The future of your cell service depends on this auction

WASHINGTON - The federal government wants to transfer as much as 100 megahertz worth of airwaves from the broadcast TV industry to carriers like Verizon and T-Mobile, in a historic auction that could pave the way for lots more mobile data capacity. That potentially means faster mobile internet, more connected devices and new services and features.

The problem is, there may not be enough demand for all those airwaves. And that could ultimately reduce the amount of new capacity that reaches consumers, as well as how much money the government can raise.

This week, the Federal Communications Commission said that 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 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 it. How much less will likely depend on how much (or little) demand the wireless carriers ultimately 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 enough supply with demand.