Rev Your Engines, FCC 700MHz Spectrum Auction Starts Today

Illustration for article titled Rev Your Engines, FCC 700MHz Spectrum Auction Starts Today

Going once, going twice, sold to Verizon! Or something like that. The FCC's 700MHz spectrum auction starts today, and you can watch all of the hot bidding action right here. It's auction 73, and the page is so exciting I nearly peed my pants.

Don't know what the hell we're talking about? No worries, scan our ultimate guide to the 700MHz auction and why you should care about it. [FCC]

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DISCUSSION

If it is run like most FCC spectrum auctions, it isn't just a matter of who has the most cash.

Think of it as a game of Monopoly where every player lands on every purchasable space on every turn, but no purchase goes through until the banker - who is trying to get the most money for the properties - agrees. Add to that the LAW that says the players can't talk to each other or the banker to work out deals, and you get a very interesting auction.

They are bidding on markets (NYC, LA, Chicago, Bumfuck, Idaho etc.). Since companies desparately want NYC, LA, Chicago etc. and are luke warm about sparsely populated areas - but the FCC's mandate is to sell every location - so there's a lot of gamesmanship going on.

As a result, companies are putting together package bids that say $X for NYC, $Y for Miami and $Z for all of Idaho.

The bidders also have to keep in mind buying one of a set is a crappy idea (again, like Monopoly). If, for example, you won New York but lost for Boston, Philly and DC, your New York property isn't worth as much. Sometimes the FCC allows contingency bids, sometimes not. So each package might include "$X for Manhattan but only if I get the rest of the eastern corridor".

Add to that the restriction on a spectrum monopoly in an area (a single company can't own a controlling amount of the spectrum in a market).

Finally, each company is allowed to put in a number of package bids per round.

So, multiply number of companies by number of package deals by the number of markets, subtract for monopoly rules and contingencies, then figure out which set nets the most money for the government while still ensuring all spectrum is used.

Repeat through multiple rounds until the FCC agrees they have the most money they'll get for the properties.

Very, very complex and at stratospheric $$$ levels. That's why the FCC and the bidders all employ the best game theory experts to get the biggest bang for their megabuck.