The FCC is considering capping the bidding credits available to small businesses and designated entities (DE) in the 2016 spectrum auction. Chairman Tom Wheeler, meanwhile, plans to reject requests to set aside more airwaves for smaller players. The…
The FCC is considering capping the bidding credits available to small businesses and designated entities (DE) in the 2016 spectrum auction. Chairman Tom Wheeler, meanwhile, plans to reject requests to set aside more airwaves for smaller players.
The commission will vote on draft rules for spectrum bidding at its next meeting, on 16 July. If approved, this would be the first-ever cap on the total value of bidding credits, Wheeler said in a blog post. The cap, he said, would minimise “an incentive for major corporations to try to take advantage of the programme”.
The bidding credit rules came under fire after affiliates of Dish Network sought US$3.3bn in small business discounts at the AWS-3 auction that ended in January. In April, the FCC called for public comment on whether the affiliates, North Star Wireless and SNR Wireless, should receive the discounts. Dish, which bought US$13.3bn worth of spectrum via the affiliates, has insisted that it followed the bidding rules and pointed to previously approved DE investment structures used by companies such as AT&T and Verizon.
Wheeler said that while bidding credits are still necessary to ensure small businesses can secure spectrum, the rules need an update.
“We must also make sure that small businesses receiving credits are exercising independent decision-making authority. We will not allow small businesses to serve as a stalking horse for another party.”
The draft rules, circulated by Wheeler to other commissioners this week, also include measures to expand opportunities for small businesses, increase transparency and efficiency and “protect the integrity” of the auction process.
Commissioner Ajit Pai, however, said he believes the new rules may create more “loopholes” for abusing the DE programme.
“I am deeply disappointed that Chairman Wheeler is proposing yet more loopholes to allow corporate giants to abuse the DE programme,” he said in a statement. “[T[hose benefitting from taxpayer-funded discounts when buying spectrum should use that spectrum for the public’s benefit – not just lease most or all of it to large carriers like AT&T and Verizon.”
Wheeler has also proposed rejecting calls from parties, reportedly including number four wireless carrier T-Mobile US, to increase the amount of spectrum to be reserved for smaller operators in the 2016 auction.
Last year, the commission voted to set aside 30 MHz per market for bidders that do not hold significant amounts of lower-band spectrum. The draft rules maintain this reserve size, as Wheeler believes it “balances the desire to make low-band spectrum available to parties with limited holdings while facilitating competitive bidding for all auction participants”.
However, he stressed that the commission aims to ensure multiple operators have the opportunity to acquire low-band spectrum, which he conceded is critical to competition among wireless carriers. Currently, 70% of this spectrum is held by AT&T and Verizon.
