Incentive Auction Second Stage: Same as the First? Not Exactly.

Tomorrow at 10:00 AM ET bidding resumes in the Incentive Auction with the opening of Stage 2. We wanted to take a moment to preview what happens next and describe how this stage will be different from Stage 1.

For Stage 2, the Auction System set the clearing target at 114 megahertz, the next-highest target that meets the Commission’s standards for setting a clearing target in a stage (explained in the Bidding Procedures Public Notice). Compared to the 126 megahertz clearing target, the 114 megahertz clearing target generally clears nine blocks of spectrum in each partial economic area (PEA) instead of 10 blocks and adds two additional channels to the TV band.

Adding more channels to the TV band allows more stations to be repacked in their pre-auction band. Thus, some stations that were provisionally winning after Stage 1 will become “unfrozen” in Stage 2 and will be presented decreasing price offers during the bidding rounds. This process will result in lowering the overall costs of clearing spectrum for wireless use.

Bidders that had at least one station with the status of “Frozen – Provisionally Winning” at the end of Stage 1 could access the Reverse Auction Bidding System for Stage 2 beginning on September 7. As we explained in the Reverse Auction New Stage Tutorial, when those bidders log in to the auction system for Stage 2 some stations that were “Frozen – Provisionally Winning” will see a new bidding status for their stations: “Frozen – Pending Catch-Up.” Bidders with stations that begin Stage 2 with the status of “Frozen – Pending Catch-Up” must be on their toes, as this status can change from one round to the next and will change by the end of the new stage. Remember – if a station’s status changes to “Bidding,” and the bidder fails to submit a bid for that station, the system interprets this as a bid to drop out and could lead to the station exiting the auction.

When Stage 2 of the reverse auction concludes, we will announce the new clearing costs and move to forward auction bidding, where prices will pick up where they left off at the end of Stage 1. Operationally, bidding is the same as in Stage 1; the primary difference is the supply of blocks at the 114 megahertz clearing target. As we mention above, overall there are fewer blocks available in almost every PEA but more of the blocks being offered are completely unimpaired – 99.6%, to be precise. In some PEAs the supply actually remained the same or increased. On September 8th we opened up access to the Forward Auction Bidding System so that eligible bidders can begin to familiarize themselves with the Stage 2 data and prepare to bid.

As in Stage 1, the public will be able to monitor the auction on our Public Reporting System (PRS). During the reverse auction, the PRS will continue to display the final stage rule graphic with the status as of Stage 1. Once round 1 of the forward auction is complete in Stage 2 the graphic will once again begin displaying the round by round progress towards meeting the final stage rule.

Welcome to Stage 2 of the Broadcast Incentive Auction!


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