For more information, please contact Michael Bennet at mbennet@bennetlaw.com or Erin Fitzgerald at efitzgerald@bennetlaw.com.
The Federal Communications Commission’s (FCC or Commission) Wireless Telecommunications Bureau (Bureau) has issued a Public Notice (Notice) seeking comment on the process for relicensing 700 MHz spectrum in unserved areas.[1]
Bottom Line: Rural carriers may have an opportunity to secure a license for unused 700 MHz spectrum. Attempts to acquire such spectrum will be governed by the proposed procedures. Carriers concerned about the proposed 100% buildout requirement should consider filing comments.
BACKGROUND
FCC rules require Lower 700 MHz A, B, and E Block licensees to provide reliable service sufficient to cover 35 percent of the geographic area of their licenses within four years and 70 percent within ten years (the license term). Upper 700 MHz C Block licensees must provide reliable service sufficient to cover 40 percent of the population of their license area within four years and 75 percent within ten years. For licensees that fail to meet the applicable interim benchmark, the license term will be accelerated by two years.
Under the “keep-what-you-serve” (KWYS) rules, if a licensee fails to meet its end-of-term construction deadline, its authorization to operate will terminate automatically for those geographic areas where it is not providing service on the date of the end-of-term deadline, and those areas will become available for reassignment by the Commission.[2] Section 27.14(j) of the FCC’s rules spells out some of the procedures for relicensing of unserved spectrum, and the Commission delegated to the Bureau the authority to establish by public notice the process by which licenses will become available for relicensing under these rules.
PUBLIC NOTICE
The Notice sets forth the 700 MHz reassignment process procedures required by the rules and seeks comment on additional procedures.
In order to implement the KWYS rules, the Bureau proposes and seeks comment on a process whereby licensees would demonstrate the “served” area of the license by filing a shapefile showing a smooth enclosed 40 dBu V/m field strength contour (Smooth Contour) of existing facilities as of the end-of-term deadline. The area within this contour would be deemed “served” by the Commission and comprise the licensee’s new reduced license area.
Because the FCC recognized that some licensees might provide service at a significantly lower field strength such that the 40 dBu V/m Smooth Contour would result in a reduced licensed area that is substantially smaller than the licensee’s actual service area, it proposed to allow a licensee whose 40 dBu V/m Smooth Contour would result in a reduced license area at least 25 percent smaller than the licensee’s actual service area to demonstrate the service area using a lower dBu V/m field strength smooth contour (Alternative Smooth Contour). An Alternative Smooth Contour showing would be required to demonstrate that: (1) the licensee is operating a viable service at the lower field strength; and (2) the service area using the lower dBu V/m field strength Alternative Smooth Contour is at least 25 percent larger than it would be using the 40 dBu V/m field strength Smooth Contour.
After submission of this showing, the Bureau would update the license in the FCC’s Universal Licensing System (ULS) using either the Smooth Contour or Alternative Smooth Contour shapefile to reflect the reduced license boundary, and the remaining portion of the original license market would be deemed unserved area and would return to the FCC’s inventory for relicensing. However, geographic area to be made available for relicensing must include a contiguous area of at least 50 square miles. Accordingly, areas smaller than a contiguous area of at least 50 square miles will not be deemed unserved for relicensing purposes and will be retained by the licensee.
The Bureau would issue a public notice identifying the areas available for relicensing and providing further instructions and specific dates for the commencement of the relicensing process. The deadline for applying for unserved area would be at least 60 days after the issuance of such public notice.
RELICENSING PROCESS
The FCC’s rules provide for a two-phase process for applying to serve unserved areas available for relicensing.
Applications
The Notice describes the application process that will apply to applications for available unserved areas. Subject to certain restrictions, applicants may apply for any area, shape, or number of available areas they choose. Applicants will file an application for either a new license or to modify an existing license, and will submit a shapefile covering the area they wish to license. The Commission emphasizes that “applicants will not be required to, and should not, file any technical specifications of the services they intend to provide” and that the Bureau’s acceptance of an application that includes such information is not an acceptance of those technical specifications. All applications for available unserved areas found acceptable for filing (including the shapefile) will be placed on public notice and available for public review and comment. Because the shapefile is critical to determining whether an application is mutually exclusive with another application, the FCC does not anticipate affording confidential treatment to a shapefile.
The Bureau proposes to limit a single application to one shapefile of a contiguous shape, or, if non-contiguous, requiring that the shapes be within a single market boundary. If an applicant files for non-contiguous shapes in a single application, grant of the application would result in a single license and a single buildout requirement would be applied to all shapes as a whole.
