New EOBC Study Pegs Auction Take At $85B

Research from economist Peter Cramton, comissioned by the broadcasters eager to cash in on the FCC incentive auction, says the commission will raise at least $85 billion.

If the FCC can buy 126 MHz of TV spectrum from broadcasters in its incentive auction next year, it should be able to turn around and sell it to wireless broadband providers for at least $84.9 billion, according to research commissioned by the Expanding Opportunities for Broadcasters Coalition.

“There are good reasons to believe that revenues will be higher than $84.9 billion as a result of the better propagation characteristics of the 600 MHz band and the greater scarcity of low-band spectrum,” says the research from a team of economists led by the University of Maryland’s Peter Cramton.

The bullish estimate is based on the average $2.72 MHzPop that the FCC was able to get from the carriers when it auctioned  AWS-3 spectrum between last November and January. That auction raised nearly $45 billion.

The average price of a  MHzPop in the AWS-3 auction “is about three times higher than investment banking estimates before the auction began in November 2014,” the research says.

“The higher prices are the result of a highly competitive auction — winners had to pay competitive prices — and the high reservation values of the carriers.”

The $84.9 billion estimate is comparable to the $60 billion-$80 billion that Kagan Media Appraisals come up with in another study commissioned by the EOBC.

BRAND CONNECTIONS

The EOBC comprises broadcasters who are eager to sell their spectrum in the incentive auction. It’s doing all it can to encourage other broadcasters to sell and to make sure the auction occurs on schedule early next year with procedures that are favorable to broadcasters.


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