June AWS Auction Could Stall as DE Issues Remain
Industry sources expressed concern last week that the lack of a proceeding yet on the relationship between designated entities (DEs) and large spectrum holders could slow the long anticipated advanced wireless services auction (AWS), which is expected to occur as early as June. Chmn. Martin has yet to begin circulating an item on DE ties with large wireless carriers. A front page story in the Wall Street Journal last week focused additional attention on the DE issue.
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“That proceeding is hanging out there,” said one regulatory attorney. “We have gotten input from both the Democrat offices that it’s a proceeding they want to get moving before AWS. But no one has stated that the AWS timetable has changed.”
“The Democrats are pushing this,” a 2nd regulatory attorney said. Comr. “Adelstein in his statement in the AWS reconsideration focused on this issue… It certainly appears there’s interest in having the auction go this summer. It’s just a question as to whether the issue [of a DE proceeding] would have an impact on this auction or other auctions.” The source added: “The chairman decides the timing of doing a notice. I don’t know what his office’s view is.” A 3rd regulatory source said: “There is going to be some dodging and weaving that has to be done if they go forward with the AWS auction without addressing this in some form.”
When the FCC approved modifications to AWS rules in Aug., Comrs. Adelstein and Copps highlighted a commitment in the order to launch a DE proceeding. Sources said that while neither wants to delay the auction, both remain committed to the proceeding. “Our largest auction in many years is going to be held in June,” Copps said in Aug. “We need to put this NPRM out immediately, compile the record, and develop whatever action plan may be necessary if it is determined that new protections are needed for the DE program -- well before the auction is held.”
The Journal story, sources said, is refocusing attention on the DE issue. The newspaper reported on recently unsealed documents in a lawsuit accusing Lynch Interactive Chmn. Mario Gabelli of helping DE bidders win licenses in auctions that Gabelli and his associates wouldn’t have gotten without the small-business designation. Through his attorney, Gabelli denied wrongdoing. The lawsuit alleges that Gabelli and his associates illegitimately earned more than $200 million.
The facts of the Gabelli case were well known to veteran FCC staffers, but, sources said, the article did raise the profile of the case. The lawsuit primarily focuses on an old auction, 1996’s C-Block PCS auction, after which the 3 largest bidders filed for bankruptcy. “I don’t know if there was anything new” in the article, said a regulatory source familiar with the case. “It seemed more focused on Gabelli, almost personally, than the FCC per se.” The source added: “If it were a crusade against the rules you would have seen more focus on recent auctions, which there wasn’t, or other companies that may have been avoiding the rules, which there wasn’t.”
“Many of us who are familiar with the business were aware that Gabelli had a lot of different interests,” a 2nd regulatory attorney said. “The primary issue is whether it’s going to create a perception that there needs to be changes.”