Proposed Rule2021-27493
Partitioning, Disaggregation, and Leasing of Spectrum
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 29, 2021
Issuing agencies
Federal Communications Commission
Abstract
In this document, the Federal Communications Commission (Commission or FCC) proposed an Enhanced Competition Incentive Program to encourage licensees to offer opportunities for small carriers, Tribal Nations, and entities committing to serve rural areas to obtain spectrum via lease, partition, or disaggregation. The Further Notice of Proposed Rulemaking seeks comment on the proposed Enhanced Competition Incentive Program, its incentives, and waste, fraud, and abuse protections, as well as additional proposals including alternative construction benchmarks for all wireless radio service licensees and flexibility to reaggregate licenses.
Full Text
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<title>Federal Register, Volume 86 Issue 247 (Wednesday, December 29, 2021)</title>
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[Federal Register Volume 86, Number 247 (Wednesday, December 29, 2021)]
[Proposed Rules]
[Pages 74024-74036]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-27493]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 1
[WT Docket No. 19-38; FCC 21-120; FR ID 62114]
Partitioning, Disaggregation, and Leasing of Spectrum
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission or FCC) proposed an Enhanced Competition Incentive Program
to encourage licensees to offer opportunities for small carriers,
Tribal Nations, and entities committing to serve rural areas to obtain
spectrum via lease, partition, or disaggregation. The Further Notice of
Proposed Rulemaking seeks comment on the proposed Enhanced Competition
Incentive Program, its incentives, and waste, fraud, and abuse
protections, as well as additional proposals including alternative
construction benchmarks for all wireless radio service licensees and
flexibility to reaggregate licenses.
DATES: Interested parties may file comments on or before February 28,
2022, and reply comments on or before March 29, 2022.
ADDRESSES: You may submit comments, identified by WT Docket No. 19-38,
by any of the following methods:
<bullet> Electronic Filers: Comments may be filed electronically
using the internet by accessing the ECFS: <a href="http://apps.fcc.gov/ecfs/">http://apps.fcc.gov/ecfs/</a>.
<bullet> Paper Filers: Parties who choose to file by paper must
file an original and one copy of each filing. If more than one docket
or rulemaking number appears in the caption of this proceeding, filers
must submit two additional copies for each additional docket or
rulemaking number.
[[Page 74025]]
<bullet> Filings can be sent by commercial overnight courier, or by
first-class or overnight U.S. Postal Service mail. All filings must be
addressed to the Commission's Secretary, Office of the Secretary,
Federal Communications Commission.
<bullet> Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9050 Junction Drive,
Annapolis Junction, MD 20701.
<bullet> U.S. Postal Service first-class, Express, and Priority
mail must be addressed to 45 L Street NE, Washington DC 20554.
<bullet> Effective March 19, 2020, and until further notice, the
Commission no longer accepts any hand or messenger delivered filings.
This is a temporary measure taken to help protect the health and safety
of individuals, and to mitigate the transmission of COVID-19. See FCC
Announces Closure of FCC Headquarters Open Window and Change in Hand-
Delivery Policy, Public Notice, DA 20-304 (March 19, 2020). <a href="https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy">https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy</a>.
People with Disabilities: To request materials in accessible
formats for people with disabilities (Braille, large print, electronic
files, audio format), send an email to <a href="/cdn-cgi/l/email-protection#b0d6d3d3858084f0d6d3d39ed7dfc6"><span class="__cf_email__" data-cfemail="d2b4b1b1e7e2e692b4b1b1fcb5bda4">[email protected]</span></a> or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (TTY).
FOR FURTHER INFORMATION CONTACT: Katherine Nevitt of the Wireless
Telecommunications Bureau, Mobility Division, at (202) 418-0638 or
<a href="/cdn-cgi/l/email-protection#236842574b46514a4d460d6d46554a5757634540400d444c55"><span class="__cf_email__" data-cfemail="216a4055494453484f440f6f4457485555614742420f464e57">[email protected]</span></a>. For information regarding the Paperwork
Reduction Act of 1995 (PRA) information collection requirements
contained in this document, contact Cathy Williams, Office of Managing
Director, at (202) 418-2918 or <a href="/cdn-cgi/l/email-protection#125173667a6b3c457b7e7e7b737f61527471713c757d64"><span class="__cf_email__" data-cfemail="a4e7c5d0ccdd8af3cdc8c8cdc5c9d7e4c2c7c78ac3cbd2">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
Further Notice of Proposed Rulemaking in WT Docket No. 19-38, FCC 21-
120 adopted November 18, 2021 and released November 19, 2021. The full
text of this document, including all Appendices, is available for
inspection and copying during normal business hours in the FCC
Reference Center, 45 L Street NE, Washington, DC 20554, or available
for viewing via the Commission's ECFS website by entering the docket
number, WT Docket No. 19-38. Alternative formats are available for
people with disabilities (Braille, large print, electronic files, audio
format), by sending an email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="13555050262327537570703d747c65">[email protected]</a> or calling the Consumer
and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-
0432 (TTY).
Ex Parte Rules
This proceeding shall continue to be treated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte
rules (47 CFR 1.1200 et seq.). Persons making ex parte presentations
must file a copy of any written presentation or a memorandum
summarizing any oral presentation within two business days after the
presentation (unless a different deadline applicable to the Sunshine
period applies). Persons making oral ex parte presentations are
reminded that memoranda summarizing the presentation must (1) list all
persons attending or otherwise participating in the meeting at which
the ex parte presentation was made, and (2) summarize all data
presented and arguments made during the presentation. If the
presentation consisted in whole or in part of the presentation of data
or arguments already reflected in the presenter's written comments,
memoranda or other filings in the proceeding, the presenter may provide
citations to such data or arguments in his or her prior comments,
memoranda, or other filings (specifying the relevant page and/or
paragraph numbers where such data or arguments can be found) in lieu of
summarizing them in the memorandum. Documents shown or given to
Commission staff during ex parte meetings are deemed to be written ex
parte presentations and must be filed consistent with rule 1.1206(b).
In proceedings governed by rule 1.49(f) or for which the Commission has
made available a method of electronic filing, written ex parte
presentations and memoranda summarizing oral ex parte presentations,
and all attachments thereto, must be filed through the electronic
comment filing system available for that proceeding, and must be filed
in their native format (e.g., .doc, .xml, .ppt, searchable .pdf).
Participants in this proceeding should familiarize themselves with the
Commission's ex parte rules.
Synopsis
I. Introduction
1. With this Further Notice of Proposed Rulemaking, we take key
steps towards closing the digital divide and we make further progress
on the goals set forth by Congress in the Making Opportunities for
Broadband Investment and Limiting Excessive and Needless Obstacles to
Wireless Act (MOBILE NOW Act) regarding the diversity of spectrum
access and the provision of service to rural areas. In particular, we
propose an Enhanced Competition Incentive Program focused on increasing
spectrum access for small carriers and Tribal Nations and on increasing
the availability of advanced telecommunications services in rural areas
with the goals of promoting greater competition in and expanded access
to such services. To achieve these vital Commission goals, we propose
to modify our existing partitioning, disaggregation, and leasing rules
by providing specific incentives for stakeholders to participate in the
program by engaging in qualifying transactions that make spectrum
available to these entities and in these areas. Separate from the
incentive program, we seek comment on potential alternatives to
population-based performance requirements for a variety of
stakeholders. Further, we propose to provide for reaggregation of
partitioned and disaggregated licenses up to the original license size.
II. Background
2. Partitioning and Disaggregation. The Commission first adopted
rules permitting geographic partitioning, which is the assignment of a
geographic portion of a geographic area licensee's license area, and
spectrum disaggregation, which is the assignment of portions of blocks
of a geographic area licensee's spectrum, for Broadband PCS licenses in
1996. The Commission has since adopted partitioning and disaggregation
rules on a service-by-service basis to provide licensees the
``flexibility to determine the amount of spectrum they will occupy and
the geographic area they will serve.''
3. The Commission's partitioning and disaggregation rules apply to
all ``Covered Geographic Licenses,'' which consist of specified
``Wireless Radio Services'' (WRS) for which the Commission has
auctioned exclusive spectrum rights in defined geographic areas. The
license term for a partitioned license area or disaggregated spectrum
license is the remainder of the original licensee's license term.
Parties to a geographic partitioning, a spectrum disaggregation, or a
combination of both have two options to satisfy service-specific
performance requirements (i.e., construction and operation
requirements). First, each party may certify that it will individually
satisfy any service-specific performance requirements and, upon failure
to do so, must individually face any service-specific performance
penalties. Alternatively, both parties may agree to
[[Page 74026]]
share responsibility for compliance with performance requirements, and
both parties are subject to any service-specific penalties.
