- AWS-3 re-auction crossed $2.9B, freeing EchoStar from any FCC shortfall payment tied to Dish’s old licenses
- Bidding topped $3.1B by Round 48 and was still climbing past $3.2B as of press time
- With major licenses reportedly down to single bidders, analysts say the auction could be in its final rounds
EchoStar avoided a shortfall payment to the Federal Communications Commission (FCC) after the AWS-3 auction cleared the $2.9 billion mark on Tuesday, ending Round 48 with more than $3.1 billion in bids.
Auction 113 is actually a re-auction because it includes 197 licenses that were once obtained by Dish Network, now EchoStar, through two designated entities (DEs), Northstar Wireless and SNR Wireless, more than 10 years ago.
The FCC determined these entities didn’t qualify for DE discounts and Dish ended up returning the licenses to the commission. Under an FCC order, Dish was liable for a penalty payment if the re-auction fell below $2.9 billion. Since it cleared the $3 billion mark, EchoStar is off the hook.
Auction 113 kicked off on June 2 and got off to a slow start, with just two rounds per day; it’s now at six rounds per day. It includes 200 licenses for markets scattered across the country, although New York, Chicago and Boston are believed to account for the majority of the value.
Auction 113’s intrigue
It’s unknown who’s bidding for what because the FCC doesn’t reveal that until the auction ends.
The big wild card is how active SpaceX has been in the bidding; it qualified to bid in the auction but that doesn’t mean it’s winning licenses.
New Street Research (NSR) conjectured early in the process that the most likely bidders are the top three wireless carriers – AT&T, T-Mobile and Verizon – with the fourth being EchoStar because it would want to keep prices high to avoid having to make up for any shortfall.
NSR analyst David Barden has been providing a play-by-play of the auction and concluded Tuesday that once the total bids crossed $2.9 billion, EchoStar had no more incentive to drive prices higher and likely stopped bidding.
“With the major licenses now down to a single bidder, the auction is nearly over,” he said in a June 16 note for investors. “We wouldn’t be surprised if the auction ends within 1 or 2 more rounds tomorrow.”
The auction was still happening as of press time, standing at over $3.2 billion after Round 49.