Trade Groups: Spectrum Incentive Auctions Would Raise Big Bucks

According to CTIA, a trade group representing mobile carriers, and the Consumer Electronics Association (CEA), wireless auctions using spectrum voluntarily given up by television stations could raise $33 billion or more for the cash-strapped US Treasury.

So-called incentive auctions, in which TV stations would give up spectrum in exchange for a share of auction proceeds, could also raise up to $2.3 billion for the stations, based on the business value of the spectrum, the lobbying groups say. The incentive auctions for 120MHz of spectrum now held by US TV stations would raise $36 billion or more, with most of the money going to the US Treasury, said Steve Largent, CTIA's president and CEO. CTIA and CEA's estimates are based on recent spectrum auctions, and the paper projects the TV spectrum auctions would raise less money per megahertz pop -- a unit of spectrum -- than the 700MHz spectrum auctions concluded in early 2008. The auction estimates in the paper are conservative, and the actual bidding could go much higher, CTIA said. If the incentive auctions sold at the same value as the B block of the 700MHz auctions, they would raise about $99 billion, the paper said. CTIA and CEA estimated that $565 million raised by the incentive auctions would go to help relocate TV channels that voluntarily give up their spectrum, and $1.2 billion to $2.3 billion would be the business enterprise value of the spectrum to the TV stations. The trade groups used two common valuation methods -- one based on the TV stations' gross revenue and one based on cash flow -- to determine the enterprise value of the spectrum.