4. Spectrum Leasing. In 2003, the Commission adopted the first
comprehensive set of rules to allow licensees in the WRS to enter into
a variety of spectrum leasing arrangements. In so doing, the Commission
recognized the public interest benefits of permitting ``additional
spectrum users to gain ready access to spectrum,'' thus enabling the
``provision of new and diverse services and applications to help meet
the ever-changing needs of the public.'' The Commission's spectrum
leasing rules apply to all ``included services,'' as set forth in
section 1.9005 of the Commission's rules and which include WRS where
commercial or private licensees hold exclusive use rights. A ``spectrum
leasing arrangement'' is an arrangement between a licensed entity and a
third-party entity in which the licensee (spectrum lessor) leases
certain of its spectrum usage rights in the licensed spectrum to the
third-party entity, the spectrum lessee. Commission rules provide for
two different types of spectrum leasing arrangements: (1) Spectrum
manager leasing arrangements, in which the licensee/lessor retains de
facto control of the licensed spectrum leased to the spectrum lessee;
and (2) de facto transfer leasing arrangements, in which the lessee is
primarily responsible for ensuring that its operations comply with the
Communications Act and Commission policies and rules.
5. While the licensee/lessor remains responsible for compliance
with any construction and performance requirements applicable to the
leased spectrum, the licensee/lessor may attribute to itself the build-
out or performance activities of its spectrum lessee(s) for purposes of
compliance with any such requirements.
6. De facto transfer spectrum leasing arrangements can be either
long-term (more than one year) or short-term (one year or less). In
general, de facto transfer spectrum leasing arrangements are subject to
the Commission's general approval procedures, under which the
Commission must grant the application prior to the parties putting the
proposed spectrum leasing arrangement into effect.
7. Statutory Requirement. Section 616 of the MOBILE NOW Act
required that, within a year of its enactment, the Commission initiate
a rulemaking proceeding to assess whether to establish a program, or
modify an existing program, under which a licensee that receives a
license for exclusive use of spectrum in a specific geographic area
under section 301 of the Communications Act of 1934 may partition or
disaggregate the license by sale or long-term lease in order to, inter
alia, make unused spectrum available to an unaffiliated covered small
carrier or an unaffiliated carrier to serve a rural area. Congress also
provided the Commission the flexibility to proceed if it found that
such a program would promote the availability of advanced
telecommunications services in rural areas or spectrum availability for
covered small carriers.
8. Section 616 required the Commission to consider four questions
in conducting an assessment of whether to establish a new program or
modify an existing program to achieve the stated goals. First, would
``reduced performance requirements with respect to the spectrum
obtained through the program . . . facilitate deployment of advanced
telecommunications services in areas covered by the program''? Second,
``what conditions may be needed on transfers of spectrum under the
program to allow covered small carriers that obtain spectrum under the
program to build out the spectrum obtained under the program in a
reasonable period of time''? Third, ``what incentives may be
appropriate to encourage licensees to lease or sell spectrum, including
(i) extending the term of a license . . . or (ii) modifying performance
requirements of the license relating to the leased or sold spectrum''?
And fourth, what is ``the administrative feasibility'' of those
incentives and of ``other incentives considered by the Commission that
further the goals of [section 616]''? Section 616 provided, however,
that the Commission ``may offer a licensee incentives or reduced
performance requirements under this section only if the Commission
finds that doing so would likely result in increased availability of
advanced telecommunications services in a rural area.'' Additionally,
section 616 directs that, ``[i]f a party fails to meet any build out
requirements set by the Commission for any spectrum sold or leased
under this section, the right to the spectrum shall be forfeited to the
Commission unless the Commission finds that there is good cause for the
failure of the party.''
A. Notice of Proposed Rulemaking
9. On March 15, 2019, the Commission released the Notice pursuant
to the MOBILE NOW Act, which initiated this proceeding to assess
whether potential changes to the Commission's partitioning,
disaggregation, and leasing rules might provide spectrum access to
covered small carriers or promote the availability of advanced
telecommunications services in rural areas. The Notice sought comment
on the specific questions and considerations posed in the MOBILE NOW
Act, but also sought comment on whether the Commission should consider
applying any rule revisions to an expanded class of licensees beyond
those Congress required it to consider.
10. The Commission received 15 comments and 10 reply comments in
response to the Notice. Commenters generally supported rule revisions
that would increase spectrum access for a variety of entities and
increase the availability of advanced telecommunications in rural
areas. As discussed below, many commenters also suggested that the
Commission go beyond the MOBILE NOW Act statutory framework if
necessary to serve the public interest and to achieve the stated goals.
III. Discussion
11. This Further Notice builds upon the efforts initiated in the
Notice by proposing incentives that are guided by the MOBILE NOW Act
framework but expand upon this approach to advance important Commission
goals. As discussed in more detail below, we propose an Enhanced
Competition Incentive Program (ECIP) focused on increasing spectrum
access for small carriers and Tribal Nations and promoting the
availability of advanced telecommunications services in rural areas by
creating incentives for competition-enhancing transactions. We propose
a range of incentives to promote partitioning, disaggregation, and
leasing, including extending license terms by five years, extending
construction periods by one year, and creating alternate rural-focused
construction requirements. Under this two-pronged proposal, parties to
qualifying transactions would establish program eligibility by: (1)
Providing spectrum to small carriers or Tribal Nations; or (2)
committing to serve a certain minimum amount of rural area. We also
propose measures necessary to ensure program goals are met and that the
program is not abused.
12. The ECIP that we propose here would establish specific
incentives based on the record in the Notice, and would build upon
Congress' goals in the MOBILE NOW Act. The ECIP also would further
certain long-standing Commission goals by facilitating transactions
that promote increased
[[Page 74027]]
spectrum access for stakeholders that will use this valuable resource
efficiently and create meaningful service to rural communities. To
develop a more workable solution for a variety of stakeholders, we seek
comment on additional proposals on related issues that are consistent
with the MOBILE NOW Act, but are based on our pre-existing authority
under Title III of the Communications Act of 1934, as amended, pursuant
to which the Commission adopted the original partitioning and
disaggregation rules. After review of the record on the Notice and as
discussed below, we find it in the public interest to explore benefits
for Tribal Nations choosing to participate in the ECIP; benefits for an
expanded group of stakeholders participating in ECIP through rural-
focused transactions; alternative performance requirements for all WRS
licenses independent of the specific ECIP benefits; and a spectrum
license reaggregation process. The proposals discussed below are
intended to facilitate increased spectrum access, rural service, and
innovative and next-generation wireless use cases, bringing increased
competition to underserved areas, while also easing the administrative
burden placed on both licensees and Commission staff.
a. Enhanced Competition Incentive Program
13. To be eligible for ECIP benefits through a qualifying
transaction, we propose that any covered geographic licensee may offer
spectrum to an unaffiliated eligible entity through a partition and/or
disaggregation, and any WRS licensee eligible to lease in an included
service may offer spectrum to an unaffiliated eligible entity through a
long-term leasing arrangement. As detailed below, we propose two types
of ECIP qualifying transactions: Those that focus on small carriers and
Tribal Nations gaining spectrum access, and those that involve any
interested party that commits to operating in, or providing service to,
rural areas. We recognize that stakeholders may be eligible for one or
both paths. However, to achieve the goals of the program, maintain
administrative feasibility as set forth in the MOBILE NOW Act, and
reduce the potential for program abuse, we propose that each
transaction be filed under either, but not both, prongs. This approach
would result in consistent application of program benefits and
safeguards to ensure program integrity.
i. Small Carrier or Tribal Nation Transactions
14. One of the goals of the MOBILE NOW Act was to encourage
Commission examination of a program(s) that would promote spectrum
availability for small carriers. Through qualifying transactions under
this ECIP prong, we would promote small carriers' access to unused
spectrum in any market licensed to a covered geographic licensee. We
also find it appropriate to propose a narrow expansion beyond the
MOBILE NOW Act statutory framework to increase spectrum access for
Tribal Nations.
15. Eligible Entities. As indicated in the Notice, section 616 of
the MOBILE NOW Act defined ``Covered small carrier'' as a carrier that
``(A) has not more than 1,500 employees (as determined under section
121.106 of title 13, Code of Federal Regulations, or any successor
thereto); and (B) offers services using the facilities of the
carrier.'' Further, section 616 applies the definition of ``carrier''
as set forth in section 3 of the Communications Act of 1934, meaning
``any person engaged as a common carrier for hire, in interstate or
foreign communication by wire or radio or interstate or foreign radio
transmission of energy.'' Consistent with Congressional intent, we
propose to adopt these statutory definitions for use in the ECIP and to
designate covered small carriers as an eligible beneficiary under this
prong. We seek comment on whether these are the appropriate definitions
for use in the program. In addition, section 616 restricts the
partitioning or disaggregation to ``unaffiliated'' small carriers.
Other than looking to the Commission's designated entity rules, we seek
comment on how to determine whether a small carrier is affiliated.
16. We note that most commenters supported an expansion of the
covered small carrier definition in the Notice, and we seek comment on
alternative definitions. While we propose below to adopt more expansive
eligibility requirements for rural-focused ECIP transactions, for
transactions specifically focused on spectrum access not limited to
rural areas, we propose a limited expansion of the group of eligible
beneficiaries beyond covered small carriers to include Tribal Nations.
