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Wireless News Aggregation

Friday — August 7, 2015 — Issue No. 669

Dear Friends of Wireless Messaging,

Welcome to The Wireless Messaging News. I hope you have a great weekend.

This issue of the newsletter is a little different. The BloostonLaw Telecom newsletter is on their traditional August recess, but they have sent me an important memorandum about the FCC’s long-awaited DE and Competitive Bidding Report and Order, in which the Commission adopted major revisions to its small business and auction rules for the first time in almost a decade. It is a little long.

This memorandum will be very interesting to some readers, and boring to others. Since it takes up most of the newsletter's space this week, some of you may want to skip this issue, and come back next week.

I got a little sidetracked today installing Windows 10. It takes a long time. Although I am primarily a Macintosh user, I do a few things with Windows as well. Stay tuned for my impressions of this major new revision of the Windows operating system.

We'll see if it should still be called “Windoze.” I have been reading some good reviews.

Now on to more news and views.

The Weather in Wayne County‚ Illinois

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Wireless Messaging News
  • Emergency Radio Communications
  • Wireless Messaging
  • Critical Messaging
  • Telemetry
  • Paging
  • Wi-Fi
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About Us

A new issue of the Wireless Messaging Newsletter is posted on the web each week. A notification goes out by e-mail to subscribers on most Fridays around noon central US time. The notification message has a link to the actual newsletter on the web. That way it doesn’t fill up your incoming e-mail account.

There is no charge for subscription and there are no membership restrictions. Readers are a very select group of wireless industry professionals, and include the senior managers of many of the world’s major Paging and Wireless Messaging companies. There is an even mix of operations managers, marketing people, and engineers — so I try to include items of interest to all three groups. It’s all about staying up-to-date with business trends and technology.

I regularly get readers’ comments, so this newsletter has become a community forum for the Paging, and Wireless Messaging communities. You are welcome to contribute your ideas and opinions. Unless otherwise requested, all correspondence addressed to me is subject to publication in the newsletter and on my web site. I am very careful to protect the anonymity of those who request it.

I spend the whole week searching the Internet for news that I think may be of interest to you — so you won’t have to. This newsletter is an aggregator — a service that aggregates news from other news sources. You can help our community by sharing any interesting news that you find.

Editorial Policy

Editorial Opinion pieces present only the opinions of the author. They do not necessarily reflect the views of any of advertisers or supporters. This newsletter is independent of any trade association.

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Advertiser Index

American Messaging  
Critical Alert  
Critical Response Systems  
Easy Solutions  
Falcon Wireless Direct  
Hark Technologies  
Ira Wiesenfeld & Associates  
Leavitt Communications  
Preferred Wireless  
Prism Paging  
Product Support Services — (PSSI) 
Paging & Wireless Network Planners LLC — (Ron Mercer) 
STI Engineering  
WaveWare Technologies

Falcon Wireless Direct


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e*Message Wireless Information Services Europe

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Dallas, Texas

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Communication Specialists

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Cook Paging

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Citipage Ltd.
Edmonton, Alberta


Newsletter Supporter

Prism Paging

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white stripe


  • VoIP telephone access — eliminate interconnect expense
  • Call from anywhere — Prism SIP Gateway allows calls from PSTN and PBX
  • All the Features for Paging, Voice-mail, Text-to-Pager, Wireless and DECT phones
  • Prism Inet, the new IP interface for TAP, TNPP, SNPP, SMTP — Industry standard message input
  • Direct Connect to NurseCall, Assisted Living, Aged Care, Remote Monitoring, Access Control Systems
Product Support Services, Inc.

Repair and Refurbishment Services

pssi logo


Product Support Services, Inc.

511 South Royal Lane
Coppell, Texas 75019
(972) 462-3970 Ext. 261 left arrow left arrow

PSSI is the industry leader in reverse logistics, our services include depot repair, product returns management, RMA and RTV management, product audit, test, refurbishment, re-kitting and value recovery.

American Messaging


American Messaging


WaveWare Technologies

2630 National Dr., Garland, TX 75041

Now stocking the full line of Daviscomms paging products

New Products

SPS-5v9E Paging System

  • 1 Serial Port Connection
  • 2 Ethernet Connections
  • Browser and Serial Port Configuration
  • TAP, COMP2, Scope, WaveWare SNPP, COMP2, & PET Protocols
  • 2W, 5W Option

DMG Protocol Converter

  • Linux Based Embedded System
  • Up to 4 Serial Port Connections
  • Ethernet Connections
  • Browser Configuration
  • Protocol Conversion
  • Additional Protocols Available Soon

WaveWare Technologies

Easy Solutions

easy solutions

Easy Solutions provides cost effective computer and wireless solutions at affordable prices. We can help in most any situation with your communications systems. We have many years of experience and a vast network of resources to support the industry, your system and an ever changing completive landscape.

