Competitive Bidding Rules for Auction of AWS-3 Licenses

<RULE> FEDERAL COMMUNICATIONS COMMISSION <CFR>47 CFR Parts 1 and 27</CFR> <DEPDOC>[GN Docket Nos. 13-185, 25-70, 25-71; FCC 25-39; FR ID 306799]</DEPDOC> <SUBJECT>Competitive Bidding Rules for Auction of AWS-3 Licenses</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Federal Communications Commission. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> In this document, the Federal Communications Commission (Commission or FCC) adopts final rules that update the eligibility criteria for designated entity bidding credits in auctions for licenses in the 1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz (AWS-3) bands. The Commission also updates its general competitive bidding rules for categorizing an entity as a small business concern. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Effective September 3, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Erik Salovaara, Office of Economics and Analytics, Auctions Division, <E T="03">Erik.Salovaara@fcc.gov</E> or 202-418-0660, or Lyndsey Grunewald, Office of Economics and Analytics, Auctions Division, <E T="03">Lyndsey.Grunewald@fcc.gov</E> or (202) 418-0660. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> This is a summary of the Commission's Report and Order and Second Report and Order in GN Docket Nos. 25-70, 25-71, and 13-185, adopted on July 24, 2025, and released on July 25, 2025 ( <E T="03">AWS-3 Report and Order</E> ). The full text of this document is available at <E T="03">https://www.fcc.gov/document/fcc-updates-bidding-rules-aws-3-inventory-auction-0.</E> <E T="03">People with Disabilities.</E> To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to <E T="03">fcc504@fcc.gov</E> or call the Consumer and Governmental Affairs Bureau at 202-418-0530 (voice). <HD SOURCE="HD1">I. Introduction</HD> 1. Advancing U.S. leadership in wireless is good for the U.S. economy, for U.S. national security, and for ensuring that every American has access to affordable, high-speed service. That is why the Commission is focused on freeing up more spectrum for consumer use. 2. With the <E T="03">AWS-3 Report and Order,</E> the Commission moves to satisfy a bipartisan congressional mandate to auction licenses for AWS-3 spectrum in the Commission's inventory. The proceeds from this auction will fund the Commission's ongoing efforts to protect American networks from untrustworthy and insecure foreign equipment. 3. The Commission has held spectrum auctions for roughly 30 years. Auctions assign spectrum licenses to their highest and best use by allowing bidders to reveal their preferences and discover a market-clearing price. Commission auctions have proven a resounding success largely because the Commission has updated its rules to account for the lessons of the past. For example, in 2015, the Commission reformed its rules to protect the integrity of their auctions from fraud, collusion, and manipulation while promoting participation by <E T="03">bona fide</E> small businesses and rural providers. 4. The <E T="03">AWS-3 Report and Order</E> advances those time-tested objectives. First, the Commission adopts designated entity eligibility requirements for future AWS-3 spectrum license auctions that are in harmony with the requirements used in every 5G auction held since 2015. Updating the AWS-3 rules to match settled practice will give small businesses and rural service providers the predictability they need to participate meaningfully at auction. Next, the <E T="03">AWS-3 Report and Order</E> updates the Commission's general part 1 competitive bidding rules for categorizing an entity as a “small business concern,” pursuant to the Small Business Runway Extension Act of 2018 (SBREA). In adopting these rules, the Commission rejects arguments from the affiliates of Auction 97 defaulters (whose unwillingness to pay the full amount of their gross winning bids led to significant AWS-3 spectrum sitting fallow in the Commission's inventory for nearly a decade) that the Commission conduct the next auction of AWS-3 licenses under the same rules that enabled the very bidding behavior that led to their defaults in the first place. Finally, the Commission declines to adopt a Tribal priority licensing window in advance of the next AWS-3 auction. 