Small business designated entities (DEs) would be barred from entering into joint bidding arrangements with non-DEs and would have spectrum auction bid credits capped at $10 million, under a joint proposal submitted to the FCC by AT&T and by 25 rural carriers. Filed on Monday, the proposal responds to the FCC’s recent request for further comments in proceedings to amend the agency’s competitive bidding rules in advance of incentive auctions of broadcast television spectrum to the wireless industry next year. 

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, the FCC asked interested parties last month for further input “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.” The proposal was also filed as various entities petitioned the FCC to deny long-form license applications filed by the DISH-backed DEs, SNR Wireless LicenseCo and Northstar Wireless LLC. Although AT&T has taken issue with bidding strategies used by DISH, SNR and Northstar in the AWS-3 auction, an AT&T spokesman confirmed that his company is not among the parties that have asked the FCC to deny the SNR and Northstar applications. 

AT&T and the rural carriers have asked the FCC to consider two new bid credit categories that would replace the FCC’s current policy of awarding eligible small or very small business DEs bid credits of 15% or 25%, respectively, and would be targeted to rural telcos and new market entrants. To qualify for the first bid credit category, the groups propose that a prospective DE “must be in the business of providing commercial communications services to a customer base of less than 250,000 combined wireless/wireline customers.” Applicants for the second category “must have average annual gross revenues for the last three completed fiscal years of $55 million or less.” Bid credits for both categories would be capped at $10 million, and any individual or business “would be eligible to claim only one bidding credit, either directly or indirectly through any relationship with or investment in an eligible bidding entity.” Prospective DEs would be prohibited from joining “a joint bidding arrangement or consortium . . . with an applicant that is not separately eligible for a bidding credit,” and any entity awarded a bid credit “would be required to meet any and all mandated interim performance requirements, without exception, before sale of the relevant spectrum license.” 

Because “there is broad, bipartisan consensus that the FCC’s current DE program is in need of reform,” AT&T and the rural carriers advised the FCC that “a radical new approach should be considered—one that will assure policymakers and taxpayers alike that auction subsidies will be directed to true small communications businesses.” Touting the proposed framework as one that “provides strong footing for a logical, equitable and sustainable DE program,” AT&T vice president Joan Marsh voiced hope that the FCC “will give the proposal careful consideration.”