March 29, 2016 marks the beginning of the spectrum auction hosted by the Federal Communications Commission in the United States. In an attempt to distribute spectrum to a greater number of wireless carriers, the FCC devised the auction. The sale will take place between television broadcasters, the FCC, and telecommunication companies. The items for sale will be the spectrum licenses currently held by TV stations.
The Demand for Spectrum
There are currently more mobile devices in the United States than there are citizens. This indicates that individuals that can afford mobile devices are usually owners of more than one. This increase in ownership of gadgets has led to a greater demand in connectivity.
Mobiles and broadband connections have become a part of people’s everyday life. The number of people joining this digital movement is steadily increasing. This surge in broadband use has left several wireless carriers with a lack of options to provide for their consumers. The FCC created a National Broadband Plan in 2010, detailing the functional purposes of the auction. The plan was approved by Congress.
This auction has an undeniable impact on many entities involved in the process of telecommunications. Wireless carriers, cell tower owners, and cell tower real estate companies such as TowerPoint Capital are just some of the agencies that will be affected. Many TV broadcasters, not just the ones that took part in the auction, may also experience a shift in the market.
There will be also room for improvement with the network connectivity. For instance, an auction such as this may enable companies to begin fortifying their efforts for a 5G network. There has been continued planning and experimentation of this faster network. The increase in spectrum may allow the telecommunication companies to make headway with this invention.
The auction is divided into a two-stage process. The initial stage takes place between the TV stations and the FCC. It is known as a reverse auction. Here, the FCC makes a series of bids to the broadcasters that are partaking in the proceedings. These bids will be quite low. This process will end once the FCC has obtained a required number of licenses from the broadcasters.
The second part of the process is between the FCC and the wireless carriers. Here, the wireless carriers make an increasingly higher bid for the spectrum licenses. When the FCC is satisfied with the bid, the licenses can be taken over by the telecommunication corporations.
There will be a discrepancy between the price that the FCC paid for the licenses and how much the wireless carriers paid for their licenses. The object behind the auction is for the FCC to make a profit from acting as middlemen to the auction. This profit is to be then deposited into the U.S Treasury, aiding with the national debt.
The U.S. spectrum auction will certainly cause a change in several different markets. This may be positive for certain entities and may cause issues in other sectors. There may be reorganizing between TV stations as a result of the auction. The wireless carriers, however, may obtain some freedom in continuing their services.