This would further facilitate Tribal spectrum access in both rural and
non-rural areas as needed. We propose, in the public interest, to
include these Tribal Nations and seek comment on this approach. We
propose that Tribal Nations eligible under this prong would include any
federally-recognized American Indian Tribes and Alaska Native Villages,
as well as consortia of federally recognized Tribes and/or Native
Villages, or other entities controlled and majority-owned by such
Tribes or consortia. We seek comment on whether this is the appropriate
definition of Tribal Nations. As of January 2021, there are 574
federally-recognized Indian Tribes, but we note that there are no
federally recognized Tribal Nations in Hawaii. We therefore seek
comment on how we should facilitate transactions involving entities
seeking to serve native Hawaiian Homelands.
17. Minimum Spectrum and Geography. We propose that a qualifying
transaction under this prong must include a minimum of 50% of the
licensed spectrum for each license(s) that is part of the transaction
in a geographic area. This approach is intended to provide stakeholders
flexibility in structuring transactions, while: (1) Ensuring sufficient
spectrum is available for the provision of advanced telecommunications
services; and (2) preventing transactions involving de minimis spectrum
amounts that are entered into solely to obtain ECIP benefits. We seek
comment on whether the proposed 50% spectrum threshold makes enough
spectrum available to small carriers or Tribal Nations. Should we
consider a lower or higher threshold percentage? For licenses that
authorize paired frequency bands, should an equal or minimum percentage
of the spectrum be from each band? Are there any alternative approaches
for ensuring sufficient spectrum is made available to small carriers or
Tribal Nations, while requiring a sufficient percentage to preclude
abuse of the program?
18. We also propose that a qualifying transaction must include a
minimum of 25% of the licensed market area for each license(s) that is
part of the transaction, regardless of market size or market type. We
seek comment on whether the 25% geographic threshold is the appropriate
amount to balance incentives for program participation against concerns
of sufficient land area for small carriers or Tribal Nations, and
concerns related to preventing program gaming. Are there considerations
that would warrant an increase or decrease in the minimum geography
required for a qualifying transaction under this prong? For example,
should the geographic thresholds be different based upon the varying
size of the overall licensed market area (e.g., counties, CMAs, PEAs,
BEAs, MTAs, REAGs)? Should parties be able to count multiple
transactions involving partitions of the same license
[[Page 74028]]
in aggregate to meet the minimum geographic threshold? We seek comment
on the costs and benefits of our proposed approach and any suggested
alternatives. We also recognize there may be situations where licenses
have been previously disaggregated and/or partitioned and a resulting
license(s) consists of a small amount of spectrum or small geographic
area. Although we propose in this Further Notice to prevent licenses
that have previously benefited from ECIP from receiving benefits again
for the same license(s), we seek comment on whether, from the outset,
we should restrict the ECIP to only licenses of a certain minimum
spectrum size and geography area. We seek to avoid inclusion in the
ECIP of transactions that might potentially evade the purpose of the
respective 50% and 25% thresholds.
19. We note that the MOBILE NOW Act directed the Commission to
examine potential changes to our partitioning, disaggregation, and
leasing framework to offer incentives to meet specific goals. Such a
focus would appear to exclude full license assignments, even those to
small carriers and/or to rural licensees. We recognize that
implementing the ECIP solely for transactions involving partition,
disaggregation, or leasing, as Congress directed us to consider, may
create a disincentive for stakeholders to engage in otherwise mutually
beneficial transactions for full license assignments. Rather, these
parties may instead negotiate transactions for smaller areas and/or
less spectrum, solely to acquire ECIP benefits even where a full
license assignment might be more appropriate given stakeholder needs.
We therefore seek comment on whether we should permit full license
assignments within the ECIP and, if so, how we should implement these
types of transactions. We note that many of the ECIP benefits discussed
below are applicable to both parties to a transaction involving
partition, disaggregation, or lease of a license, but would only be
available to the assignee in a full license assignment scenario, where
the assignor is not licensed for that spectrum after consummation of
the assignment. If we determine that the public interest would be
served by including in the ECIP those transactions involving full
license assignments, what safeguards should we put in place to ensure
that these full license assignments achieve the intended benefits of
the program?
ii. Rural-Focused Transactions
20. We also propose a rural-focused transaction approach that is
intended to facilitate coverage to rural areas by tying ECIP benefits
to construction and operation obligations, as further detailed below,
furthering the Commission's goal of promoting the availability of
advanced telecommunications services in rural areas.
21. Eligible Entities. In the Notice, the Commission sought comment
on whether it should consider rule revisions to an expanded class of
licensees beyond those Congress required the Commission to consider.
The record reflects considerable support for expanding the scope of
eligible entities. We agree with commenters that restricting program
availability, and therefore program benefits and build-out incentives,
to only small carriers, as defined in section 616 of the MOBILE NOW
Act, would exclude numerous important spectrum users and provide fewer
options for larger carrier licensees that seek to disaggregate,
partition, or lease their unused spectrum.
22. Accordingly, we propose to include, by relying on our general
Title III powers, any unaffiliated interested party that commits to
serve a minimum amount of rural area under the proposed ECIP rural-
focused transactions prong, if they meet the proposed requirements.
This would expand upon the focus of the MOBILE NOW Act and include a
substantial variety of stakeholders seeking to engage in transactions
that we anticipate could result in increased spectrum usage and
competition in rural areas, such as large or small carriers, common
carriers, non-common carriers, Tribal Nations, critical infrastructure,
and other entities (large or small) operating private wireless systems
in rural areas. This expanded scope could incentivize transactions that
accommodate a wide variety of spectrum users in rural areas facing
challenges in accessing spectrum and result in more efficient and
intensive spectrum use in rural areas. We seek comment on this flexible
approach, including whether there is any reason we should restrict the
types of licensees eligible for the ECIP benefits under this rural-
focused prong of the program. Similar to our approach in small carrier
and Tribal Nation transactions, we also seek comment on whether we
should permit full license assignments within the rural-focused prong
of the ECIP and, if so, how we should implement these types of
transactions. We seek comment on the appropriate definition of
affiliated in the context of rural-focused transactions.
23. For purposes of the rural-focused transaction approach and
consistent with Congressional intent, we propose to adopt the MOBILE
NOW Act definition of ``rural area,'' which is ``any area except (1) a
city, town, or incorporated area that has a population of more than
20,000 inhabitants; or (2) an urbanized area contiguous and adjacent to
a city or town that has a population of more than 50,000 inhabitants.''
We seek comment on this approach and any alternatives that might be
more appropriate to achieve ECIP goals.
24. Minimum Spectrum. Consistent with our proposed approach to
transactions involving covered small carriers and Tribal Nations
described above, we also propose in the rural context that a qualifying
transaction must designate a minimum of 50% of the licensed spectrum,
for each license(s) included in the transaction. We seek comment on
whether the 50% spectrum threshold makes enough spectrum available for
the actual provision of rural-focused service. Would a lower or higher
threshold percentage be more appropriate, particularly considering the
increased scope of eligible entities seeking to deploy the spectrum?
Are there alternative ways to ensure that there is sufficient spectrum
to meet stakeholder needs? Further, is there a need to also specify a
minimum threshold in terms of megahertz (in case the license has
previously been disaggregated)? For licenses that authorize paired
frequency bands, should an equal or minimum percentage of the spectrum
be from each band?
25. Minimum Qualifying Geography. We propose that a qualifying
transaction under this rural-focused prong must include a minimum
amount of ``Qualifying Geography'' sufficient to cover at least 300
contiguous square miles of rural area, for market sizes of Partial
Economic Areas (PEA) or smaller. We seek to incentivize transactions
that will result in rural operation/service where most needed. We
recognize that these underserved rural areas in many cases may not
directly align with the Commission's licensed market areas, and may be
near the edge, or even overlap, a market boundary. We therefore propose
for this prong a required minimum square mileage of rural area, rather
than a percentage of an assignor's market, which could unnecessarily
mandate a substantially larger area than intended. The square mileage
approach to establish Qualifying Geography provides flexibility for
stakeholders to enter a transaction tailored to individual needs, which
might involve rural area from more than one license. We propose 300
square miles as the most appropriate figure to ensure that
[[Page 74029]]
stakeholders include sufficient area in a transaction to warrant the
substantial benefits afforded through the ECIP. Where a single
transaction involving multiple licenses is needed to obtain the
specific rural area sought, we propose to provide ECIP benefits to each
license that contains some portion of the 300 square mile area. We seek
comment on this approach, including the costs and benefits, and on any
suggested alternatives. We understand that rural area could include
unpopulated areas, which may otherwise be used for recreation, travel,
commercial or business purposes. Should we limit eligibility to areas
that have a census defined population? Does our proposed approach
provide sufficient flexibility to structure transactions to meet
stakeholder needs in rural areas? Conversely, would such a flexible
approach result in gaming, for example, the inclusion of license(s) in
a transaction solely to receive ECIP benefits that offer a de minimis
amount of land as a percentage of the 300 square miles of Qualifying
Geography? To discourage this potential outcome, should we require a
minimum percentage of land within each license involved in a single
transaction to meet the Qualifying Geography requirement?
