Council Tree Asks Federal Court to Stay New DE Rules
Council Tree, Bethel Native Corp. and the Minority Media & Telecom Council filed Wed. evening in U.S. Appeals Court, Philadelphia for a stay on new FCC designated entity rules, approved ahead of the advance wireless services (AWS) auction. The groups asked the court to act by June 19, the deadline for the electronic filing of short form applications to bid in the auction, set to start Aug. 9.
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“This case presents issues of vital importance that demand immediate judicial intervention,” the plaintiffs said: “After many months of advance planning by potential bidders expecting to participate in Auction 66 in reliance on FCC rules established far in advance of Auction 66, the FCC took last minute action that dramatically altered the regulatory landscape.”
The move follows through on a threat by Council Tree and the other parties to seek an injunction if the FCC proceeded with DE rules unaltered. Sources at the FCC and in industry thought the DEs might get cold feet, given the fortunes in that lawyers charge for mounting an appeal. The FCC did deal with what many saw as the order’s weakest point -- concern that the new rules would apply to past auctions (CD June 5 p2).
The move by Council Tree and the others will get scant support due to concerns about an auction delay, a source who represents small carriers said: “They're kind of on their own on this. People have gotten to the point where they want the auction to go forward.” The source wasn’t surprised that Council Tree went to court, given the odds against reversing the order, he said: “They have a business plan based on their original proposal to the FCC. It’s really too late for them to turn back. Given what they've spent so far, what’s another $300,000?” But a source who supports the case said that for DEs and investors whose business plans have suffered “this is the only hope they have to get back on track, and any delay of the auction resulting in new rules would be a new lease on life.”
The FCC’s DE rule changes were “entirely unanticipated” by industry, the petitioners said: “The 11th-hour changes adopted… came about in an entirely unanticipated fashion. In June 2005, more than a year before Auction 66, Council Tree attempted to improve the DE program by asking the FCC to adopt limited, targeted rule changes that would make it more difficult for ‘large in-region incumbent wireless service providers’ to extend their already considerable influence through the use of relationships benefitting from DE bidding credits.” Instead, the rules guarantee the auction “will be dominated by the largest of this country’s incumbent wireless telecommunications carriers, to the immediate detriment of small businesses, businesses owned by members of minority groups and women, and rural telephone companies,” the papers said.