Federal Communications Commission FCC 14-146
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Updating Part 1 Competitive Bidding Rules
Expanding the Economic and Innovation 
Opportunities of Spectrum Through Incentive 
Auctions  
Petition of DIRECTV Group, Inc. and 
EchoStar LLC for Expedited Rulemaking to 
Amend Section 1.2105(a)(2)(xi) and 1.2106(a) of 
the Commission’s Rules and/or for Interim 
Conditional Waiver
Implementation of the Commercial Spectrum 
Enhancement Act and Modernization of the 
Commission’s Competitive Bidding Rules and 
Procedures
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WT Docket No. 14-170
GN Docket No. 12-268
RM-11395
WT Docket No. 05-211
NOTICE OF PROPOSED RULEMAKING
Adopted:  October 1, 2014 Released: October 10, 2014
Comment Date:  (45 days after the date of publication in the Federal Register)
Reply Date:  (65 days after the date of publication in the Federal Register)
By the Commission: Commissioner Clyburn issuing a statement; Commissioners Pai and O’Rielly 
concurring in part, dissenting in part, and issuing separate statements.
TABLE OF CONTENTS
Heading Paragraph #
I. INTRODUCTION.................................................................................................................................. 1
II. ELIGIBILITY FOR BIDDING CREDITS ............................................................................................ 4
A. Attribution Rules and Small Business Policies.............................................................................. 12
B. Unjust Enrichment ......................................................................................................................... 42
C. Bidding Credits .............................................................................................................................. 50
1. Small Business Bidding Credits .............................................................................................. 51
2. Other Bidding Preferences ...................................................................................................... 65
a. Minority- and Women-Owned Businesses and Rural Telephone Companies.................. 66
b. Unserved/Underserved Areas and Persistent Poverty Preferences ................................... 67
c. Overcoming Disadvantages Preference ............................................................................ 71
D. DE Reporting Requirements .......................................................................................................... 77
E. MMTC’s White Paper Requests .................................................................................................... 80
III. OTHER PART 1 CONSIDERATIONS............................................................................................... 82
A. Former Defaulter Rule ................................................................................................................... 83
B. Commonly Controlled Entities ...................................................................................................... 98
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C. Joint Bidding................................................................................................................................ 107
D. Miscellaneous Part 1 Revisions ................................................................................................... 141
IV. PROCEDURAL MATTERS.............................................................................................................. 145
A. Ex Parte Presentations ................................................................................................................. 145
B. Comment Period and Filing Procedures ...................................................................................... 146
C. Initial Regulatory Flexibility Analysis......................................................................................... 149
D. Paperwork Reduction Act Analysis ............................................................................................. 150
E. Further Information...................................................................................................................... 151
V. ORDERING CLAUSES..................................................................................................................... 152
APPENDIX A – Proposed Rules
APPENDIX B – Initial Regulatory Flexibility Act Analysis
APPENDIX C – Short Names of Commenters Cited in this NPRM
I. INTRODUCTION
1. Today we initiate a proceeding to revise certain of the Part 1 competitive bidding rules
for the first time in years. An evaluation of these rules is particularly important now, in advance of an 
auction that holds historic potential for interested applicants to acquire licenses for below1-GHz spectrum
in the Broadcast Television Spectrum Incentive Auction (“BIA”).  We therefore propose to reform some 
of our general Part 1 rules governing competitive bidding for spectrum licenses to reflect changes in the 
marketplace, including the challenges faced by new entrants.  Our proposals also advance the statutory 
directive to ensure that small businesses, rural telephone companies, and businesses owned by members 
of minority groups and women (collectively, “designated entities” or “DEs”)
1
are given the opportunity to 
participate in the provision of spectrum-based services, and fulfill the commitment we made in the BIA 
Report & Order.
2
  Together these proposals will assure that our Part 1 rules continue to promote our 
fundamental statutory objectives. We expect to act on the issues we raise here soon enough to allow all 
parties to account for any changes while planning for the BIA.
2. In this Notice of Proposed Rulemaking (“NPRM”), we propose to:
? Provide small businesses greater opportunity to participate in the provision of a wide 
range of spectrum-based services by modifying our eligibility requirements, updating the 
standardized schedule of small business sizes, and eliminating duplicative reporting 
requirements, while also seeking comment on whether to strengthen our rules to prevent 
the unjust enrichment of ineligible entities;
                                                     
1
In 1995, the Supreme Court decided Adarand Constructors, holding that any federal program in which the 
“government treats any person unequally because of his or her race” must satisfy the “strict scrutiny” constitutional 
standard of review.  Adarand Constructors, Inc. v. Peña, 515 U.S. 200, 227–30 (1995) (Adarand Constructors).  
The Court subsequently held in VMI that a state program that makes distinctions on the basis of gender must be 
supported by an “exceedingly persuasive justification” in order to withstand constitutional scrutiny.  United States v. 
Virginia, 518 U.S. 515, 531–34 (1996) (VMI).  In response to the Court’s holding, the Commission decided that it 
would use race- and gender-neutral provisions until it had developed a record that would provide the evidentiary 
support necessary to withstand this standard of review, and maintain provisions for small businesses.  
Implementation of Section 309(j) of the Communications Act—Competitive Bidding, PP Docket No. 93-253, Tenth 
Report and Order, 11 FCC Rcd 19974, 19975–77 ¶¶ 1–3 (1996).  The Commission has noted that many minority-
and women-owned businesses qualify for the provisions that the Commission has adopted for small businesses.  
Amendment of Part 1 of the Commission’s Rules—Competitive Bidding Procedures, WT Docket No. 97-82, Order 
on Reconsideration of the Third Report and Order, Fifth Report and Order, and Fourth Further Notice of Proposed 
Rule Making, 15 FCC Rcd 15293, 15318–19 ¶¶ 45–48 (2000) (Part 1 Fifth Report and Order), citing Adarand 
Constructors, 515 U.S. at 227.
2
See, e.g., Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions, GN 
Docket No. 12-268, Report and Order, 29 FCC Rcd 6567, 6762 ¶ 474 (2014) (BIA Report and Order).
Federal Communications Commission FCC 14-146
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? Amend our former defaulter rule to balance concerns that the current rule is overly broad 
with our continued need to ensure that auction bidders are financially reliable;
? Codify an established competitive bidding procedure that prohibits the same individual or 
entity from becoming qualified to bid on the basis of more than one short form 
application in a specific auction; 
? Prevent entities that are exclusively controlled by a single individual or set of individuals 
from becoming qualified to bid on overlapping licenses based on more than one short-
form application in a specific auction; and,
? Retain the current rules governing joint bidding arrangements among non-nationwide 
providers and prohibit joint bidding arrangements among nationwide providers.
3. We also provide notice of our intention to resolve long standing petitions for 
reconsideration and propose necessary clean up revisions to our Part 1 competitive bidding rules.
3
    
II. ELIGIBILITY FOR BIDDING CREDITS
4. In establishing the Commission’s auction authority, Congress vested the Commission 
with broad discretion in “balanc[ing] a number of competing objectives.”
4
  These included, among other 
things, special provisions to ensure that DEs, including small businesses, have the opportunity to 
participate at auction and in the provision of spectrum-based services.
5
  Section 309(j)(4)(D) of the 
Communications Act (“the Act”) requires that when the Commission prescribes regulations in designing 
systems of competitive bidding, it shall “ensure that small businesses, rural telephone companies, and 
businesses owned by members of minority groups and women are given the opportunity to participate in 
the provision of spectrum-based services, and, for such purposes, consider the use of . . . bidding 
preferences.”
6
  In addition, the statute directs that in designing such systems of competitive bidding, the 
Commission shall seek to promote “economic opportunity and competition . . . by avoiding excessive 
concentration of licenses and by disseminating licenses among a wide variety of applicants, including 
small businesses, rural telephone companies, and businesses owned by members of minority groups and 
women.”
7
At the same time, the Act requires the Commission to “prevent unjust enrichment as a result of 
the methods employed to issue licenses . . . .”
8
  
5. The Commission’s challenge in providing opportunities to small businesses and 
entrepreneurs pursuant to these provisions has always been to find a reasonable balance between the 
competing goals of affording such entities reasonable flexibility to obtain the capital necessary to 
participate in the provision of spectrum-based services and effectively preventing the unjust enrichment 
                                                     
3
See Petition for Partial Reconsideration and/or Clarification, Blooston, Mordkofsky, Dickers, Duffy & Prendergast, 
LLP (“Blooston”), WT Docket No. 05-211, filed June 2, 2006 (Blooston Petition); Petition for Reconsideration and 
Clarification, Cook Inlet Region, Inc., filed June 5, 2006; Reply to Opposition to Petitions for Reconsideration, 
Blooston, filed July 24, 2006 (Blooston Reply); Petition for Reconsideration, National Telecommunications 
Cooperative Association (“NTCA”), filed Mar. 9, 2006; Petition for Clarification and/or Reconsideration, Blooston, 
filed Mar. 9, 2006.
4
Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965, 971 (D.C. Cir. 1999); accord, Rural Cellular Ass’n v. FCC, 588 
F.3d 1095, 1103 (D.C. Cir. 2009).
5
47 U.S.C. § 309(j)(3)–(4). 
6
47 U.S.C. § 309(j)(4)(D).
7
47 U.S.C. § 309(j)(3)(B).
8
47 U.S.C. § 309(j)(4)(E).
Federal Communications Commission FCC 14-146
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of ineligible entities.
9
  Over the two-decade span of the auctions program, the Commission has 
periodically modified its rules to achieve the right balance given changing circumstances in the wireless 
industry.
10
    
6. Today we take the opportunity to consider whether our rules continue to serve their
intended purposes and the public interest in an evolving mobile wireless marketplace.  In the past decade, 
the rapid adoption of smartphones and tablet computers and the widespread use of mobile applications, 
combined with the increasing deployment of high-speed 3G and now 4G technologies, have driven 
significantly more intensive use of mobile networks.
11
  This progression from the provision of mobile 
voice services to the provision of mobile broadband services has increased the need for access to 
spectrum.
12
  In addition, in the past decade, the number of small and regional mobile wireless service 
providers has significantly decreased, yet regional and local service providers continue to offer consumers 
additional choices in the areas they serve.
13
As the costs of spectrum and network deployment especially 
for small and new entrants have increased in the last 20 years,
14
access to capital for acquiring licenses is 
critical for these providers to take advantage of different opportunities to participate in the provision of 
spectrum-based services, including through facilities-based deployment, spectrum leasing, and mobile 
virtual network operator arrangements.
7. In this Section, we address the concerns of parties that argue that our current rules inhibit, 
rather than foster, the inclusion of small businesses in the wireless marketplace.  Below we offer 
proposals to increase the opportunities for small businesses to become spectrum licensees.  At the same 
                                                     
9
See Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission’s 
Competitive Bidding Rules and Procedures, WT Docket No. 05-211, Second Report and Order and Second Further 
Notice of Proposed Rule Making, 21 FCC Rcd 4753, 4756 ¶ 8 (2006) (DE Second Report and Order).
10
See, e.g., Implementation of Section 309(j) of the Communications Act—Competitive Bidding, Second Report 
and Order, PP Docket No. 93-253, 2 FCC Rcd 2348, 2388–2400 ¶¶ 227–97 (1994) (implementing the DE policies 
of section 309(j) of the Act); Implementation of Section 309(j) of the Communications Act, Fifth Report and Order,
9 FCC Rcd 5532, 5611–13 ¶¶ 183, 185 (1994) (Competitive Bidding Fifth Report and Order), recon. Fifth 
Memorandum Opinion and Order, 10 FCC Rcd 403 (1994), modified, Sixth Report and Order, 11 FCC Rcd 136 
(1995), aff'd sub nom, Omnipoint v. FCC, 78 F.3d 620 (D.C. Cir. 1996) (adopting bidding credits for minority- and 
women-owned businesses and then, in light of Adarand Constructors, 515 U.S. 200, amending the rules to apply to 
all eligible small businesses); Part 1 Fifth Report and Order, 15 FCC Rcd 15293 (adopting as the Commission’s 
general attribution rule a controlling interest standard for determining which applicants qualify as small businesses); 
Promoting Efficient Use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets, 
WT Docket No. 00-230, Report and Order and Further Notice of Proposed Rulemaking, 18 FCC Rcd 20604 (2003)
(Secondary Markets First Report and Order), Second Report and Order, Order on Reconsideration, and Second 
Further Notice of Proposed Rulemaking, 19 FCC Rcd 17503 (2004) (Secondary Markets Second Report and Order) 
(adopting rules allowing wireless licensees to lease their spectrum, with restrictions for small business lessors); DE 
Second Report and Order, 21 FCC Rcd 4753 (adopting additional restrictions for, inter alia, leasing by small 
business lessors).
11
See Policies Regarding Mobile Spectrum Holdings; Expanding the Economic and Innovation Opportunities of 
Spectrum Through Incentive Auctions, WT Docket No. 12-269, GN Docket No. 12-268, Report and Order, 29 FCC 
Rcd 6133, 6146 ¶ 23 (2014) (Mobile Spectrum Holdings Report and Order).  
12
Id.
13
Id. at 6144 ¶ 18, 6206 ¶ 179.  
14
Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993 Annual Report and 
Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile 
Services, WT Docket No. 11-186, Sixteenth Report, 28 FCC Rcd 3700, 3766–69 ¶¶ 79–84 (2013) (16th Mobile 
Wireless Competition Report).  See also ¶ 56 (discussing the percentage change in the GDP price index between 
1997 and 2013); NTCA, NTCA 2013WIRELESS SURVEY REPORT at 9–10 (2014),
http://www.ntca.org/images/stories/Documents/Advocacy/SurveyReports/2013ntcawirelesssurvey.pdf.
Federal Communications Commission FCC 14-146
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time, we remain mindful of our responsibility to ensure that benefits are provided only to qualifying 
entities and seek comment on modifying our current unjust enrichment rules.  
8. As a first step in reassessing how we determine small business eligibility, we propose to 
repeal the attributable material relationship (“AMR”) rule and to re-examine the need for the related 
decade-old policy that has limited small businesses seeking bidding credits to providing primarily retail, 
facilities-based service directly to the public with each of their licenses.  As discussed in detail below, we 
propose to instead adopt a more flexible approach under which we would evaluate small business 
eligibility on a license-by-license basis, using a two-pronged test.  Under this proposal, the Commission 
would apply existing rules requiring attribution of controlling interests in, and affiliates of, a small 
business venture to determine whether the applicant:  (1) meets the applicable small business size 
standard, and (2) retains control over the spectrum associated with the individual licenses for which it 
seeks benefits.
15
  We further propose to modify the language of section 1.9020 to make clear that DE
lessors may fully engage in spectrum manager leasing under the same de facto control standard as non-
DE lessors.
16
  With these proposals, we revisit our statutory mandate “to ensure that small businesses, 
rural telephone companies, and businesses owned by members of minority groups and women are given 
the opportunity to participate in the provision of spectrum-based services”
17
in light of today’s wireless 
marketplace.  Alternatively, as discussed fully below, we also seek comment on retaining the policy 
and/or some variation of the AMR rule. We also ask whether we should revisit our unjust enrichment 
rules to assure that we maintain the right balance considering our responsibility to safeguard the award of 
small business benefits to only eligible entities.      
9. We also propose to modify the generally applicable schedule of small business size 
standards and bidding credits, which has remained unchanged in the 17 years since it was first adopted.
18
  
The goal of these proposals is to encourage small business participation in spectrum license auctions, and 
to ensure that our gross revenue definitions accurately reflect what constitutes a “small business” in 
today’s marketplace, taking into consideration the relative size of the large, national providers.  
Specifically, we propose revisions to our small business definitions and seek comment on whether to 
change the bidding credit percentages that would apply to those definitions.  We also seek comment on 
whether to offer alternative bidding preferences to entities based on criteria other than business size by 
revenue.  
10. Additionally, we propose to repeal the DE annual reporting requirement.
19
  We question 
whether the value of the information provided in those reports outweighs the regulatory burden that the
reporting obligation places on small businesses.
11. Collectively, these proposals seek to update our rules to reflect that small businesses need 
greater opportunities to gain access to capital so that they may have an opportunity to participate in the 
provision of spectrum-based services in today’s communications marketplace.  We recognize that high 
capital costs associated with building and operating wireless broadband networks may require small 
businesses to find alternative revenue streams, including through secondary markets, so that they have an 
opportunity to acquire licenses at auction and participate in the provision of spectrum-based services.  We 
anticipate that by revising our rules to allow small businesses to take advantage of the same opportunities 
to utilize their spectrum capacity and gain access to capital as those afforded to larger licensees, the 
                                                     
15
See 47 C.F.R. § 1.2110.
16
See 47 C.F.R. § 1.9010; see also 47 C.F.R. § 1.9020(d)(4).
17
See 47 U.S.C. § 309(j)(4)(D).
18
47 C.F.R. §1.2110(f).
19
47 C.F.R. §1.2110(n).
Federal Communications Commission FCC 14-146
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Commission can better achieve its statutory directives.
20
  We nonetheless remain mindful of our 
obligation to prevent unjust enrichment of ineligible entities.
21
Below, we describe and seek comment on 
each of our specific proposals.  
A. Attribution Rules and Small Business Policies
12. Background.  As its principal means of fulfilling the statutory goals for DEs, the 
Commission makes auction bidding credits available to eligible small businesses.
22
  A small business is 
eligible for bidding credits if its gross revenues, in combination with those of its “attributable” interest 
holders, fall below applicable service-specific financial caps.
23
  Since 2000, the Commission has applied a 
“controlling interest” standard to all services when making these attribution determinations in the small 
business context.
24
  Under this standard, the Commission attributes to an applicant the gross revenues of 
the applicant, its controlling interests, its affiliates, and the affiliates of the applicant’s controlling 
interests.
25
  A “controlling interest” includes individuals or entities, or groups of individuals or entities, 
that have control of the applicant under the principles of either de jure or de facto control.
26
  Affiliates 
include entities or individuals that directly or indirectly control or have the power to control the applicant, 
directly or indirectly are controlled by the applicant, directly or indirectly are controlled by a third party 
that also controls the applicant, or have an “identity of interest” with the applicant.
27
13. In adopting secondary markets rules in 2004, the Commission sought to expand and 
enhance secondary markets “to permit spectrum to flow more freely among users and uses in response to 
economic demand, to the extent consistent with [its] public interest objectives.”
28
The Commission 
explained that it intended for its rules to allow more flexible use of spectrum by licensees and other 
spectrum users, better define licensees' and spectrum users' rights and responsibilities, enable the use of 
spectrum across various dimensions (frequency, space, and time), promote the efficient use of spectrum, 
and provide for continued technological advances.
29
  While the Commission ostensibly extended the new 
de facto control standard for spectrum manager leasing to DE lessors,
30
it nonetheless required “that a 
licensee receiving [DE] . . . benefits be an entity that actually provides service under the license.”
31
  The 
Commission explained that it intended that DEs should remain primarily providers of facilities-based 
                                                     
20
Once effective, these revised rules will allow all licensees that have acquired licenses with or without DE benefits 
this increased flexibility.  
21
47 U.S.C. § 309(j)(4)(E).
22
A bidding credit operates as a percentage discount on the winning bid amount of a qualifying small business.  See 
Section II.C.1. (Small Business Bidding Credits); 47 C.F.R. § 1.2110(f)(1); 47 U.S.C. § 309(j)(4)(D).  
23
47 C.F.R. § 1.2110.
24
See Part 1 Fifth Report and Order, 15 FCC Rcd 15293, 15296–97 ¶¶ 4–5, 15323–27 ¶¶ 58–67.  
25
See id. at 15323–24 ¶ 59.
26
47 C.F.R. § 1.2110(c)(2).  
27
47 C.F.R. § 1.2110(c)(5).
28
Secondary Markets Second Report and Order, 19 FCC Rcd at 17505 ¶ 1.
29
Id.
30
Id. at 17543 ¶ 80; see also Secondary Markets First Report and Order, 18 FCC Rcd at 20654–55 ¶ 113 (indicating 
that DEs could undertake spectrum leasing arrangements so long as doing so was consistent with existing DE 
policies and rules, and specifying that to the extent there were any conflicts between the revised de facto control 
standard for spectrum leasing arrangements and the de facto control standard in the rules for DEs, the Commission 
would apply the latter for determinations regarding whether the licensee had maintained the requisite degree of 
ownership and control to allow it to remain eligible for the licenses or for other benefits such as bidding credits).
31
Secondary Markets Second Report and Order, 19 FCC Rcd at 17538 ¶ 71.
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service directly to the public.
32
  That conclusion was based on an interpretation of the legislative history 
underlying the Communications Act’s provisions regarding unjust enrichment, as well as the continued 
application of the Commission’s controlling interest standard and affiliation rules.
33
  
14. In that Order, the Commission also advised that “[i]n examining whether a spectrum 
lessee would, under a spectrum manager lease, become a controlling interest or affiliate of the licensee, 
the licensee should look to all of the relevant circumstances, including how large a portion of its total 
capacity to provide spectrum-based services would be leased, what involvement it would have with the 
spectrum lessee as a result of the spectrum lease, and what relationship the two parties have with one 
another apart from the lease.”
34
  The Commission concluded that a spectrum manager lease between a 
designated entity licensee and a spectrum lessee “with a prior business relationship where substantially all 
of the spectrum capacity of the licensee is to be leased would cause the spectrum lessee to become an 
attributable affiliate of the licensee. Such affiliation would render the licensee ineligible for designated 
entity or entrepreneur benefits and, therefore, would make such a spectrum lease impermissible.”
35
  On 
the other hand, the Commission reasoned that “a spectrum manager lease involving a small portion of the 
designated entity or entrepreneur licensee's spectrum capacity where no relationship existed between the 
licensee and spectrum lessee apart from the lease would likely be permissible. Situations falling 
somewhere between these two examples would have to be evaluated according to the individual 
circumstances involved.”
36
15. Subsequently in 2006, at the behest of interested parties, including Council Tree, the 
Commission released a Further Notice, which sought comment on the specific nature of the types of 
relationships that should trigger the attribution of revenues to determine eligibility for designated entity 
benefits.
37
  For instance, Council Tree initially proposed that the Commission should restrict a designated 
entity applicant’s “material relationships,” including both financial and operational agreements, in order 
to more carefully ensure that designated entity benefits are awarded only to bona fide eligible entities.
38
Expanding upon that proposal and to further protect against unjust enrichment, the Commission departed 
from its case-by-case approach and instead adopted a bright line test to require a small business applicant 
or licensee to automatically attribute to itself the gross revenues of any entity with which it had an 
“attributable material relationship.”
39
  It reasoned that an agreement that concerns “the actual use of the 
[DE’s] spectrum capacity” is one that “causes the relationship to be ripe for abuse and creates the 
potential for the relationship to impede a [DE’s] ability to become a facilities-based provider, as intended 
by Congress.”
40
  The Commission concluded that an applicant or licensee has an AMR when it has one or 
more agreements with any individual entity for the lease (under either spectrum manager or de facto 
                                                     
32
Id.
33
Id. at 17538 ¶ 71 & n.182, quoting H.R. Rep. No. 103-111, at 257–58 (1993) (referring to deterrence of 
“participation in the licensing process by those who have no intention of offering service to the public”); id. at 
17544 ¶ 82 & n.222.  
34
Secondary Markets Second Report and Order, 19 FCC Rcd at 17541–42 ¶ 77.
35
Id.  The Commission noted that even a spectrum manager lease between two designated entities might give rise to 
questions of eligibility, if affiliation between the licensee and spectrum lessee were the result.  Id. at 17541–42 ¶ 77 
n.205.
36
Id. at 17541–42 ¶ 77.
37
Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission's 
Competitive Bidding Rules and Procedures, WT Docket No. 05-211, Further Notice of Proposed Rule Making, 21 
FCC Rcd 1753, 1760 ¶ 13 (2006) (DE Further Notice).
38
Id.
39
DE Second Report and Order, 21 FCC Rcd at 4763–64 ¶¶ 25–27.
40
Id. at 4762 ¶ 23.
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transfer leasing arrangements) or resale (including under a wholesale arrangement) of, on a cumulative 
basis, more than 25 percent of the spectrum capacity of any individual license held by the applicant or 
licensee.
41
  
16. Council Tree and others challenged the AMR rule and other aspects of the Commission’s 
2006 Order in the United States Court of Appeals for the Third Circuit on the grounds that they failed to 
take into account circumstances regarding small businesses’ access to capital, among other things.
42
  In 
subsequent years, the SBA’s Office of Advocacy also expressed its belief to the Commission that the 
2006 changes to the small business rules had “inhibited participation by small entities and minority 
businesses in recent spectrum auctions,” and that the changes were unnecessary in light of the availability 
of the audit process included in the Commission’s original auction rules.
43
  In 2010, although the court
ultimately upheld the AMR rule, it nonetheless questioned some of the Commission’s reasoning, noting 
what it termed the Commission’s “inattention” to the nature of the wireless wholesale business.
44
  
Questioning why the Commission chose to attribute certain relationships to achieve its stated policy of 
DEs as facilities-based providers, the court observed that wholesaling includes an extensive provision of 
service component.
45
  The court said that it was therefore not obvious that the Commission needed to 
prohibit DEs from engaging primarily in a wholesale business in order to prevent them from simply 
monetizing their bidding credits with a large carrier, “so long as [DEs] do not sell or lease overly large 
quantities of their capacity to any single lessee or buyer.”
46
  Remarking that the Commission appeared not 
to have acknowledged this issue, the court commended it to the Commission’s attention on remand.
47
   
17. Recently, in February 2014, the Minority Media & Telecom Council (“MMTC”) filed a 
white paper with the Commission making nine recommendations to facilitate the participation of minority 
and women owned businesses in upcoming auctions.
48
  Listed first among these is the repeal of the AMR 
rule.
49
  MMTC argues that the rule impedes the ability of small entities to become providers of spectrum-
based service, explaining that wholesaling and leasing arrangements are important vehicles for small and 
minority-owned businesses to build and efficiently use capital.
50
  
                                                     
41
Id. at 4763 ¶ 25; see 47 C.F.R. § 1.2110(b)(3)(iv)(A).
42
Brief for Petitioners Council Tree Communications, Inc., Bethel Native Corporation, and the Minority Media and 
Telecommunications Council, Council Tree Commc’ns, Inc. v. FCC, 503 F.3d 284 (3d Cir. 2006) (No. 06-2943)
(Council Tree Brief).
43
Letter from Cheryl Johns, Assistant Chief Counsel for Telecommunications, SBA Office of Advocacy, to Marlene 
H. Dortch, Aug. 25, 2009, at 2.  While this letter did not differentiate among the various 2006 changes to the DE 
rules, others of which were later revised in response to the Third Circuit’s decision in Council Tree, as noted above 
other commenters view the AMR rule as a principal reason for DEs’ continued lack of opportunity to participate in 
Commission spectrum auctions.  
44
Council Tree Commc’ns, Inc. v. FCC, 619 F.3d 235, 255 n.8 (3d Cir. 2010) (Council Tree).
45
Id.
46
Id.
47
Id.
48
S. Jenell Trigg & Jeneba Jalloh Ghatt for MMTC, Digital Déjà Vu: A Road Map for Promoting Minority 
Ownership in the Wireless Industry, GN Docket No. 12-268, at v, 32–34 (filed Feb. 27, 2014) (Digital Déjà Vu).  
Among other things, the white paper argues that DE participation in spectrum auctions dramatically decreased after 
the Commission’s adoption of its 2006 rule modifications.  Id. at 12–18.
49
Id. at v, 32–34.
50
Id. at 32; see also id. at 2, 28, 34.  MMTC also laments that DEs won a smaller percentage of licenses in Auctions 
66 and 73 than they had in Auctions 5, 10, 11, 14, and 22.  Id. at 7–8, 12–18.
Federal Communications Commission FCC 14-146
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18. MMTC’s White Paper argues that “[o]ver the course of fifty-six wireless auctions during 
the past 20 years, the majority of DEs that currently hold wireless licenses are incumbent rural telephone 
companies, very few DEs are new entrants, and even fewer DEs are (minority-owned business 
enterprises) MBEs.”
51
  MMTC and its supporters maintain that DE participation in spectrum auctions 
dramatically decreased after the Commission’s adoption of its 2006 rule modifications and claim that the 
results from Auctions 66 and 73 “showed a precipitous drop in DE participation from the average 70
[percent] value of winning bids over previous years, to only 4.0 [percent] and 2.6 [percent], 
respectively.”
52
19. Other parties concur with MMTC’s concerns about the AMR rule, arguing that the 
development of the Commission’s rules and policies over the last decade, including adoption of the AMR 
rule, have significantly hindered their ability to access capital and largely impeded their ability to acquire 
and use wireless spectrum licenses in today’s wireless marketplace.
53
  Parties claim that the AMR rule 
creates insurmountable obstacles for new and existing small businesses to gain access to capital in 
secondary markets where they argue small businesses can play important roles in assuring that licensed 
spectrum is effectively and efficiently utilized.
54
  In a March 2014 request for clarification or waiver of 
the AMR rule, Grain Management, LLC (“Grain”) described how the rule could prevent a small, 
minority-owned, new-entrant lessor of spectrum capacity on licenses acquired without DE benefits from 
being eligible for such benefits in future auctions.
55
  
20. Discussion.  We conclude that it is appropriate to revisit the Commission’s small 
business eligibility rules and evaluate whether to rebalance our competing goals in order to provide small 
businesses additional opportunities to gain access to new sources of capital necessary for participation in 
the provision of spectrum-based services in today’s marketplace, while guarding against unjust 
enrichment of ineligible entities.  Chief among the actions that we take today is our proposal to repeal the 
AMR rule and to re-examine the related decade-old policy underlying it.  In lieu of the bright line test of 
the AMR rule, we propose a two-pronged approach to evaluate an entity’s eligibility for small business 
benefits.  This approach would use our existing controlling interest and affiliation standards
56
to 
determine what revenues are attributable to an applicant based upon a rigorous review of all relevant 
relationships and agreements, which will ensure that the small business makes independent decisions 
about its business operation.
57
Alternatively, as detailed below, we also seek comment on whether we 
should retain the policy but modify the AMR rule with some other attribution threshold to determine an 
applicant’s eligibility for small business benefits.  
                                                     
51
Id. at iv.
52
Id. at 14.
53
See Letter from Council Tree Investors, Inc. to Marlene H. Dortch, Secretary, FCC (Mar. 18, 201[4]); see also 
Letter from Council Tree Investors, Inc. to Marlene H. Dortch, Secretary, FCC (May 9, 2014). 
54
See Letter from Council Tree Investors, Inc. to Marlene H. Dortch, Secretary, FCC (May 9, 2014); see also Letter 
from Council Tree Investors, Inc. to Marlene H. Dortch, Secretary, FCC (Mar. 18, 201[4]).
55
Grain Management, LLC, Grain Management, LLC’s Request for Clarification or Waiver of the Commission’s 
“Attributable Material Relationship” Rule (filed Mar. 4, 2014) (Grain Waiver Request); See Grain Management, 
LLC’s Request for Clarification or Waiver of Section 1.2110(b)(3)(iv)(A) of the Commission’s Rules; 
Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission’s 
Competitive Bidding Rules and Procedures; Expanding the Economic and Innovation Opportunities of Spectrum 
Through Incentive Auctions; Amendment of the Commission’s Rules with Regard to Commercial Operations in the 
1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz Bands, WT Docket No. 05-211; GN Docket Nos. 12-268 
and 13-185, Order, 29 FCC Rcd 9080 (2014) (Grain AMR Waiver Order).
56
47 C.F.R. § 1.2110.
57
See, e.g., 47 C.F.R. § 1.2110(c)(5)(vii)–(x).  
Federal Communications Commission FCC 14-146
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21. Using long standing principles of control and affiliation, we propose to safeguard small 
business benefits by attributing the revenues of any entity that has the ability to control, or potentially 
control, an applicant’s business venture.  The Commission’s existing attribution rules examine the extent 
to which a small business may combine its efforts, property, money, skill and knowledge with another.  
Further, where there is an agreement to share profits/losses proportionate to each party’s contribution to 
the business operation, the existing rules consider these issues as a factor in whether to attribute that party 
to the applicant as its affiliate.
58
  Insofar as our proposals should allow small businesses greater flexibility 
to engage in business ventures that include increased forms of leasing and other spectrum use 
arrangements, we anticipate that the combined effect of the proposals, by allowing a small business 
greater flexibility to adopt a more individualized business model for each license it holds, should increase 
the potential sources of revenue for the small business and potentially decrease the likelihood that it
would be subject to undue influence by any particular user of a single license.  Our proposed approach 
would also ensure that a licensee retains control of all licenses for which it seeks bidding credits, while 
providing greater flexibility in potential uses for any acquired without such benefits. We seek comment 
on this proposal and ask commenters to specifically address how and why a small business may be more 
or less likely to be subject to undue influence by a user of its spectrum under this approach.  
Additionally, we propose to modify the language of section 1.9020 to make clear how our secondary 
market rules apply to DE lessors, which should provide greater flexibility to small businesses in how they 
choose to use their spectrum.
59
  We also seek comment on whether any corresponding changes may be 
warranted in our unjust enrichment rules as detailed below to ensure that small business bidding credits
are extended only to qualifying small businesses.  
22. The AMR rule and the policy that spurred its adoption were intended to prevent unjust 
enrichment, by establishing safeguards to ensure that entities ineligible for small business incentives 
could not circumvent the Commission’s rules by obtaining those benefits indirectly, through their 
relationships with eligible entities.
60
  The Commission based its decisions, in large measure, on legislative 
history suggesting that anti-trafficking restrictions and unjust enrichment payment obligations were 
needed to deter “participation in the licensing process by those who have no intention of offering service 
to the public.”
61
  For example, in the Secondary Markets Second Report and Order, the Commission 
relied on that legislative history in rejecting a commenter’s argument that “[t]here [was] no reason to 
believe that Congress intended to limit designated entities to only one form of participation in the 
spectrum market - construction and operation of a facilities-based network.”
62
  In adopting the AMR rule, 
the Commission reaffirmed that interpretation of the legislative history,
63
concluding that the adoption of 
the AMR rule, along with other modifications, was “necessary to strengthen [its] implementation of 
Congress’s directives with regard to [DEs] and to ensure that, in accordance with the intent of Congress, 
every recipient of [its DE] benefits is an entity that uses its licenses to directly provide facilities-based 
telecommunications services for the benefit of the public.”
64
                                                     
58
47 C.F.R. § 1.2110(c)(5)(x). 
59
See 47 C.F.R. § 1.9010.
60
DE Second Report and Order, 21 FCC Rcd at 4754 ¶ 1.
61
See id. at 4754–55 ¶ 3 & n.9, 4759–60 ¶ 15; see also Secondary Markets Second Report and Order, 19 FCC Rcd 
at 17538 ¶ 71.
62
Secondary Markets Second Report and Order, 19 FCC Rcd at 17538 ¶ 71.
63
DE Second Report and Order, 21 FCC Rcd at 4762–63 ¶¶ 23–24 (“[A]s we indicated in the Secondary Markets 
Second Report and Order, ‘Congress specifically intended that, in order to prevent unjust enrichment, the licensee 
receiving designated entity benefits actually provide facilities-based services.’”).
64
Id. at 4754–55 ¶ 3 & n.9, citing H.R. Rep. No. 103-111, at 257–58 (1993) (Conference Agreement adopted House 
provisions, in relevant part, with amendments.  H.R. Conf. Rep. No. 103-213, at 483 (1993)).
Federal Communications Commission FCC 14-146
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23. Yet, in the Commission’s attempts to safeguard small business benefits from unjust 
enrichment, it appears that the Commission’s policy and corresponding rule modifications may have had 
the unintended consequence of hindering the Commission’s ability to satisfy its statutory goal of 
promoting opportunities for wireless entry by small businesses.  Moreover, we note that the statute does 
not specifically state, nor does the House Report make clear, that Congress intended to require that
“offering service to the public” be defined only as DEs “directly provid[ing] facilities-based 
telecommunications services for the benefit of the public.”
65
The Commission may have placed undue 
weight on language from the House Report, given all of the various factors that the actual text of section 
309(j) gives the Commission the discretion to balance. In interpreting statutes, “[a]nalysis of the statutory 
text, aided by established principles of interpretation, controls.”
66
24. While the policy of requiring primarily the direct provision of facilities-based service by 
a small business seeking bidding credits is one way to protect against unjust enrichment, we tentatively 
conclude that it is not the only way to ensure that benefits are provided solely to those entities that 
Congress intended.  We also recognize that the AMR rule, which was adopted to further that policy, may 
inhibit the highest and best use of spectrum by preventing small businesses that lack access to traditional 
sources of capital from being able to acquire alternative revenue streams through leasing and other 
spectrum use arrangements, even in circumstances where they retain control over their business venture.  
MMTC argues that there has been a documented decline in DE participation and success at auction 
following the adoption of the Commission’s rule changes in 2006, based on the relative value of licenses 
won by DEs compared to non-DEs.
67
  While we note that the relative value of licenses won at auction is 
only one measure to gauge success of the small business program and that there are other relevant factors
to consider in assessing whether the Commission has met its statutory obligations for small businesses, 
we nonetheless concur that over the last decade small businesses have faced various increased difficulties 
in becoming wireless licensees.
68
25. We contemplate that a different approach may be more effective in balancing our 
competing goals of affording small businesses reasonable flexibility to obtain the capital necessary to 
participate in the provision of spectrum-based services and effectively preventing the unjust enrichment 
of ineligible entities.  Insofar as Congress has granted us the discretion to weigh the varying objectives of 
section 309(j), we propose rule modifications that, if adopted, could offer a more balanced approach for 
achieving our statutory directives.  We therefore propose to repeal the AMR rule and evaluate small 
business eligibility in a manner that could provide DEs with greater opportunities to participate in the 
provision of spectrum-based services, including through secondary market transactions.  We anticipate 
                                                     
