FCC Embraces Industry Proposal Making Changes to Former Defaulter Rule
The FCC approved a waiver of its former defaulter rule, which 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 order largely tracks rules proposed by the Competitive Carriers Association, CTIA and NTCA in a recent filing (http://bit.ly/1v3cHMo), FCC officials said Friday.
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Chairman Tom Wheeler ultimately decided to separate the issue from the larger competitive bidding NPRM (CD Aug 21 p1), a step urged by industry, agency officials said. All five commissioners voted for the waiver (http://fcc.us/VW395z). Wheeler and commissioners Jessica Rosenworcel and Mignon Clyburn have also voted to approve the broader NPRM, said agency officials.
Timing has been an issue. The window for filing short-form applications for the AWS-3 auction opened Thursday, though the deadline is Sept. 12. The auction is scheduled to start Nov. 13.
Carriers have pushed for changes to the rule as they consider whether to bid in the auction and make their short-form filings. Wireless industry officials have 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.
CTIA, the Competitive Carriers Association and NTCA filed a letter at the FCC Thursday seeking “immediate action,” emphasizing the importance to carriers. “The AWS-3 auction is less than three months away; the short form application window opens today and applications are due” Sept. 12, said the letter in docket 13-185 (http://bit.ly/1pQu5A5). “Because of this extremely short timeframe, it is essential that the Commission immediately grant this limited waiver to ensure the broadest possible participation in the AWS-3 auction.” Failure to grant a waiver could “potentially undermine” the AWS-3 auction, they said.
Under the joint industry proposal, the restrictions would no longer apply for debts that occurred more than five years ago or were resolved at least three years ago, or for debt less than $100,000 or 0.1 percent of the average annual revenue of the applicant. The restrictions would not apply for applicants with an “investment grade” rating from one of the major credit ratings firms or for applicants with a certified letter of credit.
CCA president Steve Berry said he was pleased the FCC had worked with industry to “foster fulsome participation” in the auction by creditworthy bidders. “The AWS-3 and incentive auctions are vital in providing opportunity for competitive carriers to gain access to much-needed spectrum,” Berry said.
A wireless industry lawyer who represents carriers said the slow pace in addressing the issue could be the subject of further investigation by House Republicans concerned about FCC process. “There really is no good reason why this waiver request has been pending for seven years,” the lawyer said. “Here we have another painful example where the FCC’s lack of action has generated significant, yet completely unnecessary, uncertainty for prospective auction participants.”