FCC Firm on DE Rules for AWS Auction
The FCC Fri. delivered a big loss to Council Tree, the Minority Media & Telecom Council (MMTC) and Bethel Native Corp., refusing to make changes they demanded in designated entity (DE) rules released April 17. The order clarifies the FCC’s intent in referring to “spectrum capacity,” and stating that the rules don’t apply retroactively to licenses bought in earlier auctions. And it counters complaints a DE decision on unjust enrichment rules didn’t follow proper procedure.
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The agency’s move bucked the NTCA and the Rural Telecom Group, which said the new DE rules would hurt small carriers. Council Tree and other parties are expected to sue to overturn the decision.
DE advocates wanted changes in the rule’s handling of unjust enrichment and a cap on the percentage of spectrum purchased using credits that can be leased in an MVNO or other arrangement higher than the 25% set in the April rules (CD April 27 p4).
Chmn. Martin doesn’t think the FCC had to change the DE rules in the first place, he said: “These changes to our designated entity rules arose out of a last-minute proposal in the proceeding to adopt rules for the AWS spectrum. While I supported examining potential changes to our designated entity rules for future auctions, I did not believe the rules needed to be changed, especially in advance of the auction this summer. Nevertheless, I agreed to the changes in order to obtain the support needed to establish the rules for wireless services that were essential to making the spectrum available for wireless broadband services this summer.”
But in their statements Comrs. Adelstein and Copps said the only reason the order was “last minute” is that the FCC didn’t address the issue until this spring, despite its lingering since last Aug., when the Commission approved the rules for the auction. By most accounts the Wireless Bureau had prepared a DE item last fall but a DE proposal wasn’t circulated until Feb., A source said Fri.
“I repeat here what I have stated previously -- we should have begun our consideration of these rules last summer,” said Copps, who supported the order: “That would have given us an opportunity to reach consensus on the important question of which companies should be allowed to acquire a partnership interest in a DE. Unfortunately, revisiting that question at this point would mean further postponing the long-scheduled AWS auction. That we cannot do.”
Adelstein supported the order in part and concurred in part. “I have this lingering concern, though, that the Commission’s course of action in this troubled proceeding, notwithstanding the legal maneuvering in this decision, may still leave other issues unresolved,” he said. “As I have noted before, much of this uncertainty could have been avoided had we started this proceeding earlier and kept it more narrowly focused. I hope that the Commission’s decisions over the past several months do not prove to be the undoing of our most significant auction in 10 years.”
Comr. Tate, in what some deemed a surprise, concurred in part, citing concerns with the effect on DEs. She said a recent trip to Alaska showed her communications issues that face the nation’s most rural areas. “I am sympathetic to the concerns of DEs, who argue that requiring repayment of license discounts prior to the end of a ten year ‘hold period’ will discourage investment and potentially limit a significant portion of designated entity participation in future spectrum auctions,” she said. “However, as always, our decision involves a balancing of interests. I therefore concur in this decision knowing that our efforts were to strengthen, not weaken, the purposes of the DE program.”