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Urgent Matters


AWS-3 auction bidding bodes well for FirstNet’s short-term funding, long-term sustainability opportunities

  • Written by Donny Jackson
  • 24th November 2014
The recent success of the FCC's AWS-3 spectrum auction means that FirstNet soon will receive the full funding that Congress anticipated. More important, the auction is an indication that there is sufficient market demand for FirstNet to be hopeful that it can forge partnership agreement that will ensure long-term sustainability for the public-safety broadband system.

What is in this article?

  • AWS-3 auction bidding bodes well for FirstNet’s short-term funding, long-term sustainability opportunities
  • AWS-3 auction bidding bodes well for FirstNet’s short-term funding, long-term sustainability opportunities
  • AWS-3 auction bidding bodes well for FirstNet’s short-term funding, long-term sustainability opportunities

AWS-3 auction bidding bodes well for FirstNet’s short-term funding, long-term sustainability opportunities

As of Friday night, high bids in the FCC’s auction of 65 MHz of AWS-3 spectrum (50 MHz paired) in the 1.7 and 2.1 GHz bands totaled more than $34 billion after just 27 rounds of bidding conducted during seven days of bidding.

No, that’s not a typo. The total is more than $34 billion. As one of my former colleagues used to say, "That’s ‘billion,’ with a ‘b,’ which stands for ‘Boy, oh boy.’”

To put this in perspective, consider the following facts:

  • The reserve price for this auction—the minimum total bids the FCC would accept to award licenses—was set at more than $10 billion. That total was surpassed during the auction’s second day of bidding.
  • Previously, the most money bid for U.S. spectrum was in the 700 MHz auction that was conducted in 2008, when bids totaled $19.1 billion. The ongoing AWS-3 auction surpassed that total in round 17, after less than five days of bidding.
  • Since the FCC began auctioning spectrum two decades ago, the auctions have generated a cumulative total of more than $53 billion in net proceeds for the U.S. Treasury. This auction is almost two-thirds of the way to matching that impressive total, and this auction likely still has a long way to go.

Now, there are a couple of disclaimers that should be noted. About $5 billion will be needed to relocate the federal-government users and other incumbent licensees. In addition, some bidders could be eligible for bidding credits, which means the actual revenue generated for the federal government could be less than the amount of total bids reflected on the FCC’s website page for the AWS-3 auction.

Even with these disclaimers, the AWS-3 auction is generating unprecedented interest from bidders. That’s great news for FirstNet, which is scheduled to receive $7 billion in funding from auction proceeds.

Bids for the 10 MHz of 1.9 GHz H Block spectrum that was auctioned earlier this year totaled only the reserve price of $1.564 billion, which is less than the $2 billion in “seed money” that FirstNet is allowed to spend while waiting for auction proceeds to provide sufficient revenue. Some industry sources questioned whether FirstNet would require a successful incentive auction of 600 MHz television spectrum to guarantee that it would be fully funded.

Last Thursday—the day after AWS-3 bidding had reached the $24 billion mark to set a new FCC auction record—FirstNet Acting General Manager TJ Kennedy said he was pleased with the bidding.

“Certainly, that’s a very good thing for FirstNet,” Kennedy said during a keynote speech delivered at the LTE North America conference in Dallas. “A key confidant of mine … had the excellent comment of, ‘It’s always great when you see your neighbor’s home go for a lot more money than you think.’”

1 | 2 | 3 |
AWS-3 auction bidding bodes well for FirstNet’s short-term funding, long-term sustainability opportunities
Tags: Public Safety Commentary FCC Funding Long Term Evolution (LTE) NTIA/FirstNet Public Safety Public-Safety Broadband/FirstNet Urgent Matters Commentary

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