FCC Proposes Tighter Rules for Carrier Ties to DEs
The FCC Fri. released a further notice of proposed rulemaking that would block wireless carriers from partnering with designated entities (DEs) to buy spectrum at cut rates in FCC auctions. The FCC said it plans to wrap up the proceeding in time for the rules to take effect before a June advanced wireless services (AWS) auction.
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The shift would matter most if the FCC holds another auction in which some licenses are set aside specifically for DEs. That’s uncommon, though licenses were reserved for DE bidding during a Feb. 2005 auction of spectrum returned to the govt. by NextWave and other carriers. That sale, Auction 58, contained a set-aside in part because the licenses returned originally had been sold to DEs.
The DE rule changes should have minimal effect on the June 29 AWS auction, a regulatory source said. “This is not a set-aside auction,” the source said. “There are no licenses set aside for just DEs. In that type of auction, what is the usefulness of [partnering with a DE] anyhow? You save money but there is cost associated with [working with] a DE.” A Commission source said the hope is the rule change will have minimal effect on future auctions, since DE set- asides are uncommon under auction rules.
Tighter rules are important because in the upcoming AWS auction carriers qualifying as small companies can receive up to a 25% auction discount, Comr. Copps said in a statement. “We need to act quickly to close any loopholes to ensure that American taxpayers do not lose millions of dollars in AWS auction revenues,” Copps said. Comr. Adelstein was “very disappointed” the FCC was longer than necessary releasing the NPRM, he said. “The Commission committed to launch this proceeding at our Aug. 2005 Open Meeting, yet it took over 5 months to prepare this relatively brief notice of proposed rule making,” he said. “We should have initiated this proceeding three months ago and allowed interested parties a more rational amount of time to comment on our proposals. Unfortunately, that didn’t happen and now commenters and indeed our own Commission staff are forced to work within an incredibly aggressive schedule to try to finalize this proceeding.”
Chmn. Martin said the rulemaking reacted to complaints by Council Tree, a DE, which sought revised rules. Council Tree said the FCC should bar ties between major carriers and DEs in areas where a carrier already has spectrum (CD Jan 18 p1). In Auction 58, “national carriers used DEs to acquire 71% of their spectrum,” even though “national carriers have zero need of government assistance,” Council Tree said.
“During our reconsideration of the AWS service rules, Council Tree Communications expressed concern that these bidding credits were being used by carriers with billions of dollars in revenues, who partner with small businesses in order to gain access to the bidding credits,” Martin said. “Today, we initiate a review of the program to consider changing these kinds of practices.”