FCC Seeks Comments on Designated Entities Role in the Upcoming Spectrum Incentive Auctions

by Latoya Livingston on September 30, 2012

The FCC took a major step forward last Friday when it officially launched its spectrum auction process by announcing the upcoming release of the Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions Notice of Proposed Rulemaking (NPRM).  The NPRM, likely to be released in the next few days, will address a first-of-its kind incentive auction process that will repurpose broadcast television spectrum for mobile broadband use.

While all five Commissioners spoke of the auction’s promise, Commissioner Mignon Clyburn touted the inclusion of bidding credits in the NPRM and expressed hope that the comments will address “whether those small business credits are sufficient to create opportunities for businesses owned by women and minorities.”  Commissioner Clyburn noted that she was very pleased to see that the NPRM will also seek comment on small business credits that would “create opportunities for small businesses to acquire wireless spectrum in the forward auction process.”  This is a major step forward for designated entities (DEs), small businesses with limited assets and revenue (especially those owned by women and minorities), which will seek to acquire wireless spectrum licenses.

This announcement came a day after MMTC commended the FCC on its prompt action on the spectrum auctions and strongly urged the agency to finish the spectrum incentive auctions by 2013.  Though the FCC has the less expeditious deadline of 2014 in mind for the auction, the fact that the process is on its way is encouraging.  With experts expecting consumers to soon begin to feel the effects of the spectrum crunch, and AT&T announcing that it will shut down its second-generation, or “2G,” wireless network by 2016, the need for wireless spectrum is increasing at an exponential pace.  With this most recent act, consumers can at least find solace in knowing that the FCC has taken a firm step to fight the problem that is the looming spectrum crunch.

In her address, Commissioner Clyburn also spoke of the conversations that she has had with small business owners, prospective owners, and their advocates, who have chagrined that the sluggish economy has made it “nearly impossible to get access to capital or find worthwhile inroads to credit.”  Opportunities like bidding and small business credits are imperative to those smaller players who want to have a realistic shot of submitting a winning bid.  DEs will have to go toe-to-toe with telecom juggernauts like AT&T and Verizon in their quest to obtain licenses in this next auction; though DEs have a chance of submitting winning bids, especially for those licenses for smaller markets, bidding credits will be key to their success.

But this was not always so.  Prior to the 2006 Designated Entity Rule changes, DEs had a much more robust presence as licensees.  The changes made it more difficult for them to operate successful wireless companies because it significantly limited ability to raise capital or secure spectrum at a discount.  Following these changes, civil rights organizations, including MMTC, fought tirelessly to get the FCC to reverse the Rule changes.  These organizations noted that “after the 2006 Advanced Wireless Service auction (Auction 66) and between 1996 and 2005, DEs’ average successful participation rate in comparable wireless auctions was over 70% compared to only 4% in Auction 66 and 2.6% in Auction 73 (a subsequent auction).  After these changes, of the $19 billion of licenses sold in Auction 73, minorities acquired just $5 million, or less than 1% of the total value of those licenses.”

We must avoid a repeat of this disheartening result at all costs.  That is why it is so important that those who submit comments on the NPRM note how vital bidding credits are to the diversification of ownership licensees.  Women and minorities need a real chance to succeed, and they shouldn’t only be included only on the back-end of the auction process, but also as winners in the bidding process.

    • Latoya LivingstonLatoya Livingston is a Washington-D.C.-based attorney with years of legal experience working in the private and public sector. Currently, Attorney Livingston serves as a Senior Attorney and the Earle K. Moore Fellow at MMTC.

 

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