Phase 1
Pursuant to the FCC’s rules, relicensing will begin with a 30-day Phase 1 filing window, during which the original licensee that failed to construct is barred from applying to relicense that area. The Commission proposes to apply the bar to “any applicant that has any interest or ownership in, or any control of, the original licensee and to any applicant in which the original licensee has any interest, ownership, or control.” The Notice seeks comment on this approach as well as potential alternatives, including application of the FCC’s pro forma standard for determining ownership, which looks to both de jure (legal) and de facto (in fact) control of the licensee, and whether the approach should vary depending on whether the wireless provider is small or large.
At the end of the 30-day Phase 1 filing window, the Bureau will issue a public notice listing applications found acceptable for filing during Phase 1. Applications proposing areas overlapping with other applications will be deemed mutually exclusive and will be subject to auction.[3] The Bureau proposes to designate a limited settlement period for applicants to resolve mutual exclusivity prior to auction. If one or both of the mutually exclusive applicants agrees to reduce or “pull back” the area covered by the application in order to avoid mutual exclusivity, the change is deemed a minor amendment and does not require a new public notice period. If one of the applicants modifies its application to include any area not specified in its original application, such a change would be deemed a major amendment and the application would be dismissed as impermissible if modified after the close of the Phase 1 filing window. At that point, the dismissed applicant could file a new application for a license covering the modified service area, but such application, because it would be filed during Phase 2, would be subject to potential Phase 2 competing filings.
Phase 2
During Phase 2, interested applicants, including those barred during Phase 1, may file applications for available unserved areas that were not licensed during Phase 1 or for which there are no pending applications. Phase 2 applications deemed acceptable for filing will then be placed on public notice for 30 days, during which petitions to deny and mutually exclusive applications may be filed.
The Notice seeks comment on a process where the Bureau would update the publicly available relicensing map following Phase 1 to reflect pending applications, licenses that were issued, and area that remains available for relicensing. The public notice for the first-filed application would determine the applicable filing period for all subsequent mutually exclusive or daisy chain applications. The Bureau then proposes that parties filing mutually exclusive applications be given 60 days to resolve the mutual exclusivity before they go to auction.
CONSTRUCTION REQUIREMENTS
The FCC’s rules impose very strict construction requirements for entities successful in the relicensing process. Under Section 27.14(j)(3) of the FCC’s rules, licensees of 700 MHz licenses acquired through the relicensing process will have one year from the date the new license is issued to complete construction, provide signal coverage, and offer service over 100 percent of the geographic area of the new license area. If the licensee fails to meet this construction requirement, its license will automatically terminate without Commission action and it will not be eligible to apply to provide service to this area at any future date. Indeed, the Notice clarifies that any portion of the relicensed area that remains unserved at the one-year construction deadline, even if less than 50 square miles, will result in failure to meet the requirement and application of the license termination penalty. The Bureau also clarifies that a government lands exclusion does not apply to relicensed area. In other words, if a service provider were to apply for a relicensed area that includes government lands, it will be required to provide service to those lands in order to meet the construction requirement.
Operations in relicensed area remain subject to the field strength limit of 40 dBu V/m at the license boundary. Licensees providing services at a field strength higher than this limit will need to coordinate with neighboring licensees to avoid interference issues.
The Bureau proposes to treat any modification, cancellation, or assignment of license as a failure to meet the construction requirement, and the penalty for failure would apply. Licensees would be permitted to file applications to assign licenses acquired through relicensing (including requests to partition and disaggregate) only after they have demonstrated that they have met the construction benchmark.
Within 15 days after the one year construction deadline, licensees will be required to file a construction notification with the FCC demonstrating that they provide signal coverage and offer service over 100 percent of the geographic area by filing either a Smooth Contour or an Alternative Smooth Contour, consistent with the proposed required filings for KWYS.
COMMENT DEADLINES
Entities which may be interested in acquiring unserved 700 MHz spectrum should consider filing comments opposing the 100% construction requirement. Such a requirement may but new licensees at risk of losing their license merely due to a de minimis shortfall in coverage. Comments on the proposals in the Notice are due September 27, and reply comments are due October 10. If you have any questions regarding the proposed procedures, or if you are interested in filing comments, please let us know.
[1] Wireless Telecommunications Bureau Seeks Comment on Process for Relicensing 700 MHz Spectrum in Unserved Areas, Public Notice, WT Docket No. 06-150, DA 17-810 (rel. August 28, 2017).
[2] 47 C.F.R. 27.14(g)(2).
[3] The Bureau proposes that the definition of mutually exclusive applications include “’daisy chains’ of mutual exclusivity, which occur when two or more applications contain proposed areas that do not directly overlap, but are linked together into a chain by the overlapping proposal(s) of other(s).”
