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FCC-LogoThursday, July 16, 2015, the Federal Communications Commission officially adopted a Report and Order that will modernize and reform policies designated to facilitate small businesses and their ability to participate in spectrum auctions and the wireless marketplace. These policies, commonly referred to as Designated Entity Rules, will also provide greater flexibility to smaller companies and rural service providers to build wireless businesses that can provide more choices to and greater investment in consumers and businesses across the country.

To read the official press release, click here.

To read the accompanying FCC fact sheet, click here.

With what the FCC is calling a better “on-ramp into the wireless industry”, these reforms will provide greater access to spectrum auctions for not only small businesses, but also minority and women-owned businesses. For example, the Commission has voted to remove the limit to the amount of spectrum small businesses can acquire. These changes will also increase the participation of rural service providers in future auctions by eliminating “outdated rules that no longer reflect the developments in today’s wireless marketplace.” The five following steps outline what the FCC will do to reform the Designated Entity Rules.

  • Elimination of the attributable material relationship rule that limited the amount of spectrum a small business could lease in order to provide small businesses the flexibility to leverage leasing and other spectrum use agreements to gain access to capital and operational experience.
  • Adoption of a first ever 15 percent bidding credit for qualifying service providers that provide commercial communications services to a customer base of fewer than 250,000 combined wireless, wireline, broadband, and cable subscribers and serve predominantly rural areas.
  • Establishment of a first ever cap on the total amount of bidding credits that a small business or rural service provider can receive in any particular auction. The cap will vary on a service-by-service and auction-by-auction basis. For the Incentive Auction, the Report and Order adopts a cap of $150 million for small businesses and a $10 million ceiling on the overall amount that any entity—either a small business or rural service provider—can receive in smaller markets.
  • Modifications to the Commission’s attribution rules to guard against unjust enrichment (where one person or company is unjustly or by chance enriched at the expense of another, and an obligation to make restitution arises, regardless of liability for wrongdoing).
  • Amendment of the competitive bidding rules to prohibit joint bidding and multiple applications by one party as well as parties with common controlling interests except in limited circumstances.

According to the fact sheet released with this announcement, the reforms will seek to “prevent abuse and empower rural carriers to compete in spectrum auctions.” Changes in the wireless marketplace such as rapidly increasing data usage on 4G networks and the decreased market presence of small businesses have prompted the FCC to even the playing field between large and small carriers.

To read each of the FCC commissioners’ statements and votes, click here.