The nation’s largest wireless carriers appear to be emptying their piggy banks for a government auction of airwaves licenses as bids topped $24.1 billion Wednesday afternoon.
Industry observers didn’t expect the auction to bring in so much money, but demand for the coveted airwaves has been strong, particularly in New York City, Los Angeles and other large metro areas. The high bidding is also a victory for federal officials, who are planning a 2016 auction of even more valuable airwaves licenses currently held by TV stations.
Bidding began last Thursday, and within four days companies had already surpassed the government’s reserve price of $10 billion. On Tuesday alone, bids rose $7.5 billion, and climbed $7.7 billion more by the close of business Wednesday after 19 rounds of bidding.
Wireless carriers covet the airwaves because they can be used to augment existing LTE networks as consumer demand for data grows.
“While bids could suddenly slow down, the auction appears on pace to blow through the top end of our expected range,” wrote BTIG Research’s Walter Piecyk in a note (registration required) Tuesday afternoon, adding it represented “a nice and needed win for the FCC.”
It’s not clear who is bidding. The FCC doesn’t release the names of bidders or winners until after the auction has ended. The auction will continue until the FCC receives no more bids, which will likely take a few more weeks.
AT&T, Verizon Wireless and T-Mobile all qualified to bid in the auction, while competitor Sprint decided to sit this one out. Another wild-card bidder is Dish Network. There has been speculation that Dish Chairman Charlie Ergen wants to drive bidding prices up to help increase the value of the nearby airwaves licenses that Dish owns. Analyst Tim Farrar speculated yesterday that it looks like Dish has been bidding up the licenses via several bidding groups in which the company is participating.
AT&T and Verizon are likely the “most aggressive bidders” with T-Mobile and smaller, regional carriers “picking their spots,” wrote J.P. Morgan telecom analyst Philip Cusick, in a note to clients.
The government plans to use about $7 billion of auction proceeds to fund FirstNet, a new national wireless broadband network for first responders. The rest of the funds will be earmarked for deficit reduction.
This article originally appeared on Recode.net.