FCC Reforms Competitive Bidding Rules for Spectrum Auctions

The Federal Communications Commission adopted a report and Order that modernizes and reforms polices designed to facilitate small business' ability to participate in spectrum auctions and the wireless marketplace. These polices are commonly known as the Designated Entity Rules. With the action, the FCC is taking the following steps to provide small businesses -- including enterprises owned by women and minorities -- with a better on-ramp into the wireless industry, to increase the participation of rural service providers in future auctions and to eliminate outdated rules that no longer reflect the developments in today’s wireless marketplace:

• Elimination of the attributable material relationship rule that limited the amount of spectrum a small business could lease in order to provide small businesses the flexibility to leverage leasing and other spectrum use agreements to gain access to capital and operational experience.
• Adoption of a first ever 15 percent bidding credit for qualifying service providers that provide commercial communications services to a customer base of fewer than 250,000 combined wireless, wireline, broadband, and cable subscribers and serve predominantly rural areas.
• Establishment of a first ever cap on the total amount of bidding credits that a small business or rural service provider can receive in any particular auction. The cap will vary on a service-by-service and auction-by-auction basis. For the Incentive Auction, the Report and Order adopts a cap of$150 million for small businesses and a $10 million ceiling on the overall amount that any entity -- either a small business or rural service provider -- can receive in smaller markets.
• Modifications to the FCC’s attribution rules to guard against unjust enrichment.
• Amendment of the competitive bidding rules to prohibit joint bidding and multiple applications by one party as well as parties with common controlling interests except in limited circumstances.