Service Rules for the 698-746, 747-762 and 777-792 MHz Bands; Revision of the Commission's Rules To Ensure Compatibility With Enhanced 911 Emergency Calling Systems; et al., 19424-19430 [2013-07397]
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Federal Register / Vol. 78, No. 62 / Monday, April 1, 2013 / Rules and Regulations
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[FR Doc. 2013–07384 Filed 3–29–13; 8:45 am]
BILLING CODE 6560–50–P
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Parts 1, 22, 24, 27 and 90
[WT Docket Nos. 06–150, 01–309, 03–264,
06–169, 96–86, 07–166, CC Docket No.
94,102, PS Docket No. 06–229; FCC 13–29]
Service Rules for the 698–746, 747–762
and 777–792 MHz Bands; Revision of
the Commission’s Rules To Ensure
Compatibility With Enhanced 911
Emergency Calling Systems; et al.
Federal Communications
Commission.
ACTION: Final rule; petition for
reconsideration.
AGENCY:
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I. Introduction
1. In this MO&O, the Commission
addresses petitions that were filed
seeking reconsideration of certain
decisions made by the Commission in
the 700 MHz Second Report and Order
at 72 FR 48814, Aug. 24, 2007, relating
to the 698–806 MHz Band (herein, the
700 MHz Band).
II. Discussion
The Memorandum Opinion
and Order on Reconsideration (MO&O)
denies or dismisses petitions seeking
reconsideration of certain decisions
made by the Commission in the 700
MHz Second Report and Order, relating
to the 698–806 MHz Band, including
decisions regarding performance
requirements, the auction and
competitive bidding rules, the open
platform rules, public safety
narrowband relocation procedures, and
the decisions not to impose wholesale
requirements, eligibility restrictions,
and spectrum aggregation limits. This
MO&O also dismisses as moot petitions
for reconsideration of rules establishing
a Public/Private Partnership between
the Upper 700 MHz D Block (D Block)
licensee and the Public Safety
Broadband Licensee in the 763–768
MHz and 793–798 MHz bands.
DATES: Effective May 1, 2013.
FOR FURTHER INFORMATION CONTACT:
Peter Trachtenberg at (202) 418–7369 or
peter.trachtenberg@fcc.gov, Wireless
Telecommunications Bureau, Spectrum
and Competition Policy Division.
SUPPLEMENTARY INFORMATION: This is a
summary of the Commission’s
Memorandum Opinion and Order on
Reconsideration, WT Docket Nos. 06–
150, 01–309, 03–264, 06–169, 96–86,
07–166, CC Docket No. 94,102, PS
Docket No. 06–229; FCC 13–29, adopted
February 28, 2013 and released March 1,
2013. The full text of this document is
available for inspection and copying
during normal business hours in the
FCC Reference Center (Room CY–A257),
445 12th Street SW., Washington, DC
20554. The complete text of this
document also may be purchased from
the Commission’s copy contractor, Best
SUMMARY:
Copy and Printing, Inc., 445 12th Street
SW., Room, CY–B402, Washington, DC
20554. The full text may also be
downloaded at: www.fcc.gov. People
with Disabilities: To request materials in
accessible formats for people with
disabilities (braille, large print,
electronic files, audio format), send an
email to fcc504@fcc.gov or call the
Consumer & Governmental Affairs
Bureau at 202–418–0530 (voice), 202–
418–0432 (tty).
A. Performance Requirements
2. Below the Commission discusses
the issues raised by petitioners with
respect to the performance requirements
that the Commission established in the
700 MHz Second Report and Order.
After careful consideration of the
arguments raised in the petitions for
reconsideration, the Commission denies
the requests to modify the existing
performance requirements.
1. Geographic-Based Coverage
Requirements for CMA and EA Licenses
3. Blooston Rural Carriers (Blooston),
MetroPCS Communications, Inc.
(MetroPCS), and Rural
Telecommunications Group, Inc. (RTG)
filed petitions for reconsideration
challenging various aspects of the
geographic-based performance
requirements.
4. The Commission denies the
petitioners’ requests to alter the
geographic-based coverage
requirements. First, the Commission is
unpersuaded by Blooston’s arguments
that a geographic-based performance
requirement on CMA licensees (i.e.
licensees in Lower 700 MHz B Block) is
arbitrary and unworkable and should be
supplemented with the option of
meeting a population-based benchmark.
The Commission provided reasonable
justifications for its decision to adopt a
geographic-based build-out requirement
for CMA and EA licenses, and the
Commission finds nothing in the record
to persuade it to change this decision.
The Commission particularly noted that:
[b]ecause [the Commission] adopt[s] smaller
geographic license areas such as CMAs to
facilitate the provision of service * * * in
rural areas, [it] also adopt[s] performance
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requirements that are designed to ensure that
such service is offered to consumers in these
areas.
The Commission further found that:
the uniqueness of the 700 MHz spectrum
justifies the use of geographic benchmarks
* * *.
Blooston argues that the Commission
arbitrarily discriminated against CMA
licenses by providing population-based
requirements on both EA and REAG
licensees. In fact, the Commission
imposed identical geographic-based
requirements on EA and CMA licenses,
and it reasonably justified its decision to
adopt a different approach for the much
larger REAG licenses. Blooston argues
that for some licenses, meeting the
geographic-based benchmarks will be
impractical, and offers analysis of nine
CMAs out of the 734 in Lower 700 MHz
B Block. For specific cases of hardship,
however, providers can seek waiver
relief. Blooston offers no evidence
demonstrating that a geographic-based
benchmark is inherently impractical in
the usual case.
