CBRS auction tops $3.5 billion as bidders bargain hunt

Action continued Wednesday in the FCC’s auction for licenses in the shared Citizens Broadband Radio Service (CBRS) band, as the last several rounds saw bidders turn attention to areas offering relative bargains on spectrum.  

At the end of round 39 this afternoon, gross proceeds stood around $3.54 billion. While demand has dropped off since earlier rounds, it still outpaced supply in 137 county areas. There is still one more round of results before Wednesday bidding ends.

Auction 105 offers 70 MHz of priority access licenses (PALs) on a county basis across 3,233 areas, each with seven 10-megahertz blocks available. Large counties, like Los Angeles and San Diego have garnered higher price tags so far on a per MHz-PoP basis – landing at $0.530339 and $0.683647 as of round 39, respectively, according to auction tracking by Sasha Javid, COO of BitPath.

Demand in the most populous counties has dropped off since the start of the auction, and Javid noted that the focus is now on smaller counties and larger markets with prices that remain relatively cheap.

“The last few rounds have been a period of bargain hunting,” Javid told Fierce after Tuesday’s bidding closed. “Bidders have left the most expensive markets like Los Angeles and San Diego and moved into markets that remain relative bargains compared to their predicted prices derived from past auctions.”

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Five of the 20 largest counties still had excess demand on Wednesday afternoon, compared to 11 at the end of round 34 on Monday. Those include Houston (Harris Texas), Phoenix (Maricopa County), Las Vegas (Clark County), Seattle (King County), and Detroit (Wayne County), which maintained lower comparative prices.

Javid, who was chief data officer and legal advisor for the FCC’s Incentive Auction Task Force in 2016, called out county areas housing Phoenix and Houston in particular, which saw demand increase substantially in rounds 33 and 34 as bidders moved out of Los Angeles.  

“Similar story for Seattle which saw an increase in demand in round 36 as its price remained a third of its predicted price,” he told Fierce. After Wednesday’s rounds, Seattle’s King County is now at 40% of its predicted price – with a price per MHz-POP of $0.164194 after Round 39.

Take a look at two bubble graphs below, courtesy of Javid, to illustrate. You can find an interactive version on his site.

Auction 105 graph Round 1Auction 105 graph Round 39

Graphs Courtesy Sasha Javid

The CBRS auction is different from earlier 5G spectrum auctions in a few ways. That includes the band itself, as CBRS has a three-tier sharing set-up that encompasses federal users, PALs, and unlicensed general authorized access (GAA) users. It also comes with more stringent power restrictions because of the shared nature. The county-size license areas are smaller than partial economic areas (PEAs) offered in recent auctions, and possibly enticed a wider pool of participants. To that end, there are 271 qualified bidders. Comparatively, the FCC’s last 5G auction for millimeter wave spectrum had 35 qualified bidders.

Mark Gibson, director of Business Development at Commscope, called the CBRS auction historic for a few reasons including the most licenses ever auctioned by the FCC (22,631) and the most bidders ever participating. And third “it’s likely someone will be able to acquire a spectrum license for a little over $1,000,” he said.  Commscope has played a large part in CBRS efforts and is one of five certified Spectrum Access System (SAS) administrators. Gibson is a board member of the CBRS Alliance and the Wireless Innovation Forum. 

While large counties with low prices are getting attention, he noted steady interest in small counties as well.

“We’ll have to wait until the auction concludes to see who bid on what, but it’s still a safe bet that the auction should ultimately result in putting spectrum in the hands of smaller, rural interests. There are over 20 counties with populations below 10,000 that are still in play. And there are many more where the bidding may have concluded,” Gibson said in comments emailed to Fierce.

Estimates have varied on how much the CBRS auction might raise, with some predicting $3 billion to as high as $10 billion for some.

That said, proceeds haven’t necessarily been the star of the show, as sustained demand captured interest from Javid as well as analysts. In a weekend note to investors New Street Research analysts cited slowing but resilient demand after last week’s rounds.

“In the last few FCC auctions for wireless spectrum, excess demand for licenses has tended to fall precipitously by the twentieth round. While excess demand is falling in the CBRS auction, it is doing so at a slower pace than in recent prior auctions,” wrote the New Street team, which previously forecast the auction would raise around $3 billion.

RELATED: CBRS auction starts off strong, with high demand in first round

“The biggest takeaway remains that excess demand declined far more gradually than prior FCC clock auctions,” Javid told Fierce, adding he believes the size of the licenses, along with the number and diversity of bidders “definitely contributed to this.”