FCC Considers Closing Spectrum Auction Discount Loophole

As was widely expected, the FCC has announced that the latest major wireless spectrum auction will begin at the end of June. But before that, the Commission is looking at closing a loophole in its auction rules that gives significant discounts to small businesses -- a loophole that's fully exploited by the big carriers it's supposed to handicap. Basically, small businesses are entitled to discounts of up to 25% on some spectrum licenses, a measure that's intended to level the playing field. But in reality, the big carriers simply affiliate themselves with small companies and use them to obtain the discounts. In last year's auction that raised about $2 billion, almost a quarter of the licenses were won by companies that got the discounts, and the vast majority of those were by four small firms linked to bigger operators. All this cost the government $210 million, but with this summer's AWS auction expected to raise $15 billion, the stakes are significantly higher.

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