A, B, and C Blocks have exceeded their reserve prices as of round 17 in Auction 73, and E Block has reached 83.73% of its reserve price, while D Block has languished at 26.99% of reserve price since the first round. Unless a great deal of the activity in A and B Blocks is intended to preserve eligibility for later round intervention in C Block, the probable C Block winner has likely made its winning bid in round 17.
The rate at which A and B Blocks have exceeded their reserve prices by the end of round 21 today — 190.51% and 462.50%, respectively — seems unlikely to abate, which may push revenue from Auction 73 to $16-17 billion, perhaps as much as $20 billion, despite the fact that D Block will almost certainly have to be reauctioned if the current pattern holds.
How much better A, B, and C Blocks are doing at this point than even at the end of Auction 66 (AWS-1) is shown in this table, which compares the dollar per MHz per population price each license in those three blocks obtained with the provisionally winning bid as of the end of round 21 to the final dollar per MHz per population price comparable licenses received by the final round of Auction 66. Since the bandwidth is different in each auction, $/MHz/Pop standardises the data for comparison.
Clearly the majority of 700 MHz spectrum on offer in Auction 73 is much more highly valued than the spectrum on offer in Auction 66: the average $/MHz/Pop price of an A Block license at the end of round 21 in Auction 73 is 193.53% of the final $/MHz/Pop price of comparable spectrum in Auction 66; the average $/MHz/Pop price of a C Block license at the end of round 21 in Auction 73 is 623.06% of the final $/MHz/Pop price of comparable spectrum in Auction 66. For C Block, the 50-state package (REAGs 1-8) is reaching 102.65% of the final price of comparable spectrum in REAGs 1-8 in Auction 66, while REAGs 9-11 are averaging 134.10% of what they finally obtained in AWS-1.
From the point of view of the U.S. Treasury Auction 73 is already a hell of a success. What remains to be seen is how well new entrants and smaller competitors did, whether the incumbents ran the table again, and whether we got a national third broadband pipe. But we won’t know that until the FCC releases bidder identities and bids at the end of the auction.
As reported by Broadband Reports and now confirmed elsewhere, a Time Warner internal memo indicates Time Warner will pilot a program where it has an explicit bandwidth cap, and users that exceed the cap will pay additional explicit fees — rather like what happens now with your standard cell phone package where you buy a bundle of minutes and then pay for any overages. The pilot will include a website to allow customers to track their usage, moderate their behavior, or buy additional capacity if they wish.
I agree with Dave Isenberg that this is the best way for Time Warner to handle its network capacity constraints and address the supposed 5% of users gobbling 50% of the bandwidth. We can expect some heavy users to move to other networks without caps, but also expect that users that use much less capacity and frustrated by congestion caused by heavy use by others to prefer plans like Time Warner’s because it should produce a less congested pipe overall.
I would be remiss if I failed to note that I was just musing about this the other day, giving me a chance to do another Stephen Colbert I CALLED IT!!! dance.
O.K., shameless gloating over. Analysis below . . . .