  • We treat our customers like family. We don’t just fix problems . . . We recommend and implement better cost effective solutions.
  • We are not just another vendor . . . We are a part of your team. All the advantages of high priced full time employment without the cost.
  • We are not in the Technical Services business . . . We are in the Customer Satisfaction business.

Experts in Paging Infrastructure

  • Glenayre, Motorola, Unipage, etc.
  • Excellent Service Contracts
  • Full Service—Beyond Factory Support
  • Contracts for Glenayre and other Systems starting at $100
  • Making systems More Reliable and MORE PROFITABLE for over 30 years.

Please see our web site for exciting solutions designed specifically for the Wireless Industry. We also maintain a diagnostic lab and provide important repair and replacement parts services for Motorola and Glenayre equipment. Call or e-mail us for more information.

Easy Solutions
3220 San Simeon Way
Plano, Texas 75023

Vaughan Bowden
Telephone: 972-898-1119

Easy Solutions

Critical Response Systems

More than Paging.
First Responder Solutions.

Our patented technology notifies clinical personnel immediately, while tracking who receives and responds to each alarm. Users confirm or defer each event with a single button press, and analytic dashboards display response statistics in real time, as well as historically broken down by time, unit, room, and individual.

Our systems not only notify your personnel quickly and reliably, but also provide actionable feedback to fine-tune your procedures, reduce unnecessary alarms, and improve patient outcomes.


Leavitt Communications


Specialists in sales and service of equipment from these leading manufacturers, as well as other two-way radio and paging products:

UNICATIONbendix king

motorola blue Motorola SOLUTIONS

COMmotorola red Motorola MOBILITY spacer
Philip C. Leavitt
Leavitt Communications
7508 N. Red Ledge Drive
Paradise Valley, AZ 85253
Web Site:
Mobile phone:847-494-0000
Skype ID:pcleavitt

STI Engineering

sti header

250W VHF Paging Transmitter

STI Engineering’s RFI-148 250 high performance paging transmitter features true DDS frequency generation that enables precise control and flexibility for a wide range of data transmission applications.

The transmitter is particularly suitable for large simulcast POCSAG and FLEX paging networks and can be used as drop-in replacement of older and obsolete transmitters. The unit has a proven track record in large scale critical messaging systems.

sti tx
  • High power output
    (selectable from 20 W - 250 W)
  • SNMP Diagnostics and alarms
  • Full VHF Band coverage
    (138-174 MHz)
  • DSP precision modulation
  • Integrated isolator
  • Sniffer port for in-rack receiver
  • Remote firmware upgrade capability
  • Software selectable frequency offset
  • Adjustable absolute delay correction
  • Front panel diagnostics
  • Hardware alarm outputs
  • High frequency stability
  • External reference option
  • FCC and ACMA approved
  • CE compliant version in development
sti22 Boulder Road Malaga 6090 Western Australia
Telephone:  +61 8 9209 0900
Facsimile:  +61 8 9248 2833

Leavitt Communications

its stil here

It’s still here — the tried and true Motorola Alphamate 250. Now owned, supported, and available from Leavitt Communications. Call us for new or reconditioned units, parts, manuals, and repairs.

We also offer refurbished Alphamate 250s, Alphamate IIs, the original Alphamate and new and refurbished pagers, pager repairs, pager parts and accessories. We are FULL SERVICE in Paging!

E-mail Phil Leavitt ( ) for pricing and delivery information or for a list of other available paging and two-way related equipment.

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Phil Leavitt

leavitt logo

7508 N. Red Ledge Drive
Paradise Valley, AZ 85253

Hark Technologies

hark logo

Wireless Communication Solutions

USB Paging Encoder

paging encoder

  • Single channel up to eight zones
  • Connects to Linux computer via USB
  • Programmable timeouts and batch sizes
  • Supports 2-tone, 5/6-tone, POCSAG 512/1200/2400, GOLAY
  • Supports Tone Only, Voice, Numeric, and Alphanumeric
  • PURC or direct connect
  • Pictured version mounts in 5.25" drive bay
  • Other mounting options available
  • Available as a daughter board for our embedded Internet Paging Terminal (IPT)

Paging Data Receiver (PDR)


  • Frequency agile—only one receiver to stock
  • USB or RS-232 interface
  • Two contact closures
  • End-user programmable w/o requiring special hardware
  • 16 capcodes
  • Eight contact closure version also available
  • Product customization available

Other products

Please see our web site for other products including Internet Messaging Gateways, Unified Messaging Servers, test equipment, and Paging Terminals.