5. Shortly after the Commission adopted the Notice of Proposed Rulemaking in this proceeding ( <E T="03">NPRM</E> ), 90 FR 11931 (March 13, 2025), the Office of Economics and Analytics (OEA), jointly with the Wireless Telecommunications Bureau (WTB), sought comment on proposed procedures for an auction of AWS-3 licenses (Auction 113). The <E T="03">AWS-3 Report and Order</E> allows OEA and WTB to establish final procedures for Auction 113 in accordance with the adopted rules and to move forward with that auction. <HD SOURCE="HD1">II. Background</HD> 6. In 2014, the Commission adopted service and bidding rules for the auction of AWS-3 spectrum licenses (Auction 97) in the 1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz frequencies. Bidding in Auction 97 began in November 2014 and ended in January 2015. Auction 97 raised a total of $41,329,673,325 in net bids, with 31 bidders placing winning bids for a total of 1,611 licenses. Following that auction, certain winning bidders selectively defaulted on winning bids for 197 licenses. In March 2025, the Commission announced that it would conduct a new auction, Auction 113, for the AWS-3 spectrum that remained in the agency's inventory, most of which was available primarily due to Auction 97 defaults. 7. <E T="03">The Commission Provides Notice in 2014 that All AWS-3 Auctions Would Be Subject to Generally Applicable Rule Changes.</E> Prior to Auction 97, the Commission provided clear notice that any and all future auctions of AWS-3 spectrum licenses would be subject to generally applicable changes to the part 1 competitive bidding rules. In particular, the Commission determined that any AWS-3 auction would be conducted in accordance with the general competitive bidding rules set forth in part 1, subpart Q of the Commission's rules except as “otherwise provided in” part 27. 8. The part 1 competitive bidding rules advance the agency's statutory directive by ensuring that designated entities (DEs), which are small businesses and rural telephone companies, have a meaningful opportunity to access wireless spectrum in FCC auctions. DEs are eligible for auction bidding credits, represented as percentage discounts from their winning bids. Eligibility requirements for DEs are set on a service-by-service basis, the capital requirements and other characteristics of each particular service establishing the appropriate threshold. 9. The Commission adopted service-specific bidding credits and DE eligibility requirements for the AWS-3 bands prior to Auction 97. The Commission provided a 15% small business bidding credit to entities with average annual gross revenues not exceeding $40 million and a 25% very small business bidding credit to entities with average annual gross revenues not exceeding $15 million. The average gross revenues would be calculated from the preceding three years. These thresholds were consistent with the standardized schedule of DE bidding credits in the Commission's rules at the time. The relevant definitions and thresholds for particular bidding credits were codified in the part 27 AWS-3 service rules. The DE eligibility requirements were modeled after the small business size standards and associated bidding credits that the Commission adopted for the AWS-1 band, based on the belief that the AWS-3 bands would be employed for purposes similar to those for the AWS-1 band. 10. <E T="03">DISH's DEs Improperly Claim $3.3 Billion in FCC Bidding Credits Intended For “Very Small Businesses.”</E> Two participants in Auction 97, Northstar Wireless, LLC (Northstar) and SNR Wireless License Co. (SNR), made extensive use of bidding credits intended for “very small businesses.” In total, Northstar and SNR improperly claimed $3.3 billion in credits under the Commission's DE rules. They ultimately placed over $13.3 billion in gross winning bids on 702 of the 1611 licenses in Auction 97, or 43.5% of the available licenses. 11. SNR and Northstar were formed immediately before Auction 97 and funded almost exclusively by a large DISH Network Corporation (DISH). During the course of reviewing long-form applications following Auction 97, the Commission denied bidding credit eligibility for both Northstar and SNR. The Commission determined that the companies were under the de facto control of DISH and therefore were ineligible for the $3.3 billion of DE bidding credits for “very small businesses.” 12. Because SNR and Northstar were ineligible for the DE bidding credits they claimed, they were required to pay the full amount of their $13.3 billion bid price for those licenses. DISH and its DEs appealed the Commission's determination. The litigation finally came to a close in 2023 when a federal court of appeals upheld the Commission's determination and the Supreme Court declined to grant certiorari. 13. <E T="03">DISH's DEs Selectively Default on the AWS-3 Licenses They Won.</E> Northstar and SNR selectively defaulted on winning bids for 197 AWS-3 licenses. Pursuant to the Commission's well-established part 1 rules governing defaults on winning bids, Northstar and SNR became liable for the difference between their winning bids in Auction 97 and the amount of winning bids for licenses accessing the same spectrum in subsequent auctions. Also pursuant to those rules, SNR and Northstar became liable for an additional payment equal to 15% of their own bids or the applicable subsequent winning bids, whichever was less. The upcoming ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 86k characters. 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