The FCC has long-standing rules prohibiting discussions between spectrum auction applicants during an auction that detract from a fair process. Applicants must immediately self-report such violations.
In a 2019 Notice of Apparent Liability (NAL), the Enforcement Bureau proposed a $75,000 forfeiture penalty against AT&T Services (NYSE: T), the parent company of New Cingular Wireless PCS, LLC, for apparently violating the rules by engaging in prohibited communications with internet firm AMG Technology Investment Group, LLC (AMG) during the Connect America Fund (CAF) Phase II (CAF-II) auction (Auction 903) and for not notifying the Commission of such communications within the allotted time.
AT&T wanted the fine rescinded. After reviewing the record, the agency said this week it stands by the penalty and rejects the carrier’s request to erase the fine.
The Commission conducted the CAF-II auction to award up to $198 million annually for 10 years to service providers that committed to offer voice and broadband services to fixed locations primarily in unserved rural areas. It was the first FCC auction to award ongoing universal service support using a multiple-round, reverse auction format.
As part of its rules governing Auction 903, the Commission prohibited an auction applicant “from cooperating or collaborating with any other applicant with respect to its own, or one another’s, or any other competing applicant’s bids or bidding strategies,” according to the decision.
“The rules further prohibited an auction applicant from communicating with any other applicant in any manner the substance of its own, or one another’s, or any other competing applicant’s bids or bidding strategies, until after the post-auction deadline for winning bidders to submit applications for support,” the agency states. The purpose of a quiet period is to protect the integrity and competitiveness of the auction process.
In the NAL, the Enforcement Bureau found that “during Auction 903, AT&T engaged in prohibited communications with AMG by ‘cooperating with and participating in discussions with AMG while AMG was repeatedly communicating to AT&T information about its bids, bidding strategies and bidding results’ during Auction 903’s Quiet Period.” The NAL further found that AT&T failed to inform the Commission about its communication with AMG within five business days.
AT&T did not deny that it had communicated with AMG during the Auction 903 Quiet Period. But the carrier argued that it did not impermissibly communicate with AMG about AMG’s bids or bidding strategies and the discussions with AMG occurred after bidding in Auction 903 ended, were “post auction,” and could not have affected AMG’s “bids or bidding strategies.” It also asserted that imposing the penalty on a party that “voluntarily reports” potential prohibited communications that “could not and did not affect the auction…” is “unjustified and unjustifiable.”
The Enforcement Bureau didn’t agree and stands by its original decision to fine AT&T. The agency called AT&T’s arguments “irrelevant,” and “without merit.” It declined to cancel or reduce the $75,000 penalty. AT&T must pay within 30 days or the case may be turned over to the Justice Department for collection.
By Leslie Stimson, Inside Towers Washington Bureau Chief
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