Alternatively, should parties be able to count multiple transactions
with different parties involving partitions of the same license in
aggregate to meet the Qualifying Geography threshold?
26. We also find it appropriate, given the Commission's current
market sizes and goal of incentivizing meaningful service and operation
in rural areas, to propose a minimum geography of 300 square miles of
rural area for PEA markets and smaller markets. However, given the wide
range in size of available markets subject to geographic area
licensing, we seek comment on whether it would be appropriate to scale
the amount of Qualifying Geography on a proportional basis in two ways.
First, we recognize that there are variations in market sizes even for
PEAs and smaller markets. For example, in approximately 3% of PEA
markets (located in large Western states, including some in Alaska),
300 square miles represents less than 1% of the market land area. We
seek comment on whether we should proportionally scale the minimum
required Qualifying Geography upwards in these PEA markets to account
for their larger size. Second, we seek comment on whether we should
proportionally scale the minimum required Qualifying Geography upwards
for all markets larger than PEAs. We note that the next largest market
area size in relation to PEAs are Basic Economic Areas (BEA), where the
average land area is almost twice the size of the average PEA. For
Regional Economic Area Grouping (REAG) market areas, which can be
comprised of several states, the market size on average is
approximately 45 times larger than the average PEA. Would scaling in
the large PEA context and/or for markets larger than PEAs prevent
windfall benefits for transactions yielding nominal spectrum access and
minimal rural buildout relative to the geographic size of the license
receiving ECIP benefits? We seek comment on what the costs and benefits
are with respect to any such proportional scaling and any suggested
alternatives.
27. In addition, we seek comment on whether we should consider
coverage on Tribal lands as an alternative to coverage of rural areas.
We understand many Tribal lands are located in rural areas and to that
extent might already qualify for ECIP benefits under this rural prong,
but note that such lands may not be located in all instances in a
contiguous 300 square mile area, or might be at least partially located
in suburban or urban areas. Should we deem non-contiguous blocks of
Tribal land that collectively reach the Qualifying Geography threshold
sufficient to warrant ECIP benefits? In addition, we seek comment on
the appropriate definition of Tribal lands for purposes of the ECIP.
b. Enhanced Competition Incentive Program Benefits
28. To properly incentivize licensees to make spectrum available to
small carriers or Tribal Nations, and to engage in other rural-focused
transactions, we propose three specific benefits for ECIP
participation. Specifically, we propose to: Extend license terms for
all parties to a qualifying transaction by five years; extend
construction deadlines (both interim and final) by one year for all
parties to a qualifying partition/disaggregation transaction and for
lessors in a qualifying spectrum lease arrangement; and establish an
alternate rural-focused construction requirement for certain
transactions. We seek comment on these proposals, any alternative
approaches, and associated issues, including whether there are
appropriate incentives to encourage licensee participation in the
program earlier in the term of the license.
i. License Term Extensions
29. The Notice sought comment on the appropriate incentives to
achieve the MOBILE NOW Act's goal of encouraging licensees to
partition, disaggregate or lease spectrum, including the incentive of
license term extensions. Most commenters addressing the issue of
incentives generally supported an extended license term benefit, with
one commentor cautioning against conferring outsized benefits. We find
it appropriate to propose a five-year license term extension for all
parties involved in a qualifying partition/disaggregation transaction,
and for all lessors entering into a qualifying spectrum leasing
transaction, given that the lessor retains the renewal obligations. We
believe this proposal will reduce regulatory burdens with less frequent
renewal obligations and will properly incentivize secondary market
transactions, particularly spectrum leases that are subject to the
lessor's license term. We also propose recommended controls to avoid
waste, fraud, and abuse as detailed below.
ii. Construction Extensions
30. The Notice also sought comment on whether modifications to the
Commission's performance requirements, including a one-year extension
in certain circumstances, would be likely to increase service to rural
areas. Commenters expressed significant support for the temporal
benefit of additional time to construct facilities, with some arguing
that the difficulty and expense associated with building rural areas
justifies the benefit. In addition, one commenter acknowledges the
potential timing constraints for meeting construction requirements when
spectrum is received in the middle of a license term. After review of
the record, we propose that all parties to a qualifying transaction
receive a one-year construction extension for both the interim and
final construction benchmarks where applicable. We believe this
approach strikes the right balance between incentivizing small carrier,
Tribal Nation, and rural-focused transactions, while ensuring that
assignees have adequate time to meet their construction milestones. We
propose that this benefit would apply to both parties in a qualifying
transaction involving partition or disaggregation. We also propose that
this benefit would apply to the lessor in a qualifying spectrum lease
arrangement, given that the lessor retains the obligations to comply
with buildout and renewal requirements. We seek comment on these
proposals and any associated costs and benefits. We recognize that the
Notice sought comment on whether the Commission should limit any
construction extension benefits to transactions filed no later
[[Page 74030]]
than six months prior to the construction deadline. After review of the
record, and in the interest of promoting even late-term transactions
that will ensure increased spectrum access and actual spectrum usage in
rural areas, we propose not to establish a timeframe prior to a
construction deadline within which an ECIP qualifying transaction must
be filed. We seek comment on whether this flexible approach will
incentivize parties to enter qualifying transactions, or whether an
ECIP transaction filing cut-off date prior to relevant construction
deadlines is necessary to prevent unintended results.
iii. Alternate Construction Benchmark for Rural-Focused Transactions
31. In response to the Notice, nearly all commentors supported
modified performance requirements, noting that existing licenses that
include significant portions of rural area are typically for large
market areas, often leaving rural and remote areas underserved. Many
commenters stated that modification of performance requirements would
appropriately reflect the realities of deploying spectrum in rural,
underserved, and unserved areas, and would incentivize the efficient
allocation of spectrum.
32. To facilitate rural-focused transactions that achieve rural
buildout, we propose to substitute an assignee's existing performance
requirement with an alternative construction benchmark for those
licenses acquired in an ECIP transaction qualifying under the rural-
focused transaction approach described above. Specifically, the
alternate construction benchmark would require 100% coverage of the
Qualifying Geography (coverage to at least 300 contiguous square miles
of rural area, for market sizes of PEA or smaller) that was the basis
for the qualifying transaction, as well as the provision of service to
the public, or operation addressing private internal business needs
over that area. We clarify that our proposal for an alternate benchmark
does not modify the timeframe for meeting the benchmark, which would
remain the current deadline of the partitioned/disaggregated license,
plus the one-year extension proposed in the above construction
extension benefit section. As previously discussed, the proposed
minimum geography seeks to ensure a reasonable investment in
construction of facilities in rural areas to warrant the substantial
ECIP benefits, while furthering the Commission's long-held goal of
providing licensees with flexibility to determine the amount of
spectrum licensees will occupy and the geographic area they will serve,
and permitting stakeholders to build networks suited to the particular
community needs. We seek comment on this approach, including the
proposed benchmark, and the associated costs and benefits. Does this
approach adequately ensure that an assignor does not enter into
partitioning transactions solely for the purpose of reducing the area
or population required to be covered under its service-specific
performance requirements? In cases where the assignee ultimately fails
to construct, should we require the assignor in a partition to meet its
obligations consistent with the entire license area, by including in
the relevant denominator the population/land of the partitioned-off
area? Finally, we also seek comment on whether we should consider an
alternative approach specifically tailored to the needs of Tribal
Nations. What should the appropriate benchmarks include and what
additional factors should be considered to facilitate the provision of
service to Tribal Nations?
33. For assignees involved in partitioning and/or disaggregation
where the interim performance requirement has not been met, we propose
that this alternative construction benchmark would replace the existing
interim performance requirement, and remove the final performance
requirement, contained in the service rules for the particular license
acquired in the ECIP transaction. Where the assignor has previously met
the interim construction deadline, this alternative construction
benchmark would replace the final construction obligation for the
assignee. We propose that the assignor remain bound by the existing
substantive coverage requirements for its license(s) (extended by one-
year) involved in a qualifying ECIP transaction. We note, however, that
this approach provides an additional incentive to the assignor that
arguably will meet its performance requirements more easily following a
partitioning/disaggregation transaction that reduces the geographic
area/population it must cover. We seek comment on this approach, as
well as the associated costs and benefits.
34. While our alternate construction benchmark proposal under ECIP
focuses on parties individually satisfying performance requirements,
the Commission's rules currently permit parties in a partition or
disaggregation transaction to share responsibility for any service-
specific requirements, and therefore share the penalties associated
with failure to meet those performance requirements. We seek comment on
whether the construct of a shared buildout requirement runs counter to
the ECIP framework proposed herein and, if so, whether, we should
afford this particular ECIP benefit solely to those parties that opt to
separately meet their construction obligations. Do the ECIP benefits,
as well as waste, fraud, and abuse protections, negate the need for the
protections that shared responsibility provides? In the context of
rural-focused transactions, does a shared responsibility unfairly
burden one party over the other?
