DEs Ask FCC to Return to Old Rules for June AWS Auction
The FCC should dump an April 25 order setting designated entity (DE) bidding rules for an advanced wireless services (AWS) auction starting June 29, urged Council Tree Communications, the Minority Media & Telecom Council (MMTC) and Bethel Native Corp. in a Fri. petition. The DEs asked the FCC to hold the auction, but using previous auction rules.
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“Everyone wants a timely and clean auction -- that’s what our proposal accomplishes,” said George Laub, partner at Council Tree: “The Commission’s DE rule changes are profound and really do deserve the fullest public input for the Commission’s deliberation.” The FCC could resolve the issue with a 2-sentence order, said David Honig, MMTC exec. dir. It should clarify before the auction that it won’t require a 10-year exit timeline, he said, and that it will address other issues raised in the filing immediately afterward.
The April 25 DE rules were “a complete surprise and completely unfair” to minority and women-owned companies, said Anastasia Hoffman, CEO of Bethel Native Corp. : “BNC is charged by Congress to be diverse.”
The Fri. filing Fri. contested the FCC decision to extend the duration of “unjust enrichment” curbs and to restrict lease or resale of capacity firms buy using DE credits. “Many of the rules announced at this 11th-hour are unsound or unreasonable,” the groups said in their filing. “The Commission substituted a 10-year unjust enrichment schedule for the five-year schedule that has applied broadly since 1997… The sudden, new schedule has the practical effect of eviscerating a designated entity’s access to capital because lenders and investors who are being asked to back untested new entrants want to see that the designated entity has a clear path to exit if the business is not succeeding.”
The DE program is about drawing the line on which firms can participate and which can’t, Honig said. “One of the things that gets [small, minority- or female-owned ventures] financing” to participate in a form-175 filing, Honig said, “is that [investors] have the opportunity to exit.” Any time frame for DE investment “has to be short enough to give investors confidence but long enough to give the entrepreneur enough time” to see their business plans brought to fruition.
The rules are “slowly starving” the DE program without the FCC having to admit it, Honig said. “I don’t think the Commission understood how it would kill the program,” Honig said, repeatedly adding “this isn’t what Congress intended.” He stressed the importance of the auction process following Congressional intent: “After a spectrum auction is held, you can’t get the spectrum back.”
“The bottom line is, we'd like the Commission set aside these rules with respect to auction 66 and proceed with their old DE rules,” a DE source said: “We're not interested in delaying the auction, and there’s an easy solution, which is to set aside these rules.”