WASHINGTON-A government plan limiting bidding credits in 900 MHz specialized mobile radio auctions to small businesses has drawn the wrath of Federal Communications Commission member Andrew Barrett.
“It appears the commission is abandoning its policy and rules designed to enhance ownership opportunities in other technologies for those that have historically lacked access to capital,” Barrett said.
Barrett’s statement accompanied the FCC’s adoption last month of new 900 MHz SMR rules for areas outside the 50 largest U.S. markets, yet to be licensed because of regulatory delay. The delay will continue.
The FCC declined to set auction guidelines when it approved the 900 MHz dispatch radio rules. Instead, the agency issued a proposal that is now under attack by Barrett. Public comments are due on the initiative May 24 and replies by June 1.
Alan Shark, president of the American Mobile Telecommunications Association, believes federal regulators missed “an important window of opportunity” to energize the fledgling 900 MHz SMR industry. Auctions, he maintained, could have been held this summer.
“Most interested parties from among the larger 900 MHz operators have accepted the auction process as the only way to move ahead quickly in the highly competitive market we operate in,” said Shark. “Because of disagreements within the commission over treatment of designated entities,” he added, “the FCC was prevented from being able to finalize the rules.”
An FCC staff member declined to comment on whether such a debate took place. Moreover, the auction proposal itself does not explain why bidding credits and other concessions were restricted to small businesses. Congress in 1993 directed the FCC to give preferential treatment to women, minorities, small businesses and rural telephone companies in wireless auctions to make up for the paucity of ownership diversity in the telecommunications industry today. The agency, with mixed success, has weaved special incentives for those groups into auction rules governing narrowband and broadband personal communications services.
But affirmative action programs are under attack in the GOP-controlled Congress, which recently killed a provision that would have given a tax break to firms that sold next-generation pocket telephone systems to women and minorities. The Supreme Court, meanwhile, is scrutinizing race-and gender-based preferences in a decision due out late next month.
Telephone Electronics Corp. last month dropped a legal challenge to PCS auction rules, which the firm had alleged favor women and minorities over rural telephone companies like itself.
“We must not voluntarily retreat from our stated goal of increasing ownership opportunities for minorities and women in new services solely in anticipation of further legislative or judicial actions,” Barrett said.
Proposing 900 MHz SMR auctions rules rather than adopting final guidelines right now could be the FCC’s way of buying time until the high court rules on the Adarand affirmative action case, AMTA’s Shark commented.
Under the proposal, the government wants to sell 20 10-channel spectrum blocks in every market. In all, 1,020 SMR licenses would be sold. Each spectrum block would be eligible for a 10 percent small business bidding credit.
Small businesses, defined as entities averaging less than $3 million in gross revenues over the past three years, would be eligible for bidding credits, reduced down payments and installment payments.
In addition, rural telephone companies would be able to buy sections of markets from winning bidders so long as partitioned geographic areas fall within areas served by local exchange carriers.
Between 1987 and 1992, the agency granted permits for 900 MHz systems in major urban areas only and has since struggled with how to license the rest of the country.
As a result, the 900 MHz SMR market has developed slowly. It is far less mature than the 800 MHz SMR business, which has been around for two decades. In fact, 900 MHz SMR channels are left over in many top cities from the first licensing phase.
Ram Mobile Data USA L.P. and Geotek Communications Inc. are two of the top 900 MHz SMR system operators, although Ram concentrates on messaging rather than two-way dispatch radio.
Shark expressed disappointment, too, over the FCC decision to retain loading and automatic channel cancellation requirements for existing 900 MHz SMR licensees. Other commercial wireless carriers, including those to be licensed in the 900 MHz SMR auction, will not be subject to those regulations.
The agency said loading rules on incumbent 900 MHz SMR licenses were kept intact to prevent spectrum warehousing during the early stages of the industry’s development.
