The 2016 FCC Broadcast Incentive Auction

63 Pages Posted: 19 Mar 2018 Last revised: 14 Dec 2018

See all articles by Michelle Connolly

Michelle Connolly

Duke University - Department of Economics

Elizabeth Lim

Independent

Frances Mitchell

Independent

Akshaya Trivedi

Independent

Date Written: March 16, 2018

Abstract

On March 29, 2016, the FCC initiated its first ever two-sided spectrum auction. The auction closed approximately one year later, having repurposed a total of 84 MHz of spectrum. The "incentive auction" included three primary components: (1) a reverse auction where broadcasters bid on the price at which they would voluntarily relinquish their current spectrum usage rights, (2) a forward ascending clock auction 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 auction participated in single-bid, second price sealed auctions to determine the exact frequencies individual licenses would be assigned within that geographic region. The reverse auction and the forward auction together completed a "stage". To guarantee that sufficient MHz were cleared, the auction included a "final stage rule" 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 auction 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 auction mechanism (or possible strategic behavior in anticipation of the incentive auction) impacted auction outcomes.

Keywords: Incentive Auction, Broadcast Spectrum, Spectrum, Spectrum Reallocation, FCC Auctions

JEL Classification: L5, O3, K2

Suggested Citation

Connolly, Michelle and Lim, Elizabeth and Mitchell, Frances and Trivedi, Akshaya, The 2016 FCC Broadcast Incentive Auction (March 16, 2018). TPRC 46: The 46th Research Conference on Communication, Information and Internet Policy 2018. Available at SSRN: https://ssrn.com/abstract=3142228 or http://dx.doi.org/10.2139/ssrn.3142228

Michelle Connolly (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
919-660-1819 (Phone)
919-684-8974 (Fax)

Elizabeth Lim

Independent ( email )

No Address Available

Frances Mitchell

Independent ( email )

No Address Available

Akshaya Trivedi

Independent ( email )

No Address Available

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