WASHINGTON-Small businesses, minority- and women-owned businesses, and rural telcos will not be eligible for installments payments following any near-future spectrum auction wins, but they will be given larger bidding credits under new, streamlined auction rules adopted by the Federal Communications Commission.
There is a chance, however, that installment payments could be resurrected if the communications industry can craft a plan to make them less prone to problems.
“In light of our decision today to suspend use of installment payments for the foreseeable future, we must pay attention to the unique obstacles facing minorities and women as they seek to participate in the telecommunications revolution,” said Commissioner Gloria Tristani.
“We seek comment on these obstacles and on what remedies we might offer to facilitate widespread participation.”
The new rules, which will replace those adopted in 1994 just prior to the narrowband personal communications services auction, will contain uniform procedures for all upcoming auctions, negating the old method of writing separate strictures for each auction and then putting them through a public-notice cycle. “Fewer trees will be killed,” said Wireless Telecommunications Bureau Chief Dan Phythyon.
According to Josh Roland, the WTB staffer who presented the item, the commission’s third report and order addresses changes in five auction procedures: how designated entities are treated, applications, payments, auction design and collusion prevention. Beside having to deal with losing the installment-payment perk, DEs now must adhere to standard affiliation and ownership disclosure rules, with the possibility of expanding those to include uniform size attribution rules for small businesses. Auction applications must be filed electronically by Jan. 1, 1999; auction winners who are late with payments may apply for a time extension, which would include late fees. Minimum bids or reserve prices, first used in the recently concluded 800 MHz specialized mobile radio auction, will become the norm along with granting additional time to potential bidders to “develop business plans, assess market conditions and evaluate the availability of equipment;” real-time bidding will be used to rein in long auctions; and pre-grant construction rules will allow winners to begin network buildout even if there are pending petitions to deny filed against them.
“This is a significant item for us,” commented FCC Chairman Bill Kennard. “There are opportunities to institutionalize the auction process.” In its string of 15 auctions since 1994, the commission has sold 4,300 licenses, 53 percent of which went to DEs. “I look forward to lots and lots of new auctions,” he said. Commissioner Susan Ness added, “We now can see the forest. This adds certainty to the process. Bidders can be sure the rules won’t change, and it will encourage financial institutions to work with bidders.”
Regarding the suspension of installment payments, Ness said the moratorium would remain in place “until the courts let us cancel licenses for nonpayment. This has caused problems, and we have to find ways to divorce the collector from the regulator.”
Commissioner Harold Furchtgott-Roth said he wished more information had been gathered as to how the auction system could be improved. “For example, with a more complete record, we could have used this opportunity to permanently discard rules-such as our ill-fated installment payment system-that thrust the commission into the role of unwitting (and unqualified) banker to our licensees. I find it incredibly inefficient and unsound policy for a federal government agency, especially one with no banking expertise, to substitute itself and its judgments for those of private financial institutions and markets.”
In other auction news, the FCC released the schedule for the General Wireless Communications Service auction, which will put up for bid 875 licenses in the 4,660 MHz-4,685 MHz band. The short-form application is due April 28, the upfront-payment deadline is May 11, and the actual auction begins May 27.
Five 5-megahertz licenses will be offered in each of 172 economic areas and three EA-like areas in the country. The five licenses will be contained in blocks A through E according to frequency.