Hark Technologies
717 Old Trolley Rd Ste 6 #163
Summerville, SC 29485
Tel: 843-821-6888
Fax: 843-821-6894
E-mail: left arrow CLICK
Web: left arrow CLICK

Hark Technologies

Preferred Wireless

preferred logo

Terminals & Controllers:
1ASC1500 Complete, w/Spares  
3CNET Platinum Controllers 
2GL3100 RF Director 
1GL3000 ES — 2 Chassis
1GL3000L Complete w/Spares
40SkyData 8466 B Receivers
1Unipage—Many Unipage Cards & Chassis
16Zetron M66 Transmitter Controllers  
Link Transmitters:
4Glenayre QT4201 25W Midband Link TX
1Glenayre QT6994, 150W, 900 MHz Link TX
3Motorola 10W, 900 MHz Link TX (C35JZB6106)
2Eagle 900 MHz Link Transmitters, 60 & 80W
2Motorola Q2630A, 30W, UHF Link TX
VHF Paging Transmitters
19 Motorola Nucleus 125W CNET
6Motorola Nucleus 350W CNET
12Motorola Nucleus 350W Advanced Control
1Glenayre QT7505
1Glenayre QT8505
UHF Paging Transmitters:
16Glenayre UHF GLT5340, 125W, DSP Exciter
900 MHz Paging Transmitters:
2Glenayre GLT8200, 25W (NEW)
15Glenayre GLT-8500 250W
3Glenayre GLT 8600, 500W


Too Much To List • Call or E-Mail

Rick McMichael
Preferred Wireless, Inc.
888-429-4171 left arrow

Preferred Wireless


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They say, “a squeaking wheel gets the grease.”

Adobe has updated their Creative Cloud (Internet authoring) applications so I needed to replace one of my computers with a Mac Mini in order to run the new programs. If you would like to help sponsor this purchase, please click on the Donate button below.

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Critical Alert

spacer cas logo

Critical Alert Systems, Inc.

Formed in 2010, CAS brought together the resources and capabilities of two leading critical messaging solutions providers, UCOM™ and Teletouch™ Paging, along with lntego Systems™, a pioneer in next-generation nurse call systems. The result was an organization that represented more than 40 years of combined experience serving hospitals and healthcare providers.

CAS was created to be a single-source provider for hospitals and healthcare facilities in need of advanced nurse call and communications technologies.

Unlike our competitors, our product development process embraced the power of software from its inception. This enables us to design hardware-agnostic solutions focused on built-in integration, flexibility and advanced performance.


Nurse Call Solutions

Innovation in Nurse Call

Innovative, software-based nurse call solutions for acute and long-term care organizations.


Paging Solutions

The Most Reliable Paging Network

To this day, for critical messaging, nothing beats paging. It’s simply the best way to deliver a critical message.



Copyright 2015 - Critical Alert Systems, Inc.

BloostonLaw Newsletter

Selected portions of the BloostonLaw Telecom Update, and/or the BloostonLaw Private Users Update — newsletters from the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP — are reproduced in this section with the firm’s permission.

BloostonLaw Telecom UpdateVol. 18, No. 31July 29, 2015

The BloostonLaw Telecom Update newsletter will be on our traditional August recess, in light of the usual slowdown in the news cycle at this time of year. We will resume publication on September 3. Meanwhile, we will keep clients apprised of significant developments via memos and special supplements.

Law Offices
2120 L Street, NW
Washington, DC 20037


1914 – 1999

(202) 659-0830
Facsimile: (202) 828-5568




August 5, 2015

Clients Should Start Planning for 600 MHz Auction Now, in Light of Bidding Rule Changes

FCC Rethinks What it Means for DEs to Have the Opportunity to Participate in Competitive Bidding and in the Provision of Spectrum Based Services

We are providing you with this memorandum as a summary and overview of the FCC’s long-awaited DE and Competitive Bidding Report and Order, in which the Commission adopted major revisions to its small business and auction rules for the first time in almost a decade. The new rules are important because they determine what companies are entitled to receive bidding credits in the upcoming Broadcast Incentive Auction, tentatively scheduled for a March 29, 2016 start date, as well as the types of business arrangements that winning bidders will be allowed to pursue with their Designated Entity (or “DE”) spectrum. The Commission has also adopted a number of measures designed to curb abuse of the DE program by companies that are not themselves eligible for DE credits, and to protect the integrity of the auction process.

