In a draft rulemaking notice (NPRM) circulated last Friday, the FCC proposed sweeping changes to its spectrum auction policies that, among other things, would impose a ban on joint bidding arrangements among the top national wireless carriers. The draft document also envisions a repeal of the agency’s attributable material relationship (AMR) rule which currently treats spectrum leases among carriers as attributable interests for the purpose of determining an auction applicant’s eligibility as a designated entity (DE) entitled to bidding credits.

The FCC last revised its spectrum auction rules eight years ago, and the agency’s goal is to have amended rules in place for the start of next year’s incentive auction of 600 MHz broadcast television spectrum that will be sold to the wireless industry. Confirming that the FCC’s commissioners have begun to review the draft NPRM, which will be voted on at a later date, FCC Wireless Telecommunications Bureau Chief Roger Sherman noted that current auction rules are grounded in policy first established in the 1990s when FCC officials “believed that bidding credits . . . should be used only to acquire licenses by companies that would engage exclusively in building their own networks to provide retail or wholesale services—often referred to as ‘facilities-based’ service.” Asserting that the FCC’s policy “made sense when the wireless industry was in its infancy,” Sherman said the goal of the draft NPRM is to offer “a better on-ramp into the wireless business” for small, woman or minority- owned enterprises that “may want to leverage business partnerships with larger companies through more flexible leasing arrangements to gain access to capital and cash flow, not to mention operational experience.” Sherman further observed that the NPRM “recognizes the challenge of entering a marketplace in which more than 95% of existing customers are served by the top four providers.”

Specifically, the draft document proposes to (1) eliminate rules that require small businesses to offer facilities-based service, (2) increase gross revenue thresholds for DE bidding credits, and (3) relax the “former defaulter” rule which requires applicants that have defaulted previously on FCC license payments or on non-tax federal debt to submit 150% of the required upfront payment to participate in the auction. While the draft NPRM concludes tentatively  that  joint  bids  among  the  top  four  wireless  carriers  should  be prohibited, the FCC plans to seek comment on whether rules governing joint bids between smaller carriers or between small carriers and the top four carriers should also be revised.