65
See id.; H.R. Rep. No. 103-111, at 257–58 (1993) (Conference Agreement adopted House provisions, in relevant 
part, with amendments.  H.R. Conf. Rep. No. 103-213, at 483 (1993)).
66
See PM Wonderful LLC v. Coca-Cola Co., 134 S.Ct. 2228, 2236 (2014).
67
Digital Déjà Vu at 6–18.
68
We stress that by measuring auction results on the basis of the value of licenses won by DEs, commenters like 
MMTC mistakenly focus on the success rate of small businesses as opposed to whether the Commission has met its 
statutory goal of providing DEs with “opportunities” to participate the provision of spectrum based services as the 
language of section 309(j) requires.  If we look instead at the percentages of applicants that were eligible for bidding 
credits in two of our largest, most recent auctions of mobile broadband spectrum, Auctions 66 (in 2006) and 73 (in 
2008), we note that 55 percent of the qualified bidders were eligible for such benefits.  See Auction of 700 MHz 
Band Licenses; 214 Bidders Qualified to Participate in Auction 73, AU Docket No. 07-157, Public Notice, 23 FCC 
Rcd 276, Appendix A (2008); Auction of Advanced Wireless Services Licenses; 168 Bidders Qualified to 
Participate in Auction No. 66; Information Disclosure Procedures Announced, Public Notice, 21 FCC Rcd 8585, 
Appendix A (2006).  We emphasize that comparisons, like MMTC’s, of DE participation across 20 years of auctions 
also have a number of causes, including the increasing demand for spectrum to provide broadband services, the 
trend toward consolidation in the wireless industry, and changes to the Commission’s DE eligibility rules that have 
altered the definition of qualified entities.  See Digital Déjà Vu at 6–18.
Federal Communications Commission FCC 14-146
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that this, in turn, will help DEs gain access to capital by enabling leasing and other spectrum use 
arrangements.  By allowing more DEs and small businesses to participate in spectrum leases and other 
spectrum use agreements, this will also promote the Commission’s goals of promoting more efficient and 
dynamic use of the important spectrum resource through secondary market spectrum transactions.
26. We seek comment on this proposal to repeal the AMR rule, and our tentative conclusions 
regarding our need to re-evaluate our small business policy.  Should we discontinue our policy requiring 
small businesses seeking bidding credits to provide primarily direct, facilities-based service on each 
individual license?  Would this proposal better promote Congress’s intent for small businesses? Would 
the proposal to eliminate this policy and to repeal the AMR rule have the unintended effect of providing 
ineligible entities with access to discounted spectrum?  
27. In a mature wireless industry where leasing and other spectrum use arrangements may be 
important tools to enable wireless providers to raise capital and participate at auction, is it appropriate to 
provide small businesses seeking bidding credits with greater flexibility to enter into such spectrum use 
arrangements?  Should we consider an alternative spectrum capacity use limit for a bright line attribution 
test, and if so what is the appropriate percentage and what spectrum use arrangements should we include? 
Would eliminating the policy that small businesses provide primarily facilities-based service with each 
individual license increase or decrease the risk of unjust enrichment to ineligible entities and/or the 
warehousing of spectrum? What safeguards should we consider to ensure that bidding credits are 
extended only to qualifying small businesses, as Congress intended?  Alternatively, should we retain the 
AMR rule and the related policy that small businesses primarily provide facilities-based service, but 
stipulate that neither would kick in for a set number of years?  This approach might provide small 
businesses with an opportunity to raise capital early in the license term, but still require that they 
eventually become primarily facilities-based providers of service when the AMR kicks in.  Commenters 
should address when the AMR rule and the related policy regarding facilities-based service should kick in 
and how construction build out requirements should be measured. Commenters should also address 
whether our proposed shift in policy would continue to allow auctions to award licenses to those entities 
that value the spectrum most highly, which fosters our ability to accomplish Congress’s multi-faceted 
policy objectives.  Will rebalancing our approach to Congress’s goals provide adequate safeguards against 
unjust enrichment to ensure that bidding credits are awarded only to qualifying small businesses?    
28. Proposed Standard for Evaluating Small Business Eligibility.  We propose a more 
focused approach to evaluate small business eligibility that looks at who controls, or has the potential to 
control, the applicant and any spectrum acquired with the use of small business benefits. Specifically, we 
propose to apply a two-pronged test using our existing controlling interest and affiliation rules to 
determine whether:  (1) an applicant meets the applicable small business size standard, and (2) whether it 
retains control over the spectrum associated with the licenses for which it seeks small business benefits.  
This approach will allow us to separate our review of those who control, or have the power to control, the 
small business applicant’s business venture and are therefore attributable for purposes of determining 
eligibility from those that use (and may control) its spectrum capacity, which would affect the small 
business’s ability to retain its benefits with respect to any particular license.  Consistent with our existing 
controlling interest and affiliation rules, we will attribute the revenues of those entities or individuals that 
determine or significantly influence the nature or types of services offered by the small business, the 
terms upon which such services are offered, and the prices charged for such services.
69
  The proposals we 
make today would expand the types of services the small business might offer as part of its overall 
business venture, but would not alter how we carefully monitor those that have the ability to control, or 
potentially control the applicant or licensee and its business venture.  Below, we seek comment on these
specific proposals.  
                                                     
69
47 C.F.R. § 1.2110(c)(2)(ii)(H)–(I). 
Federal Communications Commission FCC 14-146
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29. The first prong would evaluate whether an applicant meets the applicable small business 
size standard and is therefore eligible for benefits. To evaluate small business eligibility, we propose to 
apply our existing controlling interest standard and affiliation rules to determine whether an entity should 
be attributable based on whether that entity has de jure or de facto control of, or is affiliated with, the 
applicant’s overall business venture. De jure control is typically evidenced by the holding of greater than 
50 percent of the voting stock of a corporation or, in the case of a partnership, general partnership 
interests.
70
  De facto control is determined on a case-by-case basis to determine whether the licensee has 
actual control over its business venture.
71
Thus, pursuant to section 1.2110 and consistent with our 
current analysis, under our proposal control and affiliation may arise through, among other things, 
ownership interests, voting interests, or the terms of any agreements that create a controlling, or 
potentially controlling, relationship over the applicant’s business venture.
72
  We therefore note that our 
proposal to eliminate the policy that small businesses seeking benefits primarily provide facilities-based 
service does not alter the rules that require us to consider whether facilities sharing and other agreements 
confer control of or create affiliation with the applicant. The proposal also does not alter the general 
standard by which the Commission evaluates whether a licensee has ceded de facto control and effected 
an unauthorized transfer of control of its spectrum authorization to a third party.  
30. Our continued careful and targeted examination of these issues will allow us to ensure 
that a small business applicant has the independent ability to direct its decision making regarding its 
overall business venture and how its licenses are used to offer service to the public.  Moreover, those 
claiming small business benefits will continue to be bound by our existing rules regarding control and 
attribution, which should be familiar to all existing and future Commission licensees.  By providing small 
businesses with greater opportunities to access revenue streams through leasing and other spectrum use 
agreements, we anticipate that they will have more flexibility to employ business models that suit their 
individual needs and therefore will be less likely to be influenced by deep pocketed investors or parties 
with which they have a spectrum use agreement.  Furthermore, this approach recognizes the 
Commission’s earlier conclusion in the Secondary Markets proceeding that the mere existence of a 
spectrum use agreement between a small business and another party does not, without more, cause the 
other party to become an attributable interest holder in the applicant.
73
  This approach, coupled with our 
proposed departure from the policy of requiring small businesses to provide primarily facilities-based 
service directly to the public with each of its licenses, should allow small businesses to gain access to 
capital and better enable them to participate in auctions and in the provision of spectrum-based services, 
so long as the terms of any spectrum use agreement do not confer control or create an affiliation that 
would lead to attribution of disqualifying revenues. Will this approach promote long term investment, 
market participation and competition in the wireless industry by small businesses?  
31. Once the first prong has been met, the Commission would evaluate eligibility under the 
second prong.  Under the second prong, we propose to determine an entity’s eligibility to retain small 
business benefits on a license-by-license basis, based on whether it has maintained de jure and de facto
control of the license.  Under this proposed license-by-license approach, an entity will not necessarily lose 
its eligibility for all current and future small business benefits solely because of a decision associated with 
any particular license.
74
  Instead, while a small business might incur unjust enrichment obligations if it 
relinquishes de jure or de facto control of any particular license for which it claimed benefits, so long as 
                                                     
70
47 C.F.R. § 1.2110(c).
71
Id.  See Part 1 Fifth Report and Order, 15 FCC Rcd at 15324 ¶ 61 (incorporating long standing principles of 
control into section 1.2110 of the Commission’s rules).
72
See, e.g., 47 C.F.R. § 1.2110(c)(5)(vii)–(x) (explaining how affiliation can arise where one concern has the power 
to control or potentially control the other concern).  
73
Id.; see, e.g., Secondary Markets Second Report and Order, 19 FCC Rcd at 17542–44 ¶¶ 78–80.
74
Contra DE Second Report and Order, 21 FCC Rcd at 4763 ¶ 25.  
Federal Communications Commission FCC 14-146
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the revenues of its attributable interest holders (i.e., the DE’s affiliates, its controlling interests, and the 
affiliates of its controlling interests) continue to qualify under the relevant small business size standard, it 
could still retain its eligibility to retain current and future benefits on existing and future licenses.  In other 
words, an applicant need not be eligible for small business benefits on each of the licenses it holds in 
order to demonstrate its overall eligibility for such benefits.
75
For instance, if a small business chooses to 
permissibly relinquish benefits, incurring any applicable unjust enrichment obligation,
76
and transfer de 
facto control of a license through a de facto transfer lease, that lease will not necessarily make the lessee 
an attributable interest holder in the applicant or cause the applicant to become ineligible for other small 
business benefits it might have or want to acquire.  
32. We stress that small businesses, like all Commission licensees, remain subject to our 
rules to prevent unauthorized transfers of control of their license authorizations pursuant to section 310(d) 
of the Communications Act.
77
  Accordingly, if a small business seeking benefits executes a spectrum use 
agreement that does not comply with the Commission’s relevant standard of de facto control,
78
it will be 
subject to unjust enrichment obligations for the benefits associated with that particular license.  If the 
terms of that spectrum use agreement go so far as to confer control of, or the potential to control, the 
small business’s overall business venture, the business could risk the attribution of revenues, which could 
render it ineligible for all current and future small business benefits on all licenses.
79
  Except where the 
leasing standard of de facto control applies under the secondary market rules, the criteria of Intermountain 
Microwave and Ellis Thompson will continue to apply to any Commission licensee, including a small 
business, for purposes of assessing whether it can demonstrate that it retains de facto control of its 
business venture and spectrum authorization.  Small businesses will, however, be free under this proposal 
from the added policy requirement regarding the extent to which it must use each individual spectrum 
license for the provision of facilities-based service in order to retain eligibility for small business benefits.    
33. We seek comment on our proposed two-pronged approach to evaluate attribution and 
establish eligibility for small business benefits.  Will this proposal provide small businesses with the 
flexibility necessary to participate in an evolving wireless marketplace?  Does the absence of a bright line 
attribution standard hinder an applicant’s ability to assess its eligibility for small business benefits?  Will 
our proposed approach allow the Commission to safeguard the benefits we award and prevent ineligible 
entities from obtaining benefits indirectly, through arrangements with eligible small businesses?  Should 
we take additional steps to assure that ineligible entities cannot exercise undue influence over a small 
business or will our proposed approach empower small businesses to make their own decisions with 
respect to the highest and best use of each of their licenses without risking the undue influence of their 
investors or spectrum users?  For instance, should we, in considering whether the user’s revenues should 
be attributable to the small business applicant, consider any limits on the amount of its spectrum capacity 
a small business seeking benefits can allow a third party to use, even where such use is otherwise
                                                     
75
See, e.g., Grain AMR Waiver Order.   
76
47 C.F.R. §§ 1.2111(d) (2013), 1.9030(d)(4).
77
Section 310(d) of the Communications Act prohibits the transfer or assignment of a construction permit or station 
license, or any attendant rights, unless authorized by the Commission.  47 C.F.R. § 310(d).  See also 47 C.F.R. 
§ 1.9010.
78
See 47 C.F.R. § 1.9010 (de facto control for spectrum leasing arrangements); see also Applications for Microwave 
Transfers to Teleprompter Approved with Warning; Non-broadcast and General Action Report No. 1142, Public 
Notice (by the Commission en banc), 12 FCC 2d 559, 559–60 (1963) (Intermountain Microwave) (de facto control 
for non-leasing situations); 47 C.F.R. § 1.2110(c) (de facto control for DEs); Part 1 Fifth Report and Order, 15 FCC 
Rcd at 15324 ¶ 61 (incorporating the Intermountain Microwave principles of control into section 1.2110 of the 
Commission’s rules).
79
Our proposal does not alter the requirement of full dilution in 47 C.F.R. § 1.2110(c)(2)(ii)(A).
Federal Communications Commission FCC 14-146
15
permissible under our rules and the agreement on its own does not create a controlling interest or 
affiliation in the applicant’s business venture?  
34. Should we limit the ability of a small business seeking benefits to lease all of its spectrum 
capacity or should we allow it to be primarily engaged in the business of leasing provided that it complies
with small business eligibility rules?  Would allowing a small business seeking benefits to lease 100
percent of its spectrum capacity on any individual license, and/or on all of its licenses, increase the 
potential of the unjust enrichment of ineligible entities? Commenters should address how that risk 
increases or decreases based on the amount of spectrum capacity that may be leased.  Should the 
Commission be concerned that a small business leasing large quantities of its spectrum capacity to a 
single user has allowed another entity to receive the benefit of its bidding credits?
80
  
35. Should there be a standard by which we should automatically attribute the gross revenues 
of an entity with which a small business seeking benefits has spectrum use agreements if it has such 
agreements with a single entity in numerous markets?  How should the Commission view small 
businesses that have multiple financial and/or operational arrangements with another licensee or entity 
where the agreements do not otherwise create a controlling interest or affiliation with the small business?  
Should the existence of such multiple agreements create a rebuttable presumption of affiliation similar to 
the kinship affiliation rule,
81
or does our existing rule of “affiliation through contractual relationships”
82
already adequately guard against a third party acquiring control, or the potential to control, the small 
business through such agreements?  For instance, should the Commission permit a small business seeking 
benefits to have a combination of capital investments, loan, marketing, management and leasing 
agreements with another Commission licensee without attributing the gross revenues of that entity to the 
small business?  Is there a combination of agreements that should cause more concern in assessing small 
business benefit eligibility and should any combination of agreements with a single party create a 
rebuttable presumption of attribution or an ineligibility for small business benefits?  Are there any 
specific types of agreements that are more likely to confer control or undue influence of the small 
business seeking benefits that should cause the Commission to automatically attribute the gross revenues 
of the entity to the small business or render the small business ineligible for benefits?  
36. Do our proposals provide small business applicants with sufficient flexibility to access 
capital, compete in auctions, and participate in new and innovative ways in the provision of service in the 
wireless marketplace while retaining their benefits?  Do our proposals make it more or less likely that a 
small business will be unduly influenced by the entities with which they engage in spectrum use 
agreements?  Commenters opposing these proposals should indicate specific concerns.  Commenters 
supporting these proposals should offer any other suggestions the Commission should consider to revise 
its rules and reform its small business policies. To what extent do the changes we have proposed for 
small business eligibility positively or negatively affect auction revenues?  To what extent do our
proposals appropriately balance our competing statutory obligations in section 309(j) of the Act?  
37. Proposed Standard for Evaluating DE Leasing.  We also propose to modify the language 
of section 1.9020 to comport with our proposed approach to assessing small business eligibility.  
Specifically, we propose to make clear that DEs may fully benefit from the same de facto control standard 
for spectrum manager leasing in our secondary market rules as non-DE lessors.   
38. In developing its regulatory scheme for leasing generally, the Commission determined 
that section 310(d) of the Communications Act did not require the continued application of the facilities-
                                                     
80
See e.g., Council Tree, 619 F.3d at 255 n.8.
81
See 47 C.F.R. §1.2110(c)(5)(iii)(B).
82
See 47 C.F.R. §1.2110(c)(5)(ix).
Federal Communications Commission FCC 14-146
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based Intermountain Microwave six-part test
83
that had, since 1963, been applied to determine whether a 
licensee was exercising the requisite level of de facto control over its licensed operations.
84
  Instead, the 
Commission adopted a revised de facto control standard for leasing arrangements for purposes of 
applying the requirements of section 310(d).
85
  Under the revised standard, a spectrum manager lease does 
not constitute a transfer of de facto control so long as the licensee (1) maintains an active, ongoing 
oversight role in ensuring that the lessee complies with Commission rules and policies; (2) retains 
responsibility for all interactions with the Commission required under the license related to the use of the 
leased spectrum; and (3) remains primarily and directly accountable to the Commission for any lessee 
violation of these policies and rules.
86
39. While the Commission nominally applied the new standard to all licensees, it explained 
that DEs would be required to retain their eligibility under the traditional facilities-focused de facto 
control standard of section 1.2110 and Intermountain Microwave.
87
  Thus, the Commission stated that 
small businesses could engage in leasing only to the extent that doing so would not affect their eligibility 
for benefits.
88
  Further, it required “that a licensee receiving [DE] . . . benefits be an entity that actually 
provides service under the license.”
89
  As explained above, the Commission expressed concern that unless 
it continued to require DEs to remain engaged primarily in the provision of facilities-based services to the 
public it would run the risk that small business incentives, particularly bidding credits, would indirectly 
benefit entities that would not qualify for those incentives in the primary market.
90
  To that end, the 
Commission specified that small businesses could not retain their benefits if they made spectrum leasing 
their primary business.
91
  
40. Consistent with our proposed revisions to assessing small business eligibility, including 
the elimination of the requirement that small businesses primarily provide facilities-based service on each 
license they hold, we propose a modification to our spectrum manager leasing rule.  Specifically, we 
propose to modify the language in section 1.9020(d)(4) to remove the conflicting reference to the control 
standard of section 1.2110 in order to make clear that small business lessors are fully subject to the same
de facto control standard for spectrum manager leasing that applies to all other licensees.
92
This 
                                                     
83
In Intermountain Microwave the Commission, interpreting what is now section 310(d) of the Act (and was then 
section 310(b)), articulated the following six indicia of control:  (1) unfettered use of all facilities and equipment; 
(2) day-to-day operation and control; (3) determination and carrying out of policy decisions, including preparation 
and filing of Commission applications; (4) employment, supervision, and dismissal of personnel; (5) payment of 
financial obligations, including operational expenses; and (6) receipt of moneys and profits derived from the 
operation of the facilities.  Intermountain Microwave, 12 FCC 2d at 559–60.  
84
Secondary Markets First Report and Order, 18 FCC Rcd at 20608 ¶ 3, 20610 ¶¶ 10–11, 20623–24 ¶¶ 40–41, 
20629–42 ¶¶ 51–81.   
85
Id.
86
47 C.F.R. § 1.9010; Secondary Markets First Report and Order, 18 FCC Rcd at 20610 ¶ 11.
87
Secondary Markets First Report and Order, 18 FCC Rcd at 20654–55 ¶ 113; Secondary Markets Second Report 
and Order, 19 FCC Rcd at 17536–44 ¶¶ 67–82.
88
Secondary Markets First Report and Order, 18 FCC Rcd at 20654–55 ¶ 113, 20666–67 ¶ 145; Secondary Markets 
Second Report and Order, 19 FCC Rcd at 17536–44 ¶¶ 67–82.  To accommodate the realities of leasing, however, 
the Commission clarified that a spectrum lessee’s construction or use of facilities in the licensee’s service area or 
over its bandwidth would not, by itself, create an attributable relationship, and neither would the mere existence of 
the leasing agreement.  Secondary Markets Second Report and Order, 19 FCC Rcd at 17542–43 ¶¶ 78–79.
89
Secondary Markets Second Report and Order, 19 FCC Rcd at 17538 ¶ 71.
90
Id. at 17538 ¶ 71.
91
Id. at 17540–41 ¶ 76.
92
See 47 C.F.R. § 1.9020(d)(4).
Federal Communications Commission FCC 14-146
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modification should clarify that section 1.9010 alone defines whether a licensee, including a small 
business, retains de facto control of the spectrum that it leases to a spectrum lessee in the context of
spectrum manager leasing.
93
  This proposal does not alter the fact that small businesses must remain 
eligible for benefits under section 1.2110.  Instead, the proposed modification clarifies that one de facto
standard applies to determine if the licensee has de facto control of the spectrum in the context of a 
spectrum manager lease (i.e., 1.9010), and the other applies to determine if a third party has control, and 
the potential to control, the licensee and its business venture for the purposes of attribution of revenues
(i.e., 1.2110). In sum, our proposal departs from the traditional Intermountain Microwave facilities-
focused de facto control standard with regard to an individual spectrum lease agreement for a particular 
license. As long as the small business: (1) maintains an active, ongoing oversight role in ensuring that the 
lessee complies with Commission rules and policies; (2) retains responsibility for all interactions with the 
Commission required under the license related to the use of the leased spectrum; and (3) remains 
primarily and directly accountable to the Commission for any lessee violation of these policies and rules,
it will be considered to maintain de facto control of its spectrum for the purposes of that spectrum 
manager lease.
94
  As discussed above, spectrum manager leasing applications will continue to be 
evaluated to determine whether control of, or affiliation with, the small business applicant and its overall 
business venture has arisen through any the terms of the leasing agreement that might lead to attribution 
and result in unjust enrichment under section 1.2110.
95
  
41. When the Commission adopted section 1.9010 of its rules, it noted that “a licensee’s 
continued control over the licensed use of spectrum lies at the heart of what it means to retain the license 
and the rights thereunder” and that it could “no longer generally assume that the licensee must perform 
non-licensed activities . . . in order to conclude that the licensee has retained its license and all rights 
thereunder.”
96
  We propose that our modification will make clear that this conclusion applies equally to 
all licensees.  Are there any reasons why we should retain our existing language in section 1.9020(d)(4)?  
Should we consider limiting the amount of spectrum a small business can lease to a single entity under 
section 1.9020, in order to ensure that they retain control over their business venture as required in section 
1.2110?  Commenters opposing our proposal should offer alternative suggestions for how we could allow 
small businesses to play a larger role in secondary market transactions.
B. Unjust Enrichment
42. As discussed above, the integrity of the small business benefit program depends on 
ensuring that only entities eligible for benefits receive them.  To safeguard against abuse, the Commission 
has long relied on unjust enrichment provisions, which require a small business to pay back the benefits it 
accrued where appropriate, and careful vigilance in approving applications and transactions.  With the 
proposals we set forth today, we anticipate that these provisions will be as important as ever and that 
strong enforcement of our rules is critical.  As discussed below, we therefore seek comment on whether 
any changes are appropriate to strengthen our unjust enrichment rules and how best the Commission can 
continue to scrutinize applications and proposed transactions to ensure that only eligible entities receive 
benefits, while not undermining the Communications Act’s directive to ensure that DEs are given the 
opportunity to participate in the provision of spectrum-based services.
                                                     
93
See 47 C.F.R. §§ 1.9010, 1.9020(d)(4).  Because we do not plan to extend streamlined processing to leasing 
applications by DE lessors, Commission staff will have an opportunity to review the applications to determine 
whether they contain anything that will trigger a more extensive review under sections 1.9020(d)(4) and 1.2110.  See 
47 C.F.R. §§ 1.2110, 1.9020(d)(4).
94
47 C.F.R. § 1.9010; Secondary Markets First Report and Order, 18 FCC Rcd at 20610 ¶ 11.
95
See also Secondary Markets Second Report and Order, 19 FCC Rcd at 17537–44 ¶¶ 69–82.  
96
Secondary Markets First Report and Order, 18 FCC Rcd at 20639 ¶¶ 74–75.
Federal Communications Commission FCC 14-146
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43. Under our rules, small businesses are obligated to make unjust enrichment payments if 
they seek, inter alia, to assign or transfer control of licenses to a non-eligible party, for a period of up to 
five years from the initial issuance of the license.
97
  In rebalancing our policy objectives to provide small 
businesses greater opportunities to participate at auction and in the provision of spectrum-based services, 
we remain focused on our responsibility to ensure that benefits are provided only to qualifying entities. 
44. We therefore invite comment on whether our existing five year unjust enrichment 
payment schedule continues to provide a sufficient safeguard to ensure that benefits are provided only to 
qualifying entities.  Commenters should be specific about whether there is a need to adjust our current 
five year unjust enrichment repayment schedule, and the appropriate length and reimbursement 
percentages for any repayment schedule revisions.  If commenters support a different repayment period or 
different percentages for the repayment schedule, they should be specific about why their suggested 
approach would better meet our goals and balance our statutory objectives.
45. Specifically, we also seek comment on whether we should consider adopting a 10 year 
unjust enrichment repayment schedule, including its benefits and costs.
98
  Extending the length of the 
unjust enrichment repayment schedule to 10 years could help deter speculation and prevent spectrum 
warehousing. At the same time, extending the length of the unjust enrichment repayment schedule could 
restrict small businesses’ access to capital, which could limit their ability to participate in the provision of 
spectrum-based services, contrary to our underlying goals in this proceeding.  How does the length of the 
repayment schedule affect a small business’s capital fundraising and business planning efforts?
99
  Are 
there lessons we can draw from based on parties’ experience raising capital when the 10 year unjust 
enrichment period was in place from 2006 until 2010?  If we repeal the AMR rule as proposed and also 
modify the unjust enrichment rules, what would be the combined effect on the ability of a small business 
to raise capital and participate at auction and in the provision of service, particularly when compared to 
the existing rule?
100
   
46. Are there other unjust enrichment provisions that the Commission should consider?  For 
example, should the Commission require full reimbursement, plus interest, if a small business loses its 
eligibility prior to meeting the construction requirements applicable at the end of the license term?
101
  
Commenters should discuss how such an approach would impact the Commission’s interest in protecting 
against unjust enrichment, while ensuring that small businesses have access to capital to participate at 
auction and in the provision of service.  Is a different reimbursement percentage (something less than 100 
percent) preferable?  Are other safeguards sufficient to protect the Commission’s interests regarding 
unjust enrichment?
47. We seek comment on whether the Commission may grant small businesses greater 
flexibility to participate in the provision of spectrum-based services, as it has proposed, while also 
                                                     
97
47 C.F.R. § 1.2111(b).
98
The Commission adopted a 10-year repayment schedule in 2006, which was vacated by the Third Circuit for lack 
of notice.  There the Commission adopted a 10 year unjust enrichment schedule for licenses acquired with bidding 
credits.  Under that rule, a small business that lost eligibility for a bidding credit for any reason was liable for 
repaying 100 percent of the bidding credit, plus interest during the first five years of the license term, 75 percent of 
the bidding credit, plus interest, during years six and seven, 50 percent of the bidding credit, plus interest, during 
years eight and nine, and 25 percent of the bidding credit, plus interest, during year ten.  See DE Second Report and 
Order, 21 FCC Rcd at 4766–67 ¶¶ 37–38.  
99
See MMTC Petition for Reconsideration at 9–11 (noting that 10 year unjust enrichment period would adversely 
affect a DE’s ability to attract capital because, for example, it falls out of most lenders’ investment horizon).  
100
See, e.g., Council Tree Brief at 29–30 (arguing that the 10 year unjust enrichment period adopted in 2006 must be 
evaluated in connection with leasing and other restrictions to determine the likely impact of a DE’s ability to raise 
and retain capital, particularly compared to a shorter, five year period.) 
101
DE Second Report and Order, 21 FCC Rcd at 4767 ¶¶ 38–39. 
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ensuring that only those entities Congress intended have access to benefits.  We ask commenters to 
address how the unjust enrichment rules affect their ability to secure and retain capital and whether the 
Commission’s rules require other further modifications to safeguard the award of small business benefits.  
By granting small businesses greater regulatory flexibility to demonstrate eligibility, do we increase or 
decrease the likelihood that non-eligible entities can assert undue influence over a small business’s 
decision making for its business venture and its utilization of licenses to participate in the provision of 
spectrum-based services?  
48. We also seek comment on how other government programs ensure that only an intended 
class of recipients receive benefits that are awarded to eligible entities.  Are there other government 
programs that have greater safeguards than we currently employ?  How do other government agencies 
and small business benefit programs prevent abuse and guard against unjust enrichment of ineligible 
entities?  Commenters should be specific about any analogies that can be drawn between the 
Commission’s small business benefits and similar benefits awarded by other agencies and programs.
49. Our efforts to provide increased flexibility to small businesses must be balanced with 
vigilant enforcement to ensure that only bona fide small businesses receive benefits.  The Commission 
has a strong interest in ensuring that truthful and accurate information is available to the Commission and 
the public for purposes of implementing and enforcing policies it finds to be in the public interest.  Such 
information is imperative to the Commission’s ability to safeguard the benefits it awards and to prevent 
unjust enrichment.  To the extent we modify rules regarding the Commission’s small business benefits, 
we will remain vigilant, as we are today, in undertaking careful review of all applications of those seeking 
to acquire or retain bidding credits to ensure that the gross revenues of all parties that control, or have the 
potential to control, the applicant are properly attributed in compliance with our controlling interest and 
affiliation rules.  We emphasize that the Commission will remain focused on ensuring that an applicant’s 
certifications for eligibility comport with the actual terms of its agreements with relevant parties.  In so 
doing, we expect that we can properly execute our statutory responsibility to continue to prevent unjust 
enrichment of ineligible entities.  
C. Bidding Credits
50. We also take a fresh look at the primary way that the Commission facilitates participation 
by small businesses at auction through its bidding credit program.  We note that the generally applicable 
small business definitions and corresponding bidding preferences were adopted in 1997 and find that it is 
appropriate to revisit whether these standards have kept pace with an evolving wireless marketplace.
102
  
Toward that end, and as discussed below, we propose to increase the general size standards, measured by 
gross revenues, for purposes of determining an entity’s eligibility for a bidding preference.  We also 
propose to continue our practice of evaluating which small business definitions will apply on a service-
by-service basis, based upon associated capital requirements for a particular service.  In addition, we seek 
comment on whether to increase the bidding credit percentages applicable to associated small business 
categories.  Finally, we seek comment on our ability to consider bidding preferences for other types of 
DEs, entities that serve unserved/underserved areas or areas with persistent poverty, as well as persons 
and entities that have overcome disadvantages.  We expect that the questions raised here will provide a 
meaningful opportunity to evaluate whether the Commission’s bidding credit program continues to 
achieve our objectives.  We seek concrete, specific, data-driven feedback by commenters to facilitate our 
review. In addition to addressing the targeted questions described below, we invite commenters to
suggest other creative ideas that would promote our statutory objectives, but we emphasize that for any 
such proposals it is imperative to provide ample supporting evidence.
                                                     
102
See CCA AWS-3 NPRM Comments at 11–12.
Federal Communications Commission FCC 14-146
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1. Small Business Bidding Credits
51. Background.  Bidding credits operate as a percentage discount on the winning bid 
amounts of a qualifying small business.
103
  By making the acquisition of spectrum licenses more 
affordable for new and existing small businesses, bidding credits facilitate their access to needed capital.  
The Commission establishes eligibility for bidding credits for each auctionable service, adopting one or 
more definitions of the small businesses that will be eligible.  The Commission’s small business 
definitions have been based on an applicant’s average annual gross revenues over a three-year period.
104
  
In establishing the gross revenues thresholds for the small business definitions to be applied to a specific 
service, the Commission takes into account the capital requirements and other characteristics of the 
particular service.
105
  Thus, as explained above, in order to qualify for a small business bidding credit, an 
applicant must demonstrate that its gross revenues, in combination with those of its “attributable” interest 
holders, fall below the applicable financial caps.
106
   
52. The Commission’s rules provide a schedule of small business definitions and 
corresponding bidding credits.
107
  In adopting bidding credits for a particular service, the Commission has 
found that the use of the small business size standards and credits set forth in the Part 1 schedule provides 
consistency and predictability for small businesses.
108
  The rule sets forth three tiers of bidding credits:
? A 35 percent bidding credit for businesses with average annual gross revenues for the 
preceding three years not exceeding $3 million;  
? A 25 percent bidding credit for businesses with average annual gross revenues for the 
preceding three years not exceeding $15 million; and
? A 15 percent bidding credit for businesses with average annual gross revenues for the 
preceding three years not exceeding $40 million.
109
53. Discussion.  We propose to increase the gross revenues thresholds defining the three tiers 
of small businesses in the Part 1 schedule by which we provide the corresponding available bidding 
credits and seek comment on alternatives.  We also propose to continue our practice of deciding which 
small business definitions will apply on a service-by-service basis depending on the capital requirements 
of the particular spectrum to be auctioned.  In addition, we seek comment on whether the bidding credit 
percentages that apply to these small business definitions should be increased.    
54. Since the inception of the Commission’s DE program, and particularly in the past decade, 
the evolution of the mobile wireless marketplace from mobile voice to mobile broadband has increased 
the demands on wireless networks and the need for access to spectrum, heightening the capital-intensive 
nature of the industry.  Moreover, as stated above, the number of small and regional mobile wireless 
service providers has significantly decreased, though regional and local service providers continue to 
offer consumers additional choices in the areas they serve.
110
  In light of these changes and our statutory 
                                                     
103
A bidding credit is a discount applied to the gross bid amount for a license when the high bidder meets specific 
designated criteria.
104
See 47 C.F.R. § 1.2110(f)(2).
105
See 47 C.F.R. § 1.2110(c)(1).
106
See 47 C.F.R. § 1.2110(b).
107
47 C.F.R. § 1.2110(f).
108
See, e.g., Amendment of the Commission’s Rules with Regard to Commercial Operations in the 1695-1710 MHz, 
1755-1780 MHz, and 2155-2180 MHz Bands, GN Docket No. 13-185, Report and Order, 29 FCC Rcd 4610, 4680–
81 ¶ 189 (2014) (AWS-3 Report and Order).
109
47 C.F.R. § 1.2110(f).
110
See ¶ 6.  See also Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6144 ¶ 18, 6206 ¶ 179.  
Federal Communications Commission FCC 14-146
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goals, we seek comment on how we should reconsider our definition of what constitutes a small business 
in the wireless industry.  
55. We propose to increase the gross revenues thresholds in our Part 1 schedule to reflect the 
changing nature of the wireless industry, including the overall increase in the size of wireless networks 
and the increase in capital costs to deploy them.  We note that these changes have resulted in an increase 
in the size of the wireless service providers that can be considered to be “small” relative to the large 
nationwide providers.  By proposing adjustments to our small business size standards, we aim to promote 
the effective participation of small businesses in auctions and in the provision of spectrum-based services.  
56. In considering how much to adjust the gross revenues thresholds in our small business 
definitions, we propose to use the price index for the U.S. Gross Domestic Product (“GDP price index”) 
published by the U.S. Department of Commerce.
111
  We note that the U.S. Small Business Administration 
(“SBA”) as part of its size standards review, recently used the GDP price index to adjust its receipts-based 
industry size standards.
112
  In particular, we propose to adjust the current gross revenues thresholds with 
the percentage change in the GDP price index between 1997 and 2013.
113
  We believe that the GDP price 
index may reflect certain industry trends and a relevant range of economic activity better than the 
available wireless industry price indices.  In barely a decade, the shift from a voice-centric to a data-
centric wireless industry has seen mobile broadband data services grow from their nascent stage to 
become a significant share of the industry’s market revenues.
114
  However, the available wireless industry 
price indices may underrepresent broadband data services because the indices are based on voice-centric 
definitions of service plans.
115
  Furthermore, the wireless industry consumer and producer price indices 
may exclude goods and inputs that are relevant for the range of economic activity involved in the 
provision of wireless services.  Therefore, we propose to use the broader GDP price index.  The GDP 
price index increased by 36.4 percent from 1997 to 2013.
116
  Based on this 36.4 percent increase, we 
propose new gross revenues thresholds that are obtained by multiplying the current thresholds by 1.364 
and rounding to the nearest million.  Specifically, we propose to revise the standardized schedule in 
section 1.2110(f) as follows:
                                                     
111
The U.S. GDP price index is published by the U.S. Department of Commerce, Bureau of Economic Analysis 
(“BEA”) on a quarterly basis as part of its National Income and Product Accounts.  See generally BEA, Interactive 
Data, http://www.bea.gov/itable (last visited July 18, 2014).  
112
Small Business Size Standards: Inflation Adjustment to Monetary Based Size Standards, Interim Final Rule, 79 
Fed. Reg. 33,647 (June 12, 2014).
113
The GDP price index, also known as the GDP implicit price deflator, is defined as the ratio of current-dollar GDP 
to chained-dollar GDP, multiplied by 100.  See BEA, Interactive Data, Tables 1.1.4 and 1.1.5, 
http://www.bea.gov/itable (last visited July 18, 2014).
114
See 16th Mobile Wireless Competition Report, 28 FCC Rcd at 3883–85 ¶ 277.
115
The Bureau of Labor and Statistics (“BLS”) publishes consumer and producer price indices (“CPI” and “PPI,” 
respectively) for the wireless industry.  The BLS states that both the wireless CPI and PPI are based on providers’ 
revenues from certain service plans.  Broadband data plans are not treated as a separate category, and the BLS 
description of the indices is unclear about how the advent of mobile broadband services has been factored into the 
voice-centric CPI and PPI indices that were introduced in 1997 and 1999, respectively, long before the advent of 
mobile broadband services.  See BLS, How the Consumer Price Index Measures Price Change for Telephone 
Services, http://www.bls.gov/cpi/cpifactc.htm (last visited July 18, 2014).  Both the wireless CPI and PPI have 
declined by more than 35 percent since 1997 and 1999, respectively.  See 16th Mobile Wireless Competition Report, 
28 FCC Rcd at 3875–76 ¶ 266; BLS, Producer Price Index for Wireless Telecommunications Carriers–NAICS 
517210, http://www.bls.gov/ppi/ppinaics51721.htm (last visited July 18, 2014).
116
The base year is 2009, and the values of the index in 1997 and 2013 are 78.097 and 106.486, respectively.  See 
BEA, Interactive Data, http://www.bea.gov/itable (last visited July 18, 2014); BEA, National Economic Accounts, 
http://www.bea.gov/national/Index.htm (last visited July 18, 2014).
Federal Communications Commission FCC 14-146
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? Businesses with average annual gross revenues for the preceding three years not 
exceeding $4 million would be eligible for a 35 percent bidding credit; 
? Businesses with average annual gross revenues for the preceding three years not 
exceeding $20 million would be eligible for a 25 percent bidding credit; and 
? Businesses with average annual gross revenues for the preceding three years not 
exceeding $55 million would be eligible for a 15 percent bidding credit.
57. We seek comment on our proposal to adjust the current gross revenues thresholds in our 
small business size standards using the GDP price index.  Is there a different price index that better 
reflects industry developments and the relevant range of economic activity?  Is there an alternative 
method for setting new gross revenues thresholds that does not require adjusting the current gross 
revenues thresholds with a price index?
58. We tentatively conclude that our proposed gross revenues thresholds better reflect the 
larger size of wireless networks today, and thus expect that they will preserve the effectiveness of the 
Commission’s bidding credit program in the current mobile wireless marketplace.  Consumer demand for 
widely available mobile broadband services has increased providers’ need for additional capital to acquire 
spectrum and deploy service.  This trend is reflected in the changing structure of the industry described 
above.  By increasing the gross revenues thresholds that define small businesses and thereby making 
bidding credits available to a larger number of entities, we seek to facilitate a higher rate of participation 
by entities that might otherwise find it difficult to obtain the necessary capital to participate at auction.  
We seek comment on whether the proposed increases in the revenues thresholds are likely to increase the 
percentage of entities that will benefit from our small business bidding credits, by providing better access 
to capital and enabling them to seek access to the spectrum necessary to meet consumer demand for 
mobile broadband services.  At the same time, to further the statutory objectives of the auction 
program,
117
we must adopt revenues thresholds that will avoid including firms that have adequate access 
to financing for spectrum based on their revenue levels.  We therefore seek to avoid setting eligibility for 
bidding credits at a level that is over inclusive, which would defeat the purpose of the bidding credits and 
undermine the statutory objectives of the program.  Any new thresholds we adopt should provide 
economic opportunity to small businesses, while maintaining good economic incentives for small 
businesses to seek diverse forms of financing for spectrum.  
59. We seek comment on this proposal.  Specifically, how have capital costs, construction 
costs, and administrative costs faced by wireless providers changed since the mid-1990s?  Have the costs 
of spectrum usage rights increased significantly since the early stages of our auction program such that it 
is more difficult for small businesses to acquire wireless spectrum today?  
60. Commenters who agree that the industry’s evolution warrants new definitions for small 
businesses should discuss what gross revenues thresholds are appropriate for defining small businesses in 
the wireless context.  Commenters should explain their methodologies for deriving alternative thresholds 
and should supply supporting data or justifications for the Commission’s use in evaluating and applying 
such methodologies.  If commenters do not provide data on wireless providers’ gross revenues, what 
alternative factors should we consider in determining what constitutes a “small business” in today’s 
wireless marketplace? 
61. We also seek comment on whether to adopt a small business size standard based on 
criteria other than gross revenues.  As we recently noted in the AWS-3 proceeding, in first adopting gross 
revenues-based small business size standards for eligibility for DE benefits, the Commission rejected the 
                                                     