35. We do not propose an alternate construction benchmark for
spectrum lease arrangements. For spectrum lease arrangements that
qualify under ECIP, consistent with existing rules, we propose that a
lessor would be able to attribute the construction and operation of its
lessee's Qualifying Geography to its underlying performance obligations
on its license. We believe that retaining this current pass-through
benefit is sufficient (given the additional ECIP benefits conferred) to
incentivize lessors to lease unused spectrum, particularly in uncovered
rural areas. However, consistent with our approach to an assignor in
the partition and/or disaggregation context, the lessor is nonetheless
bound by the existing performance requirements set forth in the
applicable service-specific rules. We seek comment on these tentative
conclusions.
c. Enhanced Competition Incentive Program Waste, Fraud, and Abuse
Protections
36. Given the substantial benefits being proposed for ECIP
participants, and to ensure that stakeholders enter into transactions
that will further our goals of increased spectrum access, rural
service, and competition, we propose certain measures to protect
against waste, fraud, and abuse of the program. We note that applicant
character qualifications are part of our review of whether a
transaction can be approved in the public interest, and we seek comment
on the specific measures proposed below. We invite commenters to
suggest alternative or additional measures that would ensure that the
benefits we propose for ECIP participants are targeted and appropriate.
For example, most of the measures we propose focus on assignees or
lessees participating in ECIP transactions, but we welcome suggestions
on whether additional restrictions should be imposed on ECIP
participant assignors and lessors.
37. As stated above, we recognize that parties to an ECIP
transaction are likely in many instances to meet the eligibility
[[Page 74031]]
requirements for both the small carrier/Tribal Nation transaction prong
and the rural-focused transaction prong (e.g., a covered small carrier
might be interested in obtaining spectrum access to serve an area
consisting of at least 300 rural square miles). Nonetheless, we
recognize that open-ended program flexibility might have significant
drawbacks. We therefore propose distinct paths to ECIP participation to
meet the program's policy goals, to make program administration more
feasible, and to afford targeted benefits while reducing instances of
program abuse. We clarify our proposal that for each ECIP transaction,
applicants must elect either prong 1 or prong 2, not both, and they may
not, subsequent to application grant, modify the selected path. As a
specific example, under our ECIP proposal, an assignee in a rural-
focused transaction proposing to provide service to a partitioned area
of at least 300 rural square miles under prong 2 is required to provide
service or operate over that entire area by the extended construction
deadline. Although that assignee may also be a covered small carrier by
definition under prong 1, to ensure provision of the rural service to
the Qualifying Geography for which ECIP benefits were granted, we do
not propose to permit that assignee to later elect to provide service,
in the alternative, to a percentage of population within its licensed
area that might include more urban populations, as it might have had it
elected to file its ECIP transaction under prong 1. We seek comment on
this approach and potential costs and benefits.
38. Holding Period. First, we propose to impose a five-year holding
period on licenses assigned through partitioning and/or disaggregation
as part of ECIP transactions. Specifically, assignees of licenses
obtained through ECIP transactions may further assign or lease, in
whole or in part, those licenses to other entities only after the
expiration of a five-year period commencing from the date of license
issuance, and provided the assignee has met both the construction
requirement and the three-year operational requirement proposed below
(which also satisfies its interim performance benchmark). We seek
comment on whether an alternative length of time is more appropriate
for this holding period, considering the ECIP benefits conferred.
39. We also propose to apply a parallel ``holding period''
safeguard in the leasing context. Specifically, for spectrum leases
subject to receiving ECIP benefits, we propose to require a mandatory
five-year minimum lease term. We believe that this approach fosters
transaction parity by not improperly incentivizing leases over other
potential transactions. We seek comment on this proposal and the costs
and benefits associated with this approach. In particular, we seek
comment on how we should address leases terminated after less than five
years. We recognize that the realities of the market often result in
early termination of such agreements, but also that the benefits we
propose for ECIP transactions could pose a significant risk of program
abuse through leasing. Under what circumstances, if any, should such an
early termination result in the lessor losing the benefits already
applied to its license? Should such benefits be prorated based on how
prematurely the lease was terminated? For example, if a lease is
terminated after only two years, we could reduce by three years the
lessor's license term, but maintain the performance requirement
extension. What are the advantages and disadvantages of such an
approach? Are there alternative methods of preventing sham leasing? On
a related note, we seek comment on whether we should prohibit subleases
or otherwise limit subleases to prevent program abuses.
40. To facilitate routine transfers, we propose to allow a pro
forma transfer exception (such as pursuant to corporate
reorganizations). We seek comment on whether we should allow further
exceptions to the holding period restriction. For example, are there
additional types of transactions, other than pro forma transfers, which
should be permitted? Should we allow assignees or lessees under the
ECIP to assign their licenses or leases to other ECIP-eligible parties
that agree to be bound by the ECIP requirements? Are there any
additional requirements or protections we should impose on such
transactions? Commenters should discuss the costs and benefits of our
proposed approach and any alternatives.
41. Operational Requirement. To ensure that spectrum is efficiently
used in underserved rural areas, we propose an operational requirement
on certain ECIP transactions. Specifically, we propose that the
assignee or lessee of any transaction that qualifies as an ECIP rural-
focused transaction would be required, for a minimum of three
consecutive years, to either (1) provide and continue to provide
service to the public; or (2) operate and continue to operate to
address the licensee's private, internal communications needs. We
propose that the level of service during this three-year operational
period must not fall below that used (or intended to be used) to meet
its construction requirement (for assignees) and ECIP eligibility (for
lessees). This approach provides a uniform measure of operational
status and verifiable service for a sustained period. We seek comment
on this proposal, including the associated costs and benefits.
42. For assignees acquiring an ECIP license through partition and/
or disaggregation, we propose that this operational period begin the
earlier of the date of actual construction or the date of the interim
construction deadline for that license, as modified by the ECIP. We
propose that ECIP lessees must operate or provide service for three
consecutive years during any period within the five-year minimum lease
term. We seek comment on this proposal and any alternative structures
for operational requirements, including the associated costs and
benefits. Specifically, we seek comment on the interplay of this
requirement with our concerns discussed above regarding early
termination of leases. We also note that there is no current Commission
requirement for lessees to independently certify construction of leased
spectrum, as the lessor is responsible for meeting performance
requirements and may include in its showing, at its option, any
construction by its lessee. Considering the construction and
operational requirements proposed in the ECIP, should we also impose a
construction notification requirement on lessees that would allow us to
verify that lessees have complied with ECIP construction and
operational requirements, thereby increasing program accountability?
43. Automatic Termination. We also propose, consistent with the
MOBILE NOW Act, automatic termination for any licenses assigned as part
of an ECIP transaction where the licensee fails to meet the program
requirements or construction requirements. Further, we propose that any
licensee which was subject to such termination, or any lessee which
fails to meet the program requirements, or affiliate of such an entity,
would not be eligible to participate in the ECIP in the future. We seek
comment on the appropriate definition of affiliate. We seek comment on
our proposal, including the costs and benefits. We also seek comment on
what measures could be implemented to prevent instances of program
abuse, particularly with respect to lessors and assignors participating
in the program. How should we address instances where we believe the
assignor or lessor is potentially abusing the ECIP to obtain the
program's benefits through assignments or leases to entities it
[[Page 74032]]
knows or should know cannot satisfy the program's obligations?
44. For example, should we extend program ineligibility and/or
automatic license termination penalties to the assignor or lessor and
its affiliates in situations where its assignee(s) or lessee(s) does
not meet program requirements, including construction and operation
obligations for which both parties to an ECIP transaction received
benefits? Should we condition assignor/lessor program benefits on
assignee/lessee performance of construction and continuity of service
obligations, particularly in the rural-focused transactions context, to
ensure that benefits do not accrue without provision of service or
operation in these potentially underserved areas? For example, one
approach is to not apply the five-year license term extension to an
assignor's license where its assignee/lessee fails to timely construct
or operate in the identified Qualifying Geography. We seek comment on
the costs and benefits of such an approach. We also seek comment on
whether, in the rural-focused transactions context to ensure service or
operation, we should condition the assignor/lessor's one-year
construction extension on an assignee/lessee's timely compliance with
its construction deadline(s). We note that an assignor/lessor and
assignee/lessee may have the same extended interim or final
construction deadline under the ECIP, and therefore the Commission may
not be aware of an assignee/lessee's failure to timely construct until
after the expiration of the assignor/lessor's construction deadline,
which the assignor/lessor may have relied upon in the construction of
its license. How should we address this situation to strike the
appropriate balance between properly incentivizing transactions and
attempting to eliminate instances of program abuse?
