FCC Staff Reassigned to Cope with Auction Applications
Applicants for the Aug. advanced wireless services auction (AWS) are being grilled by FCC staffers analyzing short form applications, said lawyers representing applicants. That may reflect a mandate for more scrutiny of would-be bidders, such as whose dollars are behind designated entities (DEs). But the interrogations’ origins aren’t certain. Nor is it clear whether they mean applicants face a higher bar.
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The FCC has a small army of lawyers reviewing short-form applications to bid in the advanced wireless services auction. The auction starts Aug. 9; upfront payments were due Mon.
“They've got a lot of people over there who are processing these applications that have not been deeply involved in the past with DE applications,” a person representing auction participants said: “They're asking a lot of questions that are fundamentally inconsistent with stuff the Commission has approved in the past. For example, with most of the DEs in the past the noneligible investors frequently had more than 50% of the equity… the Commission is asking questions suggesting that anybody that has more than 50% of the equity would have to be an affiliate and you'd have to remove all the revenues… If they follow up on that, there’s going to be a firestorm. Applications that would have been perfectly suitable in the old regime” wouldn’t be allowed.
With so many applications found incomplete in the first round of review, anxiety is high among potential bidders, the source said: “With 181 applicants on the incomplete list, and with people over there kind of shooting from the hip as to what the deficiencies might be, there’s a fair amount of anxiety.”
But a 2nd attorney for bidders said the stream of queries more than anything reflects the inexperience of the FCC staff doing the asking. “The questions that are being presented to people, while voluminous, are not [sensible], they're not substantive,” the attorney said: “They have people reviewing these applications who don’t have the slightest idea what is going on with these applications.”
The lawyer is urging clients on the incomplete list not to panic, he said. “I'm not a big fan of what goes on at the FCC, but this is child’s play,” he said: “I tell my clients, ‘Don’t worry, you're going to get back in. You shouldn’t want me to even spend time on it because I charge too much per hour.'” The lawyer said the hard questions will come after the auction, when the FCC evaluates winning bids: “They will play hardball, but they're not playing it now. What they're playing now is a game of chickenshit.”
A 3rd attorney seasoned at representing bidders said both factors may be at work - heightened scrutiny of DE and non-DE bidders and staff lack of experience. “They're asking more ownership questions for even the non-DEs,” the attorney said: “They have said they were going to be scrutinize the DEs more carefully and I think they're doing that.”
Also an issue is new application forms, the attorney said: “The forms they put into place fairly recently don’t fully reflect or capture the information the FCC wants… That’s part of the problem, too. That makes it difficult for the FCC as well as the potential bidders to give information. Usually you think you just answer the question on the form and then you're done.”