FCC Ready to Hand Down Order Restricting DE Relationships with Carriers
The FCC is expected to hand down this week an order prohibiting ties between designated entities (DEs) and carriers. But questions remain about the breadth of the restrictions the FCC. The central question is whether the FCC will agreed to stick with language in a Feb. further notice of proposed rulemaking restricting relationships between DEs and “entities with significant interests in communications services” rather than just DEs and the major wireless carriers (CD Feb 6 p2).
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Sources told us Wed. the more sweeping language expanding the scope of the prohibition beyond major carriers was a last-minute change by Chmn. Martin after the rulemaking had been circulated among other commissioners. “They're very focused on it at the 8th floor,” said one source who favors greater DE restrictions: “I think it’s going to be just the national wireless carriers. Martin is still considering whether to expand upward with other communications companies.” The source said broadening the restriction could lead to confusion: “He’s got an absolutely clear flight deck as it relates to prohibiting the national carriers. It potentially undermines the integrity [of the order] to be more expansive.”
Another question is whether the order will incorporate any of the recommendations by the Justice Dept. (CD March 21 p8) that the FCC look more closely at relationships between specific DEs and carriers before imposing restrictions. One source said the DoJ filing could prove “very influential.”
Meanwhile, T-Mobile took direct aim at DE Council Tree, a leading proponent of prohibiting ties between major carriers and DEs in areas where a carrier already has spectrum (CD Jan 18 p1). “The Commission should be skeptical of Council Tree’s portrayal of itself as a small ‘mom and pop’ entrepreneur attempting to break into the wireless market,” T-Mobile said in a footnote to a filing it made at the FCC. “Council Tree is a sophisticated investor, backed by Madison Dearborn, a large private equity firm, set up to take advantage of various minority and small business programs.”
T-Mobile added that Council Tree has engaged in the kinds of relationships it now wants to prevent. “In past auctions, Council Tree has been involved in partnerships with AT&T Wireless, and, we understand, it has approached other nationwide wireless carriers seeking investment opportunities as well.”
“T-Mobile is misinformed,” a Council Tree spokesman said. “Our lead investors are several Alaska Native Corporation companies that ironically are not different than Cook Inlet, which is partnered with T-Mobile.” The spokesman said Council Tree hasn’t held discussions about partnerships with national wireless carriers in the AWS auction.