Reverse Spectrum Auction Clearing Cost Over $86 Billion; Second Stage Expected

Michael Calabrese was quoted in Communications Daily about the FCC incentive auction:

Multiple stages of the incentive auction are seen as a near certainty and the process could last into 2017, broadcast attorneys, analysts and broadcasters told us after the release of the $86.42 billion clearing cost of the reverse phase of the auction after it ended at round 52Wednesday. With auction costs and the $1.75 billion relocation reimbursement fund added on, forward auction bidders would have to more than $88 billion to prevent the auction from going to a second stage.

“These numbers suggest there are relatively few TV stations ­ in prime markets that are truly motivat­ed to sell, so they are demanding a king’s ransom,” said Michael Calabrese, director of the Wireless Future Program at New America. Calabrese predicted the FCC eventually will drop to the 84 megahertz clearing target, with seven rather than 10 licenses sold in most markets. “An 84 MHz auction that sells 70 megahertz is the outcome FCC staff and others predicted early on to be most likely,” Calabrese told us. “It still is. The big downside is that unless the FCC bypasses the 114 megahertz clearing target, which they should, the auction could drag on until the middle of 2017.”