117
See 47 U.S.C. § 309(j)(3), requiring the Commission, among other things, to seek to promote the development 
and rapid deployment of new technologies and services; to promote economic opportunity and competition, by 
avoiding excessive concentration of licenses and by disseminating licenses among a variety of applicants (including 
DEs); and to promote recovery for the public of a portion of the value of the public spectrum resource.
Federal Communications Commission FCC 14-146
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SBA’s employee-based business size standard for cellular or other wireless telecommunications entities 
as a means to qualify as a DE.
118
  The Commission concluded that such a definition would be too 
inclusive and would allow many large telecommunications firms to take advantage of preferences not 
intended for them.
119
  We note that according to census data, if we adopted the SBA’s small business 
employee-based size standard for cellular or other wireless telecommunications entities (i.e., 1,500 or 
fewer employees),
120
more than 96 percent of wireless companies would be considered small 
businesses.
121
  We therefore tentatively conclude not to reconsider the Commission’s conclusion that the 
SBA’s employee-based definition is too inclusive for the purposes of establishing DE eligibility.  
62. In addition, we ask commenters to consider whether we should increase the bidding 
credit percentages (i.e., discount amounts) currently available to small businesses in section 1.2110(f).  
Should we use the existing bidding credit percentages, but apply them to higher gross revenues 
thresholds?  Should we add additional small business definitions and associated tiers of bidding credits 
above or below the tiers proposed above?  Commenters supporting additional tiers of bidding credits 
should propose a corresponding gross revenues threshold for each additional tier.  Commenters 
supporting changes to the existing bidding credit percentages in our Part 1 rules should explain the basis 
for their proposals and provide any supporting data for the Commission’s use in evaluating potential 
changes to the Part 1 schedule.  Commenters should also address whether increases in the bidding credit 
percentages are necessary if we adopt our proposal to modify the gross revenues thresholds for our small 
business definitions since that will have the effect of increasing the level of bidding credit a substantial 
number of small businesses would receive compared to our current rules.
122
  
63. Further, we propose to continue our practice of soliciting comment on the appropriate 
small business size standards in connection with establishing rules for any particular service.  As we have 
done in the past and pursuant to section 1.2110(c)(1), we would continue to take into consideration the 
characteristics and capital requirements of each service.
123
  We seek comment on this proposal.  
Alternatively, should the Commission utilize all three small business definitions and bidding credit tiers 
in every service?  Under this approach, the Commission would make bidding credits available to any 
business that meets one of the small business definitions without engaging in an assessment of the likely 
                                                     
118
See AWS-3 Report and Order, 29 FCC Rcd at 4680–81 ¶ 189. 
119
Id.
120
13 C.F.R. § 121.201, NAICS code 517210.  In determining an entity’s number of employees, the SBA includes 
employees of each of that entity’s affiliates.  See 13 C.F.R. § 121.106 (SBA method for calculating number of 
employees).  
121
For this category, census data for 2007 show that there were 1,383 firms that operated for the entire year.  U.S. 
Census Bureau, Table No. EC0751SSSZ5, Information: Subject Series - Establishment and Firm Size: Employment 
Size of Firms for the United States: 2007 (NAICS code 517210), 
http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_51SSSZ5 (last 
visited July 23, 2014).  Of this total, 1,368 firms had employment of 999 or fewer employees and 15 had 
employment of 1000 employees or more.  Id.  The U.S. Census Bureau defines a firm as a “business organization or 
entity consisting of one domestic establishment (location) or more under common ownership or control. All 
establishments of subsidiary firms are included as part of the owning or controlling firm.”  U.S. Census Bureau, 
Frequently Asked Questions: What is the difference between establishment and firm?  What about companies?, 
https://ask.census.gov/faq.php?id=5000&faqId=487 (last visited July 23, 2014).
122
By increasing the revenues thresholds, entities previously eligible for small business bidding credits under the 
current schedule may become eligible for a higher bidding credit tier under the proposed amended schedule, and 
entities that previously exceeded the highest revenue threshold may become eligible.  Similarly, bidders that 
previously exceeded the thresholds as a result of attributable revenues under the AMR rule may fall below the 
thresholds, and thus become eligible for small business bidding credits, if the AMR rule is eliminated as proposed in 
this NPRM.
123
See 47 C.F.R. § 1.2110(c)(1).
Federal Communications Commission FCC 14-146
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capital requirements of the specific service for which licenses are being offered.  What are the advantages 
and disadvantages of this alternative approach?  If the Commission continues to adopt small business 
definitions on a service-by-service basis, are there other factors that it should consider in determining 
which small business definition to apply to a specific service?  Alternatively, if the Commission adopts its 
proposed modifications to the AMR and small business size standards, should it consider reducing the 
level of bidding credits it awards?  Commenters should provide specific suggestions on how the 
Commission should weigh its proposals collectively.  
64. We also seek comment on whether any revisions we adopt in this proceeding to our Part 
1 schedule of small business size standards and associated bidding credit percentage levels should apply 
to the specific small business definitions and bidding credit percentages we have previously adopted for 
specific services, and, if so, how such revisions would be implemented.  In particular, we propose that any 
new rules adopted in this proceeding would apply to the 600 MHz band spectrum licenses to be offered in 
the Broadcast Television Spectrum Incentive Auction (“BIA”).  In the BIA proceeding, we adopted a 15 
percent bidding credit for small businesses (defined as entities with average annual gross revenues for the 
preceding three years not exceeding $40 million) and a 25 percent bidding credit for very small 
businesses (defined as entities with average annual gross revenues for the preceding three years not 
exceeding $15 million).
124
  Consistent with the increased gross revenues thresholds we propose for the 
standardized schedule in our Part 1 competitive bidding rules, we propose to increase the gross revenues
thresholds associated with the 15 and 25 percent bidding credits adopted for the 600 MHz band.
125
  We 
seek comment on this proposal.  In addition, we seek comment on whether to adopt a third tier of small 
business bidding credits for the 600 MHz band that would provide a 35 percent bidding credit to 
businesses with average gross revenues for the preceding three years not exceeding $4 million.  If the 
Commission re-auctions licenses for existing services, should the previously adopted service-specific 
small business definitions and bidding credit percentages be revised for those services to reflect any 
changes to our Part 1 schedule in section 1.2110(f)(2)?
2. Other Bidding Preferences 
65. As explained above, the Commission’s primary method of fulfilling its statutory mandate 
regarding DEs has been to offer auction bidding credits to small business applicants. Periodically, 
however, interested parties have suggested that the Commission offer bidding preferences to entities 
based on other criteria than business size. As the Commission has explained in the past, our ability to 
implement suggestions to target bidding credits to other types of entities is constrained by both its 
statutory authority and standards of judicial review. We seek comment on these suggestions below, and 
ask commenters to specifically address the statutory authority and judicial scrutiny issues that may limit 
our ability to entertain recommendations to alter the focus of our current bidding preferences.  
a. Minority- and Women-Owned Businesses and Rural Telephone 
Companies
66. The Communications Act directs us to consider the use of bidding preferences to “ensure 
that small businesses, rural telephone companies, and businesses owned by members of minority groups 
and women are given the opportunity to participate in the provision of spectrum-based services.”
126
  We 
seek comment on whether the current small business provisions are sufficient to promote participation by 
businesses owned by minorities and women, as well as rural telephone companies.  To the extent that 
commenters propose additional provisions to ensure participation by minority-owned or women-owned 
                                                     
124
See BIA Report and Order, 29 FCC Rcd at 6762–67 ¶¶ 474–83.
125
That is, for the 600 MHz band, we propose to provide a bidding credit of 25 percent for businesses with average 
gross revenues for the preceding three years not exceeding $20 million and a bidding credit of 15 percent for 
businesses with average gross revenues for the preceding three years not exceeding $55 million.
126
47 U.S.C. § 309(j)(4)(D).
Federal Communications Commission FCC 14-146
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businesses, they should address how such provisions could be crafted to meet the relevant standards of 
judicial review.
127
  We ask commenters advocating for the adoption of rural bidding credits to supply data 
demonstrating that rural telephone companies lack access to capital or face barriers to capital formation 
similar to those faced by other DEs.
128
b. Unserved/Underserved Areas and Persistent Poverty Preferences
67. We seek comment on whether the Commission should extend bidding credits to winning 
bidders that deploy facilities and provide service to unserved or underserved areas.
129
If we adopt bidding 
credits for service to unserved or underserved areas, what criteria should we consider to determine if an 
area is unserved or underserved?  Should any unserved/underserved area bidding credits be available in 
all areas lacking service, only in rural areas, or only in persistently poor counties, as described below?  As 
required of providers awarded universal service funds through the Mobility Fund Phase I auctions, should 
a wireless provider awarded an unserved/underserved bidding credit be required to provide a certain level 
of service (e.g., 3G or 4G) by a certain time frame (e.g., two or three years) in order to retain the benefit 
of the bidding credit?  
68. We also seek comment on whether the Commission should offer a bidding credit to 
winning bidders that will use their licensed spectrum to deploy service to persistent poverty counties.  As 
defined by the Department of Agriculture’s Economic Research Service (“ERS”), a county is persistently 
poor if 20 percent or more of its population was living in poverty over the last 30 years.
130
  According to 
the ERS, “there are currently 353 persistently poor counties in the United States (comprising 11.2 percent 
of all U.S. counties).”
131
  If we adopt such a bidding credit, should the Commission impose strict 
performance requirements on providers awarded bidding credits for licenses covering persistent poverty 
counties similar to those required of winning bidders awarded Tribal land bidding credits?
132
  Should this 
type of bidding credit only apply to licenses covering persistent poverty counties that are only served by 
two or fewer wireless service providers?
69. If we adopt unserved/underserved area and/or persistent poverty county bidding credits, 
should the bidding credits be available only to small businesses and/or other DEs, or to any applicant?  
How would the Commission calculate the credit amount where the unserved or underserved area or 
targeted counties cover a portion of a license area?  Should the bidding credit be applied to the total 
amount of the winning bid for a license, or should it be applied to a portion of the winning bid based on a 
percentage of population or square miles of the license area covered by the unserved/underserved area or 
identified counties or some other metric?  What size bidding credit would be appropriate for either an 
unserved/underserved area bidding credit or a persistent poverty county bidding credit?  If an applicant 
qualifies for both bidding credits, should we limit the amount of the combined credit?  Similarly, if an 
                                                     
127
See note 1.
128
See Service Rules for Advanced Wireless Services H Block—Implementing Section 6401 of the Middle Class 
Tax Relief and Job Creation Act of 2012 Related to the 1915-1920 MHz and 1995-2000 MHz Bands, WT Docket 
No. 12-357, Report and Order, 28 FCC Rcd 9483, 9580–81 ¶ 260 (2013); AWS-3 Report and Order, 29 FCC Rcd at 
4679–80 ¶ 187; BIA Report and Order, 29 FCC Rcd at 6764–65 ¶ 479. 
129
See, e.g., RTG BIA NPRM Comments at 8.
130
See ERS, Geography of Poverty, http://www.ers.usda.gov/topics/rural-economy-population/rural-poverty-well-
being/geography-of-poverty.aspx (last visited July 18, 2014).
131
Id.  The ERS further explains that “[t]he large majority (301 or 85.3 percent) of the persistent-poverty counties 
are nonmetro, accounting for 15.2 percent of all nonmetro counties.  Persistent poverty also demonstrates a strong 
regional pattern, with nearly 84 percent of persistent-poverty counties in the South, comprising of more than 20 
percent of all counties in the region.”  Id.
132
For example, the Commission could require a recipient of such a bidding credit to cover at least 75 percent of the 
affected counties within its market within three years of licensing or risk losing the benefit of the bidding credit.
Federal Communications Commission FCC 14-146
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applicant qualifies for one of these credits in addition to a small business bidding credit, should the credits 
be cumulative and, if so, should there be a limit on the amount of the aggregate bidding credit provided?  
Should any limit be an amount greater than the maximum small business bidding credit to allow DEs 
eligible for the highest bidding credit tier to receive an increased benefit for also providing service to an 
unserved/underserved area and/or persistent poverty county?
133
  Commenters supporting cumulative 
bidding credits should provide data or support justifying the need for higher bidding credits in
unserved/underserved and/or persistent poverty areas.  Alternatively, are issues related to lack of 
deployment or low levels of deployment of wireless services in rural and poor areas better addressed 
through means other than our bidding credit program, such as through service-specific build-out 
requirements or reliance on incentives through our Mobility Fund and other universal service 
programs?
134
70. We seek comment on our authority to implement these types of bidding preferences.  We 
note that the Commission has previously implemented bidding credits based on other criteria than 
business size in order to facilitate service to Tribal lands.
135
  In that proceeding, the Commission found 
that the objectives and requirements of section 309(j) of the Act,
136
which the Commission must consider 
in designing competitive bidding systems, authorized it to grant bidding credits targeted specifically to 
entities that commit to bringing much needed wireless telecommunications services to Tribal lands.
137
  
We tentatively conclude that section 309(j) of the Act similarly authorizes the Commission to provide 
bidding credits for service to unserved/underserved areas and persistent poverty counties.  We seek 
comment on our tentative conclusion.
c. Overcoming Disadvantages Preference
71. In view of renewed interest raised in the BIA proceeding,
138
we also seek additional 
comment on the 2010 FCC’s Advisory Committee on Diversity for Communications in the Digital Age 
recommendation to implement a bidding preference for persons or entities who have overcome substantial 
                                                     
133
For example, if the maximum small business bidding credit is 35 percent, should a DE eligible for that credit and 
for a persistent poverty credit be limited to an aggregate credit of 40 percent?
134
See 47 U.S.C. § 309(j)(4)(B) (authorizing the Commission to “include performance requirements, such as 
appropriate deadlines and penalties for performance failures, to ensure prompt delivery of service to rural areas, to 
prevent stockpiling or warehousing of spectrum by licensees or permittees, and to promote investment in and rapid 
deployment of new technologies and services”).
135
Extending Wireless Telecommunications Services to Tribal Lands, WT Docket No. 99-266, Report and Order 
and Further Notice of Proposed Rule Making, 15 FCC Rcd 11794, 11800 ¶ 16 (2000) (finding that “establishing 
bidding credits for carriers, regardless of size, who agree to extend coverage to [T]ribal areas is in the public 
interest”) (Tribal Lands Report & Order).
136
47 U.S.C. § 309(j)(3) & (4).  The Commission found that Tribal land bidding credits further the objective of 
section 309(j)(3)(A) to ensure “the development and rapid deployment of new technologies, products, and services 
for the benefit of the public, including those residing in rural areas . . .” and the objective of section 309(j)(3)(D) of 
promoting “efficient and intensive use of the electromagnetic spectrum.”  Tribal Lands Report & Order, 15 FCC 
Rcd at 11801 ¶ 18; see 47 U.S.C. § 309(j)(3)(A) & (D).  The Commission also found that there is no indication in 
section 309(j)(4)(D) or in its legislative history that the Commission’s authority to award bidding preferences is 
limited to small businesses, rural telephone companies, and businesses owned by members of minority groups and 
women.  Tribal Lands Report & Order, 15 FCC Rcd at 11802 ¶ 19; see 47 U.S.C. § 309(j)(4)(D).  
137
Tribal Lands Report & Order, 15 FCC Rcd at 11801 ¶ 18.  
138
See, e.g., IAA BIA NPRM Comments at 7–9; Letter from David Honig, President and Executive Director, 
MMTC, to Marlene Dortch, Secretary, FCC, MB Docket Nos. 09-182, 07-294, IB Docket No. 11-133, GN Docket 
No. 12-268, at 1–2 (filed Jan. 10, 2013); Letter from David Honig, President, MMTC, to Marlene Dortch, Secretary, 
FCC, MB Docket Nos. 09-182, 07-294, IB Docket No. 11-133, GN Docket No. 12-268, at 4 (filed Dec. 5, 2012).    
Federal Communications Commission FCC 14-146
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disadvantage (referred to herein as an “overcoming disadvantages preference,” or “ODP”).
139
  In that 2010 
Recommendation, the Committee proposed that the Commission should provide an auction bidding credit 
for otherwise qualified persons or entities that have overcome substantial disadvantages, to allow them to 
compete on equal footing with other applicants.  The Committee stated that an ODP would provide a fair 
opportunity for highly qualified applicants to compete for spectrum licenses, thereby expanding the pool 
of eligible bidders in an auction.  
72. Commenters should specifically address the Commission’s statutory authority to adopt 
such a preference and how such a preference could be crafted to meet the relevant standards of judicial 
review.
140
  Would a preference for those who have overcome a substantial disadvantage be subject to a 
“rational basis” constitutional standard, as the Advisory Committee’s Recommendation indicates?
141
  
Additionally, we seek detailed comment on how the preference would provide additional opportunities 
not available under the current bidding credit program, particularly if the current program is amended as 
proposed in this NPRM.  
73. We also ask for input on how the Commission might systematically collect and maintain 
data in order to implement and administer an ODP.  What legal basis do we have to collect data, and what 
precise data would we need to support such a proposal?
74. We ask commenters to address how eligibility for an ODP could be demonstrated, 
providing specific information as to what definitions of disadvantages could qualify individuals or entities 
for the preference.  How would we measure when any particular disadvantage had been overcome?  The 
Advisory Committee’s Recommendation provides a non-exhaustive list that includes disadvantages such 
as physical disabilities or psychological disorders that rendered professional or business advancement 
substantially more difficult than for most individuals.
142
  How could we avoid subjective determinations 
and implement and apply an ODP on a neutral basis?  We ask commenters to discuss how the 
Commission could establish eligibility for the preference objectively.  How could the Commission render 
eligibility determinations for an ODP without appearing arbitrary?  How could the Commission safeguard 
any such benefits to ensure they are awarded only to eligible persons or entities?
75. We also seek detailed comment on how the Commission could administer an ODP.  
Commenters should identify the costs and benefits associated with such a program, addressing matters 
such as how reviews would be conducted, and the nature of the demonstration applicants seeking a 
preference would be required to make,
143
as well as how individualized evaluation for the preference 
would be incorporated into a time-sensitive short-form application process
144
or whether alternatives such 
as pre-qualification would be necessary.
145
  
                                                     
139
Advisory Committee on Diversity for Communications in the Digital Age, Recommendations to Federal 
Communications Commission: Preference for Overcoming Disadvantage, Oct. 14, 2010, 
http://www.fcc.gov/DiversityFAC/meeting101410.html (Recommendation). The Media and Wireless 
Telecommunications Bureaus subsequently issued a public notice seeking comment on additional information that 
would be helpful in evaluating whether and how to pursue the Committee’s proposal.  Media and Wireless 
Telecommunications Bureaus Seek Comment on Recommendation of the Advisory Committee on Diversity for 
Communications in the Digital Age for a New Auction Preference for Overcoming Disadvantage, GN Docket No. 
10-244, Public Notice, 25 FCC Rcd 16854 (2010) (Overcoming Disadvantage Preference Public Notice).
140
See note 1. 
141
Recommendation at 10.  
142
Recommendation at 4.
143
Overcoming Disadvantage Preference Public Notice, 25 FCC Rcd at 16857–58 ¶ 10.
144
The Commission’s short-form application is the first part of its two-phased auction application process.  In the 
first phase, any party desiring to participate in an auction must file a streamlined short-form application in which it 
certifies under penalty of perjury as to its qualifications to participate in a Commission auction.  See 47 C.F.R. 
(continued….)
Federal Communications Commission FCC 14-146
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76. As acknowledged by the Advisory Committee, its ODP proposal raises a number of 
issues that need to be refined and resolved in order to design and implement such a preference,
146
and 
comment provided to date has not provided sufficient basis or justification for doing so.
147
  Therefore, 
commenters that continue to support the adoption of an ODP are encouraged to provide as detailed and 
specific suggestions as possible regarding the Commission’s authority to establish the ODP and its 
objectives in doing so, as well as eligibility for, and administration of, the preference, to assist the 
Commission in determining a legal, neutral, and efficient way in which it could implement an ODP. 
Alternatively, we ask commenters to consider whether the proposals we have made to amend our existing 
DE program would obviate the need for the adoption of such a preference.
D. DE Reporting Requirements 
77. Background.  Section 1.2110(n) of our rules requires DE licensees to file an annual 
report with the Commission that includes, at a minimum, a list and summaries of all agreements and 
arrangements, extant or proposed, that relate to eligibility for DE benefits.
148
  The list must include the 
parties (including affiliates, controlling interests, and affiliates of controlling interests) to each agreement 
or arrangement, as well as the dates on which the parties entered into each agreement or arrangement.
149
  
DEs are required to file a report for each of their licenses no later than, and up to five business days 
before, the anniversary of the date of license grant.
150
78. Discussion.  We propose to repeal this reporting requirement.
151
  The information DEs 
are required to include in their annual reports is duplicative of information that they provide in their 
auction and license applications.
152
  In addition, before entering into leases or other agreements that might 
affect their eligibility, DEs must seek Commission approval and must list and summarize those 
(Continued from previous page)                                                            
§ 1.2105.  In its review of the short-form applications, Commission staff presumes the information and certifications 
contained in the short-form applications are true unless they are incomplete, internally inconsistent or contradicted 
by information in the Commission’s records.  See Auction of Licenses for VHF Public Coast and Location and 
Monitoring Service Spectrum, Order, 17 FCC Rcd 19746, 19749–50 ¶ 7 (2002).  Eligibility to participate in bidding 
is based on information in an applicant’s short-form application and its certifications, and on its upfront payment.  In 
the second phase of our application process, a winning bidder files a more comprehensive long-form application.  
See 47 C.F.R. § 1.2107.  The long-form application is subject to more extensive review and is the basis for any 
determination that a winning bidder is qualified to hold a Commission license and for the award of any claimed 
bidding credit.  See generally 47 U.S.C. § 308(b) (license applications must provide factual information to 
demonstrate applicant qualifications).
145
Overcoming Disadvantage Preference Public Notice, 25 FCC Rcd at 16858 ¶¶ 11–12.  See also Recommendation
at 8–9.  
146
See Recommendation at 7 (“An FCC rulemaking should flesh out similarities and differences and would refine 
and resolve some of the issues identified below.”).  See also Overcoming Disadvantage Preference Public Notice, 
25 FCC Rcd at 16854.
147
Nine comments and two reply comments were filed in response to the Overcoming Disadvantage Preference 
Public Notice.  The commenters who supported the Advisory Committee’s Recommendation largely did so with 
reservations, or simultaneously expressed support for other diversity initiatives.  Few commenters responded in 
detail to the questions presented.
148
DE Second Report and Order, 21 FCC Rcd at 4770 ¶¶ 47–48; see DE Order on Reconsideration, 21 FCC Rcd at 
6719 ¶ 42; 47 C.F.R. § 1.2110(n).
149
DE Second Report and Order, 21 FCC Rcd at 4770 ¶¶ 47–48; see id. ¶ 46; 47 C.F.R. § 1.2110(n).
150
47 C.F.R § 1.2110(n).   
151
This proposal addresses an issue raised by Blooston in a petition for reconsideration of the DE Second Report 
and Order. Blooston Petition at 9.  See also Blooston Reply at 7–8.
152
See 47 C.F.R. §§ 1.2110(j), 1.2112(b)(2)(iii).
Federal Communications Commission FCC 14-146
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agreements, including the parties to and the dates of the agreements.
153
  Moreover, for licensees with 
multiple auction licenses, each having a different grant date, the burden of the annual reporting 
requirement is exacerbated by the obligation to file multiple reports each year.  For these reasons, we 
tentatively conclude that the value of the information provided in these reports may no longer outweigh 
the reporting burden that they impose on DEs.
154
79. We seek comment on our proposal.  In particular, commenters are invited to address 
whether there are any benefits to retaining the annual reporting requirement that we have failed to 
consider. Does this reporting requirement in any way help the Commission identify agreements between 
parties relating to small business eligibility that might otherwise escape attention? Commenters should 
specifically address how other rules render this reporting requirement duplicative and how other rules 
adequately ensure that the Commission is aware of all agreements between parties relating to small 
business eligibility.  Will relieving DEs of this annual reporting requirement reduce their regulatory 
burdens to any measurable degree?  Without this reporting requirement, will the Commission continue to 
have the necessary tools to safeguard DE benefits from unjustly enriching ineligible entities? If the 
Commission adopts this proposal to eliminate this annual reporting requirement, should we amend our 
rule for reporting eligibility events to require that a small business must list and summarize all existing 
agreements to provide context each time it reports a new eligibility event?
155
E. MMTC’s White Paper Requests  
80. Background.  As we noted above, in February 2014, MMTC submitted a White Paper 
detailing several policy recommendations to advance minority and women spectrum license ownership.
156
  
In addition to requesting the elimination of the AMR, an increase in bidding credits, and a substantive 
review of proposed DE rules, all of which are addressed above, the White Paper requests Commission 
action in the following areas:
? Reinstitute select DE-only closed spectrum auctions;
? Incorporate diversity and inclusion in the Commission’s public interest analysis of mergers 
and acquisitions (“M&As”) and secondary market spectrum transactions;
? Conduct ongoing recordkeeping of DE performance;
? Complete the Adarand Studies, updating the section 257 studies released in 2000;
? Regularize procedural requirements; and
? Support increased funding for and statutory amendments regarding the Telecommunications 
Development Fund.
157
81. Discussion.  We seek comment on the proposals noted above, that are not otherwise 
addressed in this NPRM, and to the extent that they relate to our competitive bidding rules.  We observe
that certain proposals appear to be outside the scope of this proceeding and others may not be needed in 
light of other changes proposed herein.  Toward that end, we tentatively conclude that the following
MMTC proposals are outside the scope of this proceeding, which is focused on our competitive bidding 
rules, and thus will not be addressed here: (1) incorporating diversity and inclusion in the Commission’s 
public interest analysis of mergers and acquisitions and secondary market spectrum transactions; and (2) 
                                                     
153
47 C.F.R. § 1.2114.
154
We are also cognizant of the administrative burden on Commission staff that results from reviewing the annual 
reports.
155
47 C.F.R. § 1.2114. 
156
Digital Déjà Vu.
157
Id. at v, 32–34.  
Federal Communications Commission FCC 14-146
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supporting increased funding for and statutory amendments regarding the Telecommunications 
Development Fund.
158
  We seek comment on MMTC’s additional requests, including discussion 
regarding the relative costs and benefits of each proposal.  Are the proposals that we describe elsewhere 
in this NPRM, including the elimination of the AMR rule, sufficient to address the concerns identified by 
MMTC regarding the participation of businesses owned by members of minority groups and women in 
the provision of spectrum-based services?
III. OTHER PART 1 CONSIDERATIONS
82. In advance of an auction that could hold historic potential for interested applicants to 
acquire licenses for below-1-GHz spectrum, we also explore the need for other revisions to our general 
Part 1 competitive bidding rules to improve the transparency and efficiency of the auction and our 
processes.  In the Section below, we propose changes to our former defaulter rule that seek to balance 
commenters’ concerns that the current rules are overly broad with our continued need to ensure that 
auction bidders are financially reliable.  We also propose to codify an existing competitive bidding 
procedure that prohibits the same individual or entity from filing more than one short-form application to 
participate in an auction and we propose a new rule that would prevent entities that are exclusively 
controlled by a single individual or set of individuals from becoming qualified to bid on the basis of more 
than one short-form application in a specific auction.  Both proposals seek to prevent duplicative filings 
and to avert anticompetitive bidding behavior at auction.  Regarding the joint bidding rules, we seek 
comment on, among other issues, our tentative conclusions that it would be in the public interest to retain 
the current rules governing joint bidding arrangements among non-nationwide providers and to prohibit 
joint bidding arrangements among nationwide providers.  Additionally, below, we provide notice of our 
intention to resolve long standing petitions for reconsideration and propose necessary clean up revisions 
to our Part 1 competitive bidding rules.
A. Former Defaulter Rule
83. Background.  Each potential participant in a Commission auction must certify on its pre-
auction “short-form” application whether or not the applicant, its affiliates, its controlling interests, and 
the affiliates of its controlling interests have ever been in default on any Commission license or have ever 
been delinquent on any non-tax debt owed to any Federal agency.
159
  With the exception of our upcoming 
auction for AWS-3 licenses (Auction 97) for which we recently granted a limited blanket waiver that is 
discussed more fully below,
160
an applicant is considered to be a “former defaulter” if the applicant, 
                                                     
158
We note that MMTC’s request with respect to “ongoing recordkeeping of DE performance” refers to “retain[ing] 
specific information about the [minority-owned business enterprises] and [woman-owned business enterprises]
status of bidders, in addition to the small business status.”  Id. at 33.  The Commission has sought comment in WT 
Docket No. 13-135 on the need to collect information on the participation of minority and women-owned enterprises 
in the mobile wireless industry, pursuant to similar MMTC requests.  Wireless Telecommunications Bureau Seeks 
Further Comment on the State of Mobile Wireless Competition and the Role of Minority and Women-Owned 
Business Enterprises and Extends Period for Reply Comments, WT Docket No. 13-135, Public Notice, 28 FCC Rcd 
9125 (2013).
159
47 C.F.R. § 1.2105(a)(2)(xi) (former defaulter certification).  Each applicant must also certify that, as of the 
short-form application deadline, it is currently not in default on any Commission license or delinquent on any non-
tax debt owed to any Federal agency; if it is currently in default or delinquent, it cannot participate in the auction.  
Controlling interests and affiliates are defined at 47 C.F.R. § 1.2110.  See alsoWireless Telecommunications Bureau 
Reminds Prospective Broadband PCS Spectrum Auction Applicants of Default and Delinquency Disclosure 
Requirements, Public Notice, 19 FCC Rcd 21920 (2004) (providing auction applicants information regarding the 
interplay between defaults, delinquencies, and the Commission’s “red light” rule).  We do not intend in this 
proceeding to revisit this rule with respect to current defaults and delinquencies.
160
See Petition of DIRECTV Group, Inc. and EchoStar LLC for Expedited Rulemaking to Amend Section 
1.2105(a)(2)(xi) and 1.2106(a) of the Commission’s Rules; Auction of Advanced Wireless Services (AWS-3) 
Licenses Scheduled for November 13, 2014 (Auction 97), RM-11395; AU Docket No. 14-78, Order, FCC 14-130 
(rel. Aug. 29, 2014) (Auction 97 Former Defaulter Waiver Order).
Federal Communications Commission FCC 14-146
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including any of its affiliates, its controlling interests, or any of the affiliates of its controlling interests, 
has defaulted on any Commission license or been delinquent on any non-tax debt owed to any Federal 
agency, but has since remedied all such defaults and cured all of its outstanding non-tax delinquencies.
161
   
Former defaulters are eligible to bid in a Commission auction provided they are otherwise qualified,
162
but
are required to pay upfront payments that are 50 percent more than the normal upfront payment 
amounts.
163
  
84. The “former defaulter” policies were incorporated into the Commission’s Part 1 general 
competitive bidding rules in 2000.
164
  The Commission reasoned that “the integrity of the auctions 
program and the licensing process dictates requiring a more stringent financial showing from applicants 
with a poor Federal financial track record.”
165
  Thus, while cure of an outstanding Federal default or 
delinquency enables the former defaulter to participate in an auction, the rules require the former defaulter 
to make a larger upfront payment.  Other than in the recent waiver for Auction 97, the former defaulter 
rule has been applied without any limitation as to age or scope of an applicant’s prior default or 
delinquency.
166
  
85. As noted above, on August 29, 2014, in response to unopposed requests from wireless 
industry parties,
167
we granted a limited blanket waiver to narrow the circumstances under which an 
                                                     
161
See, e.g., Auction of Advanced Wireless Services Licenses Scheduled for June 29, 2006; Notice and Filing 
Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures for Auction No. 66, AU Docket 
No. 06-30, Public Notice, 21 FCC Rcd 4562, 4589 ¶¶ 82–83 (2006) (Auction 66 Public Notice).
162
An applicant is not eligible to participate in competitive bidding if the applicant, any of its affiliates, any of its 
controlling interests, or any of the affiliates of its controlling interests is currently in default on any Commission 
license or is delinquent on any non-tax debt owed to any Federal agency, as of the filing deadline for applications to 
participate in a specific auction.  Part 1 Fifth Report and Order, 15 FCC Rcd at 15317 n.142 (“If any one of an 
applicant’s controlling interests or their affiliates . . . is in default on any Commission licenses or is delinquent on 
any non-tax debt owed to any Federal agency at the time the applicant files it[s] Form 175, the applicant will not be 
able to make the certification required by [s]ection 1.2105(a)(2)(x) . . . and will not be eligible to participate in 
Commission auctions.”).
163
47 C.F.R. § 1.2106(a).
164
Part 1 Fifth Report and Order, 15 FCC Rcd at 15316 ¶ 41.  The Commission determined that, while it was 
“necessary to limit participation in Commission auctions to entities that can certify that they are not in default on 
certain debts, … past business misfortunes do not inevitably preclude an entity from being able to meet its present 
and future responsibilities as a Commission licensee.”  Id. at 15316 ¶ 41, citing Amendment of the Commission’s 
Rules Regarding Installment Payment Financing for Personal Communications Services (PCS) Licensees, WT 
Docket No. 97-82, Fourth Report and Order, 13 FCC Rcd 15743, 15753–54 ¶ 18 (1998) (C Block Fourth Report 
and Order).
165
Part 1 Fifth Report and Order, 15 FCC Rcd at 15317 ¶ 42, citing C Block Fourth Report and Order, 13 FCC Rcd 
at 15761–62 ¶ 34.  
166
In 2004, an applicant for an FM Broadcast auction (Auction 37) sought waiver of 47 C.F.R. § 1.2106(a) on the 
grounds that the controlling interest of the auction applicant had cured his loan default 12 years earlier.  The 
Auctions and Spectrum Access Division of the Wireless Telecommunications Bureau denied the request, and the 
Commission upheld the denial, based on the finding that a waiver of the former defaulter rule would lead to an 
inconsistent application of the Commission’s rules and would not serve the public interest.  See Letter to Richard 
Hodson, Hodson Broadcasting, from Gary D. Michaels, Deputy Chief, Auctions and Spectrum Access Division, 
Wireless Telecommunications Bureau, dated Sept. 14, 2004, 19 FCC Rcd 18101 (2004), recon. denied, Richard 
Hodson – Request for Waiver of Section 1.2106(a) of the Commission’s Rules, Memorandum Opinion and Order, 
19 FCC Rcd 22309 (2004) (noting that the petitioner failed to explain why he should be treated differently and how 
the interests of the public would be served by a grant of a waiver in his case).
167
Petition of DIRECTV Group, Inc. and EchoStar LLC for Expedited Rulemaking to Amend Section 1.2105(a)(2)(xi) 
and 1.2106(a) of the Commission’s Rules and/or for Interim Conditional Waiver, filed June 8, 2007, RM-11395 
(DIRECTV/EchoStar Petition); AT&T DIRECTV/EchoStar Petition Comments; Letter from Barry J. Ohlson to 
(continued….)
Federal Communications Commission FCC 14-146
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applicant for Auction 97 would be considered a former defaulter and required to submit a larger upfront 
payment to qualify to bid.
168
  We concluded that the underlying purpose of the upfront payment and 
former defaulter rules would not be served by their broad application in the AWS-3 auction, and that a 
limited waiver served the public interest.
169
Specifically, for Auction 97, we waived the former defaulter 
rule for applicants to exclude any cured default or delinquency for which any of the following criteria 
were met: (1) the notice of the final payment deadline or delinquency was received more than seven years 
before the Auction 97 short-form application deadline of September 12, 2014; (2) the amount of the 
default or delinquency falls below $100,000; (3) the default or delinquency was paid within two quarters 
(i.e., 6 months) after receiving the notice of the final payment deadline or delinquency; or (4) the default 
or delinquency was the subject of a legal or arbitration proceeding that was cured upon resolution of the 
proceeding.
170
  Pursuant to the Auction 97 Former Defaulter Waiver Order, only applicants that have had 
a cured default or delinquency that falls outside of these exclusions would have to certify to being a 
“former defaulter” and submit a larger upfront payment in Auction 97.
171
  The Auction 97 Former 
Defaulter Waiver Order noted that our limited grant of the blanket waiver for Auction 97 was without 
prejudice to our further examination and disposition, based on a complete record, of the issues 
surrounding the former defaulter rule through a rulemaking proceeding.
172
86. Discussion.  Although the former defaulter rule serves an important and necessary 
function to ensure that bidders are capable of meeting their financial commitments, we tentatively 
conclude that the rule may be too far-reaching and impose unnecessary costs and burdens on auction 
participants.  Below, we propose a more tailored approach by balancing concerns that the current 
application of the rule is overbroad with our continued need to ensure that auction bidders are financially 
reliable.  We seek comment on revising the rule to narrow the scope of the defaults and delinquencies that 
will be considered in determining whether or not an auction participant is a former defaulter.  
(Continued from previous page)                                                            
Marlene H. Dortch, Secretary, FCC, RM-11395 (filed Aug. 13, 2010) (DIRECTV/EchoStar et al. Aug. 13, 2010 Ex 
Parte Letter); Letter from Christine M. Crowe to Marlene H. Dortch, Secretary, FCC, RM-11395 (filed Oct. 6, 
2010); Letter from Competitive Carriers Association, Consumer Electronics Association, CTIA-The Wireless 
Association, and NTCA-The Rural Broadband Association, to Marlene H. Dortch, Secretary, FCC, RM-11395, GN 
Docket No. 13-185, AU Docket No. 14-78, GN Docket No. 12-268 (filed May 30, 2014) (Four Associations May 
30th Letter); Letter from Joan Marsh, AT&T, to Marlene H. Dortch, Secretary, FCC, GN Docket No. 13-185 (filed 
July 24, 2014); but see Letter from Richard B. Engelman, Sprint Corporation, to Marlene H. Dortch, Secretary, 
FCC, GN Docket No. 13-185, AU Docket No. 14-78, RM-11395 (filed July 31, 2014) (asserting that AT&T’s 
criteria is an expansion over the current rules and suggesting that the criteria expressed by the Four Associations is 
“more relevant and appropriate for many potential auction bidders and in relation to the Commission’s underlying 
policy”); Letter from Competitive Carriers Association, CTIA-The Wireless Association, and NTCA-The Rural 
Broadband Association, to Marlene H. Dortch, Secretary, FCC, GN Docket No. 13-185 (filed Aug. 1, 2014) 
(Consumer Electronics Association did not join in this filing); Letter from Competitive Carriers Association, CTIA-
The Wireless Association, and NTCA-The Rural Broadband Association, to Marlene H. Dortch, Secretary, FCC, 
GN Docket No. 13-185, AU Docket No. 14-78 (filed Aug. 14, 2014) (Three Associations August 14th Letter); Letter 
from Competitive Carriers Association, CTIA-The Wireless Association, and NTCA-The Rural Broadband 
Association, to Marlene H. Dortch, Secretary, FCC, GN Docket No. 13-185, AU Docket No. 14-78 (filed Aug. 20, 
2014) (Three Associations August 20th Letter); Letter from Competitive Carriers Association, CTIA-The Wireless 
Association, and NTCA-The Rural Broadband Association, to Marlene H. Dortch, Secretary, FCC, GN Docket No. 
13-185, AU Docket No. 14-78 (filed Aug. 28, 2014).  
168
Auction 97 Former Defaulter Waiver Order at ¶¶ 3–6 (providing a detailed history of the origin of the waiver 
request and petition for rulemaking).
169
Id. at ¶ 8.
170
Id. at ¶ 1.
171
Id.
172
Id. at ¶ 8.
Federal Communications Commission FCC 14-146
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Specifically, we propose to exclude any cured default on any Commission license or delinquency on any 
non-tax debt owed to any Federal agency for which any of the following criteria are met:  (1) the notice of 
the final payment deadline or delinquency was received more than seven years before the relevant short-
form application deadline; (2) the default or delinquency amounted to less than $100,000; (3) the default 
or delinquency was paid within two quarters (i.e., 6 months) after receiving the notice of the final 
payment deadline or delinquency; or (4) the default or delinquency was the subject of a legal or 
arbitration proceeding that was cured upon resolution of the proceeding.
173
  Additionally, we seek 
comment on limiting the individuals and entities that an applicant must consider when determining its 
status as a former defaulter.
87. In offering these proposals to limit the former defaulter rule, we keep in mind the 
underlying purposes of the upfront payment rule generally, and the increased upfront payment required of 
former defaulters.  The Commission typically requires auction participants to provide upfront payments in 
order to qualify to bid in an auction.
174
  Upfront payments help prevent frivolous or insincere bidding and 
provide the Commission with a source of funds from which to collect payments owed at the close of 
auction.
175
  In adopting an upfront payment requirement, the Commission also recognized that it was 
“balancing the goal of encouraging bidders to submit serious, qualified bids with the desire to simplify the 
bidding process and minimize implementation costs that will be imposed on bidders.”
176
  The original 
former defaulter rule appeared in the Commission’s Part 24 Broadband PCS rules in the wake of financial 
difficulties of participants in the C Block auctions.
177
  The Commission subsequently incorporated the 
                                                     
