Rural Carriers Want Revisions in Auction Rules on Consortium Bidding
The FCC should reverse course on a change to its auction rules for the upcoming advanced wireless services auction, said rural wireless carriers in a petition for reconsideration. The shift would make it harder for smaller players to bid as part of a consortium, they said.
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!
In particular, the carriers fear auction rules mandate that when small carriers bid as groups their revenues are seen collectively, unless they disband the consortium post auction. The requirement would bar many consortia from getting bidding credits and eliminate a key advantage against Verizon Wireless and other big competitors in pursuing small spectrum licenses, rural carrier groups said.
“The wording of the new consortium rule makes it appear (for the first time) that the consortium cannot simply stay together as a single operating entity without having the revenues of the individual members combined,” Blooston Group, attorneys for a rural carrier organization, said. “This combining of revenues is likely to place the consortium above the small business (or very small business) revenue limits, resulting in a requirement to pay back any bid credits achieved at auction.” NTCA called the revised rules “a Catch 22, which discourages the formation of new small business consortiums.”
John Prendergast, attorney for a group of carriers that Blooston represents, told us rural carriers have particular concerns because the AWS auction provides significant amounts of spectrum usable by small carriers. An FCC decision to provide 20 MHz nationwide in small chunks, MSAs and RSAs, targeted to small carriers demands a larger commitment than the 10 MHz originally proposed, Prendergast said. “We were surprised,” he said, saying carriers initially didn’t know the FCC had made a potentially significant change. “It just sort of slipped by… We hope maybe it’s just a misunderstanding by the Commission of how rural consortia are playing out.” He said small carriers appear to have gotten caught in gears as the FCC tightens up on designated entities.
Small carriers are looking at forming consortia to buy, for example, a single RSA license adding spectrum in each of their service territories, said Prendergast. “This is a genuinely attractive opportunity for rural carriers,” he said. “In a given RSA, it’s possible 2 or 3 phone companies have service territories that are within the RSA boundary. It’s a natural for them to get together.” Small carriers need to be able to use spectrum collectively once it’s in their hands, he said: “For most mobile service, you have to have a little economy of scale. You need to be able to tell consumers, ‘If you go to the next town over, your phone will work.'”
NTCA urged the Commission to amend its rules so consortia of small firms are eligible for bidding credits “if each member of the consortium individually meets the financial caps for small business bidding credits” regardless of aggregate gross revenue or total assets. “This will facilitate the deployment of wireless service to consumers in high-cost rural areas and further Congress’s goal of ensuring that rural telephone companies have access to spectrum and the opportunity to participate in the provision of spectrum-based services,” NTCA said.