Much has been said about the success of FCC Auction 113 for leftover AWS3 spectrum. Who would have guessed that Auction 113 would be a “feel-good” auction restarting the FCC’s auction program? A few basics, then we can delve into some specifics. The auction “feels good” in retrospect, but it was far from a sure thing in the months and years leading up to it. The value of (mostly) an additional 5+5 block of FDD spectrum was not necessarily perceived as high at this point in the evolution of 5G networks in the US.
This is best captured by Echostar’s aptly named bidder Conundrum Wireless – there was a complex problem that needed to be solved. First, it took Congress to authorize it in exchange for allocating proceeds to the underfunded rip-and-replace program.
Then it also took an unwavering FCC through several notices and rule-making proceedings to get to the starting line. It took a court settlement where Echostar agreed to the maximum penalty remaining from Auction 97 and not to sue after the auction. And of course, even with all that, it took the willing participation of bidders to pay historically high prices to bring the conundrum to its resolution.
After 74 rounds and $3.57 billion bids, all 200 licenses were sold, at an average valuation of $2.53 per MHz-pop, hauntingly almost identical to the result of Auction 97 for paired licenses way back in 2014-2015. The big winner was Verizon at $3.1 billion, accounting for close to 90% of the total tally.
After much speculation regarding SpaceX’s participation, they started with little eligibility (less than 10% of total points available) and thus never really intended to make a run for it.
Below is a brief video of LYA principals, Johanne Lemay and Robert Yates, discussing the auction with Mike O’Rielly, a former FCC Commissioner and principal at MPORielly. It includes a chart highlighting the evolution of the dollar commitments of each major bidder during the auction. As one can see, AT&T and T-Mobile’s level of interest waned rather quickly. Conundrum dropped its commitment precipitously once the penalty threshold was reached. .
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