Decision delayed on DE bidding rules

The 3rd U.S. Circuit Court of Appeals rejected on procedural grounds a challenge to the Federal Communications Commission’s small business bidding rules, delaying for another day a ruling on the merits of a case with the potential to overturn the results of last year’s advanced wireless services auction and to indirectly impact bidder strategies for the 700 MHz auction in January.
The court said it cannot consider the merits of the suit until the FCC rules on a petition for reconsideration jointly filed by Council Tree Communications Inc. and other parties more than a year ago. As such, Council Tree said it plans to ask the court to force the FCC to act on its 17-month-old petition for reconsideration. If the FCC rejects Council Tree’s petition, the case likely will return to the 3rd Circuit.
The combination of the still-alive Council Tree AWS suit and Verizon Wireless’ appeal of 700 MHz rules creates a level of uncertainty for bidders and investors.
The FCC last April approved rule revisions extending small business, or designated entity, license sale restrictions from 5 to 10 years and denying incentives to DEs that resell or lease more than 50% of their spectrum capacity. At that time, the agency also sought further comment on options to hinder major cellphone operators and others from gaining access to DE benefits-including license discounts up to 25%-by partnering with small business applicants in FCC auctions.
“In our view, if the court had felt comfortable in the FCC’s position, they would have gone ahead and ruled in the commission’s favor,” Council Tree stated. “While we are naturally disappointed that the court did not make a decision on the merits of our case, their ruling is a strictly procedural matter that represents a speed bump on the path to a subsequent court decision on the merits.”