The Minority Media and Telecom Council asked FCC officials to revise the agency’s designated entity (DE) rules in time for upcoming auctions, said a filing at the commission. “As a result of consolidation and an unstable regulatory climate after the 2006 DE Rule changes, DEs encountered, and continue to encounter, unique market entry barriers that prevent meaningful DE participation ... in spectrum auctions,” MMTC said (http://bit.ly/1m2Qk5H). “While the 2006 DE Rules were in effect, DE participation drastically declined. As the Commission prepares for the upcoming AWS and incentive auctions, it is critical for the FCC to send a clear signal to the wireless industry (and to the financial industry) that the DE program is important to the FCC and that the FCC is making improvements that will foster diversity and competition in spectrum ownership and provide the regulatory stability that is required for investment."

Mobile Future filed a paper at the FCC questioning the net effect of bidding limits the Canadian government imposed in two recent spectrum auctions -- AWS spectrum in 2008 and 700 MHz spectrum this year. “The analysis concludes that exclusionary auction rules, such as spectrum set-asides or caps, prevent efficient competition and hinder investment in the state-of-the-art wireless networks and services that consumers are demanding,” Mobile Future said (http://bit.ly/1fltxzo). “These asymmetric rules essentially add up to public subsidies that are wasted on either established players who would have bid vigorously at full market value or lost to new entrants that, similar to the European experience with preferential rules, consistently fail.” The paper cites as an example Quebecor’s purchase of licenses outside its home market in Quebec. “Quebecor has made clear the spectrum, which had no other significant bidder, was acquired for its ‘advantageous price,’ with the CEO publicly stating that it remains uncertain if it would ’sit’ on the spectrum or ‘do something with it,'” Mobile Future said. “At this stage, few analysts expect Videotron, which is owned by Quebecor, to develop a network outside of Quebec."

The U.S. Court of Appeals for the D.C. Circuit rejected a challenge by Alpine PCS to an FCC decision to re-auction two licenses the company had bought in a 1996 auction. The FCC took that step after Alpine failed to make timely payments. The D.C. Circuit decided the case without oral argument. The court said it had affirmed the FCC’s decision in 2010, but in January 2013 Alpine filed a breach-of-contract suit against the FCC in a trial court. “The court dismissed the suit for lack of subject matter jurisdiction,” the D.C. Circuit said in its order (http://bit.ly/1rEQ63N). “First, Alpine claims a forum selection clause within the contracts it signed with FCC is controlling because Congress provided a waiver of sovereign immunity in 47 U.S.C. § 309(j). Second, Alpine contends the district court erred in not deferring to FCC’s interpretation of its jurisdiction, as purportedly embodied in that contract clause, in accordance with City of Arlington v. FCC. ... Because each argument is clearly foreclosed by statute and precedent, we affirm the district court’s judgment."

The need for a TV incentive auction shows a breakdown in FCC power to regulate the airwaves, Tom Hazlett, a former commission chief economist, suggests in a white paper released Friday (See related story). The FCC has under the Communications Act “full authority to allocate spectrum according to ‘public interest, convenience or necessity,'” he said. “It does not exercise such powers in fact. The agency vested with issuing and renewing (on a seven-year cycle for TV stations) all wireless licenses has revealed that it must -- to carry out its legal mandate to promote the public interest -- buy back FCC licenses from the private parties it has assigned them to (and would use its discretion to otherwise renew).” But Hazlett said in part the FCC is recognizing reality. “Compelling evidence supports the FCC in its judgment that TV Band spectrum is efficiently substituted from TV to mobile services, and the Commission’s belief that it would be hamstrung -- by litigation, congressional backlash, or both -- if it were to uproot existing broadcasting stations (i.e., deny license renewals) under its ‘public interest’ authority,” he said (http://bit.ly/1kdcLRI). “The crucial insight is that regulation, as judged by the regulators, is too unwieldy a tool as to remedy the errors made in previous regulatory choices, such that using market mechanisms -- reverse auctions, in this instance -- will lower the cost and speed the delivery of efficient substitutions.” Hazlett is a professor at Clemson University, on leave from George Mason University.

The American Petroleum Institute said it supports a recommendation by the National Public Safety Telecommunications Council that business/industrial coordinators should be authorized to coordinate 4.9 GHz band channels applied for by business/industrial users. API also said the FCC should not permit “by regular licensing” the operation of vehicular repeater units on the 173.2375, 173.2625, 173.2875, 173.3125, 173.3375 and 173.3625 MHz telemetry channels. “Mobile voice operation is incompatible with the telemetry equipment currently deployed in the band,” said an FCC filing (http://bit.ly/1ntV1F0) by API, which represents oil and natural gas companies.

The FirstNet board’s Finance Committee approved fiscal year 2014 guidelines for expenditures for the rest of the year. Under the guidelines, FirstNet management is allowed to spend up to $33 million on network development, $16.1 million on outreach and state consultation, $16.1 million “to further develop FirstNet’s operating infrastructure, including facilities and support and contract staff,” and $6.9 million on business strategy development, said a news release Friday. “Today we are funding the essential steps for the rest of this fiscal year to move forward on our program roadmap and business planning for building a nationwide, interoperable, public safety communications network,” said FirstNet Chairman Sam Ginn.

