The FCC issued a public notice last Friday to request “more detailed input” in its current proceeding to amend the agency’s competitive bidding rules in preparation for next year’s incentive auction of broadcast television spectrum to the wireless industry.  The request follows in the wake of the recent Advanced Wireless Service (AWS)-3 auction at which a pair of designated entities (DEs) backed by DISH Network posted provisional gross winning bids of $13.3 billion for 702 licenses. 

As part of a Notice of Proposed Rulemaking (NPRM) adopted last October, the FCC proposed various amendments to its competitive bidding policies that include a ban on joint bidding arrangements among the top national wireless carriers and a repeal of the attributable material relationship (AMR) rule affecting DEs.  Under FCC rules in place for the AWS-3 auction, DEs were eligible for credits of 15% or 25% off of their provisional winning bids, and the credit they received depended upon the DE’s gross annual revenues.  If the FCC allows the auction results to stand, the combined gross winning bid posted in the AWS-3 sale by SNR Wireless License Co LLC and Northstar Wireless LLC—both very small business DEs in which DISH Network is listed as an indirect stakeholder—would qualify for a $3.3 billion discount. 

Friday’s public notice seeks further comment “on alternative proposals, as well as questions posed and issues raised by commenters, on how the Commission can meet [its] statutory obligation to ensure that small businesses . . . have an opportunity to participate in the provision of spectrum-based services, while at the same time ensuring that there are adequate safeguards to protect against unjust enrichment to ineligible entities.”  Among other things, the safeguards outlined in the public notice include (1) restrictions on large nationwide and regional carriers or “other large companies” from “providing a material portion of the total capitalization of DE applicants or otherwise exercising control over such applicants as part of the definition of ‘material relationship,’” and (2) adoption of “a rebuttable presumption that equity interests of 50% or more represent de facto control” of a DE applicant. 

To avoid the possibility of delays in the schedule for next year’s incentive auction, the FCC will adhere to an abbreviated pleading cycle in which comments would be due 21 days after the public notice is published in the Federal Register.  Voicing confidence “that we fully complied with the DE rules in the AWS-3 auction,” an official of DISH Network said his company “looks forward to working with the Commission as it examines possible [DE] rule changes for the incentive auction.”