Carriers to Pursue More User-Friendly Anti-Collusion Rules
Wireless carriers are likely to ask the FCC to rethink its anti-collusion auction rules, which cut off many business contacts between carriers in the period between the filing of short forms and the actual auction, following upcoming Auction 58. The market implications could be major. For example, sources said the current quiet period complicates any move by Verizon Wireless to make a play for Sprint, since both companies are participating with partners in the key PCS auction, which is scheduled to begin Jan. 26.
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Carrier sources said the restrictions are becoming increasingly unwieldy, given the pace of change in today’s industry. In addition to the potentially dramatic effect on the latest wireless merger, the anti-collusion rules complicate negotiations in other areas, including roaming agreements, market swaps, interconnection agreements, leasing deals and resale agreements, sources said.
An attorney who represents wireless carriers expects to see more pressure to address the anti-collusion rules following Auction 58. “During the quiet period prior to an auction you can’t do a lot of business negotiations,” the attorney said. “All the carriers are having to spend a lot of time working with their business units to make sure they don’t talk to other bidders… There will be some discussions after the auctions that the restrictions are very constraining. The extent of restrictions is very significant.”
A 2nd carrier source said the anti-collusion rules are based on sound reasoning and “you don’t want to have collusion,” but they make doing business much more complicated. “You have this period where there is so much activity because of mergers, and this does complicate things,” the source said: “Verizon has a problem. If they want to place any bid [for Sprint] they would have to get an exception. That would be a problem for them.”
Regulatory and legal staff at the carriers have to spend significant amounts of time making certain business staff comply with the requirements, the source added: “It means you have to provide notice to your business people and educate them.. The anti-collusion rules are fairly broad and sweeping.”
A source with another national carrier said the rules are very specific and require close attention. “I have all of my folks go through anti-collusion training,” the source said. “We ask CTIA to make announcements before any conference calls where more than one carrier is going to be on a call, just to remind people that we are in a [quiet] period.” The source even steers away from CTIA conference calls rather than potentially violate any rules: “I feel it’s safer not to participate.”
A regulatory attorney said the FCC likely would be reluctant to shorten the periods between key auction milestones or otherwise tweak the rules to make them more user friendly. “I'm not sure the FCC would undertake such changes on their own -- they would have to be proposed by the industry,” the attorney said: “They would have to show there’s a way to affect changes that would still ensure an appropriate, well-guarded auction process. That’s an appropriate concern of the FCC.”
Carriers may face an uphill fight. During the lead up to Auction 58, CTIA asked the FCC to extend by 3-4 weeks the deadline for filing short forms, which would have shortened the period in which the anti-collusion rules would apply. The FCC sharply rejected this suggestion. “Offering no support for its assertion, CTIA states that extending the period in which to file short form applications should not interfere with the time allotted for Commission staff to prepare for the auction or to review applicants’ filings,” the Commission said. “This statement significantly underestimates the administrative, technical and regulatory review that Commission staff undertakes to conduct an auction.”
The FCC also denied that the time built into the auction leads to a “protracted” process. “For the last 3 years, taking into account auction-specific circumstances, the Bureau has consistently factored similar timing into its competitive bidding schedules to provide conditions that will promote competitive auctions,” the FCC said. “We note that sufficient time for preparation is necessary for bidders and the Commission alike.”