Significantly for our law firm’s clients, the DE and Competitive Bidding Report and Order adopts an entirely new type of bidding credit that will be available to rural service providers and rural bidding consortia, without regard to their gross revenues or small business status. The rural service provider bidding credit provides a 15% discount to entities that provide commercial communications services to a customer base of fewer than 250,000 combined wireless, wireline, broadband, and cable subscribers and serve primarily rural areas. The Commission adopted a BloostonLaw suggestion to make it easier for rural carriers to join forces in bidding without losing the new rural bid credit (discussed in greater detail below), so this should make it easier for groups of rural service providers to form partnerships and/or bidding consortia that qualify for bidding credits and to use their combined resources to bid for the larger Partial Economic Area (or “PEA”) licenses.

In addition to establishing a new bidding credit for eligible rural service providers, the DE and Competitive Bidding Report and Order modified the Commission’s eligibility requirements for small business benefits; it raised the gross revenues thresholds used to determine small business eligibility; it adopted caps on the overall amount of bidding credits available for eligible entities in any one auction; it strengthened and targeted its gross revenue attribution rules to prevent the unjust enrichment of ineligible entities; it adopted rules prohibiting joint bidding arrangements with limited exceptions; and it adopted rules prohibiting the same individual or entity( as well as entities that have controlling interests in common) from becoming qualified to bid on the basis of more than one short form application, with a limited exception for certain rural wireless partnerships and individual members of such partnerships.

We provide a detailed description of the new DE and competitive bidding rules below. With final auction procedures for the Broadcast Incentive Auction expected to be adopted in the FCC’s August Open Meeting, clients that may be interested in bidding for 600 MHz licenses should begin their strategic planning and discussions with potential partners immediately , if they haven’t done so already. A March 2016 start date for the Incentive Auction means that short-form applications will likely be due this October or November . We are continuing to review the fine print of the FCC’s DE and Competitive Bidding Report and Order and we will let you know if we learn anything different.

FCC Adopts Rural Service Provider Bidding Credit

As noted above, the FCC took a significant step to facilitate rural telephone company participation in future auctions, including the Incentive Auction, by adopting its first ever “rural service provider” bidding credit. The credit will provide a 15% discount – equal in size to the small business bidding credit – to rural telcos and other service providers that provide commercial service to a customer base of fewer than 250,000 combined wireless, wireline, broadband and cable subscribers or fewer and that serve primarily rural areas. In calculating its subscribers, a rural provider need only count each customer once if they receive more than one service. In other words, a subscriber that receives wireline telephone service bundled with broadband service would only be counted as a single subscriber.

While the credit is not as large as we and other rural advocates had sought, and it is not cumulative with the small business credit ( i.e., an applicant would need to choose between either the rural credit or a small business credit), it will be available to eligible bidders even if the applicant entity has attributable gross revenues that exceed the small business threshold. By establishing the eligibility threshold for a rural service provider credit at fewer than 250,000 subscribers, rather than 100,000 access lines or less, the Commission’s rules allow rural service providers to expand their coverage areas, grow their subscriber base and continue to be eligible for bidding credits in future auctions. We note that the rural service provider bidding credit is available not only to RLECs or entities with ETC status, but to a broader class of entities that are in the business of providing commercial communications services in predominantly rural areas, defined as counties with a population density of 100 or fewer persons per square mile. This may create the potential for new competitors that are eligible to bid for rural licenses using the new rural credit. At the same time, it may also create the potential for new rural bidding partners or consortium members .

To determine whether an applicant has fewer than 250,000 subscribers, the Commission’s rules follow an approach similar to how it attributes gross revenues in the small business biding credit context, and it will count the combined subscribers of the applicant, its controlling interests, its affiliates, and the affiliates of its controlling interests. Thus, a rural telco affiliate of TDS should not be eligible for the rural service provider credit because it would be required to count the aggregate total of its own subscribers, those of all the other TDS affiliates, plus the subscribers of US Cellular and US Cellular-controlled affiliates. The 250,000 subscriber limit also provides flexibility because it allows groups of rural service providers to join forces and create new entities for the auction and for ongoing operations ( e.g., corporations, partnerships or LLCs) that would retain eligibility for the 15% credit, so long as all of the controlling members are individually eligible for the credit, and the combined subscriber counts of all controlling members falls below 250,000. To the extent that a company’s subscribers would push an applicant’s combined subscriber count above the maximum, we can help you to insulate the company from participation in control and/or management of the applicant, and if this insulation is done correctly under FCC rules, its customers won’t be counted toward the total for the applicant.

Rural bid credit applicants will be required to certify in their short-form application that they meet the bid credit eligibility criteria, but a more detailed eligibility showing will likely be required at the long-form stage if they are a successful bidder (or in response to a protest or FCC inquiry). Therefore, applicants should prepare a detailed calculation of their total customers ahead of the short form deadline, before certifying compliance in the application.

