FCC seeks comment on adding 'disadvantages' criteria to auction bidding credits

The Federal Communications Commission is seeking comment on whether to issue a Notice of Proposed Rulemaking (NPRM) to consider how the agency could adopt rules to give people who have “overcome substantial disadvantage” bidding credits in future auctions.
The agency noted that it is supposed to disseminate licenses among “a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women” and to “ensure that small businesses, rural telephone companies, and businesses owned by members of minority groups and women are given the opportunity to participate in the provision of spectrum-based services.”
Adding the “disadvantage” criteria would be similar to programs used by educational institutions in their admissions processes, the FCC said.
Interestingly, the FCC was chastised by a federal appeals court earlier this year for tightening the rules for designated entities bidding in auctions shortly before the 2006 spectrum auction. The appeals court said some 2006 rules on designated-entity participation in spectrum auctions are invalid, although the court said too much damage would occur if it were to rule subsequent auctions invalid. The U.S. Court of Appeals for the Third Circuit overturned two Federal Communications Commission rulings on designated entities but sided with the FCC on one matter. DE rules were designed to help smaller companies be able to become wireless operators. The FCC implemented new rules in 2006 to deter DEs from flipping licenses to large telecommunications operators or getting spectrum only to lease it to big telcos. However, Council Tree and its fellow petitioners argued that changing the rules late in the game dried up venture capital investment.
Among questions the FCC is seeking comment on is access to capital. “In establishing the existing small business bidding credit program, the commission found that the preferences would allow designated entities to overcome barriers that have impeded these groups’ participation in the telecommunications arena, including barriers related to access to capital. The Advisory Committee’s Recommendation notes that the proposed preference would provide fair opportunity to those who have overcome substantial disadvantage and that it would result in the introduction of new entrants having diverse viewpoints. How would this proposed preference provide additional opportunities to individuals and entities that differ from those available under our current bidding credit programs?”