FCC Commissioners Divided on Best Approach to Move Forward on Competitive Bidding Rules
Wireless carriers are pressing the FCC for a waiver of the agency’s former defaulter rule, operating on a quick timeline as deadlines approach for the AWS-3 auction, agency officials told us. If Chairman Tom Wheeler agrees, the agency would have to pivot slightly from the approach proposed by Wheeler Aug. 1, when he circulated a competitive bidding NPRM, seeking comment on designated entity (DE) rules, joint bidding rules and proposing changes to the former defaulter rule (CD Aug 4 p1).
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Wheeler and fellow Democratic Commissioners Mignon Clyburn and Jessica Rosenworcel have voted for the competitive bidding NPRM, but Republican Commissioners Ajit Pai and Mike O'Rielly have yet to vote, agency officials said Wednesday.
The Republicans have resisted because they don’t see a clear tie between the DE rules and the former defaulter rules, agency officials said. One FCC official said there’s “no real linkage” between the former defaulter rule and the DE rulemaking, especially since the NPRM is focused on the incentive auction. “There’s timing urgency on one and not on the other,” the official said. But a second official noted that timing is critical for both since it will take some time to revise all the rules prior to the incentive auction.
Carriers will soon have to decide whether they'll participate in the AWS-3 auction, slated to start Nov. 3. The window for filing short-form applications opens Aug. 28, though the deadline is Sept. 12. Carriers want certainty on the former defaulter rule before they have to make a go/no-go decision on the auction, said FCC and industry officials.
The rule requires bidders to make larger upfront payments for licenses if they ever defaulted on a license or were delinquent on a debt owed to a federal agency (CD June 3 p1). The Competitive Carriers Association, CTIA and NTCA jointly proposed revised rules, in a recent filing (http://bit.ly/1v3cHMo).
Wireless industry officials said the rule meant bidders had to lay out an additional $619 million in upfront payments before the AWS-1 auction and $496 million before the 700 MHz auction. The NPRM asked a series of questions about how the agency should pick small companies for bidding credits and other benefits in future spectrum auctions (http://fcc.us/XpHPXD).
CCA, CTIA and NTCA representatives made an ex parte filing last week on recent meeting with commission staff to discuss the former defaulter rule. The wireless industry wants the AWS-3 auction to be a success, they said (http://bit.ly/1sVbN35). “A pivotal element to ensuring this success is immediate action to prevent an overly broad application of the former defaulter rule through adoption of a blanket, interim waiver.”
"The basic premise for revising the former defaulter rule is to provide more certainty and encourage greater participation by carriers at upcoming auctions,” CCA President Steve Berry said Wednesday. “I hope the commissioners can promptly address this very important element of the AWS auction.”
Carriers are seeking a “common-sense waiver of the former defaulter rule in time for the upcoming AWS-3 auction,” said David Bergmann, CTIA vice president-regulatory affairs. “The AWS-3 auction represents a significant opportunity to bring much-needed spectrum to market, so we hope that the commission will act quickly on this request, which is key to promoting participation by carriers large and small.”
Meanwhile, President David Honig and other officials with the Minority Media and Telecommunications Council reported on meetings Monday with FCC staff to discuss the DE rule. MMTC urged the commission “to use the DE proceeding as a vehicle to examine how today’s market realities are different from the marketplace that existed when the rules were created,” said a filing on the meetings (http://bit.ly/1p0037P). Filings were made in docket 13-185.
Honig told us he recently met with Pai and O'Rielly and encouraged them to vote “as soon as possible” on the NPRM. “Irrespective of what rules emerge from it, the rulemaking would allow DEs and other bidders the certainty of knowing what rules will apply,” he said. “Regulatory uncertainty, and shortness of time between rule adoption and an auction, would impede access to capital. Both commissioners are advocates of reducing barriers to capital access for small and minority businesses.”