FEDERAL COMMUNICATIONS COMMISSION 
WASHINGTON 
OFFICE OF 
THE CHAIRMAN 
The Honorable Marsha Blackburn 
U.S. House of Representatives 
217 Cannon House Office Building 
Washington, D.C. 20515 
Dear Congresswoman Blackburn: 
July 27,2015 
Thank you for your letter regarding the Commission' s rules governing spectrum auctions, 
including small business participation and the market-based spectrum reserve. I appreciate your 
support for our efforts to ensure that bonafide small businesses and eligible rural service 
providers have the opportunity to participate in our spectrum auctions and in the provision of 
spectrum-based services. 
To that end, the Commission recently adopted a Report & Order updating our 
competitive bidding rules to reflect the dramatic changes in the wireless marketplace since they 
were last updated in 2006. In 2006, the top four national carriers served 82 percent of the 
market; today the share of the top four national carriers has increased to 98 percent. Given your 
interest in rural communications matters, you may be pleased to know that the Commission 
adopted a new bidding credit available to rural service providers who might not qualify as a 
small business. This new credit, which had wide support in the record, affords rural providers 
with additional incentives to win licenses and offer wireless broadband services in the rural 
communities they currently serve. This credit will allow eligible providers a discount of up to 
15%, with a cap of$10 million. 
The Report & Order also enhances the integrity of the FCC auction process by adopting 
reforms to ensure that only bona fide small businesses and eligible rural service providers benefit 
from bidding credits. For example, the Report & Order establishes the first-ever cap on the total 
amount of bidding credits any one auction participant can utilize, minimizing an incentive for 
major corporations to try to take advantage ofthe program. The amount of the cap will be 
established on an auction-by-auction basis, depending on the capital requirements of a particular 
service. For the upcoming Incentive Auction, the Report & Order establishes a $150 million cap 
for bigger markets and a $1 0 million cap in smaller markets. For future auctions, the cap will be 
established by the Commission, with a floor of $25 million in larger markets and $10 million in 
smaller markets. 
The new rules also limit the amount of spectrum that a small business or rural service 
provider may lease to its disclosable, non-controlling investors during the five-year unjust 
enrichment period. Further, the revised rules clarify that joint bidding agreements involving a 
shared strategy for bidding at auction between designated entities (including small businesses 
Page 2-The Honorable Marsha Blackburn 
and rural service providers) and nationwide service providers will not be permitted. Simply put, 
we will not allow small businesses to serve as a stalking horse for another party. 
Ultimately, the reforms adopted in the Report & Order will increase the economic 
opportunity for small and rural businesses, as well as ensure that the beneficiaries of our 
competitive bidding rules are those intended by Congress. 
One of our priorities for the Incentive Auction is to ensure that competitive providers 
have a meaningful opportunity to access low-band spectrum. This is particularly important in 
rural areas, where low-band spectrum is necessary if competitors are to fill in their coverage 
gaps, and in urban areas, where low-band spectrum allows more reliable in-building coverage. 
Facilitating access to low-band spectrum by multiple providers is important to preserve and 
promote competition in the mobile wireless marketplace, which brings consumers more choices, 
lower prices, and higher quality services. 
For these reasons, the Commission has established a groundbreaking market-based 
spectrum reserve for competitors in every market nationwide. The market-based spectrum 
reserve for the incentive auction will provide an opportunity for mobile wireless providers that 
lack significant amounts of low-band spectrum in a particular market to acquire such spectrum. 
The market-based reserve is designed to promote competition as well as ensure that all bidders 
bear a fair share of the value of the spectrum for the public and the costs of broadcaster 
relocation. I share your goal that the Incentive Auction should help ensure that consumers will 
benefit directly from increased competition in all parts of the country - rural, suburban and urban 
areas included. Toward that end, I believe we struck the right balance when we set this first-ever 
reserve at up to 30 MHz. 
Thank you for your ongoing support of our efforts to promote competition and choice in 
mobile broadband. 