The FCC Wireless Bureau sought comment on a petition by the Land Mobile Communications Council (LMCC) asking the agency to modify rules for the 800 MHz expansion bands (EB) and guard bands (GB). The group asked that 800 MHz incumbent licensees in a market be given a six-month period to apply for EB/GB frequencies before they are made available to applicants for new 800 MHz systems. “LMCC states that spectrum for incumbent 800 MHz systems in urban areas to expand is urgently needed but sparsely available,” the bureau said (http://bit.ly/1mLEw7f). “It argues that a limited opportunity for expansion of incumbent systems would serve the public interest because those licensees had to undergo the disruptive rebanding process without deriving any economic benefit, and use of EB/GB frequencies to expand existing systems’ capacity would promote spectral efficiency.” Comments are due May 27, replies June 11.

While sharing is the wave of the future, it might help if some government agency were responsible for all government spectrum, similar to how the General Services Administration manages real estate, said Blair Levin, manager of the FCC’s National Broadband Plan. “Based on what I experienced in government, I think GSA, or OMB [the Office of Management and Budget] for that matter, does a better job forcing a certain kind of efficiency within an agency, than the agency can do for itself,” Levin said Friday. “If the knowledge and incentives lie only in the silo, the prime imperative will be to protect the silo. If authority resides in a broader group, the incentives, and the use of the knowledge changes; I hope Congress explores that.” Levin also took on what he sees as a too-common mantra in Washington, that the government shouldn’t pick winners and losers. “This is also ironic as the city’s major industry, lobbying, is premised on the need to affect the picking of winners and losers,” he said at a Washington conference sponsored by Clemson and George Mason University. But Levin said policy does affect investment. “I subscribe to a different point of view, one offered me by a great investor,” he said. “He told me, ‘D.C. flatters itself to think it can pick; there are too many factors to guarantee one result or the other. But policy is like gravity; it does affect where capital flows.’ So my question is where does D.C. want money to flow in telecommunications where it is not flowing now? Do we think the market is underinvesting in wireless networks? Wired networks? Devices?” Levin, currently at the Aspen Institute, is also a former analyst and FCC chief of staff.

Government agencies have been willing to be more forthcoming than before on spectrum questions, House Commerce Committee Majority Chief Counsel David Redl said Thursday during a Mobile Future forum (see related story). Redl said he and other committee staffers were tasked by their bosses to meet regularly with NTIA, the FCC and Department of Defense on the AWS-3 band, which is to be cleared of users to be sold to wireless carriers in an auction later this year. “I think we have made significant progress,” he said. “All the agencies have been very responsive to the concerns of Capitol Hill.” Shawn Chang, senior Democratic communications counsel to the House Commerce Committee, also said he’s pleased with the progress made. “We are entering this extremely crucial period,” he said. “We really need the agencies to work together with the industry in providing enough information so that interested bidders can evaluate this spectrum."

It’s “too early to tell” how Verizon will split its budget for the upcoming AWS-3 and broadcast incentive auctions, but its top priority is the AWS-3 auction, said Chief Financial Officer Fran Shammo Thursday during a conference call with investors. The AWS-3 auction is to occur at the end of 2014, with license attainment during Q1 2015. Once the AWS-3 auction is complete, “then we'll deal with the broadcast licenses after that within 2015,” Shammo said. Verizon is currently using its existing AWS spectrum to increase capacity for its 4G LTE network. Those AWS deployments have mainly been concentrated in major urban markets like New York, San Francisco and Chicago, but it plans to deploy AWS spectrum in smaller cities and rural markets throughout the rest of the year, Shammo said. “The network performance is delivering what we expect it to,” he said. Verizon ended the quarter with a net $3.95 billion profit on $30.8 billion in revenue, driven in part by its successful $130 billion buyout of Vodafone’s 45 percent of Verizon Wireless in February (CD Feb 24 p22). Verizon added a net 539,000 postpaid wireless customers during Q1, having added a net 634,000 subscribers on tablets, but lost a net 138,000 postpaid subscribers using cellphones. AT&T said Tuesday it added a net 625,000 postpaid mobile subscribers during the quarter. Verizon’s net loss of cellphone subscribers -- the first quarter that’s happened since 2010 -- “is a shocking turnaround,” said MoffettNathanson analyst Craig Moffett in a blog post. “Verizon has topped AT&T for post-paid net additions every quarter since they got the iPhone. Not this time.” Verizon began offering the iPhone in 2011. AT&T’s response to competition from T-Mobile and its improved network performance has put Verizon “in a tough spot,” said New Street Research analyst Jonathan Chaplin in a note to investors. “Verizon is faced with either losing share or cutting price, at least until AWS deployment drives improved network performance for a large portion of the sub base."