45. Limitations on Additional Benefits for Subsequent Transactions.
To prevent the benefits of the ECIP from undermining our renewal and
construction policies through compounding extensions, we propose that
once a license is the subject of a qualifying transaction and has
received the benefits associated with the ECIP, that license, and any
license created from it, will be ineligible to receive additional ECIP
benefits. We propose to apply this restriction to the original license,
as well as to licenses issued pursuant to a partition or
disaggregation. In other words, if the license at issue in a given
transaction has previously been involved in an ECIP transaction, it is
not eligible for any more ECIP benefits. We believe this will prevent
abuse resulting from leveraging the same spectrum or geography to gain
repeated license term or construction extensions. We seek comment, in
the alternative, on whether a licensee should instead be eligible for
ECIP benefits once per license term.
46. We recognize that this proposal does not provide incentives for
licensees to enter into subsequent assignments or leases of their
unused spectrum rights, and that there may be situations where such
subsequent transactions can provide public interest benefits without
undermining our proposed program policies. For example, Licensee A may
wish to partition an area to Licensee B (receiving benefits under the
ECIP) and also partition another area to Licensee C; are there
circumstances in which Licensee C should receive ECIP benefits beyond
those already afforded to the license to be partitioned? We seek
comment on whether we should permit these types of subsequent
transactions, what benefits are appropriate, and how we might ensure
that our renewal and construction policies are not frustrated through
multiple transactions.
47. Restrictions on Leasing and Subleasing of Spectrum Rights
Obtained Through the ECIP. Finally, we seek comment on how to approach
leasing and subleasing of spectrum rights obtained through ECIP
transactions. We recognize that subsequent leases by ECIP assignees and
lessees could be used to circumvent our eligibility rules and holding
period protections. For example, an assignee of an ECIP transaction
could lease its spectrum rights to a third party, including the
assignor in the ECIP transaction, extending the license term and
construction deadlines, but not resulting in the public interest
benefits intended by the ECIP. However, leasing is also an important
tool in facilitating spectrum being put to use. How should we prevent
this kind of abuse while still permitting leasing where it is in the
public interest? Should we only permit leases (and subleases) of such
rights to other ECIP-eligible entities? What are the costs and benefits
of this approach or alternatives?
48. Report. The ECIP seeks to promote competition and increased
spectrum access for small carriers and Tribal Nations and to increase
the availability of advanced telecommunications services in rural
areas. These are critical Commission goals, and we have proposed
substantial incentives to encourage participation by our licensees.
Because of the importance of these goals and the nature of these
incentives, we propose to direct the Wireless Telecommunications Bureau
(Bureau) to conduct a review of the ECIP, with an opportunity for
interested stakeholders to provide input, so that we may assess the
program's effectiveness. We propose that, after an appropriate period
of time not to exceed five years from the effective date of the final
order adopting the program, the Bureau would submit a public report on
the ECIP to the Commission. We propose that the report would include
data about ECIP participation by eligible stakeholders, including the
number of secondary market transactions, as well as the geographic
areas and spectrum made available, under each prong of the program. We
further propose that the report would include recommendations about
rule or policy changes to increase the effectiveness of the program. In
addition, we propose that the report would be publicly available, and
that the Bureau could also prepare a non-public version with
commercially sensitive information, if included. We seek comment on our
proposals. We also seek comment on any other information that
stakeholders advocate for inclusion in this report.
d. Alternative to Population-Based Construction Requirements
49. The Notice sought comment on a range of issues related to
facilitating increased spectrum access and increased availability of
telecommunications service in rural areas. As discussed above,
commenters generally were supportive of Commission action to
incentivize transactions to meet these key goals, including the MOBILE
NOW Act's focus on possible benefits of modified construction
requirements. In addition, commenters expressed additional concerns
that our current performance rules across virtually all WRS are based
on providing coverage and offering service to a percentage of the
population in the licensed geographic area, which typically results in
more urban-focused service and a lack of service to rural areas.
Commenters urge the Commission to provide an alternative to population-
based performance benchmarks that will better meet the business needs
of a variety of stakeholders, including those providing service to
rural subscribers, or that operate telecommunications systems in
conjunction with businesses located in less populated rural areas. As
WISPA explains, ``standards based on population coverage encourage
licensees to satisfy the requirement for a large-footprint license by
covering only the most populated areas,'' often to the exclusion of
less populated areas like rural America. This approach to
[[Page 74033]]
build-out requirements can incentivize licensees to focus their
deployment efforts on densely populated areas to quickly satisfy their
construction requirements, which can leave rural Americans underserved
or unserved entirely and can result in a ``surplus of unused spectrum,
usually in less densely populated areas.'' Further, commenters argue
that having pre-approved construction requirements offers a greater
level of certainty for licensees, which would reduce concerns about the
risks involved in leasing and/or partitioning arrangements in
particular.
50. We recognize that providing alternatives to construction
requirements to a wide range of stakeholders can incentivize
acquisition of licenses by entities that will deploy innovative
spectrum use models and reach underserved areas. We believe that such
an alternative option also can serve the public interest by providing
all licensees more certainty as to regulatory requirements when
planning to deploy networks, even for licensees acquiring spectrum
directly from the Commission. We therefore seek comment on providing
all WRS flexible use licensees an alternative construction requirement
to population-based construction requirements, including for licenses
acquired through a transaction (qualifying for ECIP benefits or not) or
licenses newly issued to an auction winner. We seek to develop a robust
record on the most beneficial alternatives to achieve more efficient
use of spectrum, particularly in underserved rural areas.
51. As noted, the Commission has adopted population-based
performance requirements in most flexible use radio services. In so
doing, the Commission largely departed from providing the ``substantial
service'' option that was available to many licensees in certain
services. This option allowed licensees to provide an alternate
demonstration as to how its spectrum was used in the public interest
where population benchmarks either could not be met or were an
inaccurate measure of actual spectrum usage. We therefore seek comment
on whether to provide a ``substantial service'' type alternative as has
previously been used in many different services. We recognize that use
of the subjective term ``substantial'' provides flexibility to
licensees, but it can also create uncertainty over how to meet the
standard and how to enforce the standard. We therefore seek comment on
the appropriate definition of substantial service or an appropriate
variation of this concept more tailored to individual licensee needs.
52. We seek detailed comment on how we can best accommodate
particular use cases that are less suited to meeting population
coverage requirements, for example, critical infrastructure, Internet
of Things applications, and other private internal uses (e.g., oil and
gas, agricultural, industrial, railroads). How should we tailor
performance requirements to these types of spectrum uses that do not
directly serve the public through ubiquitous mobile service to
subscribers in a manner that nonetheless facilitates enforcement of
buildout obligations in the public interest? Should we establish
specific safe harbors to provide more certainty to stakeholders, as
some commenters in this record suggest? What is an appropriate safe
harbor for these types of use cases? Should we only apply (or modify) a
safe harbor in rural areas, recognizing that the Commission adopted a
rural safe harbor for certain radio services in 2004? Would
establishing band-specific alternative metrics or safe harbors aid in
incentivizing partitioning, disaggregation, or leasing with a range of
diverse use cases and in particular, rural providers? How should we
accommodate licensees seeking either to provide services or to meet
internal connectivity needs through fixed, rather than mobile,
operations? Commenters addressing these issues should provide specific
examples and also address the costs and benefits of any recommended
approach.
53. If the Commission determined that the public interest would not
be served by adopting the substantial service concept on a more
widespread basis, we also seek comment on whether there are more
suitable alternative metrics for flexible use licenses in lieu of
population coverage. What are the appropriate alternative performance
benchmarks for these types of spectrum use cases, whether fixed or
mobile or both? Should we apply a specific geographic area coverage
benchmark to these market areas? How could performance requirements be
tailored to meet stakeholder business needs, while ensuring that
business decisions do not result in spectrum lying fallow in
potentially large areas of a market?
e. Reaggregation of Spectrum Licenses
54. Under our current rules, while licensees may partition and
disaggregate their licenses through spectrum transactions, there is no
provision for reaggregating spectrum, even when the partitioned or
disaggregated portions of an original market area are acquired by a
single entity. In the Notice, the Commission sought comment on whether
to permit flexible use licensees to reaggregate licenses that have been
partitioned and/or disaggregated up to a maximum of the original
market/channel block size, provided certain regulatory requirements
have been fulfilled. The Commission asked whether such an approach
would increase the incentives of parties to lease or sell spectrum,
thereby furthering the Congressional and Commission policy goals of
increased spectrum access for small carriers and increased rural
service. Many commenters acknowledge the public interest benefits of
permitting partitioning/disaggregation, but also note that business
circumstances may subsequently necessitate license reaggregation, which
they argue should therefore be permitted by rule with a clear licensing
path for doing so. For example, R Street suggests that ``[a]llowing
reaggregation is essential to well-functioning markets,'' and that
``[p]ermitting free reaggregation alongside disaggregation would not
only allow more flexibility in the use of spectrum over time, it would
also incentivize initial licensees to participate in the secondary
market in the first place.'' CTIA and Google also support this flexible
approach. Google agrees that the reaggregation cap should be the
original size of the market area, while RS Access suggests that ``the
Commission's rules should not restrict aggregation to instances where
the licensee is merely reaggregating previously disaggregated or
partitioned spectrum . . . the rules should permit the aggregation of
licenses that were not previously disaggregated or partitioned,
provided a licensee has satisfied the substantial service requirements
for each of the licenses.''
