DE rules shaky, but AWS results expected to stand

A three-judge appellate panel hinted the Federal Communications Commission’s small business bidding rules could be on shaky legal ground, but seemed hesitant about throwing out results of last year’s $13.7 billion advanced wireless services auction.
Council Tree Communications Inc., Bethel Native Corp. and the Minority Media and Telecommunications Council sued the FCC last year, hoping the Philadelphia-based appeals court would block the AWS auction and overturn revised eligibility rules for small businesses classified as “designated entities.” Those rules extended DE license sale restrictions from five to 10 years and denied incentives-such as license discounts up to 25% for DEs-that resell or lease more than 50% of their spectrum capacity.
Yesterday’s oral argument before the 3rd U.S. Circuit Court of Appeals focused on the regulatory process used to arrive at modified DE guidelines and their impact on the AWS auction.
FCC attorney Frank Palmore said the agency gave adequate notice it was contemplating DE program changes along the lines ultimately adopted, and that actions taken were well within its discretion.
Council Tree early on pressed the FCC to keep national mobile phone carriers out of the AWS auction, an issue that has again arisen as the agency struggles to write rules for the upcoming 700 MHz auction. T-Mobile USA Inc., Verizon Wireless, the Sprint Nextel Corp.-cable TV venture, Metro PCS Communications Inc., AT&T Mobility and Leap Wireless International Inc. dominated the AWS auction. More than half of the 104 winning bidders were DEs, but they accounted for a very small percentage of total auction receipts.
Dennis Corbett, a lawyer representing Council Tree, Bethel and MMTC, asserted the FCC’s new DE rules came out of the blue late in the game. “You need to know what the rules of the road are,” Corbett stated.
Corbett said he could not see repealing the 10-year enrichment rule-or even sending it back to the FCC for further justification-without also throwing out auction results. “I think they’re joined at the hip . You’ve got to vacate. You’ve got to get rid of auction results and re-do it.”
It is unclear what a court ruling against the FCC might have on preparations for the 700 MHz auction.