$33 Billion Wireless Auction Upheld by Appeals Court

The US Third Circuit Court of Appeals upheld federal government auctions of about $33 billion of wireless spectrum, saying it would be "imprudent and unfair" to undo them even though some rules governing them were invalid.

The ruling allows Verizon, T-Mobile and others to keep billions of dollars of licenses they had won in the auctions, which took place between 2006 and 2008. The auction process had been challenged by Council Tree Communications, Bethel Native Corp and the Minority Media and Telecommunications Council, which contended that Federal Communications Commission rules for the auctions were unfair to smaller service providers. The FCC had offered credits to smaller providers of as much as 35 percent to help them to compete for licenses. However, it also adopted rules to limit the ability of these providers to team up with larger rivals, or sell their credits to those rivals for quick profits. According to the appeals court, companies that qualified for credits comprised 113 of the 205 winning bidders, but won only about 3.2 percent of the licenses' total value. In contrast, in auctions that preceded adoption of the rules, qualifying bidders had won about 70 percent of the licenses by dollar value, the court said. In its 53-page ruling, the Third Circuit struck down two rules designed to limit or dissuade small carriers from selling their spectrum capacity, and upheld a third.