THE FEDERAL COMMUNICATIONS COMMISSION relaxed the small-business bidding rule for the 700 MHz national commercial/public-safety block, but the agency cannot seem to shake lingering legal challenges that have the potential to disrupt the upcoming auction-as well as last year’s sale of advanced wireless services licenses.
The ruling is major victory for startup Frontline Wireless L.L.C., which has expressed strong interest in pursuing the D block and using a wholesale business model. A small business, or designated entity, is eligible for bidding discounts up to 25% as long as it does not wholesale more than 50% of its spectrum capacity. But for the D block, the FCC waived that provision, finding that unique circumstances, obligations of the D-block licensee and other factors made strict application of the rule unnecessary.
“To encourage the widest range of potentially qualified applicants to participate in bidding for the D-block license, we enabled eligible bidders for this license to seek designated-entity bidding credits for small businesses, as a means to create incentives for investors to provide innovative small businesses with the capital necessary to compete for the D-block license at auction,” the commission stated.
The filing window for short-form 700 MHz applications runs between Nov. 19 and Dec. 3.
“This was a vital step needed to pave the way for small business participation in this auction by innovative new competitors such as Frontline who want to provide facilities-based wholesale services on a fully built out network,” the Silicon Valley-backed firm stated. “Because the D block carries unique obligations to meet public safety’s needs, including a 99.3% buildout requirement, no small business could vie for this spectrum-and build out a new-build, 4G network-except as a wholesaler.”
Public safety outlines demands
Public-safety groups last week released documents outlining technical and operational expectations for the national commercial/first-responder wireless broadband network. “The signs are excellent that we will have high-quality bidders [for the D block],” said Morgan O’Brien, chairman of Cyren Call Communications Corp. Cyren Call is advising the Public Safety Spectrum Trust, a leading candidate for the 700 MHz public-safety broadband license. The public-safety broadband licensee will negotiate a network-sharing agreement with the D-block winner. The FCC will arbitrate any deadlock between the two parties.
Appeals court deadline
Besides being the first day that 700 MHz short-form applications can be accepted, Nov. 19 is the deadline for the FCC to reply to a federal appeals court on why it has not ruled on a year-and-a-half-old regulatory challenge to DE rule changes adopted in advance of last year’s AWS auction.
The 3rd U.S. Circuit Court of Appeals in September threw out on procedural grounds an appeal of the agency’s DE decision. The appeal was filed by Council Tree Communications Inc., Bethel Native Corp. and the Minority Media and Telecommunications Council. But because the court did not address the merits of the case, the appeal-which could cause AWS auction results to be overturned and thereby throw 700 MHz bidding strategies into disarray-remains alive. The FCC contends it addressed issues raised in Council Tree’s petition for reconsideration in a ruling last year, even if it has not actually ruled on the petition itself. As such, the FCC wants the 3rd Circuit to revise its September decision such that language referring to Council Tree’s pending petition for reconsideration would be deleted.
Council Tree and the others have asked that the 3rd Circuit-either the original three-judge panel or the full court-to rehear its appeal based on the arguments raised. The controversial rule revisions at issue extend DE license sale restrictions from five to 10 years and deny bidding credits to DEs that resell or lease more than 50% of their spectrum capacity.
“We are encouraged by the court’s order directing the FCC to file an expedited response to our mandamus petition,” stated Council Tree. “We anticipate that the court will examine closely the reasons that the FCC has failed to comply, for more than 18 months, with its statutory obligation to rule definitively on the reconsideration petition filed by Council Tree, Bethel Native and MMTC. Following that review, we look for the court to compel the FCC to act, either granting or denying our reconsideration petition. And upon a formal FCC denial of our reconsideration petition, our case will again be immediately reviewable in the 3rd Circuit Court of Appeals.”
Council Tree has appealed the 700 MHz decision as well, though the 3rd Circuit agreed to the FCC’s request to transfer the case to U.S. Court of Appeals for the District of Columbia Circuit.