173
Depending on the origin of any federal non-tax debt giving rise to a default or delinquency, notice to a debtor 
may include notice of a final payment deadline or notice of delinquency and may be express or implied. Consistent 
with guidance previously provided with respect to applicability of the former defaulter rules, see, e.g., Letter to 
Cheryl A. Tritt, Esq., from Margaret Wiener, Chief, Auctions and Spectrum Access Division, Wireless 
Telecommunications Bureau, 19 FCC Rcd 22907 (2004), for purposes of the certifications required on a short-form 
auction application, a debt will not be deemed to be in default or delinquent until after the expiration of a final 
payment deadline. Thus, to the extent that the rules providing for payment of a specific federal debt permit payment 
after an original payment deadline accompanied by late fee(s), such debts would not be in default or delinquent for 
purposes of applying the former defaulter rules until after the late payment deadline. In addition, we provide the 
following clarification with regard to defaults on Commission licenses. Any winning bidder that fails timely to pay 
its post-auction down payment or the balance of its bid payment or is disqualified for any reason after the close of an 
auction will be in default and subject to a default payment. See 47 C.F.R § 1.2109(c). See also, e.g., Auction of 
Advanced Wireless Services (AWS-3) Licenses Scheduled For November 13, 2014; Notice and Filing 
Requirements, Reserve Prices, Minimum Opening Bids, Upfront Payments and Other Procedures for Auction 97, 
AU Docket No. 14-78, Public Notice, 29 FCC Rcd 8386, 8450 ¶ 239 (2014). Commission staff provide individual 
notice of the amount of such a default payment as well as procedures and information required by the Debt 
Collection Improvement Act of 1996, including the payment due date and any charges, interest, and/or penalties that 
accrue in the event of delinquency. See, e.g., 31 U.S.C. §§ 3716, 3717; see also 47 C.F.R. §§ 1.1911, 1.1912, 
1.1940. See also Auction of Lower and Upper Paging Bands Licenses Closes; Winning Bidders Announced for 
Auction 95, Public Notice, 28 FCC Rcd 11848 (2013). For purposes of the certifications required on a short-form 
auction application, such notice provided by Commission staff assessing a default payment arising out of a default 
on a winning bid, constitutes notice of the final payment deadline with respect to a default on a Commission license.
174
47 C.F.R. § 1.2106.
175
See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2377–79 ¶¶ 169–76.
176
Id. at 2378 ¶ 171.
177
In explaining that rule, the Commission stated that “[a]n applicant must state under penalty of perjury whether or 
not any entity whose gross revenues and total assets are required to be attributed to the applicant under section 
24.709 of the Commission’s rules has ever been in default on any Commission licenses or has ever been delinquent 
on any non-tax debt owed to any Federal agency.  If any entity whose gross revenues and total assets are required to 
be attributed to the applicant under section 24.709 of the Commission’s rules has ever been in default on any 
Commission licenses or has ever been delinquent on any non-tax debt owed to any Federal agency, the applicant 
will be considered a ‘former defaulter’ for purposes of the upfront payment requirements for Auction No. 22.”  See
(continued….)
Federal Communications Commission FCC 14-146
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Part 24 former defaulter policies into the Part 1 general competitive bidding rules, noting that the rule’s 
purpose was “to preserve the integrity of the auction process and ensure that bidders are capable of 
meeting their financial commitments to the Commission.”
178
  As we noted in the Auction 97 Former 
Defaulter Waiver Order, in the 14 years since that Commission action, “our auctions program has 
matured and the mobile wireless industry has grown into a major segment of the nation’s economy.”
179
Accordingly, we consider here whether the current broad rule continues to strike the right balance to 
promote the goals of our upfront payment and former defaulter rule. 
88. The parties that requested waiver of the former defaulter rule also suggest that we modify 
the rule.
180
  DIRECTV/EchoStar argue that, as currently written, the former defaulter rule “appl[ies] too 
broadly to effectively advance the Commission’s goal of ensuring that auction bidders are financially 
reliable.”
181
  In their joint filing, CCA, CEA, CTIA and NTCA (“the Four Associations”) mirror that 
sentiment and suggest that the scope of the rule is unnecessary to achieve its purpose, particularly when 
the former defaults or delinquencies are in a relatively small amount or were cured years prior.
182
  These 
parties offer a variety of ways to limit the scope of the former defaulter inquiry, but all consistently 
contend that the rule is unnecessarily broad to serve its underlying purpose.
183
  We seek comment below 
on our specific proposals to narrow the scope of the defaults and delinquencies that would trigger an 
auction applicant’s former defaulter status and ask commenters to address whether, if such proposals are 
adopted, the Commission can still promote the important protective functions of our upfront payment and 
former defaulter rules.
184
  
89. Parties urge first that prior delinquencies and defaults more than a certain number of 
years old should be excluded from the scope of the former defaulter rule.
185
  In the Auction 97 Former 
Defaulter Waiver Order, we excluded from consideration under the former defaulter rule any cured 
default or delinquency for which the notice of the final payment deadline or delinquency was received 
more than seven years before the Auction 97 short-form application deadline of September 12, 2014.
186
We concluded that the rule’s current unlimited time period may capture former defaults and delinquencies 
that have lost their relevance to a bidder’s current capability to meet its financial commitments to the 
Commission, and thus may no longer warrant a larger upfront payment for Auction 97.
187
  Initially, 
advocates seeking a more limited time frame for the rule’s application argued that a three-year period 
would correspond to certain federal tax statute of limitations.
188
  More recently, in seeking a waiver for 
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Auction of C, D, E, and F Block Broadband PCS Licenses; Notice and Filing Requirements for Auction of C, D, E, 
and F Block Broadband Personal Communications Services Licenses Scheduled for March 23, 1999; Minimum 
Opening Bids and Other Procedural Issues, Public Notice, DA 98-2604 (rel. Dec. 23, 1998).
178
Part 1 Fifth Report and Order, 15 FCC Rcd at 15316 ¶ 40.
179
Auction 97 Former Defaulter Waiver Order at ¶ 15.
180
See, e.g., DIRECTV/EchoStar Petition.
181
DIRECTV/EchoStar Petition at 2.
182
Four Associations May 30th Letter at 2.
183
See, e.g., DIRECTV/EchoStar Petition at 5–7; Four Associations May 30th Letter at 3.
184
The Commission has noted that “past business misfortunes do not inevitably preclude an entity from being able 
to meet its present and future responsibilities as a Commission licensee.”  Part 1 Fifth Report and Order, 15 FCC 
Rcd at 15316 ¶ 41.
185
See, e.g., DIRECTV/EchoStar Petition at 8; Three Associations August 14th Letter at 2; Three Associations 
August 20th Letter at 4.
186
Auction 97 Former Defaulter Waiver Order at ¶ 17.
187
Id.
188
See, e.g., DIRECTV/EchoStar Petition at 10–11.
Federal Communications Commission FCC 14-146
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Auction 97, CCA, CTIA and NTCA (“the Three Associations”) suggested that we should define former 
defaulters to include only those applicants who have received notice of defaults or delinquencies within 
seven years before the Auction 97 short-form application deadline.
189
  In the Auction 97 Former Defaulter 
Waiver Order, we noted that while federal tax laws have a three-year statute of limitations to determine if 
certain forms of additional tax are owed, the period of limitations to determine whether income was 
under-reported is six years and the Internal Revenue Service has a seven-year period to review a claim for 
a loss from worthless securities or a bad debt deduction.
190
  Likewise, we acknowledged that the Fair 
Credit Reporting Act limits many types of reporting by consumer credit agencies for a period of seven 
years.
191
  In light of these longer federal limitations periods, we tentatively conclude that the purposes of 
the upfront payment and former defaulter rules may be furthered more precisely if we exclude any cured 
default on a Commission license or a delinquency on a non-tax debt owed to a Federal agency where the 
notice of the final payment deadline or delinquency was received more than seven years before the short-
form application deadline.  We seek comment on all aspects of this proposal—the number of years 
specified (seven), the triggering event (upon receipt of the notice of the final payment deadline or 
delinquency), and the point at which the counting of the age of the triggering event is cut off (the short-
form application deadline).
192
  To the extent commenters advocate a different length of time, an alternate 
triggering event, or another way of calculating how long ago the triggering event occurred, we urge them 
to be specific as to why their proposal is more appropriate given the policies behind our rule.  Should the 
length of time it took the defaulter to cure the debt, or how recently the cure occurred, be a factor?
90. Those favoring modification of the rule also suggest excluding former defaults or 
delinquencies that fall below a certain amount.  The Auction 97 Former Defaulter Waiver Order excluded 
from consideration under the former defaulter rule for Auction 97 any former default or delinquency for 
which the amount of the resolved debt or delinquency fell below $100,000.  Parties initially suggested 
excluding defaults or delinquencies of what they defined as “de minimis nature,” and specifically 
suggested that we should ignore any former default or delinquency totaling less than the lesser of 
$100,000 or 0.1 percent of the average annual revenues of the applicant, as computed by our competitive 
bidding rules.
193
  The Three Associations later suggested that we exclude from the definition of former 
defaulter any cured defaults on a Commission license or delinquencies on a non-tax debt owed to a 
Federal agency in an amount of less than $100,000.
194
  In the Auction 97 Former Defaulter Waiver Order 
we noted the $100,000 amount is used in other contexts to distinguish between less significant or material 
issues and more significant ones and we concluded that for the purposes of Auction 97, “[r]equiring a 
larger upfront payment based on any cured default or delinquency that is less than $100,000 could 
discourage participation in Auction 97 without appreciably ameliorating the risk of bidder defaults, and 
thereby undermine the underlying purposes of our upfront payment and former defaulter rules.”
195
   
91. For clarity and efficiency of the administration of the former defaulter rule from both the 
Commission’s and applicants’ perspectives, we now propose to adopt for future auctions generally the 
same bright line standard established in the Auction 97 Former Defaulter Waiver Order that would 
                                                     
189
Three Associations August 14th Letter at 2; Three Associations August 20th Letter at 4.
190
Auction 97 Former Defaulter Waiver Order at ¶ 17 citing 26 U.S.C. § 6511(d)(1).
191
Auction 97 Former Defaulter Waiver Order at ¶ 17 citing 15 U.S.C. § 1681c.
192
See Auction 97 Former Defaulter Waiver Order at ¶ 17 n.39.
193
DIRECTV/EchoStar Petition at 8–9.  See also Four Associations May 30th Letter at 3.
194
Three Associations August 14th Letter at 2; Three Associations August 20th Letter at 3–4.
195
Auction 97 Former Defaulter Waiver Order at ¶ 18; see Three Associations August 20th Letter at 3–4 (noting that 
$100,000 is the threshold for forfeiture orders that can be issued on delegated authority, establishing “material 
noncompliance” with the Commission’s rules according to the Universal Service Administrative Company, and 
determining materiality in certain arbitration contexts).
Federal Communications Commission FCC 14-146
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exclude from the rule any former default on a Commission license or delinquency on a non-tax debt owed 
to a Federal agency where the amount of the resolved debt falls below $100,000.  We tentatively conclude 
that such an exclusion will simplify the application process and minimize implementation costs imposed 
on applicants by excluding former defaults and delinquencies for which consideration is no longer 
necessary to ensure bidders in a more mature wireless industry submit serious, qualified bids.  The 
$100,000 threshold aligns with Commission precedent and is used in other contexts to determine the 
materiality or significance of various issues.
196
  If commenters disagree with the amount proposed, we 
encourage them to provide specific examples of how former defaults or delinquencies of a different 
amount would better reflect an auction applicant’s financial reliability.  We also seek comment on 
whether our proposal adequately weighs our need to consider debts of a serious nature that are indicative
of a bidder’s poor Federal track record with the burdens faced by many applicants in complying with the 
current rule, which might be considered open-ended in scope.  
92. To address situations where, due to incorrect addresses, delivery problems, or internal 
issues, applicants may not timely pay obligations, but cure such debts when discovered, the Three 
Associations also contend that the Commission should for the purposes of the former defaulter rule
exclude certain additional resolved debts.
197
  For Auction 97 applicants, we waived the former defaulter 
rule to exclude any cured default or delinquency where the debt was paid within two quarters (i.e., 6 
months) after receiving the notice of final payment deadline or delinquency.
198
  There, we concluded that 
the prompt cure of such a default or delinquency sufficiently demonstrated an applicant’s financial 
wherewithal, that therefore it was unnecessary to require a larger upfront payment from the applicant, and 
that a waiver under such circumstances served the public interest by encouraging prompt payment of 
debts owed to the government.
199
  We now propose to modify the former defaulter rule generally to 
exclude a default or delinquency that was paid within two quarters (i.e., 6 months) after receiving the 
notice of the final payment deadline or delinquency for the same reasons articulated in the Auction 97 
Former Defaulter Waiver Order.
200
  We seek comment on whether this exclusion will allow us to 
appropriately balance the practicalities that may affect applicants’ ability to timely resolve their debts 
with the need to ensure that bidders are capable of meeting their financial commitments to the 
Commission.  We also invite commenters to address whether payment within some other time period 
might better strike that balance, and whether receipt of the notice of the final payment deadline or 
delinquency is the appropriate triggering event for this exclusion.  
93. Similarly, the Three Associations also suggest for the purposes of modifying the former 
defaulter rule that an applicant should not be considered to be “in default if any debt . . . is the subject of a 
good faith dispute or a pending legal or arbitration proceeding.”
201
  In the Auction 97 Former Defaulter 
Waiver Order, we included this suggestion in part, and concluded that where the default or delinquency 
was the subject of a legal or arbitration proceeding and was cured upon resolution of the proceeding, an 
applicant has demonstrated sufficient financial credibility so that it was not necessary to require a larger 
                                                     
196
See note 195; see also, e.g., In the Matter of Amendment of Parts 0 & 1 of the Commission’s Rules
Implementation of the Debt Collection Improvement Act of 1996 and Adoption of Rules Governing Applications or 
Requests for Benefits by Delinquent Debtors, MD Docket No. 02-339, Report and Order, 19 FCC Rcd 6540, 6545 
¶ 16 (2004) (discussing a delegation of authority for the head of the agency to collect claims for money that do not 
exceed $100,000).
197
Three Associations August 20th Letter at 4–5.
198
Auction 97 Former Defaulter Waiver Order at ¶ 19.
199
Id.
200
See, e.g., id. (concluding that a waiver under these circumstances serves the public interest by encouraging 
prompt payments of debts owed to the government).
201
Three Associations August 20th Letter at 2.
Federal Communications Commission FCC 14-146
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upfront payment from it in Auction 97.
202
  We determined that waiver under such circumstances served 
the public interest by encouraging prompt resolution of debts associated with legal or arbitration 
proceedings.
203
We declined, however, to waive the larger upfront payment requirement for debts that are 
subject to a “good faith dispute” because we reasoned that such a provision, even for cured debts, would 
be too ambiguous to be efficiently applied during the auction short-form application process.  We propose 
to modify the former defaulter rule generally to exclude a default or delinquency that was the subject of a 
legal or arbitration proceeding and was cured upon resolution of the proceeding.  As in the Auction 97 
Former Defaulter Waiver Order,
204
we do not intend to include within the scope of this exclusion any 
proceedings based on requests for waiver of a rule requiring payment of a debt or delinquency.  We seek 
comment on whether our proposed exclusion addresses parties’ concerns that debts such as these are not 
indicative of an applicant’s financial credibility such that they should require an applicant to submit a 
larger upfront payment.  Should we also exclude debts cured after resolution of a “good faith dispute,” 
and if so, how could such “good faith disputes” be verified during the short-form application process, if 
necessary?  Is the proposed general exclusion for debts cured upon resolution of a legal or arbitration 
proceeding necessary?  In the alternative, should we expect financially reliable applicants to pay 
outstanding defaults on Commission licenses, or delinquencies on any non-tax debt owed to any Federal 
agency, while legal or arbitration proceedings are pending, even if the applicant’s liability or the amount 
of the debt is in dispute?  
94. We note that the initial request that we modify the former defaulter rule also maintains
that the rule should apply only to auction participants and those individuals or entities that “are in [a] 
position to affect whether such applicants meet their auction-related financial responsibilities”
205
and urge 
the exclusion of debts/delinquencies relating to personal obligations of officers or directors of entities that 
are not the auction applicant, e.g., excluding personal obligations of officers and directors of the 
applicant’s parent companies.
206
  More recent requests to amend the former defaulter rule do not include 
any suggestion to limit the scope of individuals and entities that an applicant needs to consider in 
evaluating its former defaulter status.
207
  
95. In implementing the former defaulter provisions, the Commission has included the 
applicant’s affiliates, its controlling interests, and affiliates of its controlling interests in determining if an 
applicant is a former defaulter.
208
  We recognize, however, that some of the individuals and entities that 
fall within these definitions may play no role in the applicant’s general financial responsibilities and may 
not affect an applicant’s ability to meet its financial obligations arising from an auction.  Therefore, we 
seek comment on possible ways to amend the former defaulter provisions to apply only to individuals and 
entities that play a role in the applicant’s financial responsibilities.  If we were to adopt 
DIRECTV/EchoStar’s proposal to include only individuals or entities that “are in a position to affect 
whether such applicants meet their auction-related financial responsibilities,” how could the Commission 
verify who would fit within such a category?  In their request for waiver, DIRECTV/EchoStar suggest 
                                                     
202
Auction 97 Former Defaulter Waiver Order at ¶ 20.
203
Id.
204
See id. at ¶ 20 n.51.
205
DIRECTV/EchoStar Petition at 8.
206
Id. at 9.  
207
See, e.g., Four Associations May 30th Letter at 2 (urging the Commission to waive the rule as to two categories 
of debts, those more than 3 years prior and under certain amounts).
208
See, e.g., Auction 66 Public Notice, 21 FCC Rcd at 4589 ¶¶ 82–83. 
Federal Communications Commission FCC 14-146
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specifically not applying the rule to officers and directors of parent entities.
209
  Under such an option, 
however, what would prevent applicants from evading the rule by simply creating a shell company to be 
the auction applicant?
96. Another option would be to limit the former defaulter inquiry to those individuals or 
entities that an applicant must disclose on its short-form application pursuant to section 1.2112.
210
  We 
recognize, however, that, while such an option may exclude some individuals and entities not directly 
related to an applicant’s auction finances, it could also expand the scope of individuals or entities that 
must be considered in some respects.  We could limit the inquiry further to, for example, the real party or 
parties in interest in the applicant or application, which must be disclosed pursuant to section 
1.2112(a)(1).
211
  Would this option capture the individuals and entities that are in a position to affect 
whether an applicant meets its auction-related financial responsibilities?  Would excluding officers and 
directors not otherwise covered by 1.2112(a)(1) be inconsistent with our policy to attribute them for 
purposes of evaluating eligibility for designated entity bidding credits in light of their potential ability to 
influence the management or operation of the applicant?  
97. Finally, we seek comment as to other possible ways to limit the scope of the former 
defaulter rule.  For example, we could define the rules to include only defaults and delinquencies related 
to Commission auction payments, or defaults or delinquencies on debt owed only to the Commission as 
opposed to those owed on other government non-tax debt, such as student loans.  We note, however, that 
such further limitations may not be necessary given the other limitations that we propose above.
B. Commonly Controlled Entities
98. In this Section of the NPRM, we propose to codify an established competitive bidding 
procedure that prohibits the same individual or entity from filing more than one short-form application.  
Additionally, we propose a new rule that would prevent entities that are exclusively controlled by a single 
individual or set of individuals from qualifying to bid on licenses in the same or overlapping geographic 
areas in a specific auction on more than one short-form application. 
99. Background.  The Commission’s competitive bidding procedures have long prohibited 
the same individual or entity from submitting multiple short-form applications in any auction.
212  
This 
restriction prevents duplicative filings and may avert anticompetitive bidding behavior.  
100. There is currently no similar procedure for commonly controlled entities.  The 
competitive bidding rules and procedures currently contain no explicit prohibition on commonly 
controlled entities participating in the same auction and bidding on the same licenses.  Several years ago, 
the Commission declined to set aside the results of an auction based on allegations relating to the 
                                                     
209
DIRECTV/EchoStar Petition at 10.  See also DIRECTV/EchoStar et al. Aug. 13, 2010 Ex Parte Letter at 10 
(Commission should exclude “defaults/delinquencies relating to personal obligation of officer/director of entity 
other than the auction applicant”).
210
47 C.F.R. § 1.2112.  For non-DEs, this would limit the inquiry to the applicant and its disclosable interest holders 
under 47 C.F.R. § 1.2112(a).  For DEs, since the Commission attributes to the applicant the gross revenues of the 
applicant’s affiliates, its controlling interests, and the affiliates of its controlling interests, see 47 C.F.R. 
§ 1.2112(b)(iv), we could, under this option, continue to include those individuals and entities in any consideration 
of an applicant’s former defaulter status.
211
47 C.F.R. § 1.2112(a)(1).
212
See, e.g., Auction of Lower and Upper Paging Bands Licenses Scheduled for May 25, 2010; Notice and Filing 
Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 87, AU Docket No. 
09-205, Public Notice, 25 FCC Rcd 6333, 6348 ¶ 62 (2010) (“An entity may not submit more than one short-form 
application for a single auction.  If a party submits multiple short-form applications, only one application may 
become qualified to bid.”).
Federal Communications Commission FCC 14-146
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participation of separate applicants that were commonly controlled.
213
  In that decision, the Commission 
acknowledged that auction participation by commonly controlled applicants could serve legitimate 
business purposes if such entities have different business plans, financing requirements, or marketing 
needs; however, it noted that there could be risks inherent in allowing commonly controlled bidders to 
participate in an auction.
214
101. Discussion. We propose to amend our competitive bidding rules to codify our restriction 
on the filing of multiple auction applications by the same individual or entity and to adopt a new rule that 
would prevent entities that are controlled exclusively by the same single individual or set of individuals 
from qualifying to bid based on multiple auction applications for the same or overlapping geographic 
license areas.  By proposing these amendments to our Part 1 competitive bidding rules, we seek to 
improve the transparency and efficiency of the auction process, by making clearer who the qualified 
bidders actually are and ensuring against the potential for anticompetitive auction behavior.
102. Duplicate auction applications. We propose to amend section 1.2105 to prohibit the 
same individual or entity from filing more than one short-form application for an auction.  We observe 
that in contexts other than competitive bidding, our rules already limit repetitious or conflicting 
applications.
215
  Prohibiting the same individual or entity from filing multiple applications to participate in 
an auction protects the Commission against the burden of duplicative, repetitious or conflicting 
applications. Moreover, in this context, such applications raise potential concerns that duplicate filers 
may be able to manipulate the auction process—using, for example, identical bids or multiple activity 
waivers—to pursue potentially anticompetitive ends.  We seek comment on this proposal.  Are there any 
specific reasons the Commission should allow for the filing of more than a single short form application 
from the same individual or entity?  Commenters should describe any public interest benefits to support 
their positions.
103. Applications by entities exclusively controlled by the same individual or set of 
individuals.  We also propose to adopt a new rule to provide that where entities are under the common, 
exclusive control of a single individual or set of individuals (i.e., a single individual or same set of 
individuals is the exclusive controlling interest of more than one entity) only one short-form application 
from such entities could become qualified to participate with respect to any particular geographic license 
area or overlapping areas.  In defining the entities that would be subject to this rule, we propose to use the 
concepts of “control” or “controlling interest” from section 1.2110 of the Commission’s rules,
216
which 
also applies by its terms to DEs.  Even when applicants are not identical, if more than one applicant is 
under the exclusive control of a single individual or set of individuals, such common control may allow 
the controlling individual or set of individuals to attempt to gain advantages in the bidding process based 
on certain coordinated bidding actions (e.g., tied bids, activity waivers).  While such entities may have 
different business plans, financing, accounting, non-controlling interest-holders or minority investors, if 
they are under exclusive control of a single individual or set of individuals, under our proposal those 
entities could not become qualified to bid in an auction with respect to the same or overlapping 
geographic license areas.  We seek comment on this proposal and on specific alternatives to address our 
concerns.  
104. Multiple applicants under the common control of a single individual or set of individuals
may coordinate their bidding actions in ways not available to a single bidder, and may, in some cases, 
derive some advantage from doing so.  For example, such multiple applicants would have more activity 
                                                     
213
Petition for Reconsideration and Motion for Stay of Paging Systems, Inc., Memorandum Opinion and Order, 25 
FCC Rcd 4036 (2010).
214
See id. at 4063 ¶ 88. 
215
See 47 C.F.R. §§ 1.937(d), 73.3518.
216
47 C.F.R. § 1.2110(c)(2).
Federal Communications Commission FCC 14-146
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waivers to use to ensure that the auction remains open, or would be able to submit identical bids on a 
license in ways intended to exploit auction bidding procedures.  In addition, such multiple applicants 
could potentially coordinate their bidding to gain some advantage in the context of random tie-breakers or 
through increasing the bidding activity on a single license in order to raise minimum acceptable bids more 
quickly through application of the exponential smoothing formula.  
105. Further, the mere presence of commonly controlled applicants making identical bids in a 
single auction may damage the transparency of the auction process.  For example, the placing of multiple 
identical bids by commonly controlled applicants may mislead other bidders about the extent of bidding 
competition, especially in an anonymous bidding auction where competitors are unable to discern whether 
bids are placed by commonly controlled applicants or independent competitors.  We anticipate that these 
and other potentially problematic behaviors could be curbed by requiring such applicants to participate as 
a single applicant with respect to any particular geographic license area or overlapping areas.
106. Do commenters share our concern that the participation of commonly controlled 
applicants in an auction potentially undermines evenhandedness and transparency in the auction process?  
Commenters opposing our proposals should indicate how codifying our existing auction procedure and/or 
adopting our new proposed rule would harm the efficiency or undermine the competitiveness of our 
current auction process.  We note that to the extent that the commonly controlled entities have an interest 
in holding licenses won at auction separately, such entities might consider assigning the licenses to related 
entities in the secondary market.  Are there legitimate business reasons for filing these types of 
applications that we have failed to consider that could be undermined by our proposal?
C. Joint Bidding 
107. In this Section, we initiate a review of our rules and policies governing joint bidding and 
other arrangements in order to ensure that they fulfill our statutory objectives, given the changes in the 
mobile wireless marketplace since the Commission’s initial adoption of its bidding rules two decades ago, 
and the increasing importance of spectrum for service providers to meet consumer demand for mobile 
wireless services.  Our goal in reviewing these rules and policies is to ensure that they preserve and 
promote competition in the mobile wireless marketplace and facilitate competition among bidders at 
auction, while providing potential bidders with greater clarity regarding the types of joint bidding 
arrangements that would be permissible.
108. Consistent with our commitment in the Mobile Spectrum Holdings Report and Order,
217
we seek to develop a record on how joint bidding and other arrangements affect competition in the mobile 
wireless marketplace, and the appropriate policies and procedures for substantive competitive review of 
joint bidding.  In that regard, we note that the scope of our inquiry here—unlike our other proposals in 
this Notice of Proposed Rulemaking—applies only to joint bidding and other arrangements in auctions of 
licenses likely to be used for mobile telephony/mobile broadband services.
109. To best serve the public interest and preserve and promote robust competition, we also 
propose to adopt policies tailored to the characteristics of joint bidding and other arrangements and the 
likely competitive effects on the mobile wireless marketplace.  Specifically, we tentatively conclude that 
it would best serve the public interest to retain the current rules governing joint bidding arrangements 
among non-nationwide providers and to prohibit joint bidding arrangements among nationwide providers.  
In addition, we seek comment on whether we should revise any of our current rules as applied to 
arrangements between nationwide providers and other entities, including our rules governing short-form 
applications.  Further, we seek comment on whether any revisions to our rules governing long-form 
applications are necessary in light of our consideration of the potential harms and benefits of joint bidding 
and other arrangements.
                                                     
217
See Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6203 ¶ 171.
Federal Communications Commission FCC 14-146
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110. Background.  Rules and Policies Governing Joint Bidding.  In 1994, the Commission 
adopted rules to “serve the objectives of the Act by preventing parties, especially the largest firms, from 
agreeing in advance to bidding strategies that divide the market according to their strategic interests and 
disadvantage other bidders.”
218
  The Commission also sought to help “ensure that the government 
receives a fair market price for the use of the spectrum.”
219
  The Commission further concluded that 
adopting safeguards to prevent collusive behavior among bidders would help “ensure prompt delivery of 
services (including to rural areas), rapid deployment of new services and technologies, development of 
competitive markets, and wide access to a variety of services.”
220
  Moreover, the Commission observed 
that collusive conduct among bidders could “prevent the formation of a competitive post-auction market 
structure.”
221
  At the same time, the Commission recognized that “if anticollusion rules are too strict or are 
not sufficiently clear, they could prevent the formation of efficiency enhancing bidding consortia that 
pool capital and expertise and reduce entry barriers for small firms and other entities that might not 
otherwise be able to compete in the auction process.”
222
111. The Commission concluded that in most cases the number of bidders likely to participate 
in the auction, an auction design safeguards adopted by the Commission, and existing antitrust law would 
effectively deter collusion, but adopted certain measures to help ensure collusion would not jeopardize the 
competitiveness of the auction process.
223
  Importantly, the Commission found these safeguards sufficient 
in the context of other competition-related determinations it had made regarding the initial licensing of 
Broadband PCS licenses through competitive bidding.  Specifically, the Commission had set a limit on 
the amount of broadband PCS spectrum that the incumbent cellular licensees in each market could 
acquire at the upcoming PCS auctions as well as a separate limit on the amount of such spectrum that any 
bidder could acquire at the upcoming Broadband PCS auctions.
224
  In 1991, the Commission had adopted 
                                                     
218
Competitive Bidding Second Report and Order, 9 FCC Rcd at 2386 ¶ 221; see also id. at 2386–88 ¶¶ 221–26
(adopting rules to prevent collusion in the competitive bidding process, prior to the Commission’s first auction in 
1994).  In 2006, the Commission conducted a limited review of its joint bidding rules.  See Implementation of the 
Commercial Spectrum Enhancement Act and Modernization of the Commission’s Competitive Bidding Rules and 
Procedures, WT Docket No. 05-211, Report and Order, 21 FCC Rcd 891, 892–93 ¶ 3 (2006) (adopting several 
modifications to the Commission’s competitive bidding rules required by the Commercial Spectrum Enhancement 
Act and several modifications intended to enhance the effectiveness of the Commission’s auctions program).
219
Competitive Bidding Second Report and Order, 9 FCC Rcd at 2386 ¶ 221.
220
Id. at 2385 ¶ 210.
221
Id. at 2387 ¶ 223.
222
Id. at 2386–87 ¶ 221.
223
Id. at 2387, 2387–88 ¶¶ 223, 225.  With respect to auction design safeguards, the Commission indicated that 
withholding bidder identities during the competitive bidding process “should help to deter anticompetitive conduct 
by impeding bidders’ efforts to uncover the bidding strategies of their competitors.”  Id. at 2387 ¶ 224.  In addition, 
the Commission observed that it “may establish a minimum bid or reservation price where appropriate to ensure that 
a fair value is received for a particular license or group of licenses or to reduce the likelihood of unjust enrichment.”  
Id.  The Communications Act was amended in 1997 to require use of a reasonable reserve price or minimum bid 
unless the Commission determines that such a reserve price or minimum bid is not in the public interest.  47 U.S.C. 
§ 309(j)(4)(F).
224
Specifically, cellular licensees were prohibited from holding a license of more than 10 megahertz of broadband 
PCS spectrum in any PCS license area that significantly overlapped with the cellular license area. See Amendment 
of the Commission’s Rules to Establish New Personal Communications Services, GN Docket No. 90-314, RM-
7140, 7175, and 76-18, Second Report and Order, 8 FCC Rcd 7700, 7728, 7745 ¶¶ 61, 106–07 (1993).  In addition, 
PCS licensees were prohibited from holding an ownership interest in frequency blocks that totaled more than 40 
megahertz and served the same geographic area.  See id.  This PCS cap and the cellular/PCS cross-ownership rule 
were eliminated in 1996 in favor of a modified CMRS spectrum cap.  See Amendment of Parts 20 and 24 of the 
Commission’s Rules-Broadband PCS Competitive Bidding and the Commercial Mobile Radio Service Spectrum 
Cap, WT Docket No. 96-59, Report and Order, 11 FCC Rcd 7824, 7869 ¶ 94 (1996).  In addition, a few months 
(continued….)
Federal Communications Commission FCC 14-146
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a cellular cross-interest rule that substantially limited any affiliation between the two cellular licensees in 
an area.
225
112. With relatively minor changes adopted since 1994, the Commission’s current rules allow 
potential participants in a Commission auction, prior to the short-form application deadline, to enter into 
various kinds of agreements related to the licenses being auctioned as long as the applicants disclose on 
the short-form application on both the existence (but not the terms and conditions) of any joint bidding 
arrangements and the real-parties-in-interest to the application.
226
  After the short-form application 
deadline, applicants may not enter into any additional arrangements regarding the amount of bids, bidding 
strategies or particular licenses on which they will or will not bid, subject to certain limited exceptions,
227
and may not communicate bidding information to other applicants for licenses in any of the same 
geographic areas unless those other applicant(s) were identified on the short-form application.
228
  Post-
auction, winning bidders must disclose on the long-form application the specific terms, conditions, and 
parties involved in any agreement into which the applicant has entered, and the winning bidder must be 
the same entity that files the long-form application.
229
  