55. Some commenters, however, oppose a reaggregation process on the
grounds that it would create the ``potential for abuse by large
carriers'' because it would ``encourage . . . licensees to use
partitioning to avoid their buildout obligations by partitioning non-
desirable or hard-to-serve spectrum'' followed by a later reaggregation
and consequent spectrum warehousing. Similarly, GeoLink and WISPA argue
that allowing reaggregation would undermine the goal of increasing
spectrum access by small and rural carriers.
56. The Notice sought comment on the costs and benefits of
permitting reaggregation, as well as whether measures were necessary to
prevent abuse, particularly evasion of any performance requirements
associated with partitioned or disaggregated licenses subject to a
request for
[[Page 74034]]
reaggregation. Stakeholders largely agree that there were substantial
administrative benefits associated with permitting reaggregation,
including those related to construction requirements, renewal showings,
continuous service requirements, and the need to maintain up-to-date
information in the Commission's Universal Licensing System. Commenters
also discuss the added costs associated with maintaining multiple
licenses that were formerly a single license and the extent to which
this could discourage disaggregation in the first place. R Street does
not favor construction requirements, but comments that ``[i]f the
Commission is committed to keeping construction requirements, it could
avoid this difficulty by allowing reaggregation only after the original
construction requirements for the aggregate license area have been
met.'' Google suggests that, ``[t]o the extent that possible
manipulation of disaggregation and reaggregation to evade regulatory
construction deadlines is a concern, the Commission could condition
reaggregation on building out the entire reaggregated service area.''
57. After review of the record, we propose to permit license
reaggregation with appropriate safeguards. Our goal is to further the
public interest by providing a path to removing unnecessary regulatory
barriers to facilitate secondary market transactions and easing
administrative burdens for stakeholders and the Commission. Permitting
reaggregation can make our licensing information easier to use through
a more flexible, yet accountable, data policy for geographic spectrum
licenses. The reaggregation proposal described below, however, is not
intended as an overall reexamination of the Commission's adopted
approaches on key licensing issues related to WRS licenses, including
performance requirements, renewal and associated continuing service
obligations, and permanent discontinuance of operations.
58. Accordingly, we propose to permit licensees to seek
reaggregation of partitioned and/or disaggregated portions of licenses
up to the original geographic size and spectrum band(s) for the type of
license. We believe that this approach is the appropriate scope for
reaggregation requests and that expanding this proposal to permit
consolidation of market licenses not previously partitioned or
disaggregated, as one commenter suggests, would unnecessarily undermine
the established WRS licensing framework and complicate our attempt to
ease administrative burdens. As a safeguard against potential abuses,
we propose to require that, prior to seeking license reaggregation, the
entity requesting reaggregation must ensure that each license to be
reaggregated has: (1) Met all performance requirements (both interim
and final benchmarks); (2) been renewed at least once after meeting any
relevant continuing service or operational requirements, if applicable;
and (3) not violated the Commission's permanent discontinuance rules.
We seek comment on our proposed approach to preventing potential abuses
of our essential licensing requirements, including whether we should
consider further safeguards such as requiring any additional
certifications from applicants seeking license reaggregation.
59. To implement our proposed reaggregation approach, we propose
that a licensee holding multiple active licenses in the same radio
service and for the same channel block may seek reaggregation by:
Filing FCC Form 601, identifying the licenses to be reaggregated, and
certifying that the performance requirements, renewal requirement, and
lack of permanent discontinuance conditions have been met. Under this
proposal, the licenses must be active and held under the same FCC
registration number (FRN). To simplify the administrative process
associated with this effort, we propose to treat this as a separate
filing from any transactions that may be necessary to transfer the
licenses under the same FRN and to prohibit combining a proposed
reaggregation with any other transaction in the same FCC 601
application. We recognize that the subdivided licenses within a
partitioned/disaggregated market may, over the course of license
term(s), be the subject of additional license conditions, rights (such
as granted waivers), and other parameters that make them dissimilar. We
seek comment on this approach and on how best to reflect those unique
parameters on the reaggregated license. For example, if one of the
licenses (but not the others) authorizes operation at higher power
levels through a granted waiver, should the waiver rights and
conditions be transferred to the reaggregated license (but only for the
geographic area and spectrum associated with the license subject to
waiver)? Alternatively, to simplify the process, should we prevent
reaggregation in cases where the licenses do not have identical rights
and conditions? We seek comment on how we should address these types of
circumstances, as well as the costs and benefits of any suggested
alternatives.
f. Other Considerations
60. Open Radio Access Networks. Over the last several years, the
Commission has worked closely with federal partners, equipment
manufacturers, carriers, and other parties on the important issue of
securing the United States' communications networks, in particular in
the area of supply chain risk management. In March, 2021, the
Commission issued a Notice of Inquiry into one potential method of
promoting secure communications networks: Open Radio Access Networks
(Open RAN). Open RAN has the potential to allow carriers to promote the
security of their networks while driving innovation, in particular in
next-generation technologies like 5G, lowering costs, increasing vendor
diversity, and enabling more flexible network architecture. Comments
received in response to that Notice of Inquiry, as well as discussions
enabled by the Commission's Open RAN Solutions Showcase, held on July
14-15, 2021, show that these technologies have great promise.
61. To that end, we seek comment on whether and how we should
factor the use of Open RAN technologies into the ECIP. For example,
should we tie ECIP benefits to the use of Open RAN in network
deployment? If so, what level of use should we require, and how would
parties demonstrate their use in their application? Should this
requirement apply to assignors and lessors, and assignees and lessees,
or only to some parties? Alternatively, how could we further
incentivize ECIP participants to explore Open RAN deployments? Should
we retain our proposed ECIP eligibility requirements, and provide
additional benefits to parties which use Open RAN in their networks? If
so, what should those additional benefits be? Should we make these
benefits available to both assignors/lessors and assignees/lessees, if
both sides of the transaction demonstrate their use of these
technologies?
62. Use or Share Spectrum Access Models. Many commenters proposed
adoption of varying spectrum rights models with the ``use or share''
model emerging prominently in the record. This spectrum rights model
typically involves enabling temporary or opportunistic shared access to
unused portions of a licensed band in which a licensee has not begun
operations.
63. The Open Technology Institute at New America and Public
Knowledge's joint comment references various implementations of the use
or share
[[Page 74035]]
model, in particular noting how this model is employed at 3.5 GHz (via
Spectrum Access Systems) and 600 MHz (via white spaces databases). We
seek comment on ``use or share'' models generally, and in particular on
whether there are voluntary mechanisms or incentives that we could put
into place to promote sharing, whether as part of the ECIP or more
widely. We seek comment on whether such an approach could increase
spectrum access and/or promote competition, and how these mechanisms
could be implemented. We also seek comment on incentives to promote
sharing by licensees with opportunistic users on a secondary basis. We
recognize that dynamic sharing has been managed effectively through
spectrum access systems and databases in some bands, and we seek
comment on the suitability for these systems to facilitate sharing in
other bands. We seek comment also on whether there are particular
scenarios in which licensees and sharing proponents might self-
coordinate without an access system or database, how that would
function, and how we might encourage such arrangements. We seek comment
on the costs and benefits of such approaches to sharing.
64. Digital Equity and Inclusion. Finally, the Commission, as part
of its continuing effort to advance digital equity for all, including
people of color, persons with disabilities, persons who live in rural
or Tribal areas, and others who are or have been historically
underserved, marginalized, or adversely affected by persistent poverty
or inequality, invites comment on any equity-related considerations and
benefits (if any) that may be associated with the proposals and issues
discussed herein. Specifically, we seek comment on how our proposals
may promote or inhibit advances in diversity, equity, inclusion, and
accessibility, as well the scope of the Commission's relevant legal
authority.
IV. Procedural Matters
65. Paperwork Reduction Act Analysis. This Further Notice of
Proposed Rulemaking may contain new or modified information
collection(s) subject to the Paperwork Reduction Act of 1995. If the
Commission adopts any new or modified information collection
requirements, they will be submitted to the Office of Management and
Budget (OMB) for review under section 3507(d) of the PRA. OMB, the
general public, and other federal agencies are invited to comment on
the new or modified information collection requirements contained in
this proceeding. In addition, pursuant to the Small Business Paperwork
Relief Act of 2002, we seek specific comment on how we might ``further
reduce the information collection burden for small business concerns
with fewer than 25 employees.''