Another mechanism that eligible rural telco bidders may use to combine resources and still retain eligibility for the rural service provider credit is by creating a rural service provider bidding consortium . Like the treatment of revenues in a small business consortium, the Commission will not aggregate the customers of each individual member of the consortium, but it will instead evaluate each individual consortium member’s eligibility for the bidding credit. If the consortium is fortunate enough to win a license or licenses at auction, individual members of the consortium or new legal entities comprising two more individual consortium members may file separate long form applications to divide up the license(s). Consortium members may also choose to partition PEA licenses to individual members or to new legal entities made up of multiple consortium members.

Due to the complexity of the Incentive Auction, and larger PEA license sizes, we expect our clients will want to strongly consider the possibility of forming bidding consortia among rural service providers in the same state or bidding region so they can pool resources, share auction-related expenses, and have the flexibility to spread their bidding activity among multiple PEAs so prices do not escalate as quickly as they might when an applicant is only eligible to bid in one market. Individual companies or partnerships made up of consortium members would then file separate long-form applications to divide the PEA licenses into smaller areas that correspond to their desired service territories. To the extent individual consortium members each have attributable gross revenues of $20 million or less, the consortium may decide it is preferable to seek eligibility as a “very small business” consortium so it have the benefit of a full 25% bidding credit.

With respect to the rural service provider bidding credit, last minute lobbying by the Blooston Rural Carriers and other rural advocates convinced the Commission’s staff that it should adopt an exception to the subscriber attribution rules for existing rural partnerships. Specifically, for rural partnerships providing service as of July 16, 2015, the Commission will determine eligibility for the 15% rural service provider bidding credit by evaluating whether the individual members of the rural wireless partnership each have fewer than 250,000 subscribers; and for those types of rural partnerships, the subscribers will not be aggregated. This exception should permit a limited number of eligible rural service providers (particularly those in a cellular partnership made up of rural service providers) to receive the benefit of a bidding credit without having to interrupt their existing business relationships or the provision of service to consumers. Cellular partnerships that include a nationwide or regional carrier are still required to count the customers of their larger partners, and thus won’t be eligible for the exemption. However, the FCC indicates that RLEC members of a cellular partnership will be able to bid individually or form a separate partnership or consortium that does not include the nationwide or regional carrier, and the nationwide or regional carrier’s customers would not count toward the 250,000 subscriber limit to receive the 15% rural service provider bidding credit.

The Commission’s unjust enrichment rules will apply to licensees that take advantage of the new rural service provider bidding credit much in the same way as the apply to small business licensees. Thus, a licensee that seeks to transfer or assign a license acquired with a rural service provider bidding credit to an entity that is likewise eligible for the credit will not be required to make an unjust enrichment payment. However, if the licensee assigns or transfers a license acquired with a rural service provider bidding credit to an entity that is not eligible for such a credit, within the initial five years of its license term, an unjust enrichment payment will be required. It is unclear whether any unjust enrichment payment would be required if an entity that acquired licenses with a 15% rural service provider bidding credit sought to transfer or assign its license(s) to an entity that was eligible for a 15% small business bidding credit, or vice versa. However, the language used in the amended unjust enrichment rule creates a payment obligation where “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,” so this would seem to suggest that the Commission’s focus is on the relative size of the bidding credit that a DE is eligible to receive, rather than particular type of DE status.

Updated Small Business Eligibility Thresholds

To better reflect the capital-intensive nature of today’s wireless industry, the FCC has updated its small business eligibility requirements as it proposed in its NPRM. The three tiers of gross revenue thresholds defining eligibility for each small business bidding credit were raised to the following:

  • Businesses with average annual gross revenues for the preceding three years not exceeding $4 million would be eligible for a 35 percent “Entrepreneur” bidding credit [but this credit is rarely available and will not be in the 600 MHz auction];
  • Businesses with average annual gross revenues for the preceding three years not exceeding $20 million would be eligible for a 25 percent “Very Small Business” 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 “Small Business” bidding credit.

The increase in small business revenue thresholds, roughly corresponding to the 36.4% increase in the GDP price index from 1997 to 2013, means that more of our clients should be in a position to qualify for a Small Business or Very Small Business bidding credit. As noted above, the very small business credit would provide eligible bidders or consortia an additional 10% discount on their gross bids when compared to the small business bid credit or the rural provider credit. To the extent that our law firm’s clients are in a position to take advantage of Very Small Business status, either by creating an auction applicant whose controlling members and affiliates have average gross revenues for the preceding three years not exceeding $20 million or by forming a bidding consortium consisting of companies that are each eligible as a Very Small Business, it may be preferable to opt for the 25% bidding credit to save on upfront license costs. Since the Commission has retained its existing controlling interest and affiliation rules as part of its new two-pronged standard for evaluating small business eligibility (discussed below), it appears that our clients can still utilize limited partnership or insulated limited liability company business structures to maximize bid credit eligibility. However, because every company’s situation is unique, and the FCC’s rules are complex, we recommend that our clients schedule a call with us promptly if you may participate in the auction, to discuss strategies for auction participation and go over restrictions and benefits related to your proposed structure.

