May 5, 2006

Today, three groups asked the FCC (Federal Communications Commission) to drop the agency’s new rule changes to the small-business bidding program.

In addition, the groups want to delay the June 29 start of the advanced wireless services auction pending resolution of issues raised in their petition.

Council Tree Communications, the Minority Media and Telecommunications Council, and Bethel Native Corp. said none of the new guidelines adopted by the FCC late last month is limited to partnerships involving large, in-region wireless carriers as contemplated in the agency’s original proposal.

Rather, the three groups said the new rules apply directly to designated entities, a small-business category eligible for 25 percent bidding discounts and other benefits at FCC auctions.

“Adoption of such broadly-applicable new rules merely two weeks before the short-form application deadline for Auction 66 is incurably disruptive to the business plans of designated entities, their investors and their strategic partners,” the three parties stated.

They added that new DE rules violate a 1993 law designed to foster diversity in wireless telecom licensing.

The short-form application filing deadline for the AWS auction is May 10. Upfront payments are due June 1.

Council Tree said it has invested nearly $500 million in mobile phones, television and radio, and has returned approximately $1 billion to its investors, which have included over 44,000 Native Americans.

Bethel Native is a Native American company.

The FCC on April 25 declined to impose a revenue-based threshold for partnership eligibility in favor of a resale standard to determine whether national mobile carriers and other large telecom firms can join forces with startups and entrepreneurs to pursue discounted wireless licenses at the AWS auction and future auctions.

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The FCC said a wireless carrier that leases more than 50 percent of its spectrum capacity cannot gain DE benefits through alliances with DE applicants.

Telecom regulators also said they plan to scrutinize any DE partnership that includes a wireless carrier which leases more than 25 percent of its capacity in order to determine eligibility for small business bidding credits and benefits.

The commission also extended from five to ten years restrictions on selling DE wireless licenses.

The agency will force DEs to reimburse the federal government for 100 percent of the bidding credit plus interest if during the first five years of the license term a DE loses its eligibility, attempts to sell its license or enters into a de facto lease with an entity otherwise not qualified for bidding credits.

The amount owed to the FCC under such scenarios would be reduced proportionately for years five through 10.

The cellular industry supported the FCC's DE ruling, but remains concerned about the possibility regulators will impose eligibility restrictions at a later date.

Source: RCR