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.
The telecom investment community is more reserved in the current boomlet than in its predecessors, but there are sweet spots to hit, panelists said Tues. at the Wireless Communications Assn. conference. Investment opportunities are present in the content, spectrum leasing, and specific international markets, they said, though incumbents’ sheer size makes the venture capital community a bit leery of smaller operations generally. Smaller companies that show an ability to adopt a large customer base rapidly have an advantage even in the face of other shortcomings, the investment analysts said.
The 3rd U.S. Court of Appeals, Philadelphia, should not stay revised designated entity (DE) rules heading into Aug.’s advanced wireless services auction, the FCC said. With that pleading, the FCC is taking on Council Tree, Bethel Native Corp. and the Minority Media & Telecom Council. Council Tree wrongly claims the DE order violates Communications Act provisions meant to encourage DE participation in spectrum auctions, the FCC said: “But in fact, the rules… strike a balance among the competing policy goals set out in the statute, and Council Tree has not come close to showing that they are unreasonable.” Neither has Council Tree shown it would face irreparable harm from the rules, the agency said: “Conversely, the grant of a stay would cause harm both to other parties and to the public interest. The auction is the product of years of significant coordination between the FCC and other federal agencies to relocate existing government users of the pertinent spectrum so that it could be available for licensing at auction. A stay would harm the public interest by delaying the significant public benefits of the auction and frustrating the substantial public and private efforts invested in bringing it to fruition.” Council Tree’s business plan may have to change to fit tough revised rules for “unjust enrichment,” but other DEs still can get financing to buy licenses, the FCC said: “In any event, the purpose of the DE rules has never been to have DEs participate in auctions solely for the sake of participating in auctions. Rather, the rules are designed to encourage DEs to become facilities-based providers of service. Even if the 10-year unjust enrichment period impedes bidding by some DEs, that rule change makes it more likely that those DEs that do win licenses will become genuine facilities-based providers.”
Delaying the advanced wireless services (AWS) auction after Council Tree sought a stay of designated entity rules for it would be a nearly unprecedented legal step, CTIA and T-Mobile told a federal court. Pleadings were due Thurs. in the 3rd U.S. Appeals Court, Philadelphia, which Council Tree asked to issue a stay. “Petitioners ask the court to do what courts have been asked to do but have done only once in the history of FCC spectrum auctions because some potential bidders are unhappy with the auction rules,” CTIA said: “Nothing in the petition justifies that extraordinary result.”
CHICAGO -- FCC Chmn. Martin hopes to gain consensus among Commission members on the need for “parameters,” including time limits, on local control of video franchising, he said. Following remarks to Globalcomm late Mon. Martin also said he doesn’t fear the advanced wireless services (AWS) auction will raise less than Congress expects, though designated entities and major carriers have threatened to sit out the auction.