113. We note that the Commission has always made clear with respect to its rules and policies 
governing joint bidding that “conduct that is permissible under the Commission’s Rules may be 
prohibited by the antitrust laws,”
230
review under which is subject to other and differing standards under 
the Sherman and Clayton Acts.
231
  Our auction procedures public notices for specific auctions caution that 
“[c]ompliance with the disclosure requirements of section 1.2105(c) will not insulate a party from 
(Continued from previous page)                                                            
after adopting its joint bidding rules, the Commission set aside the C and F Blocks in the broadband PCS band as 
“entrepreneurs’ blocks” for individuals and entities under a certain financial size.  Competitive Bidding Fifth Report 
and Order, 9 FCC Rcd at 5580 ¶ 113.
225
In particular, the rule prohibited any entity with an attributable interest in one cellular licensee from having a 
material ownership interest in the other licensee.  See 47 C.F.R. § 22.942 (repealed 2004).  See also Mobile 
Spectrum Holdings Report and Order, 29 FCC Rcd at 6138 ¶ 9 (citing Amendment of Part 22 of the Commission’s 
Rules to provide for the Filing and Processing of Applications for Unserved Areas in the Cellular Services and to 
Modify Other Cellular Rules, First Report and Order and Memorandum Opinion and Order on Reconsideration, 6 
FCC Rcd 6185, 6248 App. D (1991)).
226
47 C.F.R. §§ 1.2105(a)(2)(ii), 1.2105(a)(2)(viii), 1.2107(d), 1.2112(a)(1).  The Commission has adopted certain 
joint bidding rules applicable only in the designated entity (DE) context that allow an individual member of a 
bidding consortium of small or very small businesses to qualify for DE bidding credits based solely on the 
individual member’s revenues, rather than having to qualify based on the aggregated revenues of all members of the 
consortium.  47 C.F.R. § 1.2110(b)(3)(i), 1.2110(c)(6).
227
47 C.F.R. § 1.2105(a)(2)(ix).  See 47 C.F.R. § 1.2105(c)(2), 1.2105(c)(3), 1.2105(c)(4) (detailing exceptions for 
arrangements entered into after the short-form application deadline).
228
See 47 C.F.R. § 1.2105(c)(1).
229
47 C.F.R. § 1.2107(d).
230
Implementation of Section 309(j) of the Communications Act – Competitive Bidding, WT Docket No. 93-253, 
Memorandum Opinion and Order, 9 FCC Rcd 7684, 7689 ¶ 12 (1994).
231
Joint bidding arrangements subject to section 1 of the Sherman Act are prohibited if they constitute a “contract, 
combination . . . , or conspiracy, in restraint of trade.”  15 U.S.C. § 1.  Joint bidding arrangements subject to section 
7 of the Clayton Act are prohibited if their effect “may be substantially to lessen competition, or to tend to create a 
monopoly.”  15 U.S.C. § 18.  The Commission’s review of joint bidding arrangements is subject to, among other 
things, the public interest goals set forth in Section 309(j) of the Communications Act.  See 47 U.S.C. § 309(j)(3), 
309(j)(4)(D).  The Commission’s “competitive analysis, which forms an important part of the public interest 
evaluation, is informed by, but not limited to, traditional antitrust principles.”  Applications of SoftBank Corp., 
Starburst II, Inc., Sprint Nextel Corp, and Clearwire Corp., IB Docket No. 12-343, Memorandum Opinion and 
Order, Declaratory Ruling, and Order on Reconsideration, 28 FCC Rcd 9642, 9651 ¶ 25 (2013).
Federal Communications Commission FCC 14-146
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enforcement of the antitrust laws.”
232
  Bidders who are found to have violated the antitrust laws or the 
Commission’s rules in connection with their participation in the competitive bidding process may be 
subject to forfeiture, prohibition from auction participation, and other sanctions.
233
114. Evolution of the Mobile Wireless Marketplace.  The Commission adopted these joint 
bidding rules 20 years ago when the mobile wireless industry was at a nascent stage:  For example, at the 
end of 1994, the nationwide penetration rate for mobile wireless service was approximately 9 percent,
234
compared to 106 percent at the end of 2011.
235
  Moreover, when the Commission adopted its joint bidding 
rules in 1994, it had yet to hold even the first of the numerous auctions it has conducted in its history of 
licenses likely to be used for mobile telephony/mobile broadband services.
115. The Commission’s competitive bidding rules, as adopted in 1994, reflected the 
developing nature of the mobile wireless industry, as the Commission sought to promote economic 
growth in the “new wireless services” and “to enhance access to telecommunication services by 
encouraging broad participation in the provision of spectrum-based services and ensuring that spectrum-
based services are available to a wide range of consumers.”
236
  In 1998, the Commission observed again 
that “[m]uch of the mobile telephone market is still in its infancy.”
237
116. Since 1994, and particularly in the past decade, the marketplace has changed 
significantly.  It is no longer nascent.  Consumer demand for wireless services has exploded, with the 
industry focus changing from the provision of mobile voice services to the provision of mobile broadband 
services.
238
  The adoption of smartphones and tablet computers, and the widespread use of mobile 
applications, combined with the increasing deployment of high-speed 3G and now 4G technologies, is 
driving significantly more intensive use of mobile networks and increasing providers’ need for 
spectrum.
239
  In addition, during the past decade, the wireless marketplace has undergone significant 
consolidation, with a reduction from six to four nationwide providers, an increase in the market share of 
the major providers, and a smaller number of regional and local providers.
240
Indeed, by December 2013, 
                                                     
232
See, e.g., Auction of H Block Licenses in the 1915-1920 MHz and 1995-2000 MHz Bands Scheduled for January 
14, 2014, Notice and Filing Requirements, Reserve Price, Minimum Opening Bids, Upfront Payments, and Other 
Procedures for Auction 96, AU Docket No. 13-178, Public Notice, 28 FCC Rcd 13019, 13030 ¶ 31 (2013) 
(“Regardless of compliance with the Commission’s rules, applicants remain subject to the antitrust laws, which are 
designed to prevent anticompetitive behavior in the marketplace.”).
233
47 C.F.R. § 1.2109(d).
234
See Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993 Annual Report and 
Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services, FCC 98-91, Third 
Report, 13 FCC Rcd 19746, 19766, Figure 3 (Mobile Telephony Industry 1993–1997) (1998) (3rd Mobile Wireless 
Competition Report).
235
See 16th Mobile Wireless Competition Report, 28 FCC Rcd at 3956 ¶ 407.  Penetration rates represent mobile 
wireless connections across geographic areas by estimating mobile wireless connections per 100 people.  Id. at 3862 
¶ 252.
236
Competitive Bidding Second Report and Order, 9 FCC Rcd at 2350 ¶ 6.  Moreover, the Commission stated that 
“[b]y establishing an efficient licensing mechanism that will promote the rapid deployment of a wide range of new 
products and services in all areas of the country, we seek to increase residential consumer and large user access to 
new technologies and services.”  Id. at 2350 ¶ 7.
237
3rd Mobile Wireless Competition Report, 13 FCC Rcd at 19767.
238
See Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6146 ¶ 23.
239
See id. at 6134, 6146 ¶¶ 2, 23.
240
See id. at 6144, 6146–47 ¶¶ 18, 24–25.
Federal Communications Commission FCC 14-146
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the top four facilities-based nationwide providers had combined market share of approximately 97 percent 
of subscribers.
241
117. Consistent with the evolution of the mobile wireless marketplace and the Commission’s 
statutory directives and policy goals, we continue to strive to adopt policies to preserve and promote 
consumer choice and competition among multiple service providers, promote the efficient and intensive 
use of spectrum, maximize economic opportunity, and foster the deployment of innovative 
technologies.
242
  For instance, we recently concluded in the Mobile Spectrum Holdings Report and Order 
that any mobile spectrum limit on the initial licensing of a spectrum band through competitive bidding 
should be articulated and applied prior to the start of the auction in order to provide bidders greater 
certainty regarding how many licenses they would be permitted to acquire.
243
118. In the Mobile Spectrum Holdings Report and Order, we established a market-based 
spectrum reserve for the Broadcast Television Spectrum Incentive Auction of up to 30 megahertz in each 
license area, recognizing that the Incentive Auction represents a once-in-a-generation opportunity to 
auction significant amounts of greenfield low-band spectrum.
244
  We limited nationwide providers from 
bidding on reserved spectrum in Partial Economic Areas (“PEAs”) where they hold 45 megahertz or more 
of suitable and available below-1-GHz spectrum.
245
  By contrast, we permitted regional and local service 
providers to bid on reserved spectrum in all PEAs, observing that non-nationwide service providers 
present a significantly lower risk of effectively denying their rivals access to low band spectrum to 
foreclose competition or to raise rivals’ costs because of their relative lack of resources.
246
  At the same 
time, in the Mobile Spectrum Holdings Report and Order, the Commission placed no limitation on the 
amount of spectrum that bidders could acquire in the AWS-3 auction.
247
119. In the Mobile Spectrum Holdings Report and Order, we also stated we would consider in 
a Further Notice of Proposed Rulemaking possible changes to certain auction rules relating to joint 
bidding arrangements and strategies in the Incentive Auction.
248
  We here undertake a reexamination of 
our auction rules on these issues, including but not limited to their application in the Incentive Auction.
120. Discussion.  In light of the changes in the mobile wireless marketplace since the 
Commission adopted the current joint bidding rules 20 years ago, we review our rules on joint bidding 
and other arrangements to ensure that the potential competitive harms that may arise out of such 
arrangements do not outweigh any public interest benefits.  To best serve the public interest and preserve 
                                                     
241
UBS Investment Research, US Wireless 411:  Version 51, Mar. 18, 2014, Figure 21 at 14.  By contrast, as of 
December 2003, the top six facilities-based nationwide providers accounted for approximately 79 percent of mobile 
wireless subscribers in the country.  Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6147 ¶ 25 (citing 
Implementation of Section 6002(B) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and 
Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, WT Docket No. 04-111, 
Ninth Report, 19 FCC Rcd 20597, 20697 Appendix A, Table 1 (CTIA’s Semi-Annual Mobile Telephone Industry 
Survey) & Table 4 (Top 25 Mobile Telephony Operators by Subscribers) (2004).
242
See Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6145 ¶ 21.  See also 47 U.S.C. § 309(j)(3)(B).
243
Id. at 6192–93 ¶¶ 139–44.
244
Id. at 6196 ¶ 153.  See also BIA Report and Order, 29 FCC Rcd at 6708 ¶ 325.
245
Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6196 ¶ 153.
246
Id. at 6207 ¶ 180.  The Commission characterized “nationwide” providers as Verizon Wireless, AT&T, Sprint, 
and T-Mobile, with other providers characterized as “non-nationwide.”  Id. at 6206 n.502 (citing 16th Annual 
Competition Report, 28 FCC Rcd at 3736–37 ¶ 26).  In the discussion section below, we propose to define 
nationwide and non-nationwide providers in the same manner for purposes of this proceeding.
247
Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6174–75 ¶ 222.
248
Id. at 6203 ¶ 171.
Federal Communications Commission FCC 14-146
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and promote robust competition into the foreseeable future, we seek to further our statutory objectives 
today by adopting policies tailored to the type of arrangement and its likely competitive effect on the 
conduct of the auction and on the mobile wireless marketplace.
249
  Specifically, we tentatively conclude 
that it would serve the public interest to retain the current rules governing joint bidding and other 
arrangements among non-nationwide providers, but to prohibit certain joint bidding and other 
arrangements among nationwide providers.  In addition, we seek comment on whether we should revise 
any of our current rules as applied to arrangements between nationwide providers and other entities, 
including our rules governing short-form applications.  Further, we seek comment on whether any 
revisions to our rules governing long-form applications are necessary in light of our consideration of the 
potential harms and benefits of joint bidding and other arrangements.
121. For purposes of this proceeding, we define “joint bidding and other arrangements” to 
include any bidding consortia, joint venture, partnership, or agreement, understanding, or other 
arrangement entered into relating to the competitive bidding process, including any agreement relating to 
post-auction market structure or operation.  In light of our focus on promoting and preserving 
competition, we consider this definition to include not only arrangements among entities that apply to bid 
in an auction, but also arrangements between entities that apply to bid in an auction and those entities that 
do not, insofar as such arrangements have the potential to affect competition in the mobile wireless 
telephony/mobile broadband marketplace.
122. Competitive Effects of Joint Bidding and Other Arrangements.  When assessing the 
competitive effects of joint bidding and other arrangements, we must ensure that our policies and rules 
facilitate access to spectrum in a manner that promotes competition to the benefit of consumers.
250
  As the 
Commission has found, in order for there to be robust competition, multiple competing service providers 
must have access to or hold sufficient spectrum to be able to enter the marketplace or expand output 
rapidly in response to any price increase, reduction in quality, or other competitive change that would 
harm consumer welfare.
251
123. Joint conduct or competitor collaboration that is more limited in scope and does not result 
in a full integration of economic activity does not end all competition between participants post bidding 
and are analyzed differently from joint ventures that fully integrate the participants downstream 
                                                     
249
In particular, Section 309(j)(3) of the Communications Act provides that, in designing systems of competitive 
bidding, the Commission must (1) “include safeguards to protect the public interest in the use of the spectrum,” and 
must seek to promote various objectives, including (2) “promoting economic opportunity and competition and 
ensuring that new and innovative technologies are readily accessible to the American people by avoiding excessive 
concentration of licenses and by disseminating licenses among a wide variety of applicants,” (3) encouraging rapid 
deployment “including … in rural areas,” and (4) promoting “efficient and intensive use” of spectrum.  47 U.S.C. 
§ 309(j)(3).  Our auction rules must also “ensure that small businesses, rural telephone companies, and businesses 
owned by members of minority groups and women are given the opportunity to participate in the provision of 
spectrum-based services.”  47 U.S.C. § 309(j)(4)(D).
250
A key element of this determination is whether the relevant agreement would likely harm competition by 
increasing the ability or incentive profitably to raise price above or reduce output, quality, service, or innovation 
below what likely would prevail in the absence of the relevant agreement.  See U.S. Dept. of Justice & Federal 
Trade Commission, Antitrust Guidelines for Collaboration Among Competitors (2000) at §1.2 (FTC/DOJ 
Competitor Collaboration Guidelines).
251
See Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6144 ¶ 17.  See, e.g., Applications of AT&T 
Mobility Spectrum LLC, New Cingular Wireless PCS, LLC, Comcast Corp., Horizon Wi-Com, LLC, Nextwave 
Wireless, Inc., and San Diego Gas & Electric Company for Consent to Assign and Transfer Licenses, WT Docket 
No. 12-240, Memorandum Opinion and Order, 27 FCC Rcd 16459, 16467 ¶ 20 (2012); Applications of Cellco 
Partnership d/b/a Verizon Wireless and SpectrumCo LLC and Cox TMI, LLC for Consent to Assign AWS-1 
Licenses, WT Docket No. 12-4, Memorandum Opinion and Order, 27 FCC Rcd 10698, 10716 ¶ 47 (2012); 
Application of AT&T Inc. and Qualcomm Inc. for Consent to Assign Licenses and Authorizations, WT Docket No. 
11-18, Order, 26 FCC Rcd 17589, 17601–02 ¶ 30 (2011).
Federal Communications Commission FCC 14-146
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competition.  The latter, in certain circumstances, may be properly analyzed as a merger.
252
  Either type of 
competitor collaboration however may result in procompetitive benefits and/or anticompetitive effects.
124. Because some joint bidding and other competitor collaborations contemplate competition 
among participants post auction, they raise the risk that the spectrum acquired through a winning bid will 
be allocated among the joint venture participants in a manner that could harm the public interest.
253
  
Because the joint venture may be comprised of same market competitors, the arrangement may require 
proper safeguards to prevent the exchange of competitively sensitive price and output information, ensure 
independent decision making or otherwise avoid lessening competition among the participants in the 
downstream mobile wireless marketplace.
254
125. Joint bidding and other arrangements, however, also have the potential to result in 
procompetitive benefits if they enable participation in auctions by those otherwise without sufficient 
financial resources to bid, or otherwise reduce entry costs into a geographic area or enable the joint 
bidders to compete more robustly against other competitors in the marketplace.  For example, the pooling 
of capital resources could allow smaller providers to better exploit financial economies of scale
255
and 
enter into bidding for geographic areas that otherwise would not have been accessible, which may be 
particularly important given the high capital costs of network deployment and spectrum acquisition.
126. We seek comment on the foregoing analysis.  The Commission’s public interest review 
of applications for assignment of licenses through competitive bidding generally encompasses a review of 
the competitive effects of such assignments.  In light of the changing marketplace described above, and 
consistent with our recent emphasis in the Mobile Spectrum Holdings proceeding on the need for clearly-
defined rules prior to the auction on the licenses a bidder would be permitted to acquire, we seek 
comment on how best to conduct our competitive review of joint bidding arrangements going forward.
127. Given the potential benefits and harms of different types of arrangements, we seek 
comment on the rules and procedures that should govern the Commission’s review of joint bidding and 
other arrangements entered into relating to the competitive bidding process, including any agreement 
relating to post-auction market structure or operation.  In addition, we seek comment on whether the
distinctions that we set forth below—as to arrangements among non-nationwide providers, among 
nationwide providers, and between nationwide providers and other entities—provide an effective 
framework for addressing the relative harms and benefits of joint bidding arrangements in light of our 
goal of providing clearly-defined rules for potential bidders in auctions.  Further, we seek comment on 
whether these rules or procedures should differ in instances in which the Commission has adopted a 
mobile spectrum holding limit for the initial licensing of a particular spectrum band through competitive 
                                                     
252
See FTC/DOJ Competitor Collaboration Guidelines at § 1.3.  This is ordinarily the case where the collaboration 
is a full integration of the participants and eliminates all competition among them and does not terminate within a 
sufficiently limited period by its own specific and express terms.  See id.
253
Additionally, joint bidding and other arrangements have the potential to limit the number of bidders at auction.  
We caution that unlike mergers or joint ventures involving full integration, certain kinds of joint bidding and other 
arrangements are per se illegal under Section 1 of the Sherman Act.  See id. at § 1.2.  These include agreements 
among competitors to fix prices or output, rig bids, or share or divide markets by allocating customers, suppliers, 
territories, or lines of commerce.  Id.  As noted above, our Part 1 competitive bidding rules are not intended in any 
way to provide an exemption from the application of the antitrust laws, and our analysis below of the competitive 
effects of joint bidding and other arrangements for purposes of determining whether and to what extent to revise 
those Commission rules is not intended to address the application of antitrust law.
254
Id. at § 2.2.
255
“Efficiency gains from competitor collaborations often stem from combinations of different capabilities or 
resources. . . [a] collaboration may facilitate the attainment of scale or scope economies beyond the reach of any 
single participant.”  Id. §2.1.
Federal Communications Commission FCC 14-146
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bidding and, if so, how the type of mobile spectrum holding limit and the statutory goals applicable to the 
particular auction should affect these rules and procedures.
128. For purposes of the joint bidding rules, we propose to define “nationwide” providers to 
include the providers in the U.S. with networks that cover a majority of the population and land area of 
the country—currently, Verizon Wireless, AT&T, Sprint, and T-Mobile—with other providers being 
considered “non-nationwide” providers.
256
  We seek comment on how this definition of nationwide 
providers should take into account entities partially owned by Verizon Wireless, AT&T, Sprint, and T-
Mobile.  Should the definition include entities that are “affiliates” (as that term is defined in our rules for 
attributing revenues to small businesses) of the four providers, entities with spectrum holdings that would 
be attributable to these four providers (as defined by our mobile spectrum holdings rules), or a category of 
entities defined in some other manner?
257
129. Arrangements among Non-Nationwide Providers.  Considering the current competitive 
landscape and the need for access to spectrum by non-nationwide providers, we tentatively conclude that 
our current rules are sufficient to prevent any potential competitive harm from outweighing the likely 
public interest benefits associated with allowing joint bidding and other arrangements among non-
nationwide providers.  For example, joint bidding and other arrangements among non-nationwide 
providers can better overcome the challenging capital costs of license acquisition to maintain or increase 
their competitive presence to the benefit of American consumers.  In light of the relatively small size and 
scope of non-nationwide providers following substantial consolidation since our current rules were 
adopted, and the increased costs of spectrum and other capital expenditures necessary to provide mobile 
broadband service over large license areas, we believe it is highly unlikely in most circumstances that 
such arrangements would lead to competitive harm or otherwise harm the public interest.  In addition, we 
have observed that non-nationwide service providers present a significantly lower risk of effectively 
denying their rivals access to spectrum in order to foreclose downstream competition or to raise rivals’ 
costs because of their relative lack of resources.
258
  We seek comment on these views in connection with 
the competitive impact of joint bidding and other arrangements.
130. Commenters proposing any changes to our joint bidding rules for arrangements among 
non-nationwide providers should discuss why such changes are necessary to address particular 
competitive concerns and whether, on balance, such changes would ensure that the pro-competitive 
benefits and bidding flexibility arising out of our current rules remain in place.  In addition, we seek 
comment on whether any types of arrangements between non-nationwide service providers and potential 
new entrants would warrant closer examination of the competitive effects and, if so, whether any changes 
to our joint bidding rules are necessary to address any such scenarios.
131. Arrangements among Nationwide Providers.  In contrast, we tentatively conclude that 
joint bidding arrangements between or among nationwide providers likely would raise competitive 
                                                     
256
See Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6206 n.502 (citing 16th Annual Competition 
Report, 28 FCC Rcd at 3736–37 ¶ 26).
257
See, e.g., 47 C.F.R. § 1.2110(c)(5)(i) (An individual or entity is an affiliate of an applicant or of a person holding 
an attributable interest in an applicant if such individual or entity (A) directly or indirectly controls or has the power 
to control the applicant, or (B) is directly or indirectly controlled by the applicant, or (C) is directly or indirectly 
controlled by a third party or parties that also controls or has the power to control the applicant, or (D) has an 
“identity of interest” with the applicant); 47 C.F.R. § 20.22(b) (attributable interests include (1) controlling interests, 
(2) non-controlling interests of ten percent or more, (3) certain interests in spectrum, including (i) officers and 
directors of the licensee, (ii) indirectly held ownership interests pursuant to the Commission’s successive 
multiplication rule, (iii) certain persons who manage operations of the licensee pursuant to a management 
agreement, (iv) licensees and affiliates who enter into joint marketing arrangements with another licensee or 
affiliate, (v) limited partnership interests, (vi) certain debts and instruments, and (vii) certain long-term de facto
transfer leasing arrangements).
258
See Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6207 ¶ 180.
Federal Communications Commission FCC 14-146
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concerns, as these arrangements would have the potential to serve as a vehicle for anticompetitive conduct 
by altering post auction incentives to compete, and thus, would outweigh any public interest benefits from 
such arrangements such as the attainment of scale or scope economies.  As the Commission has noted, the 
mobile wireless marketplace today is characterized by factors—such as high market concentration, high 
margins and high barriers to entry—that increase the potential for anticompetitive conduct.
259
  In 
particular, by year end 2013, the top four facilities-based nationwide providers had a combined market 
share, as measured by number of subscribers or mobile wireless service revenues, of at least 97 percent.
260
132. Moreover, in light of these factors, joint bidding arrangements among nationwide 
providers would reduce the participants’ ability or incentive to compete independently, which would 
lessen competition in the downstream mobile wireless marketplace and could harm American consumers 
by increasing the price or reducing the quality of mobile wireless services.
261
  Because of these greater 
risks of public interest harms, we believe it is unlikely that the potential benefits of joint bidding 
arrangements among nationwide providers would outweigh these risks.  We seek comment on this 
analysis.
133. Further, as we have emphasized recently, it is important to provide bidders with certainty 
and clarity in advance of the start of an auction regarding whether any limitations on their ability to 
acquire licenses would apply.
262
  In that regard, we observe that post-auction enforcement of antitrust 
law—envisioned as a safeguard by the Commission in 1994
263
—may not be as well suited to preventing 
anti-competitive joint bidding arrangements as the bright-line prohibition we propose herein.
264
  In 
addition, we note that, while in 1994 bright-line prohibitions on certain types of bidding arrangements 
                                                     
259
See id. at 6165 ¶ 62 (citing Submission of the United States Department of Justice, WT Docket No. 12-269, at 2 
(filed May 14, 2014) (DOJ May 14, 2014 Ex Parte); Submission of the United States Department of Justice, WT 
Docket No. 12-269, at 11 (filed Apr. 11, 2013) (DOJ Apr. 11, 2013 Ex Parte)).
260
See Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6147 ¶ 25 (citing UBS Investment Research, 
US Wireless 411:  Version 51, Mar. 18, 2014, Figure 21 at 14); UBS Investment Research, US Wireless 411: 
Version 51, Mar. 18, 2014, at 14 and 19.
261
In the Mobile Spectrum Holdings Report and Order, we observed that “[t]oday’s mobile wireless marketplace is 
characterized by factors that, according to DOJ, increase the potential for anticompetitive conduct, including high 
market concentration, highly concentrated holdings of low-band spectrum, high margins, and high barriers to entry.”  
29 FCC Rcd at 6165 ¶ 62 (citing DOJ May 14, 2014 Ex Parte at 2; DOJ Apr. 11, 2013 Ex Parte at 11).  Moreover, 
to the extent that a joint bidding arrangement includes a full integration of economic activity among participants 
such that they will no longer independently compete, the joint venture may raise competitive concerns similar to 
those raised in a merger, i.e., whether as a result of the integration, the newly formed joint venture, would have the 
incentive or ability to increase prices, decrease quality, or reduce investment and innovation to the detriment of 
American consumers.
262
Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6192–93 ¶¶ 139–44 (declining to continue 
applying as a matter of routine its spectrum screen to post-auction review of applications for assignment of licenses 
through competitive bidding, and finding that any mobile spectrum limit on the initial licensing of a spectrum band 
through competitive bidding should be articulated and applied prior to the start of the auction in order to provide 
bidders greater certainty regarding how many licenses they would be permitted to acquire).
263
See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2388 ¶ 226.  Regarding existing antitrust law, 
the Commission articulated that “[w]here specific instances of collusion in the competitive bidding process are 
alleged during the petition to deny process, the Commission may conduct an investigation or refer such complaints 
to the United States Department of Justice for investigation.  Bidders who are found to have violated the antitrust 
laws or the Commission’s rules in connection with participation in the auction process may be subject to forfeiture 
of their down payment or their full bid amount, revocation of their license(s), and may be prohibited from 
participating in future auctions.”  Id.
264
As noted above, DOJ review and FCC review of joint bidding and other arrangements are conducted under 
different standards, and compliance with one is not a safe harbor for compliance with the other.
Federal Communications Commission FCC 14-146
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might not have been ideally suited for an industry at a nascent stage, as discussed in the background 
section above, the mobile wireless industry today is much more mature than it was in 1994.  Moreover, 
the limit set by the Commission at that time on the amount of broadband PCS spectrum that the two 
incumbent cellular licensees in each market could acquire at the auctions effectively eliminated the 
incentives of those providers to enter into joint bidding arrangements, which would have raised 
significant competitive concerns.
134. Accordingly, we tentatively conclude that it would best serve the public interest at this 
time to have a bright-line rule that would prohibit joint bidding and other arrangements among nationwide 
providers, including agreements to participate in an auction through a newly formed joint entity, given 
that such arrangements have a greater potential to harm the public interest by negatively affecting the 
competitive bidding process and downstream competition in the provision of mobile wireless services.  
We seek comment on the costs and benefits of prohibiting applications to participate in an auction that 
involve joint bidding and other arrangements, such as a new joint venture, between two or more 
nationwide providers.  We note that our tentative conclusion to prohibit joint bidding and other 
arrangements between two nationwide providers would also include prohibiting arrangements among two 
nationwide providers, together with other entities.
135. Arrangements between A Nationwide Provider and Other Entities.  We seek comment on 
what policies and procedures should apply to bidding arrangements between a single nationwide provider 
and other entities, either non-nationwide providers or potential new entrants, in order to promote 
competition.  Under what circumstances would these arrangements raise competitive concerns?  Under 
what circumstances would these arrangements likely result in public interest benefits, such as the 
expansion of mobile wireless services in additional geographic areas and increasing access to capital by 
more applicants to acquire spectrum? Should any limits apply to these types of arrangements, or should 
we continue to review these types of arrangements on a case-by-case basis?
136. If we review these types of arrangements on a case-by-case basis, what process and 
factors should we use in assessing the competitive implications?  Our current approach for reviewing joint 
ventures in the context of assignment or transfer of licenses involves the determination of the appropriate 
market definitions and the likelihood of public interest harm from the incentive and ability of the joint 
venture to act anticompetitively, either unilaterally or in concert with other service providers.
265
  Should a 
similar approach apply to our competitive review of joint bidding arrangements?  How should a case-by-
case approach to review joint bidding arrangements be designed to provide clarity to potential bidders?
266
  
What are the costs and benefits of Commission review of joint bidding arrangements on a case-by-case 
basis, including the administrative cost and burden to make such a case-by-case determination prior to the 
start of an auction?
137. To make case-by-case determinations regarding arrangements between nationwide 
providers and other entities, should we modify any of our current rules that apply to the pre-auction 
review process?  In particular, should the terms and conditions of such joint bidding arrangements be 
disclosed prior to the auction, in the short-form application, or even prior to the filing of that application?  
If so, are there changes to our rules or procedures that would be necessary to protect any confidential 
information?  If the deadline for disclosure of terms and conditions is in advance of the short-form 
                                                     
265
Applications of GCI Communications Corp, ACS Wireless License Sub Inc., ACS of Anchorage License Sub, 
Inc., and Unicom, Inc., for Consent to Assign Licenses to the Alaska Wireless Network, LLC, WT Docket No. 12-
187, WC Docket No. 09-197, Memorandum Opinion and Order and Declaratory Ruling, 28 FCC Rcd 10433, 
10447, 10446–47 ¶ 33, nn.102, 103 (2013).  We analyze whether the joint venture changes the ability or incentive of 
each applicant to compete independently at the retail level and whether their formation of a production joint venture 
and other arrangements are reasonably necessary to achieve the asserted procompetitive benefits.
266
In the Mobile Spectrum Holdings Report and Order, we found that upfront, clear determinations would provide 
potential bidders with greater certainty in the auction process regarding how much spectrum they would be 
permitted to acquire at auction.  29 FCC Rcd at 6192 ¶ 139.
Federal Communications Commission FCC 14-146
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application deadline, how would this process be affected by the rules prohibiting certain types of 
communications?  Commenters on this issue should include any costs or benefits to changing the rules 
and procedures regarding the disclosure of a joint bidding requirement.
138. If we were to make a determination that the potential harms associated with a particular 
joint bidding arrangement outweigh the potential benefits, what remedies should the Commission impose 
either at the short-form application stage or the long-form application stage?  For example, should the 
Commission find that a short-form application is unacceptable or incomplete and bar the applicant from 
bidding in the auction?  Should the Commission find that an applicant at the long-form stage is 
unqualified to hold the license and deemed in default?  Commenters proposing particular remedies should 
discuss the costs and benefits of such remedies.
139. Other Issues.  Our current rules require the entity that filed the short form application to 
be the same entity that files the long form application (FCC Form 601) seeking consent to acquire a new 
license.
267
  Our public interest review of long form applications generally encompasses a review of the 
competitive effects of such assignments, as would our review of a secondary market transaction to 
disseminate licenses from a joint entity to its individual members.  We seek comment on whether it is 
necessary to modify our current joint bidding rules, standards, and procedures that apply to the post-
auction review of long-form applications or review of a secondary market transaction to disseminate 
licenses from a joint entity to its individual members, in order to promote competition in the mobile 
wireless marketplace.
140. Further, we propose to clarify that the provision that permits DEs to participate in an 
auction as a non-legally-recognizable consortium, with a requirement that each member of the consortium 
file separate applications for licenses covered by the winning bids of the consortium,
268
is applicable only 
in the DE context, where there are special provisions regarding the attribution of revenues for purposes of 
qualifying for bidding credits.  We seek comment on this clarification.
D. Miscellaneous Part 1 Revisions
141. Background.  Part 1, Subpart Q, of our rules generally governs competitive bidding 
proceedings to assign spectrum licenses.
269
  In Appendix A, in addition to changes that would implement 
the proposals discussed above, we propose changes to two of our Part 1, Subpart Q, rules, sections 1.2111 
and 1.2112.  We also intend, when we resolve the issues raised in this NPRM, to resolve long standing 
petitions for reconsideration to our Part 1 competitive bidding rules.
270
142. Discussion.  Section 1.2111.  We propose to repeal the first two paragraphs of section 
1.2111.  We propose to repeal section 1.2111(a), under which applicants for assignments or transfers 
during the first three years of a license term must provide the Commission with detailed contract and 
marketing information.  We believe that this requirement places a burden on licensees without a 
corresponding benefit to the Commission or the public.  We also propose to repeal section 1.2111(b), a 
never-used unjust enrichment payment requirement for broadband PCS C and F block set-aside licenses.
143. Section 1.2112.  Our proposed changes to this rule would clarify the auction application 
requirements for reporting an entity’s percentage ownership in the applicant and in FCC-regulated 
entities.  We propose further changes to specify application requirements for bidding consortia.  Finally, 
we propose to correct two errors in the rule caused by the inadvertent substitution of an incorrect 
                                                     
267
See 47 C.F.R. § 1.2107(c).  See ¶ 112 above for an explanation of the disclosure requirements for agreements and 
for parties to those agreements on the short-form application.
268
47 C.F.R. § 1.2107(f).
269
See 47 C.F.R. § 1.2101 (explaining that the provisions of Subpart Q implement section 309(j) of the Act, as 
added by the Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103-66) and subsequent amendments).
270
See note 3.
Federal Communications Commission FCC 14-146
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paragraph in the Code of Federal Regulations publication of the rule for the correct one published in the 
Federal Register summary of the DE Second Report and Order.
271
  The first error was the addition of a 
requirement that DE short-form applicants list and summarize all their agreements that support their DE 
eligibility, a requirement that the Commission intended to apply only to long-form applicants.  We 
propose to delete the requirement with respect to the short-form.  The second error was the deletion of a 
requirement that DE short-form applicants list the parties with which they have lease or resale 
arrangements for any of the DE applicants’ spectrum licenses.  We propose to reinstate this requirement.
144. We seek comment on the above proposals.
IV. PROCEDURAL MATTERS
A. Ex Parte Presentations
145. Requests for Ex Parte Meetings.  The proceeding this NPRM initiates shall be treated as a 
“permit-but-disclose” proceeding in accordance with the Commission’s ex parte rules.
272
  Persons making 
ex parte presentations must file a copy of any written presentation or a memorandum summarizing any 
oral presentation within two business days after the presentation (unless a different deadline applicable to 
the Sunshine period applies).  Persons making oral ex parte presentations are reminded that memoranda 
summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting 
at which the ex parte presentation was made, and (2) summarize all data presented and arguments made 
during the presentation.  If the presentation consisted in whole or in part of the presentation of data or 
arguments already reflected in the presenter’s written comments, memoranda or other filings in the 
proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, 
memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or 
arguments can be found) in lieu of summarizing them in the memorandum.  Documents shown or given 
to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b).  In proceedings governed by rule 1.49(f) or for which the 
Commission has made available a method of electronic filing, written ex parte presentations and 
memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through 
the electronic comment filing system available for that proceeding, and must be filed in their native 
format (e.g., .doc, .xml, .ppt, searchable .pdf).  Participants in this proceeding should familiarize 
themselves with the Commission’s ex parte rules.
B. Comment Period and Filing Procedures
146. Pursuant to sections 1.415 and 1.419 of the Commission’s rules, 47 C.F.R. §§ 1.415, 
1.419, interested parties may file comments and reply comments on or before the dates indicated on the 
first page of this document.  All filings related to this NPRM should refer to WT Docket No. 14-170.  
Further, we strongly encourage parties to develop responses to this NPRM that adhere to the organization 
and structure of this NPRM.  Comments may be filed using the Commission’s Electronic Comment Filing 
System (ECFS).  See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
? Electronic Filers:  Comments may be filed electronically using the Internet by accessing the 
ECFS:  http://fjallfoss.fcc.gov/ecfs2/.  
? Paper Filers:  Parties who choose to file by paper must file an original and one copy of each 
filing.  If more than one docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or rulemaking number.
                                                     
