SENATORS OBJECT TO FCC'S LOWER 700 MHZ AUCTION CHANGES
Three key rural senators wrote to FCC Chmn. Powell last week, rebuking agency for rule changes for Aug. 27 auction of lower 700 MHz C- and D-block licenses that they said ran counter to legislation that delayed Ch. 52-59 and Ch. 60-69 bidding. “Unfortunately, these modifications to the auction rules allow participants to change their original bidding intentions, and are directly contrary to the statutory language concerning Auction 44 and the intent of Congress in passing the Auction Reform Act,” said letter from Sens. Johnson (D-S.D.), Baucus (D-Mont.) and Enzi (R-Wyo.). Legislation signed by President Bush in June indefinitely delayed most of 700 MHz auctions that had been set for June 19, moving smaller C- and D-block bidding to Aug. 27 for lower band. Smaller configurations of those licenses have been particularly sought by rural carriers. Senators said in July 18 letter that “bottom line” was that legislation didn’t authorize FCC to allow bidders to increase their upfront payments or to change their short-form applications. In updated auction procedures released June 26, FCC Wireless Bureau said eligible pool of bidders for Aug. 27 auction would include carriers that had submitted qualified applications to participate in original lower band auction. It also allowed qualified bidders to select additional licenses by increasing their upfront payments.
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Johnson, Enzi and Baucus told Powell that, by changing auction rules, bureau went further than legislation intended. They said new law stipulated that eligible bidders for Aug. 27 auction were companies that had submitted qualified applications by May 8, original short-form application deadline. “Qualification for the auction -- then and now -- means that licenses had to be specified on the short-form application by May 8, 2002,” letter said: “At no time has Congress given the FCC the additional authority to change the qualifying date on the short-form applications for license specifications. Had we intended to change this qualifying factor for the auction, we would have included it in the legislation.”
Bureau had said it was allowing already qualified bidders to select additional licenses for lower band auction because they “could not have anticipated the statutorily mandated changes in Auction Nov. 44 at the time they submitted their original license selections.” One of largest bidders, Spectrum Holdings, recently petitioned FCC for reconsideration of its decision to let bidders select licenses to pursue other than ones originally identified on their applications. That petition for reconsideration is expected to be taken up at bureau level, sources said. Qualified bidders faced deadline of July 3 to make requests for return of their down payments for what had been June 19 auction. Bidders remaining aren’t authorized to de-select any licenses they indicated they would pursue. To select additional licenses, bidders must provide information to Commission between July 22 and July 26. Supplemental upfront payments to bid on additional licenses must be made within that same window, bureau said.
“We did not intend for the FCC to suddenly allow bidders to augment their upfront payments,” senators’ letter said. “Had we intended to upset the financial positions of the bidders and shift the ability of certain entities to fully participate, we would have included the payment increase in the legislation.” Bill instead specifically directed Commission to return certain upfront payments for part of spectrum that no longer is part of lower 700 MHz auction, senators said. “This return provision was mandated in order to ease the financial burden of the delay rather than help bidders pad their upfront payments,” they said. If FCC were to back bureau’s order, “it would contravene our legislation and result in the auction being conducted under a pending hailstorm of litigation.” Senators urged Powell to not allow bureau to “circumvent” intent of legislation, which they said authorized change only of date of C- and D-block licenses in lower band and postponed larger A-, B- and E-block licenses in that band, letter said. FCC spokeswoman said letter was “under review.”
In Senate deliberations, Baucus’s concerns over delaying 700 MHz auctions had been strong enough to have prompted CTIA to write him pledged that it wouldn’t attempt changes in Aug. auction. NTCA said it shared senators’ concerns. Rural carriers have been concerned that changes allowing eligible bidders to increase pool of licenses on which they are bidding could make it harder for smaller carriers to pursue individual markets. They had worried that carriers planning to pursue all of lower band licenses, including larger A-, B- and E-blocks, now could shift their spending plans to remaining licenses.