House Commerce Committee ranking member Frank Pallone, D-N.J., touted what he saw as congressional influence in the rules the FCC circulated for the broadcast TV incentive auction last week (see 1506250057). “This proposal is welcome news for our country’s small businesses that deserve a fair shot at competing in today’s wireless marketplace,” Pallone said in a statement. “Earlier this week, Energy and Commerce Democrats sent a letter to Chairman [Tom] Wheeler asking the FCC to do just that, and it appears that our call for reform was heeded. This proposal addresses our recommendations and will help to put in place the smart policies needed to level the playing field and prevent large corporations from gaming the system.” He called the proposal “bold.” Wheeler also reassured Rep. Steve Chabot, R-Ohio, chairman of the Small Business Committee, concerning the lawmaker’s concerns about the use of the designated entity process in the AWS-3 auction bidding. “It is my expectation that any new rules that are adopted will both reflect the dynamics of the current spectrum marketplace, and fulfill our statutory obligation to ensure that small businesses, rural telephone companies and minority and women-owned businesses have the opportunity to compete in spectrum auctions,” Wheeler told Chabot in a June 17 letter the FCC released last week.
The FCC shouldn't destroy the historic designated entity classification because of concerns over the bidding practices of a few DEs in the AWS-3 auction, U.S. Cellular said in a meeting with Wireless Bureau Chief Roger Sherman and other FCC officials, according to ex parte filing posted Monday by the FCC. AT&T and smaller carriers last month asked the FCC to restructure the DE program in light of alleged bidding irregularities by two DEs working with Dish Network in the auction, known in FCC parlance as Auction 97 (see 1505110048). The FCC should “not allow a justified concern over possible abuses among participants in a joint bidding arrangement in Auction 97 to obscure its traditional recognition of the necessary financial prerequisites of a solid DE program, one which allows DEs to achieve adequate scale and scope, and gives them a reasonable chance to succeed,” U.S. Cellular said. Since 1994 when the DE program was launched “the Commission has acknowledged that bidding credits for DEs have been a necessary incentive for these investments, which have allowed DEs to obtain more than a negligible number of licenses,” the carrier said. U.S. Cellular highlighted its work with DEs to bid in spectrum auctions. “The DE program has helped U.S. Cellular remain in business and invest aggressively as a mid-sized carrier in an industry dominated by giants,” it said. The filing was made in docket 14-70.
One House Republican doesn’t anticipate granting the FCC budget request increase of roughly $50 million for FY 2016. “That’s looking less likely,” Appropriations Financial Services Subcommittee Chairman Ander Crenshaw, R-Fla., told us of the agency’s request. “We’ll probably go to our subcommittee sometime after the break, in early June, so we’ll mark our bill up probably middle of June, that kind of thing. So we’ll know more then.”
The Senate Commerce Committee hasn't dealt with any issue this year that hasn’t involved spectrum and wireless technology, said Chairman John Thune, R-S.D., during a Wireless Foundation awards reception Monday evening. “We’ve got to get more spectrum available if we’re going to do the types of things that will improve the quality of life of the people across this country -- whether it’s a light bulb or an appliance or a fitness machine. There are so many ways in which the technology continues to improve the life of people in this country." Consumers are going to need spectrum for everyday activities, Thune said. It’s important that future spectrum auctions are fair and clear, and companies have to abide by both the letter and the spirit of the law, he said. “It’s also important that it be an open competition that the free market decides, that the government isn’t there, putting its finger on the scale in one way or another.” Thune commended CTIA involvement with fighting the FCC net neutrality decision and making it “abundantly clear that that’s a wrong approach,” he said. The FCC is using a 1930s law to try to govern the Internet in the same way that the agency did landlines in the monopoly era, and “that’s a mistake,” Thune said. “I’m hopeful that at some point we’re going to encourage enough Democrats and Republicans not just on the Senate Commerce Committee, but in Congress in general that there’s a better way to do this.”
