CTIA, Major Carriers Ask FCC to Rethink Tighter DE Rules
CTIA and the major carriers urged the FCC to back away from tentative conclusions in a proposed rulemaking that the Commission no longer should award bidding credits or other small business benefits to “designated entities” that have a “material relationship” with the major national carriers. The FCC earlier this month sought comment on a further rulemaking changing its DE rules before June’s advanced wireless services (AWS) auction (CD Feb 6 p2). DE Council Tree had asked the FCC to bar ties between major carriers and DEs in areas where a carrier already has spectrum (CD Jan 18 p1).
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The proposed tighter rules would tilt against wireless carriers in the AWS auction, meanwhile benefitting wireline and nontraditional telecom players, CTIA said. The group also questioned whether the proposed rules would survive judicial review. “Either the DE rules are systemically flawed, in which case the FCC should be considering revisions to the DE rules applicable to all investors, or the rules are effective, in which case differential treatment of large incumbent carriers must be separately justified,” CTIA said: “Given the defects in the justification and rationale for the notice… CTIA believes the legality of any of the proposed rules is highly suspect.”
DE rule changes mustn’t delay the June auction, said T- Mobile, among the 4 major national carriers the most spectrum-constrained. T-Mobile also asked if a rule change would have the desired positive effect on competition. “The growing disparity in spectrum holdings may well be a cause for concern, but attempting to cure it through alterations to unrelated DE rules instead of in individual merger proceedings or other rulemakings would actually exacerbate the problem,” T-Mobile said. Verizon Wireless said the rulemaking “offers no evidence of harm resulting from strategic relationships between small businesses and large wireless carriers before it leaps to the proposal to restrict such relationships.”
But DEs and interest groups said the FCC should adopt rules restricting DEs’ spectrum purchases. MetroPCS, a small carrier that has benefitted from the rules, said DEs no longer must partner with major carriers to raise money to compete in auctions. “As a result, the statutory objective of encouraging the participation of designated entities in the provision of facilities-based services can be met without having the large incumbent carriers become beneficiaries of the bidding discounts as well,” MetroPCS said.
Restrictions should apply, but only to bar relationships between DEs and the largest wireless operators, The Minority Media & Telecom Council said. “Companies which are not among the nation’s largest national wireless incumbents are, by definition, less capable of using the DE structure to horde spectrum and forestall competition,” the group said.
“Control of the CMRS industry is already concentrated in the hands of a few national wireless service providers,” Council Tree said. “These national wireless carriers are now leveraging designated entity investments to extend and deepen their CMRS spectrum footprints.”