Rival Asks FCC to Sanction Verizon

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Verizon Wireless Inc. should be sanctioned and possibly barred from bidding in an upcoming spectrum auction for a violation of U.S. Federal Communications Commission lobbying rules, another wireless company has alleged.

Verizon has attempted to circumvent rules prohibiting it from lobbying the FCC behind the scenes to change conditions on the upcoming 700MHz auction, while, at the same time, challenging the conditions in court, alleged Frontline Wireless LLC, a likely competing bidder in the auction.

Verizon "wants to have it all," Frontline's lawyers wrote in a late Thursday filing with the FCC. "Verizon's tactic of making up procedures to suit its own needs should be firmly rejected."

Verizon Wireless violated the FCC's rules requiring public disclosure of communications with FCC staff on the January auction, alleged Frontline, a startup with several government and wireless industry veterans on board.

Frontline accused Verizon Wireless of not adequately disclosing the content of its conversation with FCC Chairman Kevin Martin and his staff during a Sept. 17 meeting. Under the FCC's so-called ex parte rules, companies meeting or communicating with the FCC during an ongoing proceeding are required to disclose a description of those communications to other interested parties.

Asked whether the FCC barring Verizon from bidding was an appropriate sanction, a Frontline spokeswoman said it would be consistent with FCC rules. "We put forward a range of sanctions, which are provided for under the FCC's rules," she said.

The FCC could also fine Verizon, bar the company from further filings about the auction or order it to provide detailed notes about its meetings with the FCC, Frontline noted.

A Verizon Wireless spokeswoman declined to comment on the Frontline filing.

The stakes in the 700MHz auction are huge. The auction is expected to raise more than US$10 billion for the U.S. government, with some winning bidders controlling a nationwide swath of spectrum that can be used to deliver long-range wireless broadband service.

The one-page Verizon ex parte letter on the Sept. 17 meeting, filed Sept. 19, provides the names and titles of three Verizon executives who met with Martin and three staff members. The purpose of the meeting was to "discuss Verizon's positions" in the 700MHz proceeding, the report says. "All positions discussed are consistent with those Verizon has placed on the record in the above proceeding," the Verizon letter concludes.

The FCC rule on ex parte communications says that "oral presentations must contain a summary of the substance of the presentation and not merely a listing of the subjects discussed. More than a one or two sentence description of the views and arguments presented is generally required."

Verizon has filed other ex parte letters with more detail. At the request of the FCC, it filed a more detailed ex parte letter about the Sept. 17 meeting on Sept. 25.

Verizon has objected to so-called open-access rules the FCC placed on 22MHz of the 62MHz of spectrum to be auctioned. The open-access rules would require the winning bidder to allow outside devices such as mobile phones from other providers to be used on the network and prohibit the winning bidder from blocking or slowing content from competitors or groups it doesn't agree with.

Frontline, in its Thursday filing with the FCC, said Verizon's Sept. 19 ex parte letter "can only be described as opaque." The Verizon "letter did not bother to even identify the issues discussed," Frontline's lawyers wrote.

Earlier this month, Verizon filed a court challenge to the FCC's open-access rules, and U.S. Court of Appeals for the District of Columbia Circuit rules prohibit a company from filing both a court challenge and a motion to reconsider an FCC decision with the agency.

Frontline argued Verizon is lobbying to get the FCC to change its mind about the open-access rules while it moves forward with a lawsuit in the court of appeals.

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