FCC chief urges stricter rules for spectrum auctions

The chairman of the Federal Communications Commission (FCC) proposed stricter rules Thursday for a program that some say allows big companies to obtain discounts in wireless spectrum auctions that are meant for small businesses.

FCC Chairman Tom Wheeler’s proposed changes come months after DISH obtained more than $3 billion in discounts by bidding through two smaller companies.

{mosads}Under the proposed rules, which still need to be approved by a majority of the agency’s five commissioners, most companies could no longer enter into so-called joint bidding agreements to coordinate their actions during an auction. Exceptions would be made for rural wireless providers who wanted to bid as part of a consortium, according to a senior FCC official.

The rules also make other changes meant to promote competition by designated entities — which are small business, often owned by women or minorities — in the spectrum auctions. Designated entities are eligible for different credits through the program.

But the chairman’s proposal would place a cap on those credits for the first time. Though the limitations will vary from auction to auction, small businesses will not be able to exceed $150 million and rural providers will not surpass $10 million in the high-profile auction, which is expected to be held in early 2016.

The review of DISH’s activities in the “AWS-3” auction remain ongoing, the senior official said, but both measures seemed designed to stop from following their path in next year’s auction. DISH used joint bidding agreements to work with two smaller providers during the auction and is claiming significantly more than the $150 million afforded to a small business under the proposed rules.

DISH has said it abided by all laws governing the auction process.

Lawmakers have also taken an interest in DISH’s behavior during the auction.

Under the new rules, there would also be a new credit for rural providers.

Republican Commissioner Ajit Pai criticized the proposal as creating new loopholes in the auction process.

“I am deeply disappointed that Chairman Wheeler is proposing yet more loopholes to allow corporate giants to abuse the designated entity program,” he said in a statement.

The reforms proposed Thursday are just one item on the FCC’s July agenda that will set the stage for 2016’s spectrum auction.

Commissioners will also consider Wheeler’s recommendation that they not expand a block of spectrum set aside specifically for small carriers. T-Mobile had asked them to expand the reserve from 30 megahertz to 40.

They will also vote on a set of procedural rules for the auction. For the first time, the FCC will be buying spectrum from television broadcaster and reselling it to wireless providers.

Wheeler said he believes the rules will strike a balance between the interests of all the parties involved.

“Yesterday, Commission staff briefed the Commissioners’ staffs on proposed recommendations to establish final rules for the auction that balance our statutory obligations, heeds commenters’ calls for simplicity and transparency in the flow of the auction, and — most importantly — serves the public’s interest in an effective, efficient, and timely auction,” Wheeler wrote in a blog post.

“Hard decisions in difficult situations mean that no stakeholder will get exactly what it wants,” he said. “Taken as a whole, however, the proposal we will present to the Commissioners strikes a fair balance that serves the greater public interest.”