Attributable Material Relationship Rule Undermines Access to Capital for Designated Entities

Attributable Material Relationship Rule Undermines Access to Capital for Designated Entities

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Profit attribution is but one hurdle MWBEs (minority and women-owned businesses) face in trying to become spectrum licensees, according to a recent filing by the Minority Media and Telecommunications Council.

The nation’s oldest civil right organization focused on technology and telecommunications policy impacting women and people of color issued comments in response to three concurrent Federal Communications Commission proceedings pertaining to Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission’s Competitive Bidding Rules and Procedures (WT Docket No. 05-211); Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions (GN Docket No. 12-268); and 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).  

MMTC asserts that the Attributable Material Relationship rule undermines the ability of designated entities (DEs) to “create flexible business plans and gain access to capital.”

According to Bennet & Bennet PLLC,

Under Federal Communications Commission rules, an entity is deemed to have an attributable relationship with another party if it leases or resells more than 25% of its spectrum capacity to that party. This attributable material relationship rule can prevent designated entities (small businesses, rural telephone companies, and businesses owned by members of minority groups and women, also known as “DEs”) from leasing, wholesaling or reselling more than 25% of their spectrum capacity to any one entity without potentially losing their designated entity eligibility.

 

In addition to hampering the ability of qualified DEs to secure capital and grow their businesses, MMTC also says that the AMR “restricts new entrant DEs that do not have a ready-made subscriber base (i.e., steady incoming revenue) from securing financial support from an anchor tenant through a lease, resale or wholesale arrangement.”

Twenty years ago when Congress first authorized the FCC to allocate scare spectrum resources, it mandated that the Commission promote the participation of DEs – small, minority and women-owned businesses, and rural telephone carriers.  Fifty-six auctions later, the majority of spectrum allocated under this premise has gone to incumbent rural telephone companies, and very little has been done to increase the participation of minorities and women as spectrum licensees or facilities-based spectrum owners.

With major spectrum incentive auctions looming on the horizon, waiver of the AMR rule could go a long way toward increasing DE participation and finally fulfilling some of Congress’ intended purposes, albeit action delayed.

Considering the importance that spectrum plays in both the lives of consumers and prospective new entrants looking to expand services and economic development opportunities, the FCC has a unique chance to ensure that spectrum owners start to better reflect the people who, studies show, are among the most avid users of mobile technologies and wireless services.

 

 

 

 

 

 

 

 

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