271
Compare 71 Fed. Reg. 26245, 26253 (May 4, 2006) (publishing summary of DE Second Report and Order, 21 
FCC Rcd 4753), with 47 C.F.R. § 1.2112 (Oct. 1, 2006). 
272
47 C.F.R. §§ 1.1200 et seq.
Federal Communications Commission FCC 14-146
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147. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or 
by first-class or overnight U.S. Postal Service mail.  All filings must be addressed to the Commission’s 
Secretary, Office of the Secretary, Federal Communications Commission.
? All hand-delivered or messenger-delivered paper filings for the Commission’s Secretary must be 
delivered to FCC Headquarters at 445 12
th
St., SW, Room TW-A325, Washington, DC 20554.  
The filing hours are 8:00 a.m. to 7:00 p.m.  All hand deliveries must be held together with rubber 
bands or fasteners.  Any envelopes and boxes must be disposed of before entering the building.  
? Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must 
be sent to 9300 East Hampton Drive, Capitol Heights, MD  20743.
? U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12
th
Street, 
SW, Washington DC  20554.
148. People with Disabilities:  To request materials in accessible formats for people with 
disabilities (braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call 
the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).
C. Initial Regulatory Flexibility Analysis
149. As required by section 603 of the Regulatory Flexibility Act, 5 U.S.C. § 603, the 
Commission has prepared an Initial Regulatory Flexibility Analysis (“IRFA”) of the possible significant 
economic impact on small entities of the proposals suggested in this document. The IRFA is set forth in 
Appendix B.
D. Paperwork Reduction Act Analysis 
150. This document contains proposed new or modified information collection requirements. 
The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public 
and the Office of Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public 
Law 104-13.  In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-
198, see 44 U.S.C. 3506(c)(4), we seek specific comment on how we might further reduce the 
information collection burden for small business concerns with fewer than 25 employees. 
E. Further Information
151. For further information about this NPRM, please contact Kathryn Hinton at (202) 
418-0660, Kathryn.Hinton@fcc.gov.  
V. ORDERING CLAUSES
152. IT IS ORDERED that pursuant to sections 1, 4(i), 303(r), 309(j), and 316 of the 
Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 303(r), 309(j), and 316, this Notice 
of Proposed Rule Making IS ADOPTED.
153. IT IS FURTHER ORDERED that the Petition for Expedited Rulemaking filed by 
DIRECTV Group, Inc. and EchoStar LLC on June 8, 2007, RM-11395, IS GRANTED to the extent
provided for herein and IS OTHERWISE DENIED.
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154. IT IS FURTHER ORDERED that the Commission’s Consumer and Governmental 
Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Notice of Proposed Rule 
Making, including the Initial Regulatory Flexibility Analysis to the Chief Counsel for Advocacy of the 
Small Business Administration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
Federal Communications Commission FCC 14-146
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APPENDIX A
Proposed Rules
For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 
47 CFR Parts 1 and 27 as follows:
PART 1—PRACTICE AND PROCEDURE
1. The authority citation for part 1 continues to read as follows:
Authority: 15 U.S.C. 79 et seq.; 47 U.S.C. 151, 154(i), 154(j), 155, 157, 225, 227, 303(r), 309, 1403, 
1404, 1451, and 1452.
2. Section 1.2105 is amended by revising paragraphs (a)(2)(xi) and (b)(1) to read as follows: 
§ 1.2105 Bidding application and certification procedures; prohibition of certain communications.
* * * * *
(a) * * *
(2) * * *
(xi) An attached statement made under penalty of perjury indicating whether or not the applicant has been 
in default on any Commission license or has been delinquent on any non-tax debt owed to any Federal 
agency.  For purposes of this certification, an applicant may exclude from consideration as a former 
default any default on a Commission license or delinquency on non-tax debt to any Federal agency that
has been resolved and meets any of the following criteria: (1) the notice of the final payment deadline or 
delinquency was received more than seven years before the short-form application deadline; (2) the 
default or delinquency amounted to less than $100,000; (3) the default or delinquency was paid within 
two quarters (i.e., 6 months) after receiving the notice of the final payment deadline or delinquency; or (4) 
the default or delinquency was the subject of a legal or arbitration proceeding that was cured upon 
resolution of the proceeding.
(xii) * * *
(b) Modification and Dismissal of Short-Form Application (FCC Form 175).
(1) (a) Any short-form application (FCC Form 175) that does not contain all of the certifications required 
Federal Communications Commission FCC 14-146
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pursuant to this section is unacceptable for filing and cannot be corrected subsequent to the applicable 
filing deadline. The application will be deemed incomplete, the applicant will not be found qualified to 
bid, and the upfront payment, if paid, will be returned.
(b) If (i) an individual or entity submits multiple applications in a single auction; or (ii) entities commonly 
controlled by the same individual or same set of individuals submit applications for any set of licenses in 
the same or overlapping geographic areas in a single auction; then only one of such applications may be 
deemed complete, and the other such application(s) will be deemed incomplete, such applicants will not 
be found qualified to bid, and the associated upfront payment(s), if paid, will be returned.
* * * * *
3. Section 1.2106 is amended by revising paragraph (a) to read as follows: 
§ 1.2106 Submission of upfront payments.
(a) The Commission may require applicants for licenses subject to competitive bidding to submit an 
upfront payment. In that event, the amount of the upfront payment and the procedures for submitting it 
will be set forth in a Public Notice. Any auction applicant that, pursuant to § 1.2105(a)(2)(xi), certifies 
that it is a former defaulter must submit an upfront payment equal to 50 percent more than that set for 
each particular license. No interest will be paid on upfront payments.
* * * * *
4. Section 1.2110 is amended by removing paragraphs (b)(3)(iv) and (n); redesignating paragraphs 
(o) and (p) as paragraphs (n) and (o); and revising paragraphs (b)(1)(i) and (ii), (f)(2), and (j) to read as 
follows:
§ 1.2110 Designated entities.
* * * * *
(b) * * *
(1) * * *
(i) The gross revenues of the applicant (or licensee), its affiliates, its controlling interests, and the 
affiliates of its controlling interests shall be attributed to the applicant (or licensee) and considered on a 
Federal Communications Commission FCC 14-146
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cumulative basis and aggregated for purposes of determining whether the applicant (or licensee) is 
eligible for status as a small business, very small business, or entrepreneur, as those terms are defined in 
the service-specific rules.  An applicant seeking status as a small business, very small business, or 
entrepreneur, as those terms are defined in the service-specific rules, must disclose on its short- and long-
form applications, separately and in the aggregate, the gross revenues for each of the previous three years 
of the applicant (or licensee), its affiliates, its controlling interests, and the affiliates of its controlling 
interests.
(ii) If applicable, pursuant to § 24.709 of this chapter, the total assets of the applicant (or licensee), its 
affiliates, its controlling interests, and the affiliates of its controlling interests shall be attributed to the 
applicant (or licensee) and considered on a cumulative basis and aggregated for purposes of determining 
whether the applicant (or licensee) is eligible for status as an entrepreneur. An applicant seeking status as 
an entrepreneur must disclose on its short- and long-form applications, separately and in the aggregate, 
the gross revenues for each of the previous two years of the applicant (or licensee), its affiliates, its 
controlling interests, and the affiliates of its controlling interests.
* * * * * 
(b) * * *
(3) * * *
(iv) [Removed]
(c) * * *
* * * * *
(f) * * *
(2) Size of bidding credits.  A winning bidder that qualifies as a small business may use the following 
bidding credits corresponding to its respective average gross revenues for the preceding 3 years:
(i) Businesses with average gross revenues for the preceding 3 years not exceeding $4 million are eligible 
for bidding credits of 35 percent;
(ii) Businesses with average gross revenues for the preceding 3 years not exceeding $20 million are 
Federal Communications Commission FCC 14-146
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eligible for bidding credits of 25 percent; and
(iii) Businesses with average gross revenues for the preceding 3 years not exceeding $55 million are 
eligible for bidding credits of 15 percent.
* * * * *
(j) Designated entities must describe on their long-form applications how they satisfy the requirements for 
eligibility for designated entity status, and must list and summarize on their long form applications all 
agreements that affect designated entity status such as partnership agreements, shareholder agreements, 
management agreements, spectrum leasing arrangements, spectrum resale (including wholesale) 
arrangements, and all other agreements including oral agreements, establishing as applicable, de facto or 
de jure control of the entity. Designated entities also must provide the date(s) on which they entered into 
of the agreements listed. In addition, designated entities must file with their long-form applications a 
copy of each such agreement. In order to enable the Commission to audit designated entity eligibility on 
an ongoing basis, designated entities that are awarded eligibility must, for the term of the license, 
maintain at their facilities or with their designated agents the lists, summaries, dates and copies of 
agreements required to be identified and provided to the Commission pursuant to this paragraph and to 
§ 1.2114.
* * * * *
(n) [Removed]
(o) [Redesignated as (n)] * * *
(p) [Redesignated as (o)] * * *
5. Section 1.2111 is revised to read as follows: 
§ 1.2111 Assignment or transfer of control: unjust enrichment.
(a) Unjust enrichment payment: installment financing.
(1) If a licensee that utilizes installment financing under this section seeks to assign or transfer control of 
its license to an entity not meeting the eligibility standards for installment payments, the licensee must 
make full payment of the remaining unpaid principal and any unpaid interest accrued through the date of 
Federal Communications Commission FCC 14-146
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assignment or transfer as a condition of approval.
(2) If a licensee that utilizes installment financing under this section seeks to make any change in 
ownership structure that would result in the licensee’s losing eligibility for installment payments, the 
licensee shall first seek Commission approval and must make full payment of the remaining unpaid 
principal and any unpaid interest accrued through the date of such change as a condition of approval. A 
licensee's (or other attributable entity's) increased gross revenues or increased total assets due to 
nonattributable equity investments, debt financing, revenue from operations or other investments,
business development or expanded service shall not be considered to result in the licensee losing 
eligibility for installment payments.
(3) If a licensee seeks to make any change in ownership that would result in the licensee’s qualifying for a 
less favorable installment plan under this section, the licensee shall seek Commission approval and must 
adjust its payment plan to reflect its new eligibility status. A licensee may not switch its payment plan to a 
more favorable plan.
(b) Unjust enrichment payment: bidding credits.
(1) A licensee that utilizes a bidding credit, and that during the initial term seeks to assign or transfer 
control of a license to an entity that does not meet the eligibility criteria for a bidding credit, will be 
required to reimburse the U.S. Government for the amount of the bidding credit, plus interest based on the 
rate for ten year U.S. Treasury obligations applicable on the date the license was granted, as a condition 
of Commission approval of the assignment or transfer. If, within the initial term of the license, a licensee 
that utilizes a bidding credit seeks to assign or transfer control of a license to an entity that is eligible for a 
lower bidding credit, the difference between the bidding credit obtained by the assigning party and the 
bidding credit for which the acquiring party would qualify, plus interest based on the rate for ten year 
U.S. treasury obligations applicable on the date the license is granted, must be paid to the U.S. 
Government as a condition of Commission approval of the assignment or transfer. If, within the initial 
term of the license, a licensee that utilizes a bidding credit makes any ownership change or enters into any 
agreement that would result in the licensee’s losing eligibility for a bidding credit (or qualifying for a 
Federal Communications Commission FCC 14-146
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lower bidding credit), the amount of the bidding credit (or the difference between the bidding credit 
originally obtained and the bidding credit for which the licensee would qualify after restructuring or under 
the agreement), plus interest based on the rate for ten year U.S. treasury obligations applicable on the date 
the license is granted, must be paid to the U.S. Government as a condition of Commission approval of the 
assignment or transfer or of a reportable eligibility event (see § 1.2114).
(2) Payment schedule.
(i) The amount of payments made pursuant to paragraph (b)(1) of this section will be reduced over time as 
follows:
(A) A loss of eligibility in the first two years of the license term will result in a forfeiture of 100 percent 
of the value of the bidding credit (or in the case of very small businesses transferring to small businesses, 
100 percent of the difference between the bidding credit received by the former and the bidding credit for 
which the latter is eligible);
(B) A loss of eligibility in year 3 of the license term will result in a forfeiture of 75 percent of the value of 
the bidding credit (or in the case of eligibility changing to qualify for a lower bidding credit, 75 percent of 
the difference between the bidding credit received and the bidding credit for which it is eligible);
(C) A loss of eligibility in year 4 of the license term will result in a forfeiture of 50 percent of the value of 
the bidding credit (or in the case of eligibility changing to qualify for a lower bidding credit, 50 percent of 
the difference between the bidding credit received and the bidding credit for which it is eligible);
(D) A loss of eligibility in year 5 of the license term will result in a forfeiture of 25 percent of the value of 
the bidding credit (or in the case of eligibility changing to qualify for a lower bidding credit, 25 percent of 
the difference between the bidding credit received and the bidding credit for which it is eligible); and
(E) For a loss of eligibility in year 6 or thereafter, there will be no payment.
(ii) These payments will have to be paid to the United States Treasury as a condition of approval of the 
assignment, transfer, ownership change or reportable eligibility event (see § 1.2114).
(c) Unjust enrichment: partitioning and disaggregation--
(1) Installment payments. Licensees making installment payments, that partition their licenses or 
Federal Communications Commission FCC 14-146
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disaggregate their spectrum to entities not meeting the eligibility standards for installment payments, will 
be subject to the provisions concerning unjust enrichment as set forth in this section.
(2) Bidding credits. Licensees that received a bidding credit that partition their licenses or disaggregate 
their spectrum to entities not meeting the eligibility standards for such a bidding credit, will be subject to 
the provisions concerning unjust enrichment as set forth in this section.
(3) Apportioning unjust enrichment payments. Unjust enrichment payments for partitioned license areas 
shall be calculated based upon the ratio of the population of the partitioned license area to the overall 
population of the license area and by utilizing the most recent census data. Unjust enrichment payments 
for disaggregated spectrum shall be calculated based upon the ratio of the amount of spectrum 
disaggregated to the amount of spectrum held by the licensee.
6. Section 1.2112 is revised to read as follows: 
§ 1.2112 Ownership disclosure requirements for applications.
(a) * * *
(1) * * *
(7) List any FCC-regulated entity or applicant for an FCC license, in which the applicant or any of the 
parties identified in paragraphs (a)(1) through (a)(5) of this section holds a 10 percent or greater 
ownership interest, regardless of the type of business entity, including both active and passive interests. 
This list must include a description of each such entity's principal business and a description of each such 
entity's relationship to the applicant (e.g., Company A owns 10 percent of Company B (the applicant) and 
10 percent of Company C, then Companies A and C must be listed on Company B's application, where C 
is an FCC licensee and/or license applicant). 
(b) * * *
(1) * * *
(iii) List all parties with which the applicant has entered into arrangements for the spectrum lease or resale 
(including wholesale arrangements) of any of the capacity of any of the applicant’s spectrum.
(iv) List separately and in the aggregate the gross revenues, computed in accordance with § 1.2110, for 
Federal Communications Commission FCC 14-146
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each of the following: The applicant, its affiliates, its controlling interests, and the affiliates of its 
controlling interests; and if a consortium of small businesses, the members comprising the consortium.
(v) If applying as a consortium under § 1.2110(b)(3)(i), provide the information in paragraphs (b)(i)-(iv) 
separately for each member of the consortium. 
(2) * * *
(ii) List any FCC-regulated entity or applicant for an FCC license, in which any controlling interest of the 
applicant owns a 10 percent or greater interest or a total of 10 percent or more of any class of stock, 
warrants, options or debt securities. This list must include a description of each such entity's principal 
business and a description of each such entity's relationship to the applicant;
(iii) List and summarize all agreements or instruments (with appropriate references to specific provisions 
in the text of such agreements and instruments) that support the applicant's eligibility as a small business 
under the applicable designated entity provisions, including the establishment of de facto or de jure 
control. Such agreements and instruments include articles of incorporation and by-laws, partnership 
agreements, shareholder agreements, voting or other trust agreements, management agreements, franchise 
agreements, spectrum leasing arrangements, spectrum resale (including wholesale) arrangements, and any 
other relevant agreements (including letters of intent), oral or written;
(vii) * * *
(v) List separately and in the aggregate the gross revenues, computed in accordance with § 1.2110, for 
each of the following: the applicant, its affiliates, its controlling interests, and affiliates of its controlling 
interests; and if a consortium of small businesses, the members comprising the consortium; and
* * * * *
7. Section 1.9020 is amended by revising paragraph (d)(4) to read as follows:
§ 1.9020 Spectrum manager leasing arrangements.
* * * * *
(d) * * *
(4) Designated entity/entrepreneur rules. A licensee that holds a license pursuant to small business and/or 
Federal Communications Commission FCC 14-146
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entrepreneur provisions (see § 1.2110 and § 24.709 of this chapter) and continues to be subject to unjust 
enrichment requirements (see § 1.2111 and § 24.714 of this chapter) and/or transfer restrictions (see § 
24.839 of this chapter) may enter into a spectrum manager leasing arrangement with a spectrum lessee, 
regardless of whether the spectrum lessee meets the Commission's designated entity eligibility 
requirements (see § 1.2110) or its entrepreneur eligibility requirements to hold certain C and F block 
licenses in the broadband personal communications services (see § 1.2110 and § 24.709 of this chapter), 
so long as the spectrum manager leasing arrangement does not result in the spectrum lessee's becoming a 
“controlling interest” or “affiliate” (see § 1.2110) of the licensee such that the licensee would lose its 
eligibility as a designated entity or entrepreneur.
(5) * * *
* * * * *
PART 27—MISCELLANEOUS WIRELESS COMMUNICATIONS SERVICES
8. The authority citation for part 27 continues to read as follows:
Authority: 47 U.S.C. 154, 301, 302a, 303, 307, 309, 332, 336, 337, 1403, 1404, 1451, and 1452, unless 
otherwise noted.
9. Section 27.1301 is amended by removing the introductory text and revising paragraphs (a)(1) and 
(2) to read as follows: 
§ 27.1301 Designated entities in the 600 MHz band.
(a) Eligibility for small business provisions.  
(1) A small business is an entity that, together with its affiliates, its controlling interests, the affiliates of 
its controlling interests, and the entities with which it has an attributable material relationship, has average 
gross revenues not exceeding $55 million for the preceding three (3) years.
(2) A very small business is an entity that, together with its affiliates, its controlling interests, the affiliates 
of its controlling interests, and the entities with which it has an attributable material relationship, has 
average gross revenues not exceeding $20 million for the preceding three (3) years.
* * * * *
Federal Communications Commission FCC 14-146
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APPENDIX B
Initial Regulatory Flexibility Act Analysis
1. As required by the Regulatory Flexibility Act of 1980, as amended (“RFA”),
1
the 
Commission has prepared this Initial Regulatory Flexibility Analysis (“IRFA”) concerning the possible 
significant economic impact on small entities by the policies and rules proposed in this Notice of 
Proposed Rulemaking (“NPRM”).  Written public comments are requested on this IRFA.  Comments 
must be identified as responses to the IRFA and must be filed by the deadlines for comments indicated on 
the first page of the NPRM.  The Commission will send a copy of the NPRM, including this IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration (“SBA”).
2
  In addition, the NPRM and 
this IRFA (or summaries thereof) will be published in the Federal Register.
3
A. Need for, and Objectives of, the Proposed Rules
2. The NPRM initiates a proceeding to revise certain of the Part 1 competitive bidding rules
in advance of an auction that holds historic potential for interested applicants to acquire licenses for below 
1-GHz spectrum in the Broadcast Television Spectrum Incentive Auction (“BIA”).  The NPRM therefore 
proposes to reform some of the Commission’s general Part 1 rules governing competitive bidding for 
spectrum licenses to reflect changes in the marketplace, including the challenges faced by new entrants.  
The NPRM’s proposals also advance the statutory directive to ensure that small businesses, rural 
telephone companies, and businesses owned by members of minority groups and women (collectively, 
“designated entities” or “DEs”)
4
are given the opportunity to participate in the provision of spectrum-
based services, and fulfill the commitment made in the BIA Report & Order.
5
  Together these proposals 
will assure that the Commission’s Part 1 rules continue to promote the Commission’s fundamental 
statutory objectives. The Commission expects to act on the issues raised in the NPRM soon enough to 
allow all parties to account for any changes while planning for the BIA.
3. Specifically, the NPRM proposes to:
? Provide small businesses greater opportunity to participate in the provision of a wide 
range of spectrum-based services by modifying the Commission’s eligibility 
                                                     
1
See 5 U.S.C. § 603.  The RFA, see 5 U.S.C. §§ 601 et. seq., has been amended by the Small Business Regulatory 
Enforcement Fairness Act of 1996 (“SBREFA”), Pub. L. No. 104-121, Title II, 110 Stat. 847 (1996). 
2
  See 5 U.S.C. § 603(a).  
3
  See id. 
4
In 1995, the Supreme Court decided Adarand Constructors, holding that any federal program in which the 
“government treats any person unequally because of his or her race” must satisfy the “strict scrutiny” constitutional 
standard of review.  Adarand Constructors, Inc. v. Peña, 515 U.S. 200, 227–30 (1995) (Adarand Constructors).  
The Court subsequently held in VMI that a state program that makes distinctions on the basis of gender must be 
supported by an “exceedingly persuasive justification” in order to withstand constitutional scrutiny.  United States v. 
Virginia, 518 U.S. 515, 531–34 (1996) (VMI).  In response to the Court’s holding, the Commission decided that it 
would use race- and gender-neutral provisions until it had developed a record that would provide the evidentiary 
support necessary to withstand this standard of review, and maintain provisions for small businesses.  
Implementation of Section 309(j) of the Communications Act—Competitive Bidding, PP Docket No. 93-253, Tenth 
Report and Order, 11 FCC Rcd 19974, 19975–77 ¶¶ 1–3 (1996).  The Commission has noted that many minority-
and women-owned businesses qualify for the provisions that the Commission has adopted for small businesses.  
Amendment of Part 1 of the Commission’s Rules—Competitive Bidding Procedures, WT Docket No. 97-82, Order 
on Reconsideration of the Third Report and Order, Fifth Report and Order, and Fourth Further Notice of Proposed 
Rule Making, 15 FCC Rcd 15293, 15318–19 ¶¶ 45–48 (2000), citing Adarand Constructors, 515 U.S. at 227.
5
See, e.g., Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions, GN 
Docket No. 12-268, Report and Order, 29 FCC Rcd 6567, 6762 ¶ 474 (2014) (BIA Report and Order).
Federal Communications Commission FCC 14-146
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requirements, updating the standardized schedule of small business sizes, and eliminating 
duplicative reporting requirements, while also seeking comment on strengthening our 
rules to prevent the unjust enrichment of ineligible entities;
? Amend the Commission’s former defaulter rule to balance concerns that the current rule 
is overly broad with the Commission’s continued need to ensure that auction bidders are 
financially reliable;
? Codify an established competitive bidding procedure that prohibits the same individual or 
entity from becoming qualified to bid on the basis of more than one short form 
application in a specific auction; 
? Prevent entities that are exclusively controlled by a single individual or set of individuals 
from becoming qualified to bid on overlapping licenses based on more than one short-
form application in a specific auction; and,
? Retain the current rules governing joint bidding arrangements among non-nationwide 
providers and prohibit joint bidding arrangements among nationwide providers.
The NPRM also provides notice of the Commission’s intention to resolve long standing petitions for 
reconsideration and proposes necessary clean up revisions to the Commission’s Part 1 competitive 
bidding rules.
6
    
4. With respect to small businesses, the NPRM’s proposals seek to update the 
Commission’s rules to reflect that small businesses need greater opportunities to gain access to capital so 
that they may have an opportunity to participate in the provision of spectrum-based services in today’s 
communications marketplace.  In the past decade, the rapid adoption of smartphones and tablet computers 
and the widespread use of mobile applications, combined with the increasing deployment of high-speed 
3G and now 4G technologies, have driven significantly more intensive use of mobile networks.
7
  This 
progression from the provision of mobile voice services to the provision of mobile broadband services has 
increased the need for access to spectrum.
8
  In addition, in the past decade, the number of small and 
regional mobile wireless service providers has significantly decreased, yet regional and local service 
providers continue to offer consumers additional choices in the areas they serve.
9
  The Commission 
anticipates that by revising its rules to allow small businesses to take advantage of the same opportunities 
to utilize their spectrum capacity and gain access to capital as those afforded to larger licensees, the 
Commission can better achieve its statutory directives.
10
  Nonetheless, the Commission remains mindful 
of its obligation to prevent unjust enrichment of ineligible entities.
11
  
                                                     
6
See Petition for Partial Reconsideration and/or Clarification, Blooston, Mordkofsky, Dickers, Duffy & Prendergast, 
LLP (“Blooston”), WT Docket No. 05-211, filed June 2, 2006; Petition for Reconsideration and Clarification, Cook 
Inlet Region, Inc., filed June 5, 2006; Reply to Opposition to Petitions for Reconsideration, Blooston, filed July 24, 
2006; Petition for Reconsideration, National Telecommunications Cooperative Association, filed Mar. 9, 2006; 
Petition for Clarification and/or Reconsideration, Blooston, filed Mar. 9, 2006.
7
See Policies Regarding Mobile Spectrum Holdings; Expanding the Economic and Innovation Opportunities of 
Spectrum Through Incentive Auctions, WT Docket No. 12-269, GN Docket No. 12-268, Report and Order, 29 FCC 
Rcd 6133, 6146 ¶ 23 (2014) (Mobile Spectrum Holdings Report and Order).  
8
Id.  
9
Id. at 6144 ¶ 18, 6206 ¶ 179.  
10
Once effective, these revised rules will allow all licensees that have acquired licenses with or without DE benefits 
this increased flexibility.  
11
47 U.S.C. § 309(j)(4)(E).
Federal Communications Commission FCC 14-146
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B. Legal Basis
5. The proposed action is authorized under sections 1, 4(i), 303(r), 309(j), and 316 of the 
Communications Act of 1934, as amended, 47 U.S.C. sections 151, 154(i), 303(r), 309(j), and 316.
C. Description and Estimate of the Number of Small Entities to Which the Proposed 
Rules Will Apply
6. The RFA directs the Commission to provide a description of and, where feasible, an 
estimate of the number of small entities that will be affected by the proposed rules, if adopted.
12
  The RFA 
generally defines the term “small entity” as having the same meaning as the terms “small business,” 
“small organization,” and “small government jurisdiction.”
13
  In addition, the term “small business” has 
the same meaning as the term “small business concern” under the Small Business Act.
14
  A small business 
concern is one which:  (1) is independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the SBA.
15
7. Small Businesses, Small Organizations, and Small Governmental Jurisdictions.  If 
adopted, the NPRM’s proposals may, over time, affect small entities that are not easily categorized at 
present.  We therefore describe here, at the outset, three comprehensive, statutory small entity size 
standards.
16
  First, nationwide, there are a total of approximately 27.5 million small businesses, according 
to the SBA.
17
  In addition, a “small organization” is generally “any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.”
18
  Nationwide, as of 2007, there were 
approximately 1,621,315 small organizations.
19
  Finally, the term “small governmental jurisdiction” is 
defined generally as “governments of cities, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.”
20
  Census Bureau data for 2011 indicate that there
were 89,476 local governmental jurisdictions in the United States.
21
  We estimate that, of this total, as 
many as 88,506 entities may qualify as “small governmental jurisdictions.”
22
  Thus, we estimate that most 
governmental jurisdictions are small.
                                                     
12
  5 U.S.C. § 603(b)(3).
13
  5 U.S.C. § 601(6).
14
  5 U.S.C. § 601(3) (incorporating by reference the definition of “small business concern” in 15 U.S.C. § 632).  
Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an agency, after 
consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public 
comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and 
publishes such definition(s) in the Federal Register.”  5 U.S.C. § 601(3).
15
  15 U.S.C. § 632.  Application of the statutory criteria of dominance in its field of operation and independence are 
sometimes difficult to apply in the context of broadcast television.  Accordingly, the Commission’s statistical 
account of television stations may be over-inclusive.
16
See 5 U.S.C. § 601(3)–(6).
17
See SBA, Office of Advocacy, Frequently Asked Questions, http://www.sba.gov/sites/default/files/sbfaq.pdf
(showing figures from 2009) (last visited Aug. 8, 2014).
18
5 U.S.C. § 601(4).
19
INDEPENDENT SECTOR, THE NEW NONPROFIT ALMANAC &DESK REFERENCE (2010).
20
5 U.S.C. § 601(5).
21
U.S. CENSUS BUREAU, STATISTICAL ABSTRACT OF THE UNITED STATES:  2011, Table 427: Number of Local 
Governments by Types–States: 2007, available at http://www.census.gov/prod/2011pubs/11statab/stlocgov.pdf. 
22
The 2007 U.S. Census data for small governmental organizations are not presented based on the size of the 
population in each such organization.  There were 89,476 small governmental organizations in 2007.  If we assume 
that county, municipal, township and school district organizations are more likely than larger governmental 
(continued….)
Federal Communications Commission FCC 14-146
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8. Licenses Assigned by Auction.  The changes and additions to the Commission’s rules 
proposed in the NPRM are of general applicability to all auctionable services.  Accordingly, this IRFA 
provides a general analysis of the impact of the proposals on small businesses rather than a service-by-
service analysis.  The number of entities that may apply to participate in future Commission spectrum 
auctions is unknown.  Moreover, the number of small businesses that have participated in prior spectrum 
auctions has varied.  As a general matter, the number of winning bidders that qualify as small businesses 
at the close of an auction does not necessarily represent the number of small businesses currently in 
service.  Also, the Commission does not generally track subsequent business size unless, in the context of 
changes in control, changes in material relationships or assignments or transfers, unjust enrichment issues 
are implicated.  
9. Wireless Telecommunications Carriers (except satellite).  The Census Bureau defines this 
category to include “establishments engaged in operating and maintaining switching and transmission 
facilities to provide communications via the airwaves.  Establishments in this industry have spectrum
licenses and provide services using that spectrum, such as cellular phone services, paging services, 
wireless Internet access, and wireless video services.”
23
  The SBA has developed a small business size 
standard for Wireless Telecommunications Carriers (except satellite).
24
  Under the SBA’s standard, a 
business is small if it has 1,500 or fewer employees.
25
  For this category, Census data for 2007 show that 
there were 1,383 firms that operated for the entire year.
26
  Of this total, 1,368 firms (approximately 99%) 
had employment of 999 or fewer employees and only 15 (approximately 1%) had employment of 1,000 
employees or more.
27
  Thus under this category and the associated small business size standard, the 
Commission estimates that the majority of wireless telecommunications carriers (except satellite) are 
small entities that may be affected by the NPRM’s proposed actions.
28
10. Broadband Radio Service and Educational Broadband Service.  Broadband Radio Service 
systems, previously referred to as Multipoint Distribution Service (“MDS”) and Multichannel Multipoint 
Distribution Service (“MMDS”) systems, and “wireless cable,” transmit video programming to 
subscribers and provide two-way high speed data operations using the microwave frequencies of the 
Broadband Radio Service (“BRS”) and Educational Broadband Service (“EBS”) (previously referred to as 
the Instructional Television Fixed Service (“ITFS”)).
29
  In connection with the 1996 BRS auction, the 
(Continued from previous page)                                                            
organizations to have populations of 50,000 or less, the total of these organizations is 52,125.  If we make the same 
assumption about special districts, and also assume that special districts are different from county, municipal, 
township, and school districts, in 2007 there were 37,381 special districts.  Therefore, of the 89,476 small 
governmental organizations documented in 2007, as many as 88,506 may be considered small under the applicable 
standard.  This data may overestimate the number of such organizations that has a population of 50,000 or less.  Id. 
at Tables 427, 426 (data cited therein are from 2007).
23
U.S. Census Bureau, Industry Statistics Portal, 2012 NAICS: 517210 – Wireless telecommunications carriers 
(except satellite), Definition & Comparability, 
http://www.census.gov/econ/isp/sampler.php?naicscode=517210&naicslevel=6# (last visited Aug. 11, 2014).
24
13 C.F.R. § 121.201, NAICS code 517210.
25
Id.
26
U.S. Census Bureau, 2007 Economic Census, Table No. EC0751SSSZ5, Information: Subject Series – Estab and 
Firm Size: Employment Size of Firms for the United States: 2007 (NAICS Code 517210), 
http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_51SSSZ5&prod
Type=table (last visited Aug. 19, 2014). 
27
Id.  Available census data do not provide a more precise estimate of the number of firms that have employment of 
1,500 or fewer employees; the largest category provided is for firms with “1,000 employees or more.” Id.
28
See id.
29
Amendment of Parts 21 and 74 of the Commission’s Rules with Regard to Filing Procedures in the Multipoint 
Distribution Service and in the Instructional Television Fixed Service and Implementation of Section 309(j) of the 
(continued….)
Federal Communications Commission FCC 14-146
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Commission established a small business size standard as an entity that had annual average gross 
revenues of no more than $40 million in the previous three calendar years.
30
  The BRS auction resulted in 
67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (“BTAs”).  Of the 67 
auction winners, 61 met the definition of a small business.  BRS also includes licensees of stations 
authorized prior to the auction.  At this time, based on our review of licensing records, we estimate that of 
the 61 small business BRS auction winners, 48 remain small business licensees.  In addition to the 48 
small businesses that hold BTA authorizations, there are approximately 86 incumbent BRS licensees that 
are considered small entities (18 incumbent BRS licensees do not meet the small business size standard).
31
  
After adding the number of small business auction licensees to the number of incumbent licensees not 
already counted, there are currently approximately 133 BRS licensees that are defined as small businesses 
under either the SBA or the Commission’s rules.  In 2009, the Commission conducted Auction 86, the 
sale of 78 licenses in the BRS areas.
32
  The Commission established three small business size standards 
that were used in Auction 86: (i) an entity with attributed average annual gross revenues that exceeded 
$15 million and do not exceed $40 million for the preceding three years was considered a small business; 
(ii) an entity with attributed average annual gross revenues that exceeded $3 million and did not exceed 
$15 million for the preceding three years was considered a very small business; and (iii) an entity with 
attributed average annual gross revenues that did not exceed $3 million for the preceding three years was 
considered an entrepreneur.
33
  Auction 86 concluded in 2009 with the sale of 61 licenses.
34
  Of the 10 
winning bidders, two bidders that claimed small business status won four licenses; one bidder that 
claimed very small business status won three licenses; and two bidders that claimed entrepreneur status 
won six licenses.  We note that, as a general matter, the number of winning bidders that qualify as small 
businesses at the close of an auction does not necessarily represent the number of small businesses 
currently in service. 
11. In addition, the SBA’s placement of Cable Television Distribution Services in the
category of Wired Telecommunications Carriers is applicable to cable-based educational broadcasting 
services.  Since 2007, Wired Telecommunications Carriers have been defined as follows: “This industry 
comprises establishments primarily engaged in operating and/or providing access to transmission 
facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and 
video using wired telecommunications networks.  Transmission facilities may be based on a single 
technology or a combination of technologies.”
35
  Establishments in this industry use the wired 
telecommunications network facilities that they operate to provide a variety of services, such as wired 
telephony services, including VoIP services; wired (cable) audio and video programming distribution; and 
wired broadband Internet services.  By exception, establishments providing satellite television distribution 
(Continued from previous page)                                                            
Communications Act—Competitive Bidding, MM Docket No. 94-131, PP Docket No. 93-253, Report and Order, 
10 FCC Rcd 9589, 9593 ¶ 7 (1995).
30
47 C.F.R. § 21.961(b)(1) (1996).
31
47 U.S.C. § 309(j).  Hundreds of stations were licensed to incumbent MDS licensees prior to implementation of 
Section 309(j) of the Communications Act of 1934, 47 U.S.C. § 309(j).  For these pre-auction licenses, the 
applicable standard is SBA’s small business size standard of 1,500 or fewer employees.
32
Auction of Broadband Radio Service (BRS) Licenses, Scheduled for October 27, 2009, Notice and Filing 
Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 86, AU Docket No.
09-56, Public Notice, 24 FCC Rcd 8277 (2009).
33
Id. at 8296.
34
Auction of Broadband Radio Service Licenses Closes, Winning Bidders Announced for Auction 86, Down 
Payments Due November 23, 2009, Final Payments Due December 8, 2009, Ten-Day Petition to Deny Period, 
Public Notice, 24 FCC Rcd 13572 (2009).
35
U.S. Census Bureau, 2012 NAICS Definitions: 517110 Wired Telecommunications Carriers, 
http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=517110&search=2012 (last visited Aug. 19, 2014).
Federal Communications Commission FCC 14-146
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services using facilities and infrastructure that they operate are included in this industry.
36
  The SBA has 
developed a small business size standard for this category, which is: all such firms having 1,500 or fewer 
employees.
37
  Census data for 2007 shows that there were 3,188 firms that operated for the duration of 
that year.
38
  Of those, 3,144 had fewer than 1,000 employees, and 44 firms had more than 1,000 
employees.  Thus under this category and the associated small business size standard, the majority of such 
firms can be considered small.  In addition to Census data, the Commission’s Universal Licensing System 
indicates that as of July 2014, there are 2,006 active EBS licenses.  The Commission estimates that of 
these 2,006 licenses, the majority are held by non-profit educational institutions and school districts, 
which are by statute defined as small businesses.
39
12. Television Broadcasting.  This economic census category “comprises establishments 
primarily engaged in broadcasting images together with sound.  These establishments operate television 
broadcasting studios and facilities for the programming and transmission of programs to the public.”
40
  
The SBA has created the following small business size standard for Television Broadcasting firms: those 
having $38.5 million or less in annual receipts.
41
  The Commission has estimated the number of licensed 
commercial television stations to be 1,387.
42
  In addition, according to Commission staff review of the 
BIA/Kelsey, LLC’s Media Access Pro Television Database on July 30, 2014, about 1,276 of an estimated 
1,387 commercial television stations (or approximately 92 percent) had revenues of $38.5 million or less.   
We therefore estimate that the majority of commercial television broadcasters are small entities.
13. We note, however, that in assessing whether a business concern qualifies as small under 
the above definition, business (control) affiliations must be included.
43
  Our estimate, therefore, likely 
overstates the number of small entities that might be affected by the NPRM’s proposals because the 
revenue figure on which it is based does not include or aggregate revenues from affiliated companies.  In 
addition, an element of the definition of “small business” is that the entity not be dominant in its field of 
operation.  We are unable at this time to define or quantify the criteria that would establish whether a 
specific television station is dominant in its field of operation.  Accordingly, the estimate of small 
businesses to which rules may apply does not exclude any television station from the definition of a small 
business on this basis and is therefore possibly over-inclusive to that extent.
                                                     
36
Id.
37
See 13 C.F.R. § 121.201, NAICS code 517110.
38
U.S. Census Bureau, 2007 Economic Census, Table No. EC0751SSSZ5, Information: Subject Series - Estab and 
Firm Size: Employment Size of Firms for the United States: 2007 (NAICS code 517110), 
http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_51SSSZ5 (last 
visited Aug. 11, 2014).
39
The term “small entity” within SBREFA applies to small organizations (nonprofits) and to small governmental 
jurisdictions (cities, counties, towns, townships, villages, school districts, and special districts with populations of 
less than 50,000).  5 U.S.C. § 601(4)–(6).
40
U.S. Census Bureau, 2012 NAICS Definitions: 515120 Television Broadcasting, http://www.census.gov/cgi-
bin/sssd/naics/naicsrch?code=515120&search=2012 (last visited Aug. 19, 2014).
41
13 C.F.R. § 121.201, NAICS code 515120 (updated for inflation in 2014).
42
See FCC News Release, Broadcast Station Totals as of June 30, 2014 (rel. July 9, 2014), available at 
http://www.fcc.gov/document/broadcast-station-totals-june-30-2014 (June 2014 Broadcast Station Totals).
43
“[Business concerns] are affiliates of each other when one concern controls or has the power to control the other, 
or a third party or parties controls or has the power to control both.”  13 C.F.R. § 121.103(a)(1).
Federal Communications Commission FCC 14-146
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14. In addition, the Commission has estimated the number of licensed noncommercial 
educational (“NCE”) television stations to be 395.
44
  These stations are non-profit, and therefore 
considered to be small entities.
45
15. There are also 2,460 LPTV stations, including Class A stations, and 3,838 TV translator 
stations.
46
  Given the nature of these services, we will presume that all of these entities qualify as small 
entities under the above SBA small business size standard.
16. Radio Broadcasting.  The SBA defines a radio broadcast station as a small business if 
such station has no more than $38.5 million in annual receipts.
47
  Business concerns included in this 
industry are those “primarily engaged in broadcasting aural programs by radio to the public.”
48
  
According to review of the BIA/Kelsey, LLC’s Media Access Pro Radio Database as of July 30, 2014, 
about 11,332 (or about 99.9 percent) of 11,343 commercial radio stations have revenues of $38.5 million 
or less and thus qualify as small entities under the SBA definition.  The Commission notes, however, that, 
in assessing whether a business concern qualifies as small under the above definition, business (control) 
affiliations must be included.  This estimate, therefore, likely overstates the number of small entities that 
might be affected, because the revenue figure on which it is based does not include or aggregate revenues 
from affiliated companies.
17. In addition, an element of the definition of “small business” is that the entity not be 
dominant in its field of operation.  The Commission is unable at this time to define or quantify the criteria 
that would establish whether a specific radio station is dominant in its field of operation.  Accordingly, 
the estimate of small businesses to which rules may apply does not exclude any radio station from the 
definition of a small business on this basis and therefore may be over-inclusive to that extent.  Also, as 
noted, an additional element of the definition of “small business” is that the entity must be independently 
owned and operated.  The Commission notes that it is difficult at times to assess these criteria in the 
context of media entities and the estimates of small businesses to which they apply may be over-inclusive 
to this extent.
D. Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements for Small Entities
18. The NPRM proposes and seeks comment on a number of rule changes that will affect 
reporting, recordkeeping, and other compliance requirements.  Each of these changes is described below.
19. Eligibility for Bidding Credits.  The NPRM proposes changes to the Commission’s 
process for evaluating small business eligibility for bidding credits.  In particular, the NPRM proposes to 
repeal the attributable material relationship (“AMR”) rule and tentatively concludes that the Commission 
should re-examine the need for the related decade-old policy that has limited small businesses seeking 
bidding credits to providing primarily retail, facilities-based service directly to the public with each of 
their licenses.  Under the AMR, a small business applicant or licensee must automatically attribute to 
itself the gross revenues of any entity with which it has an “attributable material relationship.”  An 
applicant or licensee has an AMR when it has one or more agreements with any individual entity for the 
lease (under either spectrum manager or de facto transfer leasing arrangements) or resale (including under 
a wholesale arrangement) of, on a cumulative basis, more than 25 percent of the spectrum capacity of any 
                                                     
