RURAL CARRIERS URGE END OF SET-ASIDES FOR DESIGNATED ENTITIES
The Rural Cellular Assn. is breaking with other rural groups to urge an end to set-asides for designated entities (DEs), arguing that bidding credits are a much more effective means of spurring bids by small carriers. RCA said the FCC should undertake a rulemaking to explore different levels of bidding credits as well as smaller geographic areas for licenses.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
The filing puts RCA in sharp disagreement with the Rural Telecom group, which also represents rural carriers. Other filings were being completed late Fri. T-Mobile, expected to be a top bidder in the auction, was preparing a filing arguing that “closed auctions have imposed extraordinary costs on the public.” Based on a new analysis by former FCC Chief Economist Simon Wilkie, T-Mobile was to argue that delays in getting spectrum on the market have cost consumers $13-$32 billion in lost value. A number of DE interests were also drafting filings.
RCA officials told us Fri. a new analysis they performed of bids in Auction 35 -- the predecessor to Auction 58 scheduled for Jan. -- showed that small players actually fared better bidding for open licenses available to all than for closed licenses available just to DEs. A major carrier source said the rural arguments should be helpful in getting the FCC to rethink its proposed auction rules.
Auction 58 is the FCC’s 2nd attempt to sell PCS licenses returned by NextWave and other bidders. Under the rules approved by the FCC in markets larger than 2.5 million, 20 MHz will be offered to all bidders and 10 MHz just to DEs. That ratio flips for markets below the cut-off.
RCA said the rules are good for those DEs able to affiliate with a large carrier with deep pockets, but not its many members who can’t easily form these alliances. RCA found in its survey that unaffiliated DEs won only 12.2% of closed licenses as opposed to 17% of open licenses.
A small carrier source said many RCA members were shocked when they reviewed Auction 35 results and realized how dominant affiliated DEs had been. “Auction 35 didn’t work,” the carrier said. “The real DEs didn’t get many of the licenses. There’s an awful lot of motive for the big guys to set up these partnerships under the DE structures. The FCC rules should be set up so you can’t game the system. DEs should be real DEs.”
“Our members looked at the results of Auction 35 and found that only about 12% of the licenses offered in closed bidding were won by entities that had no association with large carriers,” said David Nace, gen. counsel to RCA. “We found that closed bidding was not working for small wireless carriers.”
RCA proposes 2 alternatives to spur bids by small carriers, including giving small carriers more significant bidding credits beyond discounts they received in Auction 35. “RCA submits that additional levels of bidding credits with larger credits for the smallest entities would allow more entrepreneurs to compete successfully in auctions with large companies,” the group said in its filing: “Presently, no bidding credits are available for small businesses with average annual gross revenues of $40 million or more.” RCA also suggested selling licenses for smaller geographic areas.