20/MHz/PoP, setting in motion Stage 3 of the telecom broadband service provider forward auction’s start on Monday. The previous stage of the forward auction generated $21B for 126 MHz, equaling $0.53/MHz/PoP.

Assuming less interest from AT&T, we expect Stage 3 forward auction proceeds of $27.3B for 70 MHz of spectrum, at $1.25/MHz/PoP, below the expected Stage 4 clearing price of $30B for 84 MHz required by broadcasters in the reverse auction.

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WSJ:  The Federal Communications Commission has adjusted its target price for the forward portion of the wireless incentive auction to $40.3 billion, a 26% decline from the agency’s previous attempt to balance the supply of broadcaster spectrum with telecom demand. The forward auction is expected to resume Monday, December 5th with the FCC hoping service providers will meet that price.

In addition to the wireless carriers AT&T, Verizon, and T-Mobile US Inc., Comcast Corp.and Dish Network Corp. are also participating in the auction. Some bidders may not win licenses.

Among those that have filed to sell stations are CBS Corp. and Univision Communications Inc., as well as local PBS stations and investors such as billionaire Michael Dell.

http://www.wsj.com/articles/fcc-to-pay-less-for-airwaves-as-auction-moves-to-third-round-1480633266

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Other References:

https://www.fcc.gov/about-fcc/fcc-initiatives/incentive-auctions

https://www.fcc.gov/about-fcc/fcc-initiatives/incentive-auctions#block-menu-block-4

FCC Completes Reverse Auction as Forward Auction Looms Large