DEs Still Can’t Wait: Reform of the Designated Entity Program is the Next Step in Fostering Diversity in Spectrum Ownership

by Jacqueline Clary on February 24, 2015

Diverse EntrepreneursLast week, the Multicultural Media, Telecom and Internet Council (MMTC), along with the DE Opportunity Coalition, a group comprised of 16 national organizations and individuals, filed joint comments to support increased competition in the Federal Communications Commission’s (FCC) spectrum auction process. The timing for this filing was impeccable as the Commission prepares to launch the next historic sale of U.S. spectrum assets – the spectrum incentive auction slated for 2016.

In our comments, the Coalition urged the FCC to build upon its recent commitment to reviving the Designated Entity (DE) program to promote meaningful participation from small businesses, minority- and women-owned businesses, and rural telcos (collectively known as “DEs”), as mandated by Congress.

Meaningful DE participation not only fulfills the statutory mandate of Section 309j of the Telecommunications Act of 1996 to avoid an excessive concentration of spectrum licenses in the hands of a few players, but it also yields several public interest benefits. These benefits include increased competition in a highly concentrated wireless industry and higher auction proceeds that benefit taxpayers and the U.S. Treasury, while also giving more small businesses an on-ramp into the highly competitive wireless industry.

For the past year, MMTC has urged the FCC to eliminate the Attributable Material Relationship (AMR) Rule, a counterproductive regulatory hammer that inhibits DE participation because it impedes their ability to create flexible business plans and access the capital necessary to participate in spectrum auctions. That message has not changed in this current filing. The Coalition also urges the Commission to maintain the existing five-year unjust enrichment repayment schedule to ensure that the protections are reasonably tailored to prevent unjust enrichment while preserving the ability of DEs to raise capital and implement their business plans. To ensure transparency and accountability, the Coalition also proposed that the FCC retain existing reporting requirements; increase bidding credits across small business categories; and extend new credits to race-neutral categories of businesses, where data has been gathered through a fact-based notice and comment process. Finally, the Coalition supports additional policy recommendations that would prioritize data collection and analysis of diverse business participation in all aspects of FCC regulation.

The wireless industry is becoming increasingly important as a vehicle for all Americans, and in particular, vulnerable populations, to connect to the Internet. The Coalition recognizes the need for a more competitive industry to serve all communities, and in the process generate economic opportunities for all involved. Positive DE reform is the first step to stimulating new competition and generating public benefits. MMTC applauds the FCC for taking the first step. Now, we need to reform the program so more entrepreneurs and small businesses of color can take advantage of this burgeoning industry.

  • Jacqueline ClaryJacqueline Clary is Senior Counsel and Assistant Policy Director at the Multicultural Media, Telecom and Internet Council. In this position, she focuses on a variety of policy issues to advance minority participation in the media and telecommunications industries. Ms. Clary earned her B.A. from John Carroll University, her J.D. from Syracuse University College of Law, and is a member of the New York State Bar.
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