The problem is, there may not be enough demand for all those airwaves. And that could reduce the new capacity that reaches consumers like you and me, as well as how much money the government can raise.
This week, the Federal Communications Commission said putting all that radio spectrum in the hands of wireless carriers would cost the companies, collectively, more than $86 billion. That's a staggering figure that indicates there may be a lot of spectrum to go around. The agency didn't pull this number from thin air; what it reflects is how many TV stations apparently anticipate making some money by going off the air or moving to a different channel.
This will "give wireless bidders the opportunity to compete for this beachfront spectrum to meet America’s growing mobile data needs,” the FCC said in a statement Wednesday.
Wall Street analysts, however, don't expect the carriers to spend nearly that much in the auction. Some estimates suggest it may be closer to $30 billion to $40 billion, roughly half of the FCC's target.
If there isn't enough demand, the government will scale back the amount of spectrum it'll make available in the auction and reduce the amount of money it'll take for the bidders to end the auction. How much less will likely depend on how much (or little) demand the wireless carriers express, as well as what price the TV stations will accept in exchange for handing over their airwaves.
"There is such a large gap now between the need to generate $86 billion to close the auction, and the projected total bids of wireless providers in the forthcoming forward auction, that the FCC will almost certainly need to rerun the reverse auction at a less ambitious clearing target," said Michael Calabrese, a senior research fellow at the New America Foundation.
In plain English, this means the FCC may need to revise its target a few times before it's confident it can match supply with demand.
Correction: An earlier version of this post said analysts were predicting bids of between $30 million and $40 million. In fact, they estimated $30 billion to $40 billion.