Repeal of the AMR Rule / Adoption of Two-Pronged Test for DE Eligibility

Another significant rule change for DEs, and one that will give small businesses and rural carriers greater flexibility to enter into lease and other spectrum use arrangements as they see fit, is the elimination of the attributable material relationship rule, or “AMR rule.” The FCC created this rule in 2006, just prior to the AWS-1 auction, as a way to prevent DEs from acquiring licenses at a discount and then turning around and leasing their spectrum capacity to large carriers. Under the prior rule, a DE would be attributed with the gross revenues of any entity to whom they lease more than 25% of their spectrum capacity in any market. Lease more that 25% of the capacity of even just one of your DE licenses to another carrier, and the attribution of the lessee’s gross revenues could cause the lessor to lose its small business status for all of its licenses. Thus, a practical upshot of the AMR rule was the requirement that all DEs serve as facilities-based carriers.

From the standpoint of preventing unjust enrichment, the AMR rule certainly made sense. However, the bright-line attribution rule also prevented DEs from entering into beneficial business arrangements that didn’t raise any unjust enrichment concerns, such as leasing spectrum to another DE. It further prevented DEs from being able to take advantage of smaller business opportunities – such as the lease of spectrum capacity from just a single license – without potentially jeopardizing the DE lessor’s eligibility for bid credits associated with all of its licenses. Advocates for minority business interests argued that the wireless marketplace had gone through fundamental changes since the DE program was established and it was no longer realistic to think that small businesses could compete as a startup wireless service provider against the likes of AT&T and Verizon. The Commission agreed, and it repealed the AMR rule. In response to the objections of the Blooston Rural Carriers that elimination of the AMR rule would facilitate more bid credit abuse by larger carriers, the FCC adopted multiple measures to prevent a repeat of past issues. First, the Commission created a two-pronged test to determine eligibility for the award and retention of small business benefits. Under the new test, it will apply existing rules requiring attribution of the controlling interests in, and the 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. This test retains the foundation of the current controlling interest standard, but it applies these requirements in a more precise manner, based upon a careful review of all of a DE’s relevant relationships and agreements ( i.e . using a totality-of-the-circumstances approach) to ensure that small businesses make independent decisions about their business operations.

To eliminate the possibility of “wink and a nod” lease arrangements involving a DE investor, the Commission also adopted a new attribution requirement under which the gross revenues of an investor having a 10% interest or greater in a DE applicant or license become attributable, on a license-by-license basis, if the investor uses or has an agreement to use more than 25% of the DE’s spectrum capacity. Thus, the new rule is designed to prevent arrangements where a “passive” investor in a DE seeks to gain access to the DE’s spectrum by lease. The Commission has also said it would closely scrutinize agreements and arrangements in which a disclosable interest holder, lender, spectrum lessee, or other interest holder in a DE plays a role in the day-to-day operations and business of a DE that is “beyond the standard and typical role of a passive investor.” This restriction appears to be aimed at curbing arrangements where a large entity invests in a DE “shill” that holds the license and conducts operations on its own, but which is largely dependent on the non-DE for its financing and operating arrangements.

An important exception to this lease attribution rule that the Commission adopted at the behest of the Blooston Rural Carriers will allow eligible rural service providers to enter into spectrum usage arrangements with a disclosable interest holder without having to attribute the disclosable interest holder’s subscribers, so long as (a) the disclosable interest holder is independently eligible for a rural service provider credit and (b) the use agreement is otherwise permissible under existing FCC rules. This exception should help rural service providers to work in concert to provide service to rural areas.

Other Reforms to Ensure Large Companies Cannot “Game the System”

After it became apparent that two AWS-3 auction DE applicants in which DISH Network held an 85% beneficial interest were seeking more than $3 billion in small business bidding credits and that the DISH DEs had pursued a tightly-coordinated bidding strategy, the Commission came under significant pressure from Congress and non DEs like Verizon and AT&T to close loopholes and adopt new measures to prevent abuse of the DE program. The sheer scale of the DISH gambit led the Commission to adopt, for the first time, caps on the total amount of credits that any one bidder could claim in an auction, as well as restrictions on the ability of investors to hold interests in multiple applicants. These reforms, which were supported in comments and ex parte filings by the Blooston Rural Carriers, are discussed below.

