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industry, including Verizon Wireless and T-Mobile. Cingular has also applied, but its application is among those requiring amendment. The bidders also include 166 applicants who claimed status as “Designated Entities.” This status entitles them to a discount of 15 or 25 percent, depending on their size.

The FCC has gone to great lengths to prevent abuse of Designated Entity status, a status that is intended to encourage participation in spectrum auctions by small businesses, businesses owned by members of minority groups and/or women, and rural telephone companies. Late in the rulemaking process leading up to announcement of the auction, the FCC took steps to limit the award of Designated Entity benefits to applicants who had an impermissible or attributable “material relationship” with large wireless providers. These steps included limitations on the right of the Designated Entity to lease out the spectrum it wins in the auction and increasing the time that licenses won in the auction must be held before they can be sold.

Three Designated Entities filed suit in the U.S. Court of Appeals for the Third Circuit, attacking the FCC’s last-minute rules and seeking a stay of the auction. The stay was denied on June 29 on the ground that the petitioners had not shown “irreparable harm.” The petitioners had argued that the FCC’s new rules would effectively bar them from participation in the auction because they would be unable to attract financing. The court noted, however, that 166 other similarly-situated entities seem not to have been hindered. The petitioners do not appear to be among the entities that filed applications to participate in the auction.

Nonetheless, the court noted that the FCC may not have given sufficient notice of the rules it eventually adopted. It left resolution of this question, however, to the panel that will hear the arguments on the merits of the petitioners’ appeal. This raises the possibility that the court could invalidate the FCC’s auction rules after the auction has been concluded, perhaps invalidating the results of the auction.

AT&T PAYS $550,000 TO SETTLE FCC MATTERS By William R. Still, Jr.

Earlier this month, the FCC announced that AT&T had agreed to pay $550,000 to resolve two separate regulatory matters pending before the Commission. According to published reports, the deal allowed for the “‘voluntary payment’ [which] doesn’t constitute a fine or penalty, according to the consent decree” without requiring AT&T to admit that they violated the law. (“Company settles FCC actions on privacy,” Bloomberg News, July 11, 2006).

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