The 2016 FCC Broadcast Incentive Auction

Abstract

On March 29, 2016, the FCC initiated its first ever two-sided spectrum auction. The closed approximately one year later, having repurposed a total of 84 MHz of spectrum. The auction included three primary components: (1) a reverse where broadcasters bid on the price at which they would voluntarily relinquish their current spectrum usage rights, (2) a forward ascending clock for flexible use wireless licenses which determined the winning bid for all licenses within a given geographic region, and (3) an assignment phase, where winning bidders from the forward participated in single-bid, second price sealed auctions to determine the exact frequencies individual licenses would be assigned within that geographic region. The reverse and the forward together completed a To guarantee that sufficient MHz were cleared, the included a stage which, if not met, triggered a clearing of the previous stage and the start of a new stage. This rule led to a total of four stages taking place in the incentive before the final assignment phase took place. Even at first glance, the incentive auctions are unique among FCC spectrum auctions. Here we consider the estimated true valuation for these licenses based on market conditions. We further compare these results to more recent outcomes in previous FCC spectrum auctions for wireless services to determine if this novel mechanism (or possible strategic behavior in anticipation of the incentive auction) impacted outcomes.