WASHINGTON—Three groups sued the Federal Communications Commission over changes to small-business bidding rules, asking a federal appeals court in Philadelphia to immediately stay enforcement of new guidelines and delay the scheduled Aug. 9 start of the advanced wireless services auction pending juridical review of the legal challenge.
In its emergency motion filed at the 3rd U.S. Circuit Court of Appeals last night, Council Tree Communications Inc., Bethel Native Corp. and the Minority Media and Telecommunications Council requested the stay be issued by June 19—the filing deadline for short-form AWS applications.
“On the doorstep of Auction 66, the FCC has gone a long way toward ensuring that this auction—the largest spectrum auction in United States history and one that holds promise of bringing high-speed digital communications to even the most remote parts of this country—will be dominated by the largest of this country’s incumbent wireless telecommunications carriers, to the immediate detriment of small businesses, businesses owned by members of minority groups and women and rural telephone companies,” the organizations stated.
Congress in 1993 directed the FCC to promote diversity and competition in the wireless industry by making bidding credits and other benefits available to “designated entities” in spectrum auctions. The sale of 1,122 licenses in the 1710-1755 MHz and 2110-2155 MHz bands could generate billions of dollars for the U.S. Treasury, though some skeptics doubt receipts will hit the projected $15 billion mark.
Council Tree, Bethel Native and MMTC challenged the notion that last Friday’s FCC ruling —which largely upheld April 25 rules extending license sale restrictions from five to 10 years and denying bidding incentives to DEs that resell or lease more than 50 percent of their spectrum to others—were a logical outgrowth of the original agency proposal. To curb sham DE bidding, the FCC initially proposed banning large in-regional mobile phone carriers from partnering with small-business applicants. The mobile phone industry opposed that proposal.
“Council Tree and Bethel Native would need the powers of the Oracle of Delphi to anticipate that a proceeding Council Tree itself had recommended to address the discrete problem of large, deep-pocketed incumbents’ potential abuse of bidding credits would first earn the FCC’s tentative endorsement but then, in a startling, phantom reversal, result in the demise of their own ability to participate in Auction 66, to the very direct and tangible benefit of the same large incumbents who were the ostensible targets” of the commission’s plan to reform the DE program, the parties told the court.
The three groups said revised DE rules violate the 1993 wireless diversity statute as well as the Administrative Procedure Act and the Regulatory Flexibility Act.
Clyde Ensslin, an FCC spokesman, said the agency does not comment on pending litigation.
While the 3rd Circuit considers the three organizations’ emergency motion, the 2nd Circuit Wednesday rejected a petition to delay the start of the AWS auction until the FCC studies any potential health impact from the upcoming auction of wireless licenses throughout the country.
Last month, the FCC moved back the AWS auction start date from June 29 to Aug. 9.
