SBA Office Supports Complaints Calling DE Rules Too Tough
The Small Business Administration’s Office of Advocacy joined designated entities (DEs) in questioning the need for the major rule changes for DEs that the FCC approved before the recent AWS auction. In a filing on a further notice of proposed rulemaking on future auction rules, the Office suggested the FCC had already gone too far.
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!
The Office questioned the FCC’s decision to impose severe limitations on the ability of DEs to sell spectrum they buy. DEs say the restrictions made it harder for them to attract investment before the AWS auction. The Office said the FCC should analyze carefully the effect on small businesses before agreeing to any other rule changes.
“Instead of concentrating on preventing unjust enrichment, small businesses believe that the Commission should concentrate on promoting opportunities for designated entities by removing market-entry barriers and creating a regulatory environment that encourages funding for designated entities,” the agency said. “In particular, small businesses are concerned that the 10-year limitation on transfer of a spectrum license is overly burdensome, impedes their ability to attract funding, and is unnecessary to prevent unjust enrichment.”
DE Council Tree, which is challenging the rules and the AWS auction in federal court, said the revised rules meant that DEs sat out the auction.
“Designated entities had won an average of 74% of licenses by value in the 6 major commercial mobile radio service license auctions in which designated entity preferences were offered in the past 10 years,” Council Tree said. “In Auction 66, however, designated entities won just 4% of licenses by value.” The company said the adoption of revised rules “followed a long period of decline in the number and quality of Commission incentives available to designated entities” and amounted to “nails in the coffins of many designated entities hoping to enter the industry through Auction 66.”
Leap Wireless said the results of the AWS auction show the need for the Commission to impose rules preventing any carriers from accumulating more than 80 MHz in any area. Leap said the FCC should act before the upcoming 700 MHz auction. “Before Auction No. 66, the nation’s top 5 carriers controlled nearly 90% of CMRS spectrum on a MHz-POP basis,” Leap said. “In the AWS auction, the large carriers have again asserted their dominance, with T-Mobile, Verizon and Cingular accumulating more than $8 billion worth of new spectrum licenses.” Imposing a new spectrum cap would allow major carriers to buy more spectrum “but not on an unlimited basis” that works against competition, Leap said.
But NAB told the FCC it didn’t need to further tighten its auction rules, particularly by denying DE benefits to any smaller company forming a relationship with a larger one -- one of the rule changes under consideration. The prohibition “appears unnecessarily broad” and could “unduly hinder small businesses in obtaining investors and financing and impede their participation in spectrum auctions.”
CTIA agreed that no further changes are necessary. “The FCC’s current DE rules adequately ensure that the recipients of DE benefits are limited to those entities and for those purposes Congress intended and that smaller and rural companies have access to spectrum,” CTIA said. CTIA also argued, contrary to Council Tree, that the AWS auction was highly competitive. In the auction “73 applicants self-identified as rural telephone companies and 100 applicants were granted DE status as small or very small businesses,” the group said. “Of those, 68 rural telephone company or small business entities were the high bidders for 247 licenses for a net bid amount of nearly $562.4 million.”