FCC Commissioner Ajit Pai isn’t happy with the rules FCC Chairman Tom Wheeler circulated last week. “I am deeply disappointed that Chairman Wheeler is proposing yet more loopholes to allow corporate giants to abuse the designated entity program,” Pai said. “For instance, those benefiting from taxpayer-funded discounts when buying spectrum should use that spectrum for the public’s benefit–not just lease most or all of it to large carriers like AT&T and Verizon. Loopholes like this might be good for big business and small arbitrageurs, but they certainly aren’t in the interest of the American people, and they do nothing to further wireless competition.” Pai is likely referencing the auction rules that allow entities, who don’t own networks, to get discounts on spectrum. This could allow Mobile Virtual Network Operators to receive discounts and then lease the spectrum to larger carriers. There was much concern after the AWS-3 spectrum auction earlier this year when Dish Network used two companies to bid on spectrum during the auction. Dish Network had an 85% stake in each of these companies, yet received $3 billion in discounts under the Designated Entity program. In February 2015, AT&T’s Vice President of Federal Regulatory, Joan Marsh, wrote a blog post regarding the DE rules, “The competitive bidding rules clearly need to be revisited. Fixes can be as simple as requiring joint bidders to participate at auction as a single entity or prohibiting joint bidders from placing competing bids on the same license. Whatever the path, the type of coordinated strategic bidding we saw here needs to be addressed so similar conduct does not cloud the incentive auction.” The FCC is expected to vote on Wheeler’s proposed rules at its next open meeting on July 16, 2015.
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