66. Regulatory Flexibility Act. The Regulatory Flexibility Act of
1980, as amended (RFA), requires that an agency prepare a regulatory
flexibility analysis for notice and comment rulemakings, unless the
agency certifies that ``the rule will not, if promulgated, have a
significant economic impact on a substantial number of small
entities.'' Accordingly, the Commission has prepared an Initial
Regulatory Flexibility Analysis (IRFA) concerning potential rule and
policy changes contained in this Further Notice of Proposed Rulemaking.
The IRFA is contained in Appendix B to the Further Notice of Proposed
Rulemaking.
V. Ordering Clauses
67. Accordingly, it is ordered, pursuant to sections 1, 4(i), 303,
and 310(d) of the Communications Act of 1934, as amended, and section
616 of the Making Opportunities for Broadband Investment and Limiting
Excessive and Needless Obstacles to Wireless Act, 47 U.S.C. 151,
154(i), 303, 310(d), 1506, that this Further Notice of Proposed
Rulemaking is hereby adopted.
68. It is further ordered that, pursuant to applicable procedures
set forth in Sec. Sec. 1.415 and 1.419 of the Commission's Rules, 47
CFR 1.415 and 1.419, interested parties may file comments on the
Further Notice of Proposed Rulemaking on or before 60 days after
publication in the Federal Register, and reply comments on or before 90
days after publication in the Federal Register.
69. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Further Notice of Proposed Rulemaking, including the
Initial Regulatory Flexibility Analysis, to the Chief Counsel for
Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Part 1
Practice and procedure, Wireless radio services Applications and
proceedings, Spectrum leasing.
Federal Communications Commission.
Marlene Dortch,
Secretary.
Proposed Rules
The Federal Communications Commission proposes to amend 47 CFR part
1 as follows:
PART 1--PRACTICE AND PROCEDURE
0
1. The authority citation for part 1 continues to read as follows:
Authority: 47 U.S.C. ch. 2, 5, 9, 13; 28 U.S.C. 2461, unless
otherwise noted.
0
i. Amend Sec. 1.950 by revising the heading of paragraph (c) and
adding paragraph (i) to read as follows:
Sec. 1.950 Geographic partitioning and spectrum disaggregation.
* * * * *
(c) Filing requirements for partitioning and disaggregation. * * *
* * * * *
(i) Reaggregation of licenses. (1) A licensee of multiple licenses
which were disaggregated or partitioned, pursuant to Sec. 1.950, from
the same Wireless Radio Service License may apply to reaggregate those
licenses into one new license.
(i) Parties may not reaggregate licenses unless all licenses to be
aggregated were once part of the same Wireless Radio Service license.
(ii) All performance requirements for the licenses to be combined
through reaggregation must have been completed and certified as
required prior to the filing of the application.
(iii) Each of the licenses to be combined through reaggregation
must have been renewed at least once since the completion and
certification of all performance requirements.
(iv) None of the licenses being combined may have violated the
Commission's permanent discontinuance rules, as applicable to that
license.
(2) A licensee does not need to reaggregate all licenses which were
once part of the original Wireless Radio Service license in order to
qualify for reaggregation.
(3) Licensees seeking approval for reaggregation of licenses must
apply by filing FCC Form 601. Each request which involves geographic
area aggregation must include an attachment defining the boundaries of
the licenses being aggregated by geographic coordinates to the nearest
second of latitude and longitude, based upon the 1983 North American
Datum (NAD83). The licenses must all be active in the Commission's
licensing system, and held by the same licensee under the same FCC
Registration Number.
0
2. Add Sec. 1.961 to read as follows:
Sec. 1.961 Enhanced competition incentive program.
(a) Definitions--(1) Covered small carrier. A covered small carrier
is a carrier (as defined in section 3 of the
[[Page 74036]]
Communications Act of 1934 (47 U.S.C. 153)) that has not more than 1500
employees (as determined under Sec. 121.106 of title 13, Code of
Federal regulations, or any successor thereto) and offers services
using the facilities of the carrier.
(2) Enhanced Competition Incentive Program. The Enhanced
Competition Incentive Program allows licensees to assign or lease some
of their spectrum rights pursuant to a given Wireless Radio Service
license as part of a qualifying transaction, as defined in paragraph
(b) of this section, and in return receive certain benefits, as defined
in paragraph (c) of this section.
(3) Qualifying transaction. A qualifying transaction under the
Enhanced Competition Incentive Program, as defined in paragraph (b) of
this section.
(4) Rural area. A rural area is any area other than:
(i) A city, town, or incorporated area that has a population of
more than 20,000 inhabitants; or
(ii) An urbanized area contiguous and adjacent to a city or town
that has a population of more than 50,000 inhabitants.
(5) Tribal Entity. A Tribal entity is any federally-recognized
American Indian Tribe or Alaska Native Village, as well as consortia of
federally recognized Tribes and/or Native Villages, or other entities
controlled and majority-owned by such Tribes or consortia.
(b) Eligibility. (1) In order to qualify for benefits under the
Enhanced Competition Incentive Program, a qualifying transaction must
partition or disaggregate (pursuant to Sec. 1.950) or lease (pursuant
to Subpart X of this part) a minimum of 50% of the frequencies
authorized by a Wireless Radio Service license to an unaffiliated
entity.
(2) That transaction must also involve either:
(i) An assignee or lessee which is a covered small carrier or
Tribal Nation which receives rights to a minimum of 25% of the Wireless
Radio Service license area; or
(ii) Any assignee or lessee that proposes to cover at least 300
contiguous square miles of rural area for license areas consisting of a
Partial Economic Area or smaller, as defined in Sec. 27.6(a) of this
chapter. The transaction may not involve a party which has been
previously found to have failed to comply with the requirements of the
Enhanced Competition Incentive Program, whether as an assignee or a
lessee.
(3) The transaction may not involve any license which has
previously been included in a qualifying transaction and received
benefits under the Enhanced Competition Incentive Program.
(c) Incentives. Parties to a qualifying transaction will be
eligible to receive the following benefits.
(1) License term extension. The license term for all licenses
involved in a qualifying transaction will be extended by five (5)
years. If other Commission action, whether by Order or by rule, would
otherwise have modified the license term for the party's license, this
increase would be in addition to that modification.
(2) Construction extension. The period in which each party is
required to demonstrate compliance with the relevant interim and/or
final performance requirements of the license will be extended by one
(1) year. This will apply to all relevant performance deadlines
applicable to this license but will have no impact on any license not
covered by the qualifying transaction.
(3) Alternative construction requirements. The assignee of a
disaggregated or partitioned license in a qualifying transaction under
clause (b)(2)(ii) of this section which involves the assignment of, and
commitment to cover and serve, a qualifying geography of rural area
will substitute the construction requirements which apply to this
license with actual coverage over the entirety of the qualifying
geography that was the basis for the qualifying transaction, as well as
the provision of service to the public, or operation addressing private
internal business needs over that area. The assignor of such license
remains subject to its original construction requirements, as modified
in this section.
(d) Filing requirements. Parties seeking to participate in the
Enhanced Competition Incentive Program must file for a partition or
disaggregation pursuant to Sec. 1.950 or a spectrum lease pursuant to
subpart X of our rules. As part of the application, the parties should
state whether the transaction qualifies under clause (b)(2)(i) or (ii)
of this section, show their satisfaction with all relevant eligibility
requirements, and request participation in the program.
(e) Protections against waste, fraud, and abuse.
(1) Operating requirements. Licenses assigned through the Enhanced
Competition Incentive Program pursuant to paragraph (b)(2) of this
section must provide service for a period of at least three (3) years,
commencing no later than the next construction deadline for the license
(as modified by this program). Lessees of Enhanced Competition
Incentive Program transactions must provide service for a period of at
least three (3) years during any period within the five (5) years of
that lease. The service for licensees and lessees must not fall below
the level of service used (or which will be used) to meet its
construction requirement or by which it qualifies for participation in
the program.
(2) Holding period. (i) Licenses assigned through the Enhanced
Competition Incentive Program must be held for a period of at least
five (5) years following grant of the assignment application. Leases
made through the Enhanced Competition Incentive Program must be for a
minimum of five years and remain in effect for the entire term of the
lease and may not be assigned to another party.
(ii) Licenses assigned through the Enhanced Competition Incentive
Program may not be assigned, even after five (5) years following the
grant of the assignment application, unless the underlying construction
and operating requirements imposed, either through the Enhanced
Competition Incentive Program or by other rule, have been satisfied.
(iii) These assignment restrictions do not apply to pro forma
transfers pursuant to Sec. 1.948(c)(1).
(5) Automatic termination. If the licensee of a license assigned
pursuant to the Enhanced Competition Incentive Program fails to meet
performance requirements, including requirements imposed by this
paragraph and those imposed by other Commission rules, that license
shall be automatically terminated without further notice to the
licensee.
[FR Doc. 2021-27493 Filed 12-28-21; 8:45 am]
BILLING CODE 6712-01-P
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