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 SEPARATE  STATEMENT  OF  COMMISSIONER  JONATHAN  S.  ADELSTEIN 
 Re:  Implementation  of  the  Commercial  Spectrum  Enhancement  Act  and  Modernization  of  the  Commission’s  Competitive  Bidding  Rules  and  Procedures;  Further  Notice  of  Proposed 
 Rule  Making;  WT  Docket  No.  05-  211 
 I  strongly  support  this  Further  Notice  and  its  tentative  conclusion  that  the  Commission  should  limit  the  ability  of  designated  entities  (DEs)  who  have  a  material  relationship  with  the 
 nation’s  largest  wireless  carriers  from  having  access  to  bidding  credits  in  future  auctions.  But  I  am  very  disappointed  that  it  has  taken  so  long  for  this  item  to  be  adopted.  The  Commission 
 committed  to  launch  this  proceeding  at  our  August  2005  Open  Meeting,  yet  it  took  over  five  months  to  prepare  this  relatively  brief  notice  of  proposed  rule  making. 


 The  upcoming  Advanced  Wireless  Services  (AWS)  auction  will  be  a  landmark  event  for  the  Commission.  It  represents  the  first  auction  in  almost  10  years  of  a  nationwide  footprint  of 
 spectrum  ideal  for  mobile  wireless  services.  There  is  a  great  deal  at  stake  both  for  carriers  interested  in  creating  new  services  or  expanding  old  ones  and  for  the  Government,  which  has 
 authorized  the  relocation  of  federal  users  to  make  room  for  these  commercial  services.  This  also  is  the  first  auction  subject  to  the  Commercial  Spectrum  Enhancement  Act,  which  requires  that 
 auction  proceeds  must  be  sufficient  (at  least  110  percent)  of  estimated  relocation  costs  of  eligible  federal  entities. 


 I  have  repeatedly  stated  my  commitment  to  try  to  avoid  unnecessary  delays  to  the  AWS  auction.  I  also  believe  we  should  do  whatever  we  can  to  conclude  this  proceeding  as  quickly  as 
 possible.  Of  course,  we  have  lost  a  great  deal  of  time  since  the  Commission  first  committed  to  launch  this  proceeding.  I  am  frustrated  that  the  lack  of  timely  action  may  unnecessarily  create 
 challenges  and  some  uncertainty  as  interested  parties  both  respond  to  this  item  and  prepare  for  the  upcoming  auction.  I  cannot  emphasize  enough  that  this  timing  was  not  of  my  choosing.  We 
 should  have  initiated  this  proceeding  three  months  ago  and  allowed  interested  parties  a  more  rational  amount  of  time  to  comment  on  our  proposals.  Unfortunately,  that  didn’t  happen  and 
 now  commenters  and  indeed  our  own  Commission  staff  are  forced  to  work  within  an  incredibly  aggressive  schedule  to  try  to  finalize  this  proceeding  sufficiently  in  advance  of  the  June  29, 
 2006,  AWS  auction  date. 
 Whatever  the  status  of  this  proceeding  at  the  time  of  the  AWS  auction,  I  want  to  put  all  interested  parties  on  notice  that  I  will  personally  review  any  agreements  through  which  one  of 
 our  nation’s  largest  wireless  companies  partners  with  a  DE  that  is  seeking  to  use  bidding  credits  in  the  AWS  auction.  I  am  not  interested  in  excluding  companies  from  participating  in  the 
 auction,  but  I  am  concerned  when  large  wireless  carriers  gain  indirect  access  to  bidding  credits.  I  will  rigorously  enforce  whatever  rules  and  policies  are  on  the  books  at  that  time. 


 The  issue  of  DEs  partnering  with  the  largest  wireless  carriers  is  particularly  important  given  the  dramatic  scope  of  consolidation  in  the  wireless  industry  over  the  last  18  months  and  the 
 ever-  increasing  market  share  of  the  largest  carriers.  It  has  been  reported  to  us  that  in  1998  the  five  largest  wireless  carriers  controlled  48%  of  the  market;  in  2005,  the  top  five  carriers 
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 controlled  almost  90%  of  the  market.  Also,  the  AWS  auction  could  raise  $15  billion  dollars  by  some  estimates  for  the  federal  Government  at  a  time  our  budget  is  under  ever  increasing 
 pressure.  Do  we  really  want  the  nation’s  largest  wireless  carriers  partnering  with  DEs  to  get  a  25%  discount  so  that  auction  revenues  to  the  U.  S.  Treasury  could  potentially  be  reduced  by 
 billions  of  dollars?  How  is  the  public  interest  served  in  that  outcome? 
 Finally,  with  respect  to  the  specific  proposals  in  the  Further  Notice,  I  want  to  let  commenters  know  that  I  do  not  necessarily  support  the  decision  to  expand  the  original  scope  of 
 inquiry  from  large  wireless  carriers  partnering  with  DEs  to  the  broader  “entities  with  significant  interests  in  communications  services”  as  that  term  is  defined  in  the  Further  Notice.  At  a  time  of 
 significant  consolidation  in  the  wireless  industry,  the  DE  program  indeed  may  be  an  appropriate  opportunity  for  smaller  wireless  providers,  with  the  backing  of  non-  wireless  companies,  to  build 
 new  networks  to  compete  with  large  wireless  incumbents.  While  I  look  forward  to  reviewing  all  of  the  comments  on  the  Further  Notice  with  great  interest,  I  will  be  particularly  interested  in 
 pleadings  that  address  this  specific  aspect  of  the  item. 
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