New Investor Group Says DE Rules Mean No Minority Investment in Spectrum
FCC designated entity (DE)rules guarantee minority investors will avoid spectrum auctions, said Mosaic Partners, a new minority investors group. A filing by the group, which last week began meeting with agency officials, came as the FCC contemplates rules for the 700 MHZ auction, which could begin as early as summer.
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!
Mosaic’s membership hasn’t been announced, sources said. DE Council Tree, which fought changes to DE rules before the 2006 AWS auction, filed on behalf of the group after a meeting with Comr. Copps. Mosaic said in a presentation to Copps that though 35% of U.S. residents are minorities, only 4% of radio licenses, 3% of TV licenses and 1% of wireless licenses are held by minorities.
In the 2006 AWS auction, minority bidders won only 2% of licenses -- and those through one organization, Denali Spectrum, said Mosaic. Without reform minority, bidders won’t win any 700 MHz licenses, it said. DEs landed 4% of licenses by value in the AWS auction, Mosaic said. In Auction 35 in 2001, on the other hand, DEs not affiliated with a major carrier won 19% of licenses by value. In Auction 58 in 2005, they won 30%.
“Without substantial and effective efforts, the minority population will be increasingly under-represented in the ownership of communications licenses,” Mosaic said: “Auction 66 DE participation was relegated to very small scale undertakings, reflecting DEs inability to raise any meaningful capital under the new DE rules.”
Council Tree, Bethel Native Corp. and Minority Media & Telecom Council are challenging the DE rules for the AWS auction in a case at the 3rd U.S. Appeals Court, Philadelphia. The DEs say the revised rules -- which extend the duration of “unjust enrichment” curbs and restrict lease or resale of capacity that companies buy using DE credits -- mean few DEs will participate in FCC auctions.