Dish Network defended its bidding practices in the AWS-3 auction, in a letter Monday to Sen. John Thune, R-S.D. Northstar Wireless and SNR Wireless, the designated entities (DEs) employed by Dish to indirectly capture the second-most AWS-3 spectrum of any player in the auction at discounted prices (see 1501300051), defended their participation in the auction in filings at the FCC. Dish is “confident” that it and its DEs “followed the rules” of the AWS-3 auction when they bought $13.3 billion worth of spectrum for $10 billion, saving more than $3 billion in discounts, Dish CEO Charlie Ergen said 10 days ago on an earnings call (see 1505110035).
Longtime designated entity Council Tree defended the DE program in comments filed in response to an April FCC public notice further exploring revised rules in the aftermath of the AWS-3 auction. On May 11, AT&T and small carriers proposed revisions to the DE program, which would recast it to provide limited bidding credits to small carriers rather than traditional DEs (see 1505110048). The AWS-3 auction raised a new set of questions about the role of DEs in auctions after Dish Network used two DEs to attempt to buy $13.3 billion worth of licenses for $10 billion (see 1501300051)
Senate Commerce Committee Chairman John Thune, R-S.D., is investigating Dish Network’s use of designated entities in the recent AWS-3 spectrum auction. “The Committee has significant questions about whether conduct surrounding the bidding strategies employed by DISH Network and two affiliates adhered to both the letter and intent of the law, since it may ultimately cost three billion dollars in public funds,” Thune said in a statement. “While the FCC is reportedly already looking at whether DISH broke auction rules, an examination of how these affiliated companies approached the auction is the only way for Congress to determine whether this three billion dollar price tag was appropriate or a result of wrongful conduct, flawed agency rules, or laws Congress must update.” Thune sent four letters -- to Dish, the FCC and Dish DEs Northstar Wireless and SNR Wireless LicenseCo. Thune warned Dish CEO Charlie Ergen that Dish’s bidding activity may have been to “suppress rival bidders” and said in that letter “it is not difficult to draw comparisons” to Justice Department antitrust violation descriptions. Thune requested answers to several questions by May 15. Dish told us it will work with Thune. “We are confident that we fully complied with all legal requirements for the AWS-3 auction, including antitrust law and the DE rules, which were unanimously approved by the full Commission,” Dish said. “Our approach -- which was fully and 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 many other auction participants in the past.”
Verizon updated FCC officials on its allegations that Dish Network manipulated bidding in the AWS-3 auction, said an ex parte filing posted Monday. Dish indirectly captured the second-most spectrum of any player in the auction, behind AT&T, but at a discounted price through designated entities (DEs) Northstar and SNR Wireless (see 1501300051). Verizon officials were accompanied at the meetings described in the filing by Leslie Marx, professor of economics at Duke University, said the filing in docket 14-78. “Dr. Marx concluded that the auction data reveal extensive evidence of collusion by DISH, Northstar and SNR, which violates antitrust law and the Commission’s rules and policies,” Verizon said. “DISH and the DEs frequently bid on the same licenses in the same rounds while other bidders were active, which created the false perception that multiple other parties were interested in those licenses (though did so generally without bidding each other up),” Verizon said. “After competing bidders dropped out, DISH and the DEs avoided bidding against one another. This conduct is indicative of a bidding ring, intended to drive out competitors and then suppress rivalry among the ring members.” The two Dish DEs appeared to divide markets between them, Verizon said. Dish also “colluded with the DEs to exit the auction early, without risk and without penalty,” Verizon said. “It did this by ensuring that, when DISH exited the auction following round 20 when it was the high bidder on several hundred licenses, the DEs topped its previous high bids on virtually all those licenses.” Verizon said its representatives met with Wireless Bureau Chief Roger Sherman and Commissioners Ajit Pai and Mike O’Rielly, among others. Dish is confident it complied with the law during the auction, a spokesman responded. “Our approach -- which was fully and 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 Verizon,” he said. “Participation by small businesses through the DE program helped make the AWS-3 auction, on a gross and net basis, the most successful spectrum auction in FCC history.”
Sprint and T-Mobile spent less on lobbying so far this year, Q1 lobbying reports showed. Monday was the deadline for quarterly lobbying reports, but many trade associations and companies hadn't filed theirs by our deadline. Observers have said net neutrality and proposed acquisitions are big drivers of spending in the telecom space, and those issues turned up repeatedly in the Q1 forms posted this week.
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.