Rules the FCC is developing for the 700 MHz band auction will require the Commission to decide whether to impose tough “use it or lose it” requirements, and whether to offer some spectrum in chunks small carriers can afford to buy and use. Both questions were fiercely debated in reply comments to the FCC, pitting groups of rural carriers against their large, national competitors. The auction, expected in late 2007, will offer some of the most eagerly awaited spectrum in FCC history.
The 30 companies and associations that filed comments on FCC rules for the upcoming 700 MHz auction speak to the massive interest in the 60 MHz of spectrum to be auctioned before early 2008, sources said Tues. “From a business standpoint, if AWS is beachfront spectrum, this is the Riviera of beachfront,” said an industry official: “The fact that you did see all these commenters is indicative of how interested people are.”
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.
The Wireless Bureau seeks comment on rules for a coming auction of 64 licenses in the 1392-1395 MHz and 1432-1435 MHz bands, set for 2007. Auction No. 69 is comparatively small, offering licenses useful in fixed or mobile services such as wireless Internet and advanced 2-way mobile and paging. One source said the spectrum is essentially “scraps.” The FCC, as in the AWS auction, sought comment on whether to follow the traditional simultaneous multiple-round (SMR) format. The FCC again is eyeing blind bids, with winners unknown the auction ends. “In particular, commenters should specifically address whether technological considerations or the likely level of competition in this auction weighs in favor of or against limiting the disclosure of information on bidder interests and identities relative to most past Commission spectrum auctions,” the bureau said. Comments due Sept. 11, replies 7 days later.
A company owned by Mario Gabelli appears poised to win 3 licenses in the advanced wireless services (AWS) auction, which grinds along in its 3rd week. In July, Comr. Adelstein said the N.Y. financier should have been barred from this and future auctions (CD July 12 p1). Through round 44 late Thurs., total bids were $13.14 billion. No bids have been made on 12% of the licenses.
The battle for the major regional licenses in the AWS auction appears close to its end, with bidding at a halt for those licenses in recent rounds - including the most valuable licenses of all, the 6 regional 20 MHz F block licenses. In the most recent bidding rounds, action has shifted from the 18 regional licenses to the smaller A, B and C blocks.
Legislation aimed at managing spectrum auction revenue shows some policymakers want to do more than reduce the federal budget deficit, according to a new Congressional Research Service (CRS) report. New bills called for using spectrum revenue for public safety communications and to help small businesses, the report said. Although only a few measures made it past preliminary stages, the legislative activity reflects a growing desire among some policymakers for a national spectrum policy, it said. But it’s “an exercise in reconciling divergent interests,” the CRS report said. There’s strong pressure to use the money for the budget, which is the long-standing policy. For some, it is a “desirable policy choice,” the report said. The Deficit Reduction Act, which became law in Feb., sets about $1 billion from auction proceeds for a public safety fund to help with the transition from analog to digital broadcasting. Other pending legislation includes a bill (HR-1323) offered by Rep. Stupak (D-Mich.) that would set aside auction proceeds for grants to improve interoperability in public safety communications. Rep. Rush (D-Ill.) is backing HR-1661 that would create a new category of loan in to help companies bid in spectrum auctions, the CRS report said. Sen. Snowe (R-Me.) introduced S-1767, which would license spectrum for small geographic areas tailored to give regional and smaller wireless carriers a chance for the business. Similar provisions are in the Senate telecom bill (HR-5252), the CRS report said. Sens. Allen (R-Va.) and Stevens (R-Alaska) have introduced separate bills S-2327 and S-2332, respectively, that would allocate new frequencies for unlicenced use such as wireless broadband.
U.S. wireless spectrum auctions may have big implications for Deutsche Telekom (DT), Moody’s Investors Service said Mon. Moody’s already has factored potential upfront costs of any licenses subsidiary T-Mobile wins into DT’s A3 and Prime-2 ratings and stable outlook, it said: “DT has the capacity to accommodate these investments without any… adverse impact on its rating given the strength of its future free cash flow generation.” T-Mobile likely will remain DT’s “main growth engine,” Moody’s said.
Money manager Mario Gabelli must pay $130 million to resolve civil fraud charges involving FCC spectrum auctions, the Manhattan U.S. Attorney’s office said Thurs. A Justice Dept. complaint named Gabelli and 38 others as parties to an alleged scheme to misuse the FCC designated-entity (DE) process in auctions 1995-2000. Gabelli set up bogus companies to bid as DEs in auctions limited to small businesses, or to qualify for bidding credits and favorable financing in others, DoJ said. The companies “existed only on paper solely to certify that they met the FCC’s eligibility rules,” DoJ said. A company Gabelli owns has applied to bid in the Aug. AWS auction, outraging FCC Comr. Adelstein. DoJ charged that none of those Gabelli set up as small businesses “possessed any relevant telecommunications experience or knowledge,” nor did they control their companies. Those were controlled by Gabelli, who later transferred some licenses to 3rd parties at substantial profit, the complaint said. The govt. charged Gabelli and his affiliates with violating the False Claims Act, saying they unjustly enriched themselves by submitting false certifications of eligibility to the FCC. Lawyer R.C. Taylor filed the original suit under the False Claims Act’s whistleblower provisions, entitling him to $32.2 million of the recovery. FCC Chmn. Martin said Thurs. the FCC probably is powerless to bar investor Mario Gabelli from participating in future spectrum auctions. “I think that the settlement itself encompasses the actions the government will take against him,” Martin said after the agency’s agenda meeting. “I think the government committed in the settlement that they wouldn’t take any other action.”
E-911 supporters urged Congress Wed. to approve funding for wireless E-911 technology that would make it possible for Americans to connect to safety services anywhere in the country. Only part of the wireless E-911 network is built, and many states need federal and state grants to upgrade equipment and technology to route calls from public safety access points (PSAPs) to the proper emergency personnel, said Greg Rohde, exec. dir.-E-911 Institute.