FRED UPTON, MICHIGAN
CHAIRMAN
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ONE HUNDRED FOURTEENTH CONGRESS
Majority (202) 225-2927
Minority (202)225-3641
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COMMITIEE ON ENERGY AND COMMERCE
2125 RAYBURN HOUSE OFFICE BUILDING
WASHINGTON, DC 20515-6115
June 23,2015
The Honorable Tom Wheeler
Chairman
Federal Communications Commission
445 121hStreet SW. ,
Washington, DC 20554
Dear Chairman Wheeler:
We write to thank you for taking a fresh look at the policies the Federal Communications
Commission applies to small businesses seeking to participate in spectrum auctions and the
wireless marketplace. It is now time to adopt final rules that encourage meaningful participation
by actual small businesses in the wireless market.
Small businesses are the engines of our nation's economy. Approximately half of all
workers in the country are employed by small businesses. But in capital-intensive industries like
telecommunications, these small businesses simply cannot compete without smart policies. That
is why we called on the FCC earlier this year to modernize its Designated Entity program. This
program has served to boost small business participation in wireless auctions for the past two
decades. But the market has changed dramatically and the program must now be revamped in a
way that recognizes these changes and better serves small businesses. At the same time, the new
rules must not encourage or provide incentives for gaming by major corporations.
Since we first called for the FCC to modernize its small business policies, the
Commission has collected a robust and thorough record. We believe the record demonstrates
that the best way to ensure that the Commission's policies benefit genuine small businesses is to
take a two-pronged approach.
First, the FCC must curb gaming by multi-billion dollar corporations by limiting the size
of the small business credit that anyone entity can receive. Any cap must strike a careful
balance, however. Bidding credits must be significant enough to give real small businesses a fair
shot at winning spectrum in any market. But the credit should not be so large to in cent major
corporations to use it to gain an unfair advantage under the guise of being a small business. In
addition to imposing a cap on bidding credits, the FCC should adopt additional measures that
limit the ability of large corporations to take advantage of this program.
The Honorable Tom Wheeler
June 23, 2015
Page 2
Second, the Commission's updated policy should finally shelve outdated requirements
that have not kept up with developments in the wireless marketplace. For example the
Attributable Material Relationship (AMR) rule has outlived its usefulness. This dusty relic
served a purpose, but in today's dynamic wireless market it only constrains innovation. It does
nothing more than artificially restrict the types of business models small businesses may use. So
rather than use regulations to shackle creative entrepreneurs that are providing new services to
consumers, we urge the Commission to toss this dated rule. Similarly, the Commission should
liberalize its policies regarding facilities based services and allow small businesses to explore
wholesale and leasing opportunities in the same way larger companies are allowed. If the largest
corporations are unable to stand up new facilities based networks to compete with the biggest
wireless providers, it makes no sense to require small businesses to do so. Finally, any new rules
should provide flexibility for small businesses to make strategic decisions about how to run its
business and to change course as it sees fit. While a small business may choose to forego
benefits on one license, that should not preclude it from eligibility on others.
It is time to recognize that there may be other ways to enter and compete in the wireless
marketplace. The FCC should not be telling small businesses how to do so but instead allow for
small business innovators to do what they do best.
Taken together, we believe these rule changes=-caps to curb gaming and elimination of
outdated policies like the AMR rule-e-combine to provide a powerful one-two punch that can
help jumpstart a small business renaissance in the wireless market. By adopting these policies
that promote small businesses, the Commission will help boost the economy, foster diversity,
and ultimately pay dividends for consumers. We urge you to act soon to bring the Designated
Entity program into the modem wireless era.
Sincerely,
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Frank Pallone, Jr.
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Doris O. Matsui
Ben Ray Lujan
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Yvette D. Clarke