The second stage of a government auction of wireless spectrum ended abruptly on Wednesday, as telecoms and investors participating in the sale showed a tepid appetite for licenses.

Federal Communications Commission Chairman Tom Wheeler is conducting a landmark auction that allows TV stations to sell their broadcast spectrum licenses to wireless carriers. The sale is the first of its kind. Without a precedent, interpreting developments can be challenging.

In the second stage of the complex auction on Wednesday, the bidding by wireless carriers, communications companies and others lasted just one round, with the aggregate bids dropping 7% to $21.5 billion.

"We didn't expect much of an increase of bidding by wireless operators in Stage 2 of the Forward spectrum auction, but we did not think it would take just one round to end bidding," Walt Piecyk of BTIG wrote in a report.

At the auction's start, many analysts expected the auction to raise $30 billion to $40 billion. Piecyk suggested that the consensus would likely fall to the mid $20 billion range.

In each stage of the auction, the government first offers to buy licenses from TV station owners. The FCC starts with a high offer for licenses in a given city, and then lowers its bid to ensure that it doesn't pay TV station owners too much.

Then, the government auctions license to wireless carriers and other buyers in a more traditional sale. The bidding starts low and increases with each round to obtain the highest possible bid.

In the auction's second stage, the broadcasters agreed to sell their spectrum for a total of $55 billion, a steep decline from the roughly $86 billion asking price in the first stage.

The second-stage bidding by the wireless carriers and other spectrum buyers began Wednesday morning and ended in the afternoon.

"We do think there is demand for spectrum -- just not this much," Marcy Rivycker of Wells Fargo Securities suggested in a report. The bidding could still hit $30 billion, she suggested, if the auction goes to a fourth round.

Cheaper wireless spectrum could benefit a carrier like T-Mobile USA (TMUS) - Get Report , which competes against the likes of AT&T (T) - Get Report and Verizon Communications (VZ) - Get Report in the market for spectrum.

A price cut would mean a lower payout for broadcasters such as Sinclair Broadcast Group (SBGI) - Get Report , Media General (MEG) , Nexstar (NXST) - Get Report , Twenty-First Century Fox (FOXA) - Get Report and Tribune Media (TRCO) - Get Report , who could sell spectrum in the auction.

Sinclair dropped 30 cents, or 1.13%, to $26.30 on Wednesday. Media General fell 1% to $17.45. Nextar declined 1.64% to $52.05. Tribune lost 2.15% to $33.66.

The incentive auction will have less of an effect on larger broadcasting groups that also produce programs and own cable networks. CBS gained 1.73% Wednesday to $56.49, while Fox rose .6% to $25.27.

The FCC will release more information about the third stage next week, including when it will be held.