The FCC indicates that a cap of $25 million will be typical for the small business bid credit. However, for purposes of the Incentive Auction, the Commission has adopted a $150 million cap on small business bidding credits. This means that a small business that is eligible for a 15% bidding credit will be able bid up to $1 billion before it “maxes out” on the credits it can receive, and that well-funded startup DE bidders should be able to compete when bidding for licenses in some of the larger PEAs. Nothing will prevent a DE from bidding significantly more than $1 billion if it has the backing to do so, but its ability to leverage bidding credits and get a taxpayer-provided “boost” will be limited to $150 million. A very small business that is eligible for a 25% credit will “max out” on bidding credits once it has $600 million in gross bids. While these amounts will sound daunting to rural bidders, the FCC adopted an additional protection to help level the playing field in smaller markets.

In particular, to create parity in the Incentive Auction among small businesses and eligible rural service providers competing against each other in smaller markets, the Commission has adopted a $10 million cap on the overall amount of bidding credits that any winning DE bidder may receive in connection with winning licenses in markets with a population of 500,000 or less ( i.e., PEAs 118 through 416). Thus, well-funded startup bidders should not have any bid credit “edge” over rural service providers because their ability to use small business bidding credits in smaller markets will be limited to the same $10 million as rural carriers. To the extent that rural bidders or consortia anticipate that they may need to place bids in excess of $67 million to acquire licenses in their target PEAs, or if rural carriers may seek to bid for any markets having a population in excess of 500,000, it may be more advantageous for these applicants to seek eligibility as a small business or very small business to leverage maximum bidding credits.

The Commission has also adopted a cap of $10 million on the amount of the “rural service provider” credit that can be used in the Incentive Auction. A $10 million cap means that an individual rural service provider applicant or consortium may have gross bids approaching $67 million before they “max out” on the 15% rural credit.

In adopting the caps, the FCC observed: “As Blooston Rural notes, a cap ‘would serve as a substantial disincentive to truly large entities that may be tempted to configure an applicant that is designed to qualify for a small business status’.” For other future auctions, the cap will be determined on an auction-by-auction basis with a $25 million floor for eligible small businesses and a $10 million floor for eligible rural service providers.

We believe that elimination of the AMR rule has increased the chance of mischief by larger players in future auctions; however, the adoption of both an overall cap on bid credits and a separate cap on credits that can be used for smaller markets should go a long way to discourage some of the arrangement in prior auctions that allowed larger bidders to garner the benefit of most of the bid credits awarded.

Five-Year Unjust Enrichment Period Retained

The Commission declined to make any changes or adjustments to the unjust enrichment period and repayment schedule. It is retaining its current five-year unjust enrichment period, with the amount of unjust enrichment decreasing year-to-year (i.e., 100% repayment if a license is transferred or assigned to a non-DE during the first two years of the license term; 75% repayment if the transfer or assignment is in year 3; 50% repayment if the transfer of assignment is in year 4; and 25% repayment if the transfer or assignment is in year 5). For transfers or assignments after year 5, there is no unjust enrichment payment required.

A similar five-year schedule will apply to recipients of the rural service provider bidding credit that seek to assign a license or licenses during the initial five years to an entity that is not also eligible for the rural credit. If the proposed transaction is after year 5, or if the proposed assignee/transferee is itself eligible for the rural service provider bidding credit, no unjust enrichment payment will be required.

Elimination of Joint Bidding Agreements and Other Reforms

In response to changes in the wireless marketplace, and having learned its lesson all too well from the DISH DE joint bidding controversy, the FCC has decided to prohibit certain arrangements that communicate bids or bidding strategies, including joint bidding arrangements that allowed exchanges of information regarding price, specific licenses on which to bid, and/or the post-auction market structure. The new rules prohibit joint bidding arrangements between applicants (including any party that controls or is controlled by, such applicants), regardless of whether the applicants are nationwide or non-nationwide providers. The rules also prohibit joint bidding arrangements involving two or more nationwide providers including providers that are not themselves an applicant in the auction (a decision that appears to be aimed at preventing an agreement between T-Mobile and Sprint, even if one of them should decide not to bid), as well as joint bidding arrangements involving nationwide and non-nationwide providers, where any one of the parties is an applicant for auction. In other words, the prohibition on joint bidding would appear to prohibit non-nationwide carriers that are not themselves participants in an auction from entering into bidding agreements with any of the four nationwide carriers.

