The U.S. Federal Communications Commission (FCC) has in the first stage of a government auction set the price for the 126 MHZ TV band for wireless use at $86.4 billion.
The low-frequency spectrum currently in use by television broadcasters is to be up for bidding to be reallocated and is open to wireless companies and other bidders looking for new bands to build and improve wireless networks.
Contrary to this, the airwaves looking for network expansion may not be willing to pay such an amount which could lead to another round of auctions.
The price was revealed in the first part of the auction to re-purpose low-frequency wireless spectrum, which is tagged to be the most complex and ambitious one undertaken by the FCC till date.
“Strong participation from broadcast stations made this initial clearing target possible,” said Gary M. Epstein, Chairman, Incentive Auction Task Force, FCC.
The first round named as reverse auction, had broadcasters offering lowest price for the spectrum to the FCC.
The second stage or the forward auction will be held in late July or later, and will see the wireless and other companies bidding on the same airwaves for the highest price.
If the price expectations are not met, another round will be held for the same with a renewed figure, though the amount of spectrum on bid may also be cut down.
Wireless providers up for participation include Verizon Communications Inc, AT&T Inc and T-Mobile US Inc alongside pay-TV providers Comcast Corp and Dish Network Corp.
Among wireless networks, T-Mobile US is said to need the spectrum more urgently than AT&T and Verizon, reveal analysts.
Analysts have concluded that the 60 MHz to 70 MHz range spectrum is of main interest to the wireless companies. While wireless phone companies will zero in on markets like New York or Chicago, TV broadcasters may not participate if the spectrum demand is low or bid prices soar high.
An estimated figure of up to $13 billion can be generated in the spectrum auction if Univision Communications Inc, CBS Corp, Sinclair Broadcast Group Inc and Media General Inc and Tribune Media Co participate in the provision, say S&P Global Market Intelligence.
The average estimates of the price by analysts ranges around $35 billion to $43 billion, with some going as high as $60 billion.
AT&T, Verizon and T-Mobile stocks rose on Wednesday, as a result.