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Dems Advise FCC on New DE Rules

Rep. Frank Pallone (D-N.J.), ranking member of the House Energy & Commerce Committee, and the five supporters of his bill, The Small Business Access to Spectrum Act, are sending a letter to the FCC Wednesday telling it how they would like the commission to modify its Designated Entity rules for auction rules for spectrum auctions to insure access by small businesses.

Those cosponsors are Democratic committee members Reps. Bobby Rush (Ill.), Yvette Clarke (N.Y.), G.K. Butterfield (N.C.), Doris Matsui (Calif.) and Ben Ray Lujan (N.M.).

In the letter, a copy of which was obtained by B&C/Multichannel News, the legislators are pushing a two-pronged approach. First, they said, the FCC should curb "gaming" of the DE program by multibillion dollar corporations. The FCC can do so, they say, by limiting the size of the small business credit that any one DE can receive and take "additional measures" to limit large corporations' use of the program. They say that will give small businesses a fair shot at spectrum without incentivizing large corporations to gain a bidding advantage "under the guise of being a small business."

The second prong is to get rid of what they say are outdated requirements, including the attributable material relationship (AMR) rule, and liberalize policies on small businesses leasing opportunities. They also want the FCC to give DEs the ability to forego DE benefits on one license and still be eligible for them on others.

"It is time to recognize that there may be other ways to enter and compete in the wireless marketplace," they said. They are pretty much preaching to the choir.

FCC chairman Tom Wheeler has said that the commission would update those DE rules, though the bill would put the FCC on a 90-day clock to do so.

Responding to questions about Dish's 85% stake in two companies applying for $3.3 billion in DE bidding credits in the recently-completed AWS-3 auction, Wheeler told Congress earlier this year that he did not want slick lawyers gaming the system and that the commission would update the rules.

The "gaming the system" comment stems from complaints that Dish could get billions in DE discounts via bids it made in the AWS-3 auction through two companies in which it holds a majority interest.

The FCC is planning to circulate order on auction procedures this week that could address the DE issue.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.