Notwithstanding its tentative conclusion in the NPRM to allow joint bidding arrangements between non-nationwide providers, an arrangement that some of our law firm’s clients have used in previous auctions, the Commission has concluded that the risk of undesirable strategic bidding is too great and that it should also prohibit joint bidding arrangements between non-nationwide providers as separate applicants in an auction . We think this prohibition is overly broad, as there are many pro-competitive benefits from such agreements – such as increased auction participation by companies with some overlapping ownership – and there is no record of significant inappropriate strategic bidding by non-nationwide carriers in the past.

While non-nationwide carriers will be prohibited from entering into joint bidding arrangements to the extent that they are themselves applicants, an important distinction is that the Commission’s revised DE rules will permit joint bidding arrangements between non-nationwide providers where only one of the parties files an auction application and the other(s) are non-applicants . This should allow groups of rural telcos the flexibility to have a very small business eligible company among them to bid on behalf of the group, provided that the non-applicants do not hold interests in any other bidding entity or consortia. It will be important, however, to make sure that these and other auction arrangements satisfy anti-trust law requirements.

Another significant exception to the Commission’s broad prohibition against joint bidding arrangements will allow DEs to use joint ventures and consortia to bid as single applicants. We note that (1) DEs will be allowed to participate in only one consortium in an auction, which shall be the exclusive bidding vehicle for its members in that auction, and (2) non-nationwide providers may participate in an auction through only one joint venture, which also shall be the exclusive bidding vehicle for its members in that auction.

The joint bidding prohibition does not encompass agreements that are solely operational in nature, that is, agreements that address operational aspects of providing a mobile service, such as agreements for roaming, spectrum leasing and other spectrum use arrangements, or device acquisition, as well as agreements for assignment or transfer of licenses, provided that any such agreement does not both relate to the licenses at auction and address or communicate, directly or indirectly, bidding at auction (including specific prices to be bid) or bidding strategies (including the specific licenses on which to bid or not to bid) or post-auction market structure. It will be important to vett such arrangements for compliance if you are participating in the auction when pursuing them.

Exception to Prohibition on Multiple Applications for “Historic Wireline Cellular Partnerships”

As noted above, fallout from the DISH joint bidding controversy has led the Commission and is staff to be extremely cautious when it comes to adopting new DE policies and rules. As a result, the rules are full of bright-line prohibitions that are easy for the FCC’s staff to enforce, but which fail to appreciate the many different (and often complex) business arrangements that bona fide rural service providers are often a part of. Fortunately, however, successful advocacy by our law firm and others helped to convince the Commission of the need to adopt an exception to the “single applicant” rule in recognition of the fact that many rural telcos old longstanding interests in wireline cellular partnerships, and that will permit each qualifying rural wireless partnership and its individual members to participate separately in an auction. For purposes of this rule, a qualifying rural wireless partnership is one that was established as a result of the cellular B block settlement process established by the Commission in CC Docket No. 85-388, no nationwide provider is a managing partner or a managing member of the management committee; and partnership interests have not materially changed as of the effective date of the DE and Competitive Bidding Report and Order. A partnership member would qualify for this exception if it is a partner or successor-in-interest to a partner in a qualifying partnership, does not have day-to-day management responsibilities in the partnership and holds 25 percent or less ownership interest; and certifies that it will insulate itself from the bidding process of the cellular partnership and any other members of the partnership (other than expressing prior to the deadline for resubmission of short-form applications the maximum it is willing to spend as a partner). Such individual qualifying members of a rural wireless partnership may bid separately at auction, in addition to the rural wireless partnership itself.

Modifications to DE Annual Reporting

The Blooston Rural Carriers sought elimination of the DE annual reporting requirement as overly burdensome and redundant, because licensees with multiple auction licenses with different grant dates were obligated to file annual reports numerous times per year, and the reports provided information that the FCC received from other sources. While the Commission proposed in the NPRM to eliminate the report as we requested, it has ultimately decided to retain annual reporting as part of the system of checks and balances on waste, fraud, and abuse in the DE program. Like small business DEs, eligible rural service provider DEs will also be required to file annual reports. However, in response to comments from BloostonLaw, and a citing a petition for reconsideration of the original DE reporting requirement that our law firm filed in 2006, the Commission has concluded that it should modify the DE annual reporting requirement to reduce administrative and related burdens. Under the new rule, all DE annual reports will be due by September 30 of each calendar year. This annual report will reflect the status of each individual license subject to unjust enrichment requirements that is held by a particular licensee as of August 31 of that same calendar year including all proposed or executed agreements or arrangements affecting DE benefit eligibility. This September 30 deadline will apply regardless of the grant date of an individual license.

Please contact us with any questions or if you wish to discuss your auction participation under the new rules.

This newsletter is not intended to provide legal advice. Those interested in more information should contact the firm. For additional information, please contact Hal Mordkofsky at 202-828-5520 or .

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