44
See June 2014 Broadcast Station Totals. 
45
See generally 5 U.S.C. § 601(4), (6).
46
See June 2014 Broadcast Station Totals.
47
13 C.F.R § 121.201, NAICS code 515112 (updated for inflation in 2014).
48
U.S. Census Bureau, 2012 NAICS Definitions: 515112 Radio Stations, http://www.census.gov/cgi-
bin/sssd/naics/naicsrch?code=515112&search=2012 (last visited Aug. 19, 2014).  
Federal Communications Commission FCC 14-146
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individual license held by the applicant or licensee.
49
  The NPRM seeks comment on the proposal to 
repeal the AMR rule, and the Commission’s tentative conclusions regarding its need to re-evaluate its 
small business policy. Alternatively, the NPRM also seeks comment on retaining the Commission’s 
small business policy and/or some variation of the AMR rule.  For instance, the NPRM seeks comment on 
whether the Commission should adopt a rule with some other spectrum capacity use limit that would 
render an applicant ineligible for all current and future benefits.             
20. The NPRM also proposes to adopt a more flexible approach under which the 
Commission would evaluate small business eligibility on a license-by-license basis, using a two-pronged 
test.  The first prong would evaluate whether an applicant meets the applicable small business size 
standard and is therefore eligible for benefits.  To evaluate small business eligibility, the NPRM proposes 
to apply the Commission’s existing controlling interest standard and affiliation rules to determine whether 
an entity should be attributable based on whether that entity has de jure or de facto control of, or is 
affiliated with, the applicant’s overall business venture.  Once the first prong has been met, the 
Commission would evaluate eligibility under the second prong.  Under the second prong, the NPRM 
proposes to determine an entity’s eligibility to retain small business benefits on a license-by-license basis, 
based on whether it has maintained de jure and de facto control of the license.  Under this proposed 
license-by-license approach, an entity will not necessarily lose its eligibility for all current and future 
small business benefits solely because of a decision associated with any particular license.  Instead, while 
a small business might incur unjust enrichment obligations if it relinquishes de jure or de facto control of 
any particular license for which it claimed benefits, so long as the revenues of its attributable interest 
holders (i.e., the DE’s affiliates, its controlling interests, and the affiliates of its controlling interests) 
continue to qualify under the relevant small business size standard, it could still retain its eligibility to 
retain current and future benefits on existing and future licenses.  The NPRM seeks comment on the 
proposed two-pronged approach to evaluate attribution and establish eligibility for small business 
benefits.  
21. The NPRM also proposes to modify the Commission’s secondary market rules to 
comport with the Commission’s proposed approach to assessing small business eligibility.  Specifically, 
the NPRM proposes to modify the language in section 1.9020(d)(4) to remove the conflicting reference to 
the control standard of section 1.2110 in order to make clear that small business lessors are fully subject 
to the same de facto control standard for spectrum manager leasing that applies to all other licensees.
50
  
This modification should clarify that section 1.9010 alone defines whether a licensee, including a small 
business, retains de facto control of the spectrum that it leases to a spectrum lessee in the context of 
spectrum manager leasing.
22. The NPRM seeks comment on whether any changes are appropriate to the Commission’s 
unjust enrichment rules that provide additional safeguards by requiring repayment of small business 
benefits where an applicant loses eligibility for any reason.  Specifically, the NPRM invites comment on, 
among other things, whether to adjust the Commission’s current five year unjust enrichment schedule 
either in terms of the duration of the requirements or the percentages of the repayment schedule.  The 
NPRM also seeks comment on how best the Commission can continue to scrutinize applications and 
proposed transactions to ensure that only eligible entities receive benefits, while not undermining the 
Communications Act’s directive to ensure that DEs are given the opportunity to participate in the 
provision of spectrum-based services.  Specifically, the NPRM seeks comment on adopting a 10 year 
                                                     
49
See Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission’s 
Competitive Bidding Rules and Procedures, WT Docket No. 05-211, Second Report and Order and Second Further 
Notice of Proposed Rule Making, 21 FCC Rcd 4753, 4763 ¶ 25 (2006) (DE Second Report and Order); see 47 
C.F.R. § 1.2110(b)(3)(iv)(A).
50
See 47 C.F.R. § 1.9010; see also 47 C.F.R. § 1.9020(d)(4).
Federal Communications Commission FCC 14-146
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unjust enrichment repayment schedule similar to the one it adopted in 2006,
51
but vacated by the Third 
Circuit for lack of notice.
52
  
23. Bidding Credits.  The NPRM examines the primary way that the Commission facilitates 
participation by small businesses at auction through its bidding credit program.  Bidding credits operate 
as a percentage discount on the winning bid amounts of a qualifying small business.  By making the 
acquisition of spectrum licenses more affordable for new and existing small businesses, bidding credits 
facilitate their access to needed capital.  The Commission establishes eligibility for bidding credits for 
each auctionable service, adopting one or more definitions of the small businesses that will be eligible.  
The Commission’s small business definitions have been based on an applicant’s average annual gross 
revenues over a three-year period. The NPRM proposes to increase the general schedule of size standards 
in its Part 1 rules, measured by gross revenues, for purposes of determining an entity’s eligibility for a 
bidding preference.  Specifically, the NPRM proposes to revise the standardized schedule in section 
1.2110(f) as follows:
? Businesses with average annual gross revenues for the preceding three years not exceeding $4 
million would be eligible for a 35 percent bidding credit; 
? Businesses with average annual gross revenues for the preceding three years not exceeding 
$20 million would be eligible for a 25 percent bidding credit; and 
? Businesses with average annual gross revenues for the preceding three years not exceeding 
$55 million would be eligible for a 15 percent bidding credit. 
The NPRM also asks about alternative methods for setting new gross revenues thresholds.  
24. The NPRM seeks comment on whether to adopt a small business size standard based on 
criteria other than gross revenues, and proposes to continue the Commission’s practice of evaluating 
which small business definitions will apply on a service-by-service basis, based upon associated capital 
requirements for a particular service.  In addition, the NPRM seeks comment on whether to increase the 
bidding credit percentages (i.e., discount amounts) applicable to associated small business categories.  
The NPRM also seeks comment on whether any revisions the Commission adopts in this proceeding to its 
Part 1 schedule of small business size standards and associated bidding credit percentage levels should 
apply to the specific small business definitions and bidding credit percentages the Commission previously 
adopted for specific services, and, if so, how such revisions would be implemented.  The NPRM proposes 
that any new rules adopted in this proceeding would apply to the 600 MHz band spectrum licenses to be 
offered in the Broadcast Television Spectrum Incentive Auction (“BIA”).  In the BIA proceeding, the 
Commission adopted a 15 percent bidding credit for small businesses (defined as entities with average 
annual gross revenues for the preceding three years not exceeding $40 million) and a 25 percent bidding 
credit for very small businesses (defined as entities with average annual gross revenues for the preceding 
three years not exceeding $15 million).  Accordingly, the NPRM proposes to adopt for the 600 MHz band 
increases in the gross revenues thresholds associated with the 25 percent and 15 percent bidding credits 
that are consistent with the increased gross revenues thresholds proposed in the NPRM for the 
standardized schedule in our Part 1 competitive bidding rules.  The NPRM also seeks comment on 
whether the Commission should adopt a third small business bidding credit tier for the 600 MHz band 
                                                     
51
See DE Second Report and Order, 21 FCC Rcd at 4766–67 ¶¶ 37–38. There the Commission adopted a 10 year 
unjust enrichment schedule for licenses acquired with bidding credits. For the first five years of the license term, if 
a small business lost its eligibility for a bidding credit for any reason, it owed 100 percent of the bidding credit, plus 
interest. For years six and seven of the license term, 75 percent of the bidding credit, plus interest, was owed. For 
years eight and nine, 50 percent of the bidding credit, plus interest, was owed, and for year 10, 25 percent of the 
bidding credit, plus interest, was owed.
52
Council Tree, 619 F.3d at 256.
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that would provide a 35 percent bidding credit to businesses with average gross revenues for the 
preceding three years not exceeding $4 million. 
25. Further, the NPRM seeks comment on the Commission’s ability to consider bidding 
preferences for other types of DEs,
53
entities that serve unserved/underserved areas or areas with 
persistent poverty,
54
as well as persons or entities that have overcome disadvantages.
55
  The NPRM asks 
commenters to specifically address the statutory authority and judicial scrutiny issues that may limit the 
Commission’s ability to entertain recommendations to alter the focus of its current bidding preferences by 
offering bidding preferences to entities based on other criteria than business size.  
26. The Commission expects that the questions raised in the NPRM will provide a 
meaningful opportunity to evaluate whether its bidding credit program continues to achieve the 
Commission’s objectives.  To facilitate the Commission’s review, the NPRM seeks concrete, specific, 
data-driven feedback by commenters.  In addition, the NPRM invites commenters to suggest other
creative ideas that would promote the Commission’s statutory objectives, but emphasizes that for any 
such proposals it is imperative to provide ample supporting evidence.  
27. DE Reporting Requirements.  The NPRM proposes to eliminate the DE annual reporting
requirement in section 1.2110(n) of the Commission’s rules and questions whether the value of the 
information provided in those reports outweighs the regulatory burden that the reporting obligation places 
on small businesses.
56
  The NPRM seeks comment on this proposal.  Among other things, the NPRM asks 
if the Commission adopts the proposal to eliminate this annual reporting requirement, whether it should 
amend its rule for reporting eligibility events to require that a small business must list and summarize all 
existing agreements to provide context each time it reports a new eligibility event.
57
28. MMTC White Paper Requests.  In February 2014, MMTC submitted a White Paper 
detailing several policy recommendations to advance licensing of spectrum to minority- and women-
owned businesses.
58
  The NPRM raises and addresses several of these issues and seeks comments on the 
other proposals that are not otherwise addressed in the NPRM, and to the extent that they relate to the 
                                                     
53
Specifically, the NPRM seeks comment on whether the current small business provisions are sufficient to promote 
participation by businesses owned by minorities and women, as well as rural telephone companies.  
54
As defined by the Department of Agriculture, a county is persistently poor if 20 percent or more of its population 
was living in poverty over the last 30 years.  See USDA, Geography of Poverty, 
http://www.ers.usda.gov/topics/rural-economy-population/rural-poverty-well-being/geography-of-poverty.aspx (last 
visited July 9, 2014).
55
In view of renewed interest raised in the BIA proceeding, the NPRM seeks comment on the 2010 FCC’s Advisory 
Committee on Diversity for Communications in the Digital Age recommendation to implement a bidding preference 
for persons or entities who have overcome substantial disadvantage.  Advisory Committee on Diversity for 
Communications in the Digital Age, Recommendations to Federal Communications Commission: Preference for 
Overcoming Disadvantage, Oct. 14, 2010, http://www.fcc.gov/DiversityFAC/meeting101410.html
(Recommendation).  In the Recommendation, the Committee proposed to provide a bidding credit for otherwise 
qualified persons or entities that have overcome substantial disadvantages, to allow them to compete on equal 
footing with other applicants.  Id.
56
47 C.F.R. §1.2110(n).  This rule requires DE licensees to file an annual report with the Commission that includes, 
at a minimum, a list and summaries of all agreements and arrangements, extant or proposed, that relate to eligibility 
for DE benefits.  Id.
57
47 C.F.R. § 1.2114.
58
S. Jenell Trigg & Jeneba Jalloh Ghatt for MMTC, Digital Déjà Vu: A Road Map for Promoting Minority 
Ownership in the Wireless Industry, GN Docket No. 12-268 (filed Feb. 27, 2014).
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Commission’s competitive bidding rules.
59
  The NPRM observes that certain proposals appear to be 
outside the scope of this proceeding and others may not be needed in light of other changes proposed in 
the NPRM.  Toward that end, the NPRM tentatively concludes that the following MMTC proposals are 
outside the scope of this proceeding, which is focused on the Commission’s competitive bidding rules, 
and thus will not be addressed in the NPRM:  (1) incorporating diversity and inclusion in the 
Commission’s public interest analysis of mergers and acquisitions and secondary market spectrum 
transactions; and (2) supporting increased funding for and statutory amendments regarding the 
Telecommunications Development Fund.
60
        
29. Former Defaulter Rule.  The NPRM proposes changes to the Commission’s former 
defaulter rule to balance concerns that the current rule is overly broad with the Commission’s continued 
need to ensure that auction bidders are financially reliable.  The NPRM seeks comment on revising the 
rule to narrow the scope of the defaults and delinquencies that will be considered in determining whether 
or not an auction participant is a former defaulter.  Specifically, the NPRM proposes to exclude any cured 
default on any Commission license or delinquency on any non-tax debt owed to any Federal agency for 
which any of the following criteria are met: (1) the notice of the final payment deadline or delinquency 
was received more than seven years before the relevant short-form application deadline; (2) the default or 
delinquency amounted to less than $100,000; (3) the default or delinquency was paid within two quarters 
(i.e., 6 months) after receiving the notice of the final payment deadline or delinquency; or (4) the default 
or delinquency was the subject of a legal or arbitration proceeding that was cured upon resolution of the 
proceeding.
61
  Additionally, the NPRM seeks comment on limiting the individuals and entities that an 
applicant must consider when determining its status as a former defaulter.   
                                                     
59
In addition to requesting the elimination of the AMR, an increase in bidding credits, and a substantive review of 
proposed DE rules, all of which are addressed in the NPRM, the White Paper requests Commission action in the 
following areas: (1) reinstitute select DE-only closed spectrum auctions; (2) incorporate diversity and inclusion in 
the Commission’s public interest analysis of mergers and acquisitions and secondary market spectrum transactions; 
(3) conduct ongoing recordkeeping of DE performance; (4) complete the Adarand Studies, updating the Section 257 
studies released in 2000; (5) regularize procedural requirements; and (6) support increased funding for and statutory 
amendments regarding the Telecommunications Development Fund.  Id. at v, 32–34.
60
We note that MMTC’s request with respect to “ongoing recordkeeping of DE performance” refers to “retain[ing] 
specific information about the [minority-owned business enterprises] and [woman-owned business enterprises]
status of bidders, in addition to the small business status.”  Id. at 33.  The Commission has sought comment in WT 
Docket No. 13-135 on the need to collect information on the participation of minority and women-owned enterprises 
in the mobile wireless industry, pursuant to similar MMTC requests.  Wireless Telecommunications Bureau Seeks 
Further Comment on the State of Mobile Wireless Competition and the Role of Minority and Women-Owned 
Business Enterprises and Extends Period for Reply Comments, WT Docket No. 13-135, Public Notice, 28 FCC Rcd 
9125 (2013).
61
Depending on the origin of any federal non-tax debt giving rise to a default or delinquency, notice to a debtor may 
include notice of a final payment deadline or notice of delinquency and may be express or implied. Consistent with 
guidance previously provided with respect to applicability of the former defaulter rules, see, e.g., Letter to Cheryl A. 
Tritt, Esq., from Margaret Wiener, Chief, Auctions and Spectrum Access Division, Wireless Telecommunications 
Bureau, 19 FCC Rcd 22907 (2004), for purposes of the certifications required on a short-form auction application, a 
debt will not be deemed to be in default or delinquent until after the expiration of a final payment deadline. Thus, to 
the extent that the rules providing for payment of a specific federal debt permit payment after an original payment 
deadline accompanied by late fee(s), such debts would not be in default or delinquent for purposes of applying the 
former defaulter rules until after the late payment deadline. In addition, we provide the following clarification with 
regard to defaults on Commission licenses. Any winning bidder that fails timely to pay its post-auction down 
payment or the balance of its bid payment or is disqualified for any reason after the close of an auction will be in 
default and subject to a default payment. See 47 C.F.R § 1.2109(c). See also, e.g., Auction of Advanced Wireless 
Services (AWS-3) Licenses Scheduled For November 13, 2014; Notice and Filing Requirements, Reserve Prices, 
Minimum Opening Bids, Upfront Payments and Other Procedures for Auction 97, AU Docket No. 14-78, Public 
Notice, 29 FCC Rcd 8386, 8450 ¶ 239 (2014). Commission staff provide individual notice of the amount of such a 
(continued….)
Federal Communications Commission FCC 14-146
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30. Commonly Controlled Entities.  The NPRM proposes to codify an established 
competitive bidding procedure that prohibits the same individual or entity from filing more than one 
short-form application to participate in an auction.
62
  The NPRM also proposes a new rule that would 
prevent entities that are exclusively controlled by a single individual or set of individuals from qualifying 
to bid on licenses in the same or overlapping geographic areas in a specific auction on more than one 
short-form application.
63
  These proposals seek to improve the transparency and efficiency of the auction 
process, by making clearer who the qualified bidders actually are and ensuring against the potential for 
anticompetitive auction behavior.  The NPRM seeks comment on these proposals and on specific 
alternatives to address the Commission’s concern that common control may allow the controlling 
individual or set of individuals to attempt to gain advantages in the bidding process based on certain 
coordinated bidding actions (e.g., tied bids, activity waivers).
31. Joint Bidding.  The NPRM initiates a review of the Commission’s rules and policies 
governing joint bidding and other arrangements in order to ensure that they fulfill the Commission’s 
statutory objectives, given the changes in the mobile wireless marketplace since the initial adoption of the 
bidding rules two decades ago, and the increasing importance of spectrum for service providers to meet 
consumer demand for mobile wireless services.
64
  The NPRM seeks comment on the Commission’s 
tentative conclusions that it would be in the public interest to retain the current rules governing joint 
bidding arrangements among non-nationwide providers and to prohibit joint bidding arrangements among 
nationwide providers.  Additionally, the NPRM seeks comment on whether the Commission should revise 
any of its current rules as applied to arrangements between nationwide providers and other entities, 
including its rules governing short-form applications.  Further, the NPRM seeks comment on whether any 
revisions to the Commission’s rules governing long-form applications are necessary in light of the 
Commission’s consideration of the potential harms and benefits of joint bidding and other arrangements.  
(Continued from previous page)                                                            
default payment as well as procedures and information required by the Debt Collection Improvement Act of 1996, 
including the payment due date and any charges, interest, and/or penalties that accrue in the event of 
delinquency. See, e.g., 31 U.S.C. §§ 3716, 3717; see also 47 C.F.R. §§ 1.1911, 1.1912, 1.1940. See also Auction of 
Lower and Upper Paging Bands Licenses Closes; Winning Bidders Announced for Auction 95, Public Notice, 28 
FCC Rcd 11848 (2013). For purposes of the certifications required on a short-form auction application, such notice 
provided by Commission staff assessing a default payment arising out of a default on a winning bid, constitutes 
notice of the final payment deadline with respect to a default on a Commission license.
62
The Commission’s short-form application is the first part of its two-phased auction application process.  In the 
first phase, any party desiring to participate in an auction must file a streamlined short-form application in which it 
certifies under penalty of perjury as to its qualifications to participate in a Commission auction.  See 47 C.F.R. 
§ 1.2105.  In its review of the short-form applications, Commission staff presumes the information and certifications 
contained in the short-form applications are true unless they are incomplete, internally inconsistent or contradicted 
by information in the Commission’s records.  See Auction of Licenses for VHF Public Coast and Location and 
Monitoring Service Spectrum, Order, 17 FCC Rcd 19746, 19749–50 ¶ 7 (2002).  Eligibility to participate in bidding 
is based on information in an applicant’s short-form application and its certifications, and on its upfront payment.  In 
the second phase of the Commission’s application process, a winning bidder files a more comprehensive long-form 
application.  See 47 C.F.R. § 1.2107.  The long-form application is subject to more extensive review and is the basis 
for any determination that a winning bidder is qualified to hold a Commission license and for the award of any 
claimed bidding credit.  See generally 47 U.S.C. § 308(b) (license applications must provide factual information to 
demonstrate applicant qualifications).
63
In other words, where multiple entities are under the common, exclusive control of a single individual (i.e., a 
single individual is the exclusive controlling interest of more than one entity) or set of individuals, only one short-
form application from such entities could become qualified to participate with respect to any particular geographic 
license area or overlapping areas.
64
For purposes of this proceeding, the NPRM defines “joint bidding and other arrangements” to include any bidding 
consortia, joint venture, partnership, or agreement, understanding, or other arrangement entered into relating to the 
competitive bidding process, including any agreement relating to post-auction market structure or operation.  
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32. Miscellaneous Part 1 Revisions.  In addition to changes that would implement the 
foregoing proposals, the NPRM proposes changes to two of the Commission’s Part 1, Subpart Q, rules, 
sections 1.2111 and 1.2112. 
? Section 1.2111 – The NPRM proposes to eliminate two provisions of this rule:  (1) section 
1.2111(a), under which applicants for assignments or transfers during the first three years of a 
license term must provide the Commission with detailed contract and marketing information, 
and (2) section 1.2111(b), a never-used unjust enrichment payment requirement for 
broadband PCS C and F block set-aside licenses.
? Section 1.2112 – The NPRM’s proposed changes to this rule clarify the auction application 
requirements for reporting an entity’s percentage ownership in the applicant and in FCC-
regulated entities.  The NPRM proposes further changes to specify application requirements 
for bidding consortia.  The NPRM also proposes to correct two errors in the rule caused by 
the inadvertent substitution of an incorrect paragraph in the Code of Federal Regulations 
publication of the rule for the correct one published in the Federal Register summary of the 
DE Second Report and Order.
65
  The first error was the addition of a requirement that DE 
short-form applicants list and summarize all their agreements that support their DE eligibility, 
a requirement that the Commission intended to apply only to long-form applicants.  The 
NPRM proposes to delete the requirement with respect to the short-form.  The second error 
was the deletion of a requirement that DE short-form applicants list the parties with which 
they have lease or resale arrangements for any of the DE applicants’ spectrum.  The NPRM 
proposes to reinstate this requirement.
33. The NPRM seeks comments on these proposals.  In addition, the NPRM notes that the 
Commission intends, when it resolves the issues raised in the NPRM, to resolve long standing petitions 
for reconsideration to the Commission’s Part 1 competitive bidding rules.
66
  
E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and 
Significant Alternatives Considered
34. The RFA requires an agency to describe any significant alternatives that it has considered 
in reaching its proposed approach, which may include the following four alternatives (among others): (1) 
the establishment of differing compliance or reporting requirements or timetables that take into account 
the resources available to small entities;
67
(2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather 
than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small 
entities.
68
35. If adopted, the NPRM’s proposed approach to evaluating attribution and establishing 
small business eligibility could provide small businesses with greater opportunities to participate in the 
provision of spectrum-based services.  Moreover, insofar as the NPRM’s proposals should allow small 
businesses greater flexibility to engage in business ventures that include increased forms of leasing and 
other spectrum use arrangements, the Commission anticipates that the combined intent of the proposals 
should increase the potential sources of revenue for the small business and decrease the likelihood that it 
would be subject to undue influence by any particular user of a single license.  The NPRM’s proposed 
                                                     
65
Compare 71 Fed. Reg. 26245, 26253 (May 4, 2006) (publishing summary of DE Second Report and Order, 21 
FCC Rcd 4753), with 47 C.F.R. § 1.2112 (Oct. 1, 2006). 
66
See note 6.
67
  We note that all references to small entities in this IRFA apply also to minority-and women-owned small 
businesses.
68
  5 U.S.C. § 603(c)(1)–(c)(4).
Federal Communications Commission FCC 14-146
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two-pronged approach to establishing small business eligibility would also ensure that a licensee retains 
control of all licenses for which it seeks bidding credits, while providing greater flexibility for any 
acquired without such benefits.  Further, the proposal to eliminate the AMR rule and to clarify how 
spectrum manager leasing rules apply to DEs should allow small businesses greater certainty to 
participate in secondary markets transactions.      
36. The NPRM’s proposed increases in the gross revenues thresholds that define the three 
tiers of small businesses in the Part 1 schedule by which the Commission provides the corresponding 
available bidding credits would encourage small business participation in spectrum license auctions. The 
proposed gross revenues thresholds are intended to more accurately reflect what constitutes a “small 
business” in today’s marketplace, taking into consideration the relative size of the large, national 
providers.  This proposal will provide an economic benefit to small entities by making it easier to acquire 
spectrum licenses.  Moreover, the NPRM’s proposal to repeal the DE reporting requirement would 
eliminate the burden on DEs to submit annual reports.
37. The proposed changes to the Part 1 rules will apply to all entities in the same manner as 
the Commission will apply these changes uniformly to all entities that choose to participate in spectrum 
license auctions.  The Commission believes that applying the same rules equally to all entities in these 
contexts promotes fairness.  The Commission does not believe that the limited costs and/or administrative 
burdens associated with the rule revisions will unduly burden small entities.  In fact, many of the 
proposed rule revisions clarify the Commission’s competitive bidding rules, including short-form 
application requirements, as well as reduce reporting requirements.  
38. Finally, the NPRM’s joint bidding proposals are intended to preserve and promote robust 
competition in the mobile wireless marketplace and facilitate competition among bidders at auction, 
including small entities.  These proposals provide potential bidders with greater clarity regarding the 
types of joint bidding arrangements that would be permissible.  In addition, the NPRM’s proposal to 
retain its current rules for joint bidding arrangements among non-nationwide providers would maintain 
flexibility for small businesses to enter into such arrangements.     
F. Federal Rules Which Duplicate, Overlap, or Conflict With the Proposed Rules 
39. None.
G. Report to Small Business Administration
40. The Commission’s Consumer and Governmental Affairs Bureau, Reference Information
Center, will send a copy of this NPRM, including this IRFA, to the Chief Counsel for Advocacy of the 
SBA.
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APPENDIX C
Short Names of Commenters Cited in this NPRM
A. Broadcast Television Spectrum Incentive Auction Proceeding – GN Docket No. 12-268
Name of Filer Short Name
Council Tree Investors, Inc. Council Tree
Incentive Auction Advocates IAA
Minority Media and Telecommunications Council MMTC
Rural Telecommunications Group, Inc. RTG
B. AWS-3 Proceeding – GN Docket No. 13-185
Name of Filer Short Name
Competitive Carriers Association CCA
C. Former Defaulter Proceeding – RM-11395
Name of Filer Short Name
AT&T, Inc. AT&T
Competitive Carriers Association, Consumer 
Electronics Association, CTIA-The Wireless 
Association, and NTCA-The Rural Broadband 
Association
CCA, CEA, CTIA and NTCA, or collectively, “the 
Four Associations”
Competitive Carriers Association, CTIA-The 
Wireless Association, and NTCA-The Rural 
Broadband Association
CCA, CTIA and NCTA, or collectively, “the Three 
Associations”
DIRECTV Group, Inc. DIRECTV
EchoStar LLC EchoStar
D. Auction 97 Proceeding – AU Docket No. 14-78
Name of Filer Short Name
AT&T, Inc. AT&T
Competitive Carriers Association CCA
Dish Network Corporation Dish Network
Verizon Wireless Verizon
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STATEMENT OF
COMMISSIONER MIGNON L. CLYBURN
Re: In the Matter of Updating Part 1 Competitive Bidding Rules, WT Docket No. 14-170; 
Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive 
Auctions, GN Docket No. 12-268; Petition of DIRECTV Group, Inc. and EchoStar LLC for 
Expedited Rulemaking to Amend Section 1.2105(a)(2)(xi) and 1.2106(a) of the Commission’s 
Rules and/or for Interim Conditional Waiver, RM-11395; Implementation of the Commercial 
Spectrum Enhancement Act and Modernization of the Commission’s Competitive Bidding 
Rules and Procedures, WT Docket No. 05-211
     Since 2010, I have been calling on the Commission to consider creative and legally sustainable 
approaches to promote greater participation by small businesses in the communications industry.
1
  
Therefore, I applaud Chairman Wheeler for putting forth comprehensive reforms to the Commission’s 
competitive bidding rules that will enable small businesses to compete more effectively in auctions and in 
the commercial wireless market.  These proposals address important developments in the wireless 
industry and are fully consistent with Congress’s directives that authorize the agency to conduct spectrum 
auctions.  It is imperative that we update our rules in advance of the voluntary broadcast TV incentive 
auction, which will offer applicants a historic opportunity to acquire substantial amounts of valuable 
wireless spectrum below 1 GHz.  While I support all the proposals in this NPRM, I find three proposals 
particularly noteworthy: (1) the repeal of the AMR rule; (2) bidding credits for winning bidders who plan 
to deploy networks to underserved areas; and (3) changes to the former defaulter rule.
Congress’s Directive to Promote Small Business and Deter Unjust Enrichment 
     In 1993, Congress authorized the Commission to conduct spectrum auctions by enacting Section 
309(j) of the Communications Act.  It realized that small businesses faced significant barriers to entering 
the communications market particularly when competing against large, well-capitalized, and entrenched 
communications companies.  It was concerned that unless the Commission “is sensitive to the need to 
maintain opportunities for small businesses, competitive bidding could result in a significant increase in 
concentration in the telecommunications businesses.”
2
  Therefore, Section 309(j) directs the Commission
to adopt auction rules that would “promot[e] economic opportunity and competition and ensur[e] that new 
and innovative technologies are readily accessible to the American people by avoiding excessive 
concentration of licenses and by disseminating licenses among a wide variety of applicants, including 
small businesses.”
3
     In implementing its auctions authority, the Commission has tried to promote small business 
participation in the wireless industry primarily by awarding auction bidding credits through its Designated 
Entity (DE) program.  The challenge for the Commission has been to find the proper balance between 
allowing small businesses to acquire spectrum through DE credits, on the one hand, while preventing 
parties from circumventing the purpose of those rules and being unjustly enriched, on the other.  
                                                     
1
Statement of FCC Commissioner Mignon L. Clyburn, Statement on Public Notice Seeking Comment on Proposal 
to create an “Overcoming Disadvantage” category for its current Designated Entity rules (December 3, 2010); 
Section 257 Triennial Report to Congress Identifying and Eliminating Market Entry Barriers for Entrepreneurs and 
other Small Businesses, Report, 26 FCC Rcd 2909, 2969-70 (2011) (Separate Statement of FCC Commissioner 
Mignon L. Clyburn); Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive 
Auctions, GN Docket No. 12-268, Notice of Proposed Rulemaking, 27 FCC Rcd 12357, 12368 (2012) (Separate 
Statement of FCC Commissioner Mignon L. Clyburn).
2
H.R. Rep. No. 103-111 at 254 (1993).      
3
47 U.S.C. § 309(j)(3)(B).
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In 2004, the Commission Decides DEs Must Use the Spectrum they Obtained with Bidding Credits 
to Directly Provide Facilities Based Service 
     Between 2004 and 2006, the Commission made policy changes which shifted that balance towards 
further preventing non-DEs from improperly benefitting from spectrum won using small business credits.  
In 2004, as part of its proceeding to promote efficient use of spectrum by removing barriers to secondary 
market transactions, the Commission rejected a request that it allow DE licensees to lease spectrum to any 
entity, without regard to how the spectrum lease might affect the licensees’ status as DEs.  The 
Commission believed it was required to interpret Section 309(j) of the Communications Act so that 
licensees, which acquired spectrum at auction with small business credits, must use that spectrum to 
directly provide facilities based services to the public.
4
  The Commission based that interpretation on the 
following two sentences in the House Report that accompanied draft amendments to the Communications 
Act.    
This paragraph expressly authorizes the Commission to impose or assess 
payments in order to prevent unjust enrichment resulting from trafficking 
in licenses.  The Committee anticipates that the Commission will use this 
authority to deter speculation and participation in the licensing process by 
those who have no intention of offering service to the public.
5
     To determine “whether a spectrum lessee would, under a spectrum manager lease, become a 
controlling interest or affiliate of the licensee,” the 2004 Order explained that the Commission would
conduct a case-by-case approach and “look to all of the relevant circumstances, including how large a 
portion of its total capacity to provide spectrum-based services would be leased, what involvement it 
would have with the spectrum lessee as a result of the spectrum lease, and what relationship the two 
parties have with one another apart from the lease.”
6
The Attributable Material Relationship (AMR) Rule Moves the Commission from Case-by-Case 
Review of Spectrum Leases to a Bright Line Test
     The 2006 Designated Entities Order reaffirmed the Commission’s earlier interpretation that Congress 
intended the Commission to require small businesses, who acquire spectrum with small business credits, 
to use that spectrum to directly provide facilities based services.  But it went even further to prevent 
unjust enrichment.  It also adopted the Attributable Material Relationship (AMR) rule that would require 
every small business to attribute the gross revenues of another entity if that small business planned to 
apply for DE benefits and entered into an arrangement with that entity to lease, wholesale, or resell more 
than 25 percent of the capacity of any one of its licenses to that entity.  
     By adopting the AMR rule in 2006, the Commission moved away from the case-by-case examination 
of the relationships between DEs and lessees, which it had reaffirmed in the 2004 Secondary Markets 
Order, to a bright line rule that would require attribution, under the terms of the AMR rule, without an 
                                                     
4
Promoting Efficient Use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets, 
WT Docket No. 00-230,  Second Report and Order, Order on Reconsideration, and Second Further Notice of 
Proposed Rulemaking, 19 FCC Rcd 17503, 17541 ¶ 71 (2004) (Secondary Markets Second Report and Order) 
(“While we believe that spectrum leasing by small businesses serves many policy goals, we cannot disregard 
Congress’ stated intent that a licensee receiving designated entity or entrepreneur benefits be an entity that actually 
provides service under the license.”)
5
H.R. Rep. No. 103-111, at 257-58 (1993).
6
Secondary Markets Second Report and Order, 19 FCC Rcd at 17542 ¶ 77.
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inquiry into what influence the lessee entity might have on the small business.  The AMR rule would also 
require a DE to make this attribution even if the spectrum it leased was not acquired with DE bidding 
credits.  For example, the AMR Rule would penalize a DE for raising funds for its own spectrum-based 
communications business by temporarily leasing to another company more than 25 percent of any of its 
licenses even if those licenses were not acquired with DE bidding credits and the lessee had no influence 
over the DE. 
The 2004 and 2006 Policies Were Based on an Unnecessarily Narrow Interpretation of Section 
309(j) 
     The Supreme Court has made clear this Commission has the discretion to depart from an earlier policy 
choice when “there are sound reasons for the new policy.”
7
  Today’s NPRM provides several sound bases 
to reevaluate those earlier DE policies.  As an initial matter, there is no reason the Commission should 
believe it is bound by the statutory interpretations reached in those 2004 and 2006 Orders.  The starting 
point of statutory interpretation is the language in the statute itself.
8
   The term “facilities based service” 
does not appear anywhere in Section 309(j).  Nor is there any other language in Section 309(j) which
would compel the Commission to decide that entities who acquire licenses with small business bidding 
credits must use that spectrum to directly provide facilities based service.  
     Although legislative history can be helpful, there is no specific language in those two sentences from 
the 1993 House Report that requires the phrase “offering service to the public” to be defined as 
“designated entities providing facilities based service.”  The plain meaning of those two sentences in the 
House Report is that any entity, which uses a small business bidding credit to acquire spectrum in an 
auction, should primarily intend that the spectrum be used to serve the public and not simply try to resell 
the spectrum to another entity for a profit.  That is why the Commission defined trafficking as “obtaining 
or attempting to obtain an authorization for the principal purpose of speculation or profitable resale of the 
authorization rather than for the provision of telecommunication services to the public or for the licensee's 
own private use.”
9
  Thus, if a designated entity used bidding credits to acquire spectrum at an auction, 
with the intent of offering service to the public, and then leased the spectrum to another entity (DE or 
non-DE) and that lessee used the spectrum to provide facilities based services, then such an arrangement 
would not appear to violate the plain language of the anti-trafficking and unjust enrichment provisions of 
Section 309(j) or the legislative history of those provisions.  
     The better reading of this statute is that Congress gave the Commission wide discretion to adopt DE 
policies that strike an appropriate balance between (1) promoting small business participation in the 
wireless industry, and (2) deterring unjust enrichment, and to amend those policies when developments in 
the commercial wireless market warrant such changes.  
Developments in the Commercial Wireless Industry Require Changes to the AMR Rule
     Substantial changes in the structure of the commercial wireless market call for a change to the AMR 
rule.  We have seen increased consolidation in the commercial wireless industry.  In 2003, six nationwide 
wireless carriers accounted for 79 percent of the mobile wireless subscribers.  In 2013, four nationwide 
carriers had a combined market share of approximately 97 percent of subscribers.  The Commission uses 
the widely accepted Herfindahl-Hirschman Index (HHI) to measure concentration in competition analysis.  
A highly concentrated industry is one with an HHI over 2500.  In 2006, when the Commission adopted 
                                                     
7
F.C.C. v. Fox Television Stations, 556 U.S. 502, 515 (2009).
8
Dean v. United States, 556 U.S. 568, 572 (2009) (“We start, as always, with the language of the statute.”)
9
47 C.F.R. § 1.948(i)(1).
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the AMR rule, the HHI for the wireless industry was 2674.  By 2013, it had increased to 2873.
10
  Voice 
and data roaming and other network sharing agreements could stimulate the deployment of more 
networks to offer competitive alternatives.  Despite the Commission’s 2010 adoption of the data roaming 
order, it appears that continued resistance to entering into these agreements is preventing smaller carriers 
from providing competitive service offerings.
     In addition, with the introduction of more innovative smartphones and tablets since 2008, we have 
seen explosive consumer demand for mobile broadband services.  This demand is driving intense use of 
mobile networks and an increasing need for more spectrum.  At the same time, the costs of spectrum and 
network deployment, especially for small and new entrants, have increased in the last 20 years.
11
These 
developments in the commercial wireless market mean it is more important now, than it was in 1993, for 
small businesses to develop business models that can attract capital for both acquiring communications 
licenses and for deploying networks that can provide service to the public.
     According to a number of commenters, the AMR rule is having an adverse effect on small businesses 
at a time when these entities are facing increasing challenges to compete effectively in the commercial 
wireless industry.  It appears to have prevented some small businesses, which previously qualified as DEs 
and had entered into spectrum leases before the rule was adopted, from participating as DEs in the 
auctions for valuable AWS-1 and 700 MHz spectrum.  One party asserts there was “a precipitous drop in 
DE participation from 70% of winning bids to only 4.0 percent and 2.6 % respectively in those 
auctions.”
12
That significant a drop in DE participation is not only alarming, it indicates the Commission 
is not doing enough to meet the clear directive of Section 309(j), that auctions “promote economic 
opportunity and competition… by avoiding excessive concentration of licenses and by disseminating 
licenses among a wide variety of applicants, including small businesses.”
13
  
