Designated entity Grain asked the FCC for clarity...

Designated entity Grain asked the FCC for clarity on whether the attributable material relationship rule applies to spectrum deals in the secondary market. Grain was part of a multiparty spectrum deal involving AT&T and Verizon Wireless last year. AT&T agreed to lease three 700 MHz B-block licenses in North Carolina that Verizon Wireless sold to Grain for $189 million. Meanwhile, AT&T sold Grain a single AWS license, with expectations it would be leased by Verizon (CD Jan 13/13 p9). Grain asked the commission to clarify how the rule applies in such secondary market deals. “The attributable material relationship rule, as it is currently drafted, is overly broad and has the potential to deny entities whom Congress would have intended to receive DE benefits from receiving such benefits,” Grain said (http://bit.ly/1oqUWhy). “For example, this rule could potentially disqualify an otherwise qualified DE by virtue of the entity’s mere participation in a leasing transaction with a non-DE that: (1) does not involve licenses acquired through DE benefits and, instead, involves only licenses acquired on the secondary market; and (2) carries no risk of a non-DE unduly influencing the DE’s activities or decision-making.” Applying the rule for such secondary market transactions would be “irrational, and contrary to the intent of Congress and the public interest,” Grain said. “A leasing transaction involving licenses that were acquired without the use of any DE benefits does not pose any danger of unjustly enriching non-DE entities.” A leasing relationship also “does not pose a danger of undue influence unless the leasing transaction involves some sort of future business relationship between the parties -- such as a joint venture, governance relationship, or agreement related to future rights in spectrum capacity -- that would confer undue influence over the DE’s activities or decision-making,” Grain said. Also, “the Commission has expressly recognized the importance of promoting secondary market spectrum transactions and the potential role for such transactions in enabling meaningful participation by minority-owned and small businesses in the wireless sector."