Cheryl Leanza, policy advisor to the United Church of Christ, stressed the importance of designated entity rules in spectrum auctions, in a meeting with Maria Kirby and Renee Gregory, aides to FCC Chairman Tom Wheeler. Leanza tied DE issues to media ownership rules, said an ex parte filing in docket 09-182. Leanza “thanked the office for the Chairman’s previous statements in support of media ownership diversity and urged the Chairman to follow through on all related issues with equal degrees of speed,” the filing said.
FCC Chairman Tom Wheeler told lawmakers that the broadcast TV incentive auction should happen in early 2016, as he has been committing. “In addition to the competitive benefits of moving forward with the incentive auction, a convergence of forces is building that strongly supports commencing the auction in early 2016,” Wheeler told House Communications Subcommittee ranking member Anna Eshoo, D-Calif., and Sen. Ed Markey, D-Mass., in a March 11 letter released last week. Broadcaster interest “has gathered significant momentum,” Wheeler said, citing the agency’s outreach and pointing to the market demand shown by the bidding in the recent AWS-3 auction. And “the ‘beachfront’ character of 600 MHz band spectrum guarantees that providers will bid substantial sums for it,” Wheeler told Eshoo and Markey. Wheeler sent a different letter the same day to Sen. Claire McCaskill, D-Mo., on the FCC’s dedication to revisiting the competitive bidding rules ahead of the incentive auction. "I remain committed to providing bona fide small businesses a meaningful opportunity to participate in FCC spectrum auctions -- including next year's incentive auction -- while protecting the integrity of our auction program,” Wheeler told McCaskill, who had blasted Dish Network’s “abuse” of the FCC designated entity rules.
House Communications Subcommittee lawmakers pressed FCC officials on details of the broadcast TV incentive auction, focusing on whether stations will participate and whether the commission’s funding for the efforts will be enough. The officials said the agency is ready to tackle the issues with the resources at hand.
A lack of spectrum in rural markets isn't the reason Sprint and T-Mobile aren't offering service in many rural markets, Mobile Future said in a white paper arguing against setting aside spectrum for competitors to AT&T and Verizon in future spectrum auctions. The paper, by American Rural CEO Diane Smith, examines the five most-rural states: the Dakotas, Montana, Wyoming and New Mexico. All four national carriers hold spectrum in every county in those states, Smith wrote. “In counties where Sprint and T-Mobile provide no coverage on their networks, the companies hold on average more than 84 MHz and more than 32 MHz of spectrum, respectively.” The real impediment is economic, the paper said. The “revenue potential” for a wireless carrier in a major urban center is $248,000 per square mile of service, which drops to $262 per square mile in the least densely populated areas, Smith said. “The premise that Sprint and T-Mobile will use additional low-band spectrum to enter rural markets and compete with established providers is simply not supported by the facts,” she said. Sprint and T-Mobile had no immediate comment.
Dish Network’s use of two designated entities to buy spectrum at discounted prices in the AWS-3 auction was directly harmful to many small businesses, FCC Commissioner Ajit Pai said in a statement Monday. Pai has called for an investigation of Dish’s use of DEs in the auction (see 1501300051). Dish worked with two DEs in the auction, Northstar Wireless and SNR Wireless, successfully winning $13.3 billion worth of licenses for $10 billion (see 1501300051).
There's no chance that spectrum licenses sold in the TV incentive auction will be truly generic or equal and there is broad agreement that the FCC’s solutions for addressing this issue won’t work, AT&T told the FCC in reply comments on a public notice on competitive bidding rules. Several large broadcasters weighed in with ideas to increase auction participation, including decreasing the increments by which prices in the reverse auction are lowered. The comments were filed in docket 12-268.
The Communications Workers of America and NAACP called on the FCC to reject bids made by two designated entities controlled by Dish Network in the AWS-3 auction. The groups sent a letter to commissioners Thursday questioning how Dish, a company with a $34.6 billion market capitalization and $14.6 billion in annual revenue, could qualify for bidding credits designed to help small businesses buy spectrum licenses. The two DEs, Northstar Wireless and SNR Wireless, were the winning bidders for $13.3 billion worth of licenses for $10 billion (see 1501300051). “While the AWS-3 auction was an enormous success, DISH's unusual bidding tactics coupled with its abuse of the designated entity rules are creating a cloud over the auction,” the groups said. “We expect that the FCC will reject DISH's attempt to qualify as a small business eligible for $3.25 billion in taxpayer subsidies.” The letter was filed Thursday in docket 12-268. At Dish, "we respectfully disagree with the criticism of the Designated Entity program, and we are confident that we fully complied with the DE rules in the AWS-3 auction, which were unanimously approved by the full Commission," a Dish spokesman emailed us Friday. "The DE program has been successful in providing much smaller entities the ability to access stronger capital structures, which has facilitated their meaningful participation in an auction process from which they would otherwise be precluded. Our approach -- publicly disclosed ahead of the auction -- was based on DE investment structures that have been approved by the FCC in past wireless spectrum auctions, including structures used by AT&T and Verizon."
Dish Network’s use of two designated entities (DEs) in the AWS-3 auction, alleged by some to be an effort to manipulate prices, is getting a look from the FCC. Whether Dish did anything that violates rules remains an open question, industry observers said.
T-Mobile is dead wrong that the AWS-3 auction was bad for consumers, AT&T said Wednesday in a blog post. AT&T Vice President Joan Marsh said the wrong lesson to draw from the AWS-3 auction is that the auction shows the need to protect competitors to AT&T and Verizon in next year’s TV incentive auction. “The auction reallocated 50 MHz of valuable paired spectrum to the wireless industry -- an allocation that T-Mobile itself has long advocated for,” she wrote. Among the auction's real lessons is that you can’t win if you don’t bid, Marsh wrote. T-Mobile won 151 bids for a total of $1.77 billion, but at one point had entered as much as $3.5 billion in bids, she said. “From a strategic perspective, one can surmise that T-Mobile came to the auction with a $3.5B budget but, as valuations rose, decided to take some of its capital off the table, which was certainly its prerogative to do.” Results also show that Dish Network, not AT&T and Verizon, was T-Mobile’s real competitor in the auction, Marsh said. Bidding patterns suggest T-Mobile was focused on the G-block, “bidding aggressively for it in major markets like Chicago, Seattle and Denver,” she said. In the end, the Dish-controlled designated entities were the ones that outbid T-Mobile for the block in the top 100 markets, Marsh said. The auction results also show a fierce competitiveness that mirrors the wireless industry, Marsh said. “Even setting aside Dish’s unusual bidding construct, auction competition was going to be fierce anyway you cut it. T-Mobile is a big proponent of competition unless they are facing it in an auction – there they prefer protection.” T-Mobile has offered its own takeaways from the AWS-3 auction. “It is an undeniable fact that in Auction 97 AT&T and Verizon’s deep pockets enabled them to win 63 percent of all paired AWS-3 spectrum, or roughly 91 percent of the value of all the spectrum won by wireless carriers in that auction," T-Mobile responded. "They have the incentive and the ability to foreclose smaller carriers from spectrum auctions, and the last auction results clearly demonstrate that. Considering Verizon and AT&T also currently control 73 percent of the nation’s low-band spectrum, a similar outcome at next year’s incentive auction would be a disaster for competition and innovation in mobile broadband.”
Two powerful House Republicans continued pushing for Congress to respond to the FCC net neutrality order, in different ways. They agreed that the order will generate uncertainty and said they're confident that courts will strike it down.