     The AMR rule is also likely deterring current DEs from leasing spectrum they previously acquired at 
auction for fear they will lose their DE status in upcoming auctions.  This type of reaction to our DE rules 
also improperly impedes our secondary market policies that are important to the dynamic and productive 
use of spectrum for commercial services.  DEs, and other small businesses who want to compete in the 
wireless market, need flexibility to take advantage of opportunities to participate in the provision of 
spectrum-based services, including through spectrum leasing, and mobile virtual network operator 
arrangements.  
These Proposed Changes to the DE Rule are Consistent with Congressional Intent
     To be sure, I fully support rules and policies that properly enforce Congress’s intent that small 
businesses who acquire spectrum bidding credits are not unjustly enriched by simply reselling spectrum 
in the aftermarket.  But, we can do a better job in developing DE rules, which promote that policy, as well 
as giving small businesses the flexibility they need to enter into leases and other relationships that will 
help them secure financing and develop business models to effectively compete in an increasingly 
consolidated wireless market.  By applying well established principles to examine control and affiliation
                                                     
10
Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993 Annual Report and 
Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile 
Services, WT Docket No. 11-186, Sixteenth Report, 28 FCC Rcd 3700, 3719 (2013) (Sixteenth Mobile Services 
Report).
11
Id. at 3766–69 ¶¶ 79–84.
12
S. Jenell Trigg & Jeneba Jalloh Ghatt for MMTC, Digital Déjà Vu: A Road Map for Promoting Minority 
Ownership in the Wireless Industry, GN Docket No. 12-268, at 32 (filed Feb. 27, 2014) (Digital Déjà Vu).  
13
47 U.S.C. 309(j)(3)(B).
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of entities, and thoroughly reviewing leasing agreements, we can safeguard small business benefits by 
attributing the revenues of any entity that has the ability to control, or potentially control, an applicant’s 
business venture.  In addition, by allowing small businesses greater flexibility to engage in a wider range 
of business arrangements, this should increase the potential sources of revenue for the small businesses
and decrease the likelihood they would be subject to undue influence by any particular user of a single 
license.  
The Commission Should Promote Deployment to Under Served Areas and Persistent Poverty 
Counties
     I am also pleased this NPRM seeks comment on whether the Commission should extend bidding 
credits to winning bidders that deploy facilities and provide service to underserved areas, particularly 
those areas that would constitute persistent poverty counties.  As defined by the Department of 
Agriculture’s Economic Research Service (“ERS”), a county is persistently poor if 20 percent or more of 
its population was living in poverty over the last 30 years.  According to the ERS, “there are currently 353 
persistently poor counties in the United States (comprising 11.2 percent of all U.S. counties).”
14
Despite 
the fact that 98 percent of Americans have access to commercial mobile wireless networks, our last report 
on the mobile wireless market found that 7.7 million people live in rural areas with two or fewer service 
options, and there are still 400,000 Americans who lack access to any mobile service option.
15
  
Deployment of new wireless networks can drive jobs and economic growth in communities.  Given that 
the upcoming broadcast TV incentive auction holds such promise to stimulating investment and 
innovation in mobile networks, the Commission should consider proposals to promote investment in low 
income communities that do not have the same level of mobile service competition most areas of the 
Nation enjoy.  Revising our DE rules, auctioning smaller license blocks and geographic license areas, and 
mandating interoperability are all important regulatory measures that can lower barriers to entry and 
attract carriers, who may have less capital than nationwide providers, yet possess a strong desire to deploy 
networks to underserved areas such as persistent poverty counties.  
The Commission Properly Adopted Limited Waivers of the AMR and Former Defaulter Rules  
     I also want to take this opportunity to explain why it was appropriate for the Commission to grant 
limited waivers of the AMR and the former defaulter rules before the adoption of this NPRM.
16
  Those 
Orders are important to holding an AWS-3 auction that better complies with the directives of the 
Communications Act to design auctions that promote competition and “disseminat[e] licenses among a 
                                                     
14
See ERS, Geography of Poverty, http://www.ers.usda.gov/topics/rural-economy-population/rural-poverty-well-
being/geography-of-poverty.aspx (last visited July 18, 2014).
15
Sixteenth Mobile Services Report, 28 FCC Rcd at 3725-27.
16
The Commission has, on prior occasions, granted waivers pending the completion of rulemakings.  See
Amendment of Parts 1 and 17 of the Commission’s Rules Regarding Public Notice Procedures for Processing 
Antenna Structure Registration Applications for Certain Temporary Towers; 2012 Biennial Review of 
Telecommunications Regulations, RM-11688, WT Docket No. 13-32, Order, 28 FCC Rcd 7758 (2013) (Granting 
waivers four months before the adoption of a Notice of Proposed Rulemaking to consider proposed changes to the 
rules involved in the waivers); Amendment of Part 101 of the Commission's Rules to Accommodate 30 MHz 
Channels in the 6525-6875 MHz Band, Amendment of Part 101 of the Commission's Rules to Accommodate 30 
MHz Channels in the 6525-6875 MHz Band, WT Docket No. 09-114, Notice of Proposed Rulemaking and Order, 
24 FCC Rcd 9620, 9630 ¶ 24 (2009) (granting waiver pending outcome of rulemaking when no party, who could be 
potentially harmed by the waiver order, opposed the grant of the waiver); Waiver of Section 1.2110(b)(3)(iv)(A) of 
the Commission's Rules For the Upper 700 MHz Band D Block License, Order, 22 FCC Rcd 20354 (2007) (waiving 
the impermissible material relationship rule for purposes of determining DE eligibility solely with respect to
arrangements for lease or resale (including wholesale) of the Upper 700 MHz Band D Block license).
Federal Communications Commission FCC 14-146
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wide variety of applicants including small businesses.”
17
  That auction, which the Commission plans to 
hold this fall, will make 65 megahertz of spectrum available for flexible commercial wireless use.  It is 
the first auction to offer multiple blocks of paired spectrum licenses on a nationwide basis since the 700 
MHz auction some eight years ago. The March 2014 AWS-3 Order helped to promote robust competitive 
bidding and opportunities for both small and larger carriers by adopting a band plan with a mix of five 
and 10 megahertz license blocks and small and large geographic license areas (CMAs and EAs). Such a 
band plan promotes an efficient allocation of spectrum to its highest and best use because it offers 
interested parties diverse options, thereby encouraging participation by large and small carriers. 
     But there was more the Commission could do to encourage participation in the AWS-3 auction, as a 
number of parties have shown through petitions for waivers of parts of our Part 1 Competitive Bidding 
Rules.  Specifically, Grain Management, LLC. petitioned to waive the AMR rule. It contended that a 
bright line application of the AMR rule would require every small business to attribute the gross revenues 
of another entity if that small business planned to apply for DE benefits and entered into an arrangement 
with that entity to lease more than 25 percent of the capacity of any one of its licenses to that entity.  This 
attribution would be required even if, as in the case of Grain, the small business acquired the spectrum 
license without using DE bidding credits.  The attribution would also be required without any inquiry into 
what influence the other entity might have on the small business. Separately, CTIA, CCA, and NTCA 
filed a joint petition to waive the former defaulter rule for this auction.  Under that rule, an applicant is 
considered to be a former defaulter if the entity, including any of its affiliates, its controlling interests, or 
any of the affiliates of its controlling interests, has defaulted on any Commission license or has been 
delinquent on any non-tax debt owed to any Federal agency.  Former defaulters are eligible to bid in a 
Commission auction, provided they are otherwise qualified, but they must pay an upfront payment that is 
50 percent more than the normal upfront payment amount.  
     Although two of my colleagues dissented from the granting of the Grain limited waiver in July, I 
continue to support both waivers because the waiver petitions are procedurally similar and advance the 
Communications Act’s goals of designing auctions that promote competition.  The petitions were filed by 
entities who intend to participate in the AWS-3 auctions.  The Commission released Public Notices 
seeking comment on both waiver petitions.  No party filed oppositions to the petitions.  Both petitions 
sought waivers of bright line rules that the Commission adopted years ago to strike a balance between 
competing policy objectives.  In the case of the AMR rule, those objectives were promoting participation 
by smaller businesses in auctions through DE credits, while deterring unjust enrichment by those who 
acquired auction using those DE credits.  With regard to the former defaulter rule, the Commission was 
balancing the goal of encouraging bidders to submit serious bids with the recognition that past business 
misfortunes do not necessarily preclude an entity from meeting present and future responsibilities as a 
Commission licensee.  Both petitions persuasively argued that the Commission needed to reevaluate the 
balances it struck with those rules because, due to developments in the industry, those rules were now 
acting as unnecessary barriers to greater competition in auctions.  The Grain petition and its supporters
demonstrated that the AMR rule was having an undue adverse effect on the ability of small businesses to 
secure financing and compete.  The former defaulter rule petition showed that it has been 14 years since 
the Commission adopted the former defaulter rules and the application of those rules could require 
applicants that are now well-established in a mature industry to make larger upfront payments based on 
very old or relatively small defaults.  This Competitive Bidding NPRM finds that the public interest 
would be served by initiating a proceeding to change both of those rules.  
     Contrary to what some have said, the waiver of the AMR Rule is consistent with the Commission’s 
policies with regard to Joint Sales Agreements (JSA).  In both contexts, the Commission’s public interest 
goals are the same because the Commission is looking to see whether a broadcast station or a DE has lost 
                                                     
17
47 U.S.C. §309(j)(3)(B).
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actual control of its operations.  But the broadcast media business is different from the commercial 
wireless industry and, with regard to our proposal to repeal the AMR rule, we simply recognize that 
spectrum leasing arrangements do not automatically result in a surrender of control over a small wireless 
carrier’s decision-making.  Moreover, we would keep the Commission’s other existing control rules, 
which include a thorough review of all pertinent spectrum leasing agreements.  
     As I mentioned earlier in this statement, I have been asking the Commission for years to consider 
approaches to promote greater small business participation in auctions and the communications industry.  
The parties filing these petitions needed the Commission to waive the application of those rules, before 
the September 12, 2014, deadline for filing short form applications for the AWS-3 auction.  Both waivers 
could give small businesses greater access to capital and enhance their ability to more effectively compete 
in the important AWS-3 auction.  Once again, I commend Chairman Wheeler for circulating orders 
granting both limited waivers so the entire industry has clear guidance in advance of the AWS-3 auction.    
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STATEMENT OF
COMMISSIONER AJIT PAI
CONCURRING IN PART, DISSENTING IN PART
Re: In the Matter of Updating Part 1 Competitive Bidding Rules, WT Docket No. 14-170; 
Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive 
Auctions, GN Docket No. 12-268; Petition of DIRECTV Group, Inc. and EchoStar LLC for 
Expedited Rulemaking to Amend Section 1.2105(a)(2)(xi) and 1.2106(a) of the Commission’s 
Rules and/or for Interim Conditional Waiver, RM-11395; Implementation of the Commercial 
Spectrum Enhancement Act and Modernization of the Commission’s Competitive Bidding 
Rules and Procedures, WT Docket No. 05-211
     When Congress authorized the Commission to provide small businesses with taxpayer-funded 
discounts on auctioned spectrum, it required us to put safeguards in place to prevent abuse and unjust 
enrichment at the expense of the American people.
1
  And for over 20 years, the FCC has worked in a 
bipartisan manner to ensure that discounted spectrum could not just be passed along to large, well-funded 
corporations.
2
  Indeed, the whole point was to promote independent, facilities-based competition by small 
providers—competition that will spur the deployment of new service to the public, including in rural and 
underserved areas—not to create taxpayer-funded middlemen.
     But today, the Commission proposes to jettison this framework.  The NPRM proposes to permit small 
businesses (known as “designated entities” or “DEs”) to obtain taxpayer-funded discounts and then turn 
around and lease 100% of their spectrum to the world’s largest corporations.  It does absolutely nothing 
good for competition in the wireless marketplace to award bidding credits to entities that flip their 
spectrum to large incumbent providers.  To the contrary, it only makes it harder for small and regional 
facilities-based providers to win spectrum and compete on a level playing field.
     The Commission did not need to take this approach.  We could have adopted an NPRM that focused 
exclusively on ways we could lawfully advance and strengthen our DE program, improve our competitive 
bidding regulations, and make it easier for DEs and other providers to deploy facilities.  To be sure, the 
NPRM asks some questions along those lines.  And I thank my colleagues for agreeing to include some 
suggestions designed to promote DE participation while guarding against unjust enrichment, such as 
seeking comment on whether the FCC should retain a modified version of the facilities-based requirement 
or adopt a 10-year unjust enrichment schedule.  But I cannot support the vast majority of today’s 
proposals.  As a result, I am concurring in part and dissenting in part.
I.
     At the outset, let’s be clear about what the Commission’s proposal would allow.  A small business 
would be permitted to purchase spectrum at a 35% discount and then lease all of its spectrum capacity to 
our nation’s largest wireless carriers.  I can see how this could be good for the large wireless carrier that 
would gain access to discounted spectrum (rather than purchasing it for itself at full price).  And I can see 
how this would be profitable for the small business with no business plan beyond regulatory arbitrage.  
But how is any of this in the public interest?  It isn’t.  By failing to recover the full value of spectrum, we 
are adding to the national debt.  And by failing to require DEs to offer service to the public, we are 
                                                     
1
See 47 U.S.C. § 309(j)(4)(D)–(E); see also Conference Report, Omnibus Budget Reconciliation Act of 1993, H.R. 
Rep. 103-213, 103rd Cong., 1st Sess. 484 (1993), available at http://go.usa.gov/55wx.
2
See Implementation of Section 309(j) of the Communications Act—Competitive Bidding, PP Docket No. 93-253, 
Second Report and Order, 9 FCC Rcd 2348, 2394-95, paras. 258-65 (1994) (Competitive Bidding Second Report 
and Order).
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denying the American people the benefits of additional competition that taxpayer-funded discounts were 
intended to provide.  In fact, by giving bidding credits to entities that simply lease all of their spectrum 
capacity to the nation’s largest wireless carriers, we are increasing concentration in the wireless market 
by preventing smaller carriers that actually provide facilities-based service from obtaining spectrum.
     In short, this proposal would make a very small number of Americans very wealthy and leave 99.99% 
of us worse off. 
     Indeed, the NPRM’s approach creates all the wrong incentives, as both Democratic and Republican 
FCC Commissioners have consistently recognized.  For example, Commissioner Michael Copps called on 
the Commission to strengthen—not eliminate—the facilities-based requirement the last time the FCC 
examined these rules precisely because it encourages competition from smaller providers and gives them 
a “fighting chance to compete with industry giants.”
3
  Commissioner Copps recognized that giving large 
corporations access to “discounts they were never meant to enjoy”—which today’s NPRM proposes to 
do—“threatens the integrity of our auctions and, worse, it cheats consumers. It costs taxpayers millions 
of dollars in foregone revenue. It also means that spectrum goes to those most willing and able to 
manipulate the rules of the game, rather than to the entities Congress actually intended to benefit.”
4
     What is more, the NPRM actually proposes to eliminate an FCC rule that enables the Commission to 
conduct oversight of DE leases.
5
  So at the very moment the FCC is proposing DE rules that invite abuse, 
it is seeking to eliminate reporting requirements that enable the FCC to police just such misconduct.  This 
is troubling.
     In my view, and consistent with Commissioner Copps’ views years ago, proposing to eliminate the 
long-standing facilities-based requirement is contrary to our statutory authority, undermines the integrity 
of the DE program, impedes competition, and abdicates the responsibilities we owe to the American 
taxpayer.
II.
     It should come as no surprise that the NPRM’s proposal to eliminate the requirement that taxpayer-
funded businesses provide facilities-based service runs contrary to the statutory scheme Congress enacted, 
as numerous bipartisan FCC decisions make clear.  How does the NPRM justify this drastic change of 
course?  It engages in some revisionist history.  It casually asserts that up until today, the Commission’s 
decisions simply “placed undue weight on language” contained in certain legislative history.
6
  This 
assertion does not withstand scrutiny.
     Start with Section 309(j) itself.  In that provision, Congress authorized the Commission to use bidding 
credits to provide DEs with “the opportunity to participate in the provision of spectrum-based services.”
7
  
Congress then codified its determination that the Commission shall “require such transfer disclosures and 
antitrafficking restrictions . . . as may be necessary to prevent unjust enrichment as a result of the methods 
                                                     
3
See Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission’s 
Competitive Bidding Rules and Procedures, WT Docket No. 05-211, Second Report and Order and Second Further 
Notice of Proposed Rulemaking, 21 FCC Rcd 4753, 4808 (2006) (Statement of Commissioner Michael J. Copps)
(CSEA/Part I Second Report and Order).
4
Id.
5
NPRM at paras. 77–79.
6
See NPRM at para. 23.
7
47 U.S.C. § 309(j)(4)(D).
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employed to issue licenses and permits.”
8
     The Commission has consistently and unanimously recognized this language as requiring DEs to 
operate as facilities-based providers—not profiteering middlemen.  Less than seven months after 
Congress passed Section 309(j), the Commission recognized that “[i]t would be unjust and inconsistent 
with the will of Congress for [DEs] . . . to obtain a license with the government’s help, transfer that 
license after a short period of time to an entity that was not entitled to special treatment at the auction, and
appropriate for themselves the difference between the full market value of the license and the discounted 
price which they paid the government for that license.”
9
     Ten years later, when the FCC sought to liberalize its secondary market rules, it recognized that 
Section 309(j) required it to treat leases of DE spectrum differently than all others.  Congress’s “statutory 
directives were not intended to provide generalized economic assistance to small businesses, but rather to 
facilitate their ability to acquire licenses, build out systems, and provide service.”
10
  The Commission also 
stated, “the licensee cannot make spectrum leasing its primary business and must . . . continue to provide 
facilities-based network services under its licenses” regardless of the degree of control the DE maintains 
over the leased spectrum.
11
  In fact, the Commission rejected the contention made by many large wireless 
providers at the time that DEs “need not be limited to constructing and operating a facilities-based 
network in order to satisfy Congress’ objective that they participate in the spectrum market.”  It stated that 
“[w]e cannot accept that reading of Section 309(j)” because “Congress specifically intended that, in order 
to prevent unjust enrichment, the licensee receiving designated entity benefits actually provide facilities-
based services as authorized by its license.”
12
     The statutory basis for this decision was clear.  The Commission stated that “Section 309(j) . . . directs 
the Commission to prescribe anti-trafficking restrictions and payment schedules as necessary to prevent 
designated entity benefits from giving rise to unjust enrichment.”
13
  Treating DE leases differently was 
necessary, the Commission determined, because otherwise “we would run the risk that [DE] . . . 
incentives would benefit, indirectly, entities that do not qualify for such incentives in the primary market. 
In other words, we would be paving the way for the very unjust enrichment Congress wanted us to 
prevent.”
14
     When the Commission took up the question of Section 309(j)’s application to DE leases in 2006, the 
Commission found no wiggle room in the statutory language.  It recognized that the provision directs the 
FCC to ensure that “every recipient of our designated entity benefits is an entity that uses its licenses to 
directly provide facilities-based telecommunications services for the benefit of the public.”
15
  It adopted 
the current rules “to ensure, as Congress intended, that . . . benefits are awarded to provide opportunities 
for designated entities to become robust independent facilities-based service providers with the ability to 
                                                     
8
47 U.S.C. § 309(j)(4)(E).
9
Competitive Bidding Second Report and Order, 9 FCC Rcd at 2394, para. 260.
10
Promoting Efficient Use of Spectrum through Elimination of Barriers to the Development of Secondary Markets, 
WT Docket No. 00-230, Second Report and Order, Order on Reconsideration, and Second Further Notice of 
Proposed Rulemaking, 19 FCC Rcd 17503, 17538, para. 70 (2004) (Secondary Markets Second Report and Order); 
see also Competitive Bidding Second Report and Order, 9 FCC Rcd at  2394, para. 260.
11
Secondary Markets Second Report and Order, 19 FCC Rcd at 17541, para. 76.
12
Id. at 17544, para. 82.
13
Id. at 175378, para. 71.
14
Id.
15
CSEA/Part I Second Report and Order, 21 FCC Rcd at 4760, para. 15.
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provide new and innovative services to the public.”
16
  It held that “where an agreement concerns the 
actual use of the designated entity’s spectrum capacity, it is the agreement, as opposed to the party with 
whom it is entered into, that causes the relationship to be ripe for abuse and creates the potential for the 
relationship to impede a designated entity’s ability to become a facilities-based provider, as intended by 
Congress.”
17
     In a subsequent order, the FCC again stated that “Section 309(j)(4)(D) directs the Commission to issue 
regulations to ‘ensure’ that designated entities ‘are given the opportunity to participate in the provision of 
spectrum-based services.’”
18
  “We believe that the word ‘participate’ in this directive contemplates 
significant involvement in the provision of services to the public, not merely passive ownership of a 
license to spectrum used by others to provide service.”
19
     Given this strikingly consistent approach over many years, the NPRM’s abrupt assertion that the 
FCC’s facilities-based requirement was grounded in a misreading of legislative history belies credulity.  
The legislative history shows that Congress passed the relevant portions of Section 309(j) “to deter 
speculation and participation in the licensing process by those who have no intention of offering service 
to the public.”
20
  There is simply no way to square the NPRM’s proposal to eliminate the facilities-based 
requirement with Section 309(j) or the policies underlying that provision.
21
     What is more, there has been broad-based support for the FCC’s long-held view that imposing limits 
on DE leasing is critical to the success and integrity of the Commission’s program.  For example, 
Commissioner Copps in 2006 urged the Commission to “move quickly to curb abuses of the DE 
program” by adopting the facilities-based requirement that the NPRM proposes to eliminate today.
22
  He 
explained that without the rule in place “entities with deep pockets helped themselves to discounts they 
were never meant to enjoy.”
23
  “[B]y strengthening our unjust enrichment rules,” Commissioner Copps 
stated, “we take away the incentive for speculators to try to masquerade as legitimate DEs . . . .  And most 
importantly, we reserve the DE program for companies that actually intend to use their spectrum to serve 
customers.”
24
  
     Commissioner Adelstein shared a similar position.  He believed that the Commission should be acting 
to close “loophole[s]” in the DE program, not opening them up.
25
  He expressed serious concerns about 
                                                     
16
Id. at 4762, para. 21.
17
Id. at 4762, para. 23.
18
Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission’s 
Competitive Bidding Rules and Procedures, WT Docket No. 05-211, Order on Reconsideration, 21 FCC Rcd 6703, 
6705, n.8 (2006) (emphasis added) (CSEA/Part I Order on Reconsideration).
19
Id. (emphasis added).
20
H.R. Rep. No. 103-111, at 257–58 (1993) (Conference Agreement adopted House provisions, in relevant part, 
with amendments.  H.R. Conf. Rep. No. 103-213, at 483 (1993)).
21
While some have cited consolidation in the wireless industry as counseling in favor of eliminating the facilities-
based requirement, any such consolidation is irrelevant to determining the limits Congress imposed on the FCC’s 
authority.  And in any case, as mentioned above, eliminating that requirement would only increase market 
concentration since spectrum would be flipped from non-facilities-based entities to the largest wireless carriers.
22
See CSEA/Part I Second Report and Order, 21 FCC Rcd at 4808 (Statement of Commissioner Michael J. Copps).
23
Id.
24
Id.
25
Id. at 4810 (Statement of Commissioner Jonathan Adelstein Approving in Part, Dissenting in Part).
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the impact a contrary approach would have on American taxpayers:  “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?”
26
     The U.S. Court of Appeals for the Third Circuit made the same point when it reviewed the FCC’s 
2006 DE rules.
27
  The court drew a distinction between the provision of facilities-based service, on the 
one hand, and arrangements under which “a DE merely monetizes its credits or partners with a large
carrier, thus rendering the DE’s separate existence a mere formality” on the other.
28
  The court indicated 
that the rationale underlying the relevant DE rule would not permit small businesses to “sell or lease 
overly large quantities of their capacity to any single lessee.”
29
     And the U.S. Department of Justice has stated that “the FCC should disqualify a DE that has any . . . 
agreement with a large wireless carrier that suggests that the licenses will be used principally for the 
benefit of the large wireless carrier.”
30
  
     Congress, numerous FCC Commissioners over the years, the Third Circuit, the Department of 
Justice—all were in unison regarding how to ensure that DEs are truly independent providers.  Yet 
today’s NPRM blesses just the opposite approach.
III.
     The NPRM’s proposals suffer from several additional flaws as well.  First, the NPRM’s approach to 
DE leasing cannot be reconciled with its proposal on joint bidding.
31
  In the joint bidding section of the 
NPRM, the Commission proposes to adopt a broad prohibition against any agreement between 
nationwide wireless providers that even relates to the competitive bidding process, even though the 
NPRM identifies no evidence that there’s any need for such a rule.
32
  The FCC’s reasoning?  Any such 
arrangement “would reduce the participants’ ability or incentive to compete independently, which would 
lessen competition . . . and could harm American consumers by increasing the price or reducing the 
quality of mobile wireless service.”
33
  This begs the question:  How can the NPRM conclude that any type 
of agreement between two nationwide providers would necessarily harm consumers and reduce the 
incentives to compete, yet maintain that an agreement under which a small provider leases 100% of its 
spectrum to a large corporation raises no such concerns?  The NPRM offers no answer.
     Second, and similarly, the proposal to eliminate the facilities-based requirement cannot be reconciled 
                                                     
26
Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission’s 
Competitive Bidding Rules and Procedures, WT Docket No. 05-211, 21 FCC Rcd 1753, 1772 (2006) (Statement of 
Commissioner Jonathan Adelstein).
27
See Council Tree Communications, Inc. v. FCC, 619 F.3d 235, 255 n.8 (3d Cir. 2010).
28
Id.
29
Id.
30
See Ex Parte Submission of the U.S. Department of Justice, WT Docket No. 05-211, at 5 (Mar. 17, 2006), 
available at http://go.usa.gov/58fY.
31
See NPRM at paras. 107–40.
32
See id. paras. 131–34.
33
Id. para. 132.
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with the FCC’s recent approach to Joint Sales Agreements (JSAs) in the broadcast television industry.
34
  
In the JSA context, the FCC prohibited one broadcast television licensee from selling more than 15% of 
another station’s advertising time.  The FCC’s theory?  It claimed that the mere existence of such an 
agreement gave licensees selling the advertising “the opportunity, ability, and incentive to exert 
significant influence over the” other station.
35
  It was said then that “[w]hen one licensee controls the cash 
flow of another, it controls the other.  The old admonition ‘follow the money’ has never been more 
appropriate.”
36
  The Commission thus determined that the mere presence of these agreements required 
attribution for purposes of the agency’s media ownership rules because the risk of undue influence was 
simply too great.
37
     Yet under today’s proposal, one licensee could control 100% of the spectrum of another.  How can the 
FCC reconcile these different approaches?  How is it that one television station in a small market selling 
16% of another station’s advertising is conclusive evidence of “undue influence” and an intolerable end-
run around our rules, but, as proposed in this NPRM, a DE can lease 100% of its spectrum to some of the 
largest companies in the world without triggering any concerns about undue influence?  As I stated earlier 
when the Commission waived our facilities-based requirement for the benefit of a single private equity 
firm,
38
whatever happened to the old admonition “follow the money”?  Why follow 16% of the money, 
but not 100% of the money?  Some say that we must take into account differences between the broadcast 
television business and the wireless business.  But if anything, those differences cut the other way.  
Indeed, a middleman that simply leases all of its spectrum to our nation’s largest wireless carriers is not 
even a “wireless carrier” in any meaningful sense of the term.
     Third, the NPRM makes no attempt to harmonize its proposed approach to DE leasing with other 
Commission precedents.  For example, the NPRM proposes to replace our existing, bright-line approach 
                                                     
34
See, e.g., Processing of Broadcast Television Applications Proposing Sharing Arrangements and Contingent 
Interests, Public Notice, 29 FCC Rcd 2647 (Med. Bur. 2014) (JSA Processing PN).
35
2014 Quadrennial Regulatory Review — Review of the Commission’s Broadcast Ownership Rules and Other 
Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996 et al., MB Docket Nos. 14-50, 09-
182, 07-294, 04-256, Further Notice of Proposed Rulemaking and Report and Order, 29 FCC Rcd 4371, 4527 para. 
340 (2014) (2014 Quadrennial Regulatory Review) (“[T]he ability of a broker to control a brokered television 
station’s advertising revenue, its principal source of income, affords the broker the opportunity, ability, and 
incentive to exert significant influence over the brokered station.”); see also id. at 4533, para. 350 (“[T]elevision 
JSAs involving a significant portion of the brokered station’s advertising time convey the incentive and potential for 
the broker to influence program selection and station operations.”); id. at 4539, para. 360 (“[A] 15 percent 
advertising time threshold will identify the level of control or influence that would realistically allow holders of such 
influence to affect core operating functions of a station, including programming choices, and give them an incentive 
to do so.”); id. at 4539, para. 361 (“As the amount of advertising revenue controlled by the brokering station 
increases, so too does its incentive and ability to influence brokered station’s programming.”); id. at 4582 (Statement 
of Chairman Tom Wheeler) (JSAs provide broker stations “the incentive and ability to unduly influence the 
operations” of brokered stations), available at http://go.usa.gov/58Ck.
36
Id. at 4582 (Statement of Chairman Tom Wheeler).
37
See JSA Processing PN, 29 FCC Rcd at 2648; but see Statement of FCC Commissioner Ajit Pai on the Media 
Bureau’s New Guidance on Sharing Arrangements and Contingent Interests (Mar. 12, 2014), http://go.usa.gov/58ax; 
2014 Quadrennial Regulatory Review, 29 FCC Rcd at 4587 (Dissenting Statement of Commissioner Ajit Pai), 
available at http://go.usa.gov/58a5; Joint Statement of Commissioners Ajit Pai and Michael O’Rielly on Three More 
TV Stations Going Dark Under The FCC’s New JSA Policy (June 24, 2014), http://go.usa.gov/58xQ; Statement of 
Commissioners Ajit Pai and Michael O’Rielly on the Negative Impact of the Decision to Restrict Television 
Stations’ Use of Joint Sales Agreements (May 29, 2014), http://go.usa.gov/9N7V.
38
See Grain Management, LLC’s Request for Clarification or Waiver of Section 1.2110(b)(3)(iv)(A) of the 
Commission’s Rules, WT Docket No. 05-211, Order, FCC 14-103 (2014) (Dissenting Statement of Commissioner 
Ajit Pai), go.usa.gov/5PSY.
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to DE leasing with a post-auction, fact-based inquiry into the degree of control that particular leases 
would give large companies over the DE.  But the level of uncertainty that this case-by-case approach will 
create is directly contrary to the FCC’s recent approach to spectrum auctions.  In the FCC’s Mobile 
Spectrum Holdings Order, for example, the Commission concluded that “it is in the public interest to 
replace our post-auction case-by-case analysis” with bright-line, ex ante rules.
39
  Likewise, the NPRM 
itself states in the joint bidding section that “certainty and clarity in advance of the start of an auction . . . 
best serve the public interest.”
40
  There isn’t any way to square those approaches with the decision here, 
and the NPRM doesn’t try.  It would seem the Commission chooses either the certainty of bright-line 
rules or the flexibility of case-by-case adjudication as necessary to further its ideological agenda.
     Fourth, I do not support the Commission’s decision to seek comment on instituting closed, DE-only 
spectrum auctions.
41
  In my view, the FCC should not limit competitors’ ability to compete.  We should 
not pick winners and losers.  Instead, we should pursue policies that maximize participation in our 
spectrum auctions.  That’s especially the case when bidding limitations by definition will reduce the 
revenue the U.S. Government (and hence taxpayers) could gain from such auctions while providing no 
offsetting public benefits under the new spectrum-flipping regime.
     Finally, at a time when the FCC is proposing changes that invite arbitrage and abuse of the DE 
program, I cannot support the NPRM’s proposal to lessen FCC oversight.
42
  This is not the time to discard 
tools that can help the FCC identify misuse of taxpayer funds.  Nonetheless, the NPRM proposes to 
eliminate the requirement that DE licensees file annual reports with the FCC that identify all agreements, 
in existence or proposed, that relate to the licensee’s eligibility for DE benefits.  In my view, transparency 
is essential here.
IV.
     While I do not support the NPRM’s proposal to eliminate the facilities-based requirement, I appreciate 
my colleagues agreeing to incorporate some of my suggestions.  I am glad that the NPRM now seeks 
comment on retaining a modified version of the facilities-based requirement and whether eliminating the 
requirement would increase the chances that DEs would be subject to undue influence.  Also, the NPRM 
now seeks comment on how its proposed approach could impact auction revenues and whether it would 
result in ineligible entities obtaining access to discounted spectrum.  Moreover, the NPRM now seeks 
specific comment on whether the Commission should strengthen its unjust enrichment rules by adopting a 
10-year repayment schedule
43
and by requiring full reimbursement of any taxpayer-funded discounts, plus 
interest, if a DE loses eligibility before completing its licensing obligations.
44
  Finally, the NPRM asks 
whether a DE with multiple agreements or arrangements with a large provider merits more rigorous 
scrutiny.
45
  I hope commenters submit useful information on these important topics.
     The NPRM includes other proposals that are worth exploring.  For example, it seeks comment on 
prohibiting a single entity from filing multiple short-form applications and on prohibiting commonly-
                                                     
39
Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269, Report and Order, 29 FCC Rcd 6133, 
619,  paras. 139–42 (2014).
40
NPRM at paras. 133–34.
41
See id. paras. 80–81.
42
See id. paras. 77–79 (proposing to repeal the reporting requirement at 47 C.F.R. § 1.2110(n)).
43
Id. para. 45.
44
Id. para. 46.
45
Id. para. 35.
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controlled entities from submitting multiple applications.  In addition, the NPRM seeks comment on 
whether the FCC should modify our former defaulter rule.  I concur in these portions of the NPRM.
* * *
     In the end, this NPRM is the latest lost opportunity to focus on ways we could, on a bipartisan basis, 
lawfully promote entry by small companies into the wireless business, facilitate the deployment of new 
facilities, and encourage the provision of service to underserved areas.  Instead, the Commission proposes 
an arbitrage scheme that allows DEs to obtain discounted access to spectrum and then profit as 
middlemen.  This impedes—rather than furthers—the type of competition that Congress sought to 
promote when it authorized taxpayer-funded discounts on spectrum.  I therefore hope that the 
Commission veers from its current course in this proceeding.
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STATEMENT OF 
COMMISSIONER MICHAEL O’RIELLY
CONCURRING IN PART, DISSENTING IN PART
Re: In the Matter of Updating Part 1 Competitive Bidding Rules, WT Docket No. 14-170; 
Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive 
Auctions, GN Docket No. 12-268; Petition of DIRECTV Group, Inc. and EchoStar LLC for 
Expedited Rulemaking to Amend Section 1.2105(a)(2)(xi) and 1.2106(a) of the Commission’s 
Rules and/or for Interim Conditional Waiver, RM-11395; Implementation of the Commercial 
Spectrum Enhancement Act and Modernization of the Commission’s Competitive Bidding 
Rules and Procedures, WT Docket No. 05-211
     Over the years, Congress has charged the Commission with implementing important—and sometimes 
competing—statutory provisions regarding small businesses.  The Commission’s role is to faithfully 
execute Congressional intent, without substituting its own policy objectives.  To do otherwise would 
untether communications policy decisions from the duly-elected members of Congress and those they 
represent, and rest it in the hands of appointed Commissioners.  While this item is still in the Notice of 
Proposed Rulemaking stage, I have deep concerns that it violates this basic tenet.  Not to mention, if 
certain proposals are enacted, it would impose a questionable policy that favors certain entities and 
distorts the wireless marketplace.  Therefore, I must dissent on much of this item, while concurring with a 
few portions.  
     One of the proposals, if adopted, would remove the requirement that a designated entity (DE) actually 
function as a facilities-based provider of wireless services.  To support this about face, the item uses legal 
somersaults to justify the abandonment of our current precedent and seems to discard the true meaning of 
the statute and its legislative history in an ends-justify-the-means approach to achieve the desired 
outcome.    
     Under this proposed regime, small businesses could obtain licenses at a substantial discount from the 
market rate and then lease the entirety of the spectrum to another entity, instead of building their own 
networks and offering services to the American people.  In other words, rather than provide head-to-head 
competition, a DE could merely integrate its spectrum into the network of an incumbent wireless 
provider.  Given this likelihood, it is hard to see how this wouldn’t sanction middlemen to underpay the 
American people for their collectively owned scare resource (i.e., spectrum) and pocket the money while 
doing almost nothing.  
     In the past, critics of the DE program have raised a number of concerns.  One issue that has been 
raised is the ability of licensees receiving bidding credits to “flip” their licenses to larger wireless 
providers for huge profits after the unjust enrichment period expires.  Instead of the proposals in the 
NPRM, the Commission should look at steps to prevent this by strengthening its controlling interest and 
unjust enrichment rules, and imposing and enforcing buildout requirements.  Those actions would have a 
greater impact on license ownership diversity.    
     While this item focuses on designated entities in spectrum auctions, I can’t ignore the apparent 
hypocrisy generated by what is being proposed here and the Commission’s actions to effectively ban joint 
sales agreements (JSAs) for television stations.  Just months ago, we were told that JSAs deceive the 
American public by allowing one television station, often of questionable financial situation, to 
contractually partner with another station in the market to perform certain functions.  These agreements 
were considered offensive because the larger station supposedly would be able to influence the 
programming selection of the other broadcaster.  The solution was to impose mandatory sell-offs to avoid 
violations of this new ban.  In reality, the Commission’s actions actually harmed consumers, because a 
number of stations went dark resulting in viewers losing valuable programming.  Yet in this item, it is the 
Federal Communications Commission FCC 14-146
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flip side of the same coin, but the outcome is somehow different.  We would be sanctioning small entities 
that acquired licenses with government subsidies to build partnerships with larger wireless providers.  In 
this case, we are giving away money to entities that may never provide service; whereas JSAs served the 
public interest by assisting stations, either in financial distress or not, to provide Americans with more 
and better programming options.  Surely, if the contractual links created by JSAs were objectionable, then 
even greater opposition should be expressed over the newly proposed structures for DEs.    
     There are a host of other ideas in the item that cause concern.  For instance, I am extremely troubled 
that the Commission is entertaining the possibility of new eligibility categories for DE status (i.e., new 
classes of protected citizens) based on flawed concepts.  Ideas like offering DE preferences for areas of 
persistent poverty or for overcoming disadvantages would generate years of litigation, open the 
Commission up to ridicule for trying to define the qualifications for such categories, and violate the U.S. 
Constitution.  Further, the Commission is also proposing to raise the revenue thresholds for designated 
entity eligibility, allowing a greater number of auction applicants to meet the criteria for bidding credits, 
which is dubious at best.
     On a positive note, the item raises a host of questions regarding the Commission’s former defaulter 
rule.  These issues were recently addressed in a separate waiver item for the upcoming AWS-3 auction.  
As such, I see some merit in considering the proposed changes for other auctions going forward and am 
willing to concur on this portion of the notice.  In addition, the proposal to address issues with commonly 
controlling entities participating in an auction seems worthy of questions and consideration.
     While I couldn’t support most of the item, I do thank the staff in the Wireless Telecommunications 
Bureau for their work on this matter and for briefing me and my staff.