Sincerely~~ 
~eeler 
FEDERAL COMMUNICATIONS COMMISSION 
WASHINGTON 
OFFICE OF 
THE CHAIRMAN 
The Honorable Bob Latta 
U.S. House ofRepresentatives 
2448 Rayburn House Office Building 
Washington, D.C. 20515 
Dear Congressman Latta: 
July 27, 2015 
Thank you for your letter regarding the Commission's rules governing spectrum auctions, 
including small business participation and the market-based spectrum reserve. I appreciate your 
support for our efforts to ensure that bona fide small businesses and eligible rural service 
providers have the opportunity to participate in our spectrum auctions and in the provision of 
spectrum-based services. 
To that end, the Commission recently adopted a Report & Order updating our 
competitive bidding rules to reflect the dramatic changes in the wireless marketplace since they 
were last updated in 2006. In 2006, the top four national carriers served 82 percent of the 
market; today the share of the top four national carriers has increased to 98 percent. Given your 
interest in rural communications matters, you may be pleased to know that the Commission 
adopted a new bidding credit available to rural service providers who might not qualify as a 
small business. This new credit, which had wide support in the record, affords rural providers 
with additional incentives to win licenses and offer wireless broadband services in the rural 
communities they currently serve. This credit will allow eligible providers a discount of up to 
15%, with a cap of$10 million. 
The Report & Order also enhances the integrity of the FCC auction process by adopting 
reforms to ensure that only bonafide small businesses and eligible rural service providers benefit 
from bidding credits. For example, the Report & Order establishes the first-ever cap on the total 
amount of bidding credits any one auction participant can utilize, minimizing an incentive for 
major corporations to try to take advantage of the program. The amount of the cap will be 
established on an auction-by-auction basis, depending on the capital requirements of a particular 
service. For the upcoming Incentive Auction, the Report & Order establishes a $150 million cap 
for bigger markets and a $1 0 million cap in smaller markets. For future auctions, the cap will be 
established by the Commission, with a floor of $25 million in larger markets and $10 million in 
smaller markets. 
The new rules also limit the amount of spectrum that a small business or rural service 
provider may lease to its disclosable, non-controlling investors during the five-year unjust 
enrichment period. Further, the revised rules clarify that joint bidding agreements involving a 
shared strategy for bidding at auction between designated entities (including small businesses 
Page 2-The Honorable Bob Latta 
and rural service providers) and nationwide service providers will not be permitted. Simply put, 
we will not allow small businesses to serve as a stalking horse for another party. 
Ultimately, the reforms adopted in the Report & Order will increase the economic 
opportunity for small and rural businesses, as well as ensure that the beneficiaries of our 
competitive bidding rules are those intended by Congress. 
One of our priorities for the Incentive Auction is to ensure that competitive providers 
have a meaningful opportunity to access low-band spectrum. This is particularly important in 
rural areas, where low-band spectrum is necessary if competitors are to fill in their coverage 
gaps, and in urban areas, where low-band spectrum allows more reliable in-building coverage. 
Facilitating access to low-band spectrum by multiple providers is important to preserve and 
promote competition in the mobile wireless marketplace, which brings consumers more choices, 
lower prices, and higher quality services. 
For these reasons, the Commission has established a groundbreaking market-based 
spectrum reserve for competitors in every market nationwide. The market-based spectrum 
reserve for the incentive auction will provide an opportunity for mobile wireless providers that 
lack significant amounts of low-band spectrum in a particular market to acquire such spectrum. 
The market-based reserve is designed to promote competition as well as ensure that all bidders 
bear a fair share of the value ofthe spectrum for the public and the costs of broadcaster 
relocation. I share your goal that the Incentive Auction should help ensure that consumers will 
benefit directly from increased competition in all parts of the country - rural, suburban and urban 
areas included. Toward that end, I believe we struck the right balance when we set this first-ever 
reserve at up to 30 MHz. 
Thank you for your ongoing support of our efforts to promote competition and choice in 
mobile broadband. 
~ Sincerely,#4? 
~eeler