5. Indeed, the results of the auction of
Lower 700 MHz B Block licenses
provide further support for the
reasonableness of the Commission’s
geographic-based performance
requirements. In the 700 MHz Second
Report and Order, the Commission
decided that, if those geographic-based
requirements caused a reduction in the
monetary value of the licenses to such
an extent that bidding in the auction
resulted in the Lower 700 MHz B Block
failing to meet its applicable aggregate
reserve price, the licenses for that block
would be re-auctioned subject to
population-based performance
requirements. Thus, the Commission
relied in part on the auction results as
a final check on whether its geographicbased performance requirements were
in the public interest. When the licenses
were auctioned in Auction 73, the
Commission received provisionally
winning bids on 728 out of 734 Lower
700 MHz B Block licenses and the
aggregate amount of the provisionally
winning bids far exceeded the
applicable aggregate reserve price.
Accordingly, the Commission reaffirms
the geographic-based coverage
requirement for Lower 700 MHz B Block
licensees and the Commission denies
Blooston’s request to add an optional
population-based benchmark to Lower
700 MHz B Block. For similar reasons,
the Commission rejects the requests of
various commenters for a populationbased buildout option for EA licensees.
6. The Commission also rejects
arguments that the Commission should
broaden the exclusions from the
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Commission’s geographic coverage
requirements. The Commission’s
geographic coverage requirements
already exclude government lands, and
any further categorical exclusions could
undermine the Commission’s goals in
adopting these requirements, which
include taking advantage of the
excellent propagation characteristics of
700 MHz spectrum to promote wireless
coverage in remote and rural areas. Even
with regard to bodies of water, there is
a public interest benefit to wireless
coverage to vessels near shore, and some
level of coverage may be possible from
infrastructure on land or, where
relevant, through platforms or other
facilities constructed out from the shore.
In some cases, there may also be
demand from economic activity that
may benefit from access to advanced
communications services over the
relevant body of water. For example, for
both EAs and CMAs, the Commission
separately licenses the Gulf of Mexico as
a service area, reflecting the
Commission’s recognition of the public
interest in promoting the deployment of
service there to help meet the growing
communications needs of petroleum
and natural gas providers in the area.
7. Further, the Commission already
specifically considered and rejected
exclusions for Tribal lands, finding that
it did not want to discourage
deployment to these areas. While
Blooston would limit exclusion of
Tribal lands to cases where a licensee
had made a good faith but unsuccessful
attempt to obtain Tribal government
consent, the Commission see no
evidence that such consent will often be
unreasonably withheld, and the
Commission is concerned that an
exclusion for Tribal lands may result in
reduced efforts to obtain such consent
and deploy in these areas.
8. In sum, the Commission concludes
that the requested categorical exclusions
are not appropriate, but, as mentioned
in the 700 MHz Second Report and
Order itself, licensees may seek waivers
of the Commission’s rules if they believe
the circumstances in a particular area
warrant relief under the Commission
waiver standard. If licensees seek to
obtain such waivers, the Commission
urges that they make these requests as
soon as possible. These requests must be
well founded and not based solely on
grounds of low population density. The
Commission staff will consider these
types of requests on a case-by-case basis.
2. Benchmarks for REAG Licenses
9. In the 700 MHz Second Report and
Order, the Commission imposed a
population-based performance
requirement on Regional Economic Area
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Groupings (REAG) licensees, who
occupy the Upper 700 MHz C Block. In
its petition for reconsideration, RTG
argues that a geographic-based coverage
requirement will better ensure that
REAG licensees deploy in rural areas.
10. The Commission concludes that it
will retain the requirement that REAG
licensees must meet the populationbased benchmarks. RTG argues that the
REAG approach is inconsistent with the
approach the Commission took with
regard to EA and CMA licenses, but
there is no requirement that the
performance requirements be the same
for all commercial wireless services, nor
even for those of a certain type. The
Commission explained its
determination that population-based
benchmarks were better suited for the
much larger REAG licenses in some
detail, and there is nothing new in the
record to persuade the Commission to
change this decision. This decision
involved tradeoffs particular to the
expectation that these licenses would
lead to regional or even nationwide
network deployment. Contrary to RTG’s
assertion, the Commission was mindful
not only of the need to develop regional
and nationwide networks, but also of
the need to promote wireless services in
less populated portions of the nation,
including rural areas. To address this
concern, it provided that REAG
licensees must meet the populationbased build-out requirements on an EA
basis. RTG questions the Commission’s
expectation that the REAG licenses were
more likely to be used to provide
regional or nationwide service than the
much smaller EA and CMA licenses but
offers nothing to undermine the
Commission’s well-supported predictive
judgment. Therefore, the Commission
denies RTG’s request that REAG
licensees be required to meet a
geographic-based coverage requirement.
3. Keep-What-You-Use Provisions
11. In the 700 MHz Second Report
and Order, the Commission established
both interim and end-of-term
enforcement measures that would apply
automatically in the event that licensees
failed to meet the applicable
benchmarks. For licensees that fail to
meet the applicable interim benchmark,
the Commission decided that the
normal ten year license term would be
reduced by two years, and the end-ofterm benchmark must then be met
within eight years. The Commission
determined that, at the end of the
license term, licensees that fail to meet
the end-of-term benchmark would be
subject to a keep-what-you-use rule,
which would make unused spectrum
available to other potential users. For
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those CMAs or EAs in which the endof-term performance requirements have
not been met, the unused portion of the
license will terminate automatically
without Commission action and will
become available for reassignment by
the Commission. Similarly, if a REAG
licensee fails to provide signal coverage
and offer service to at least 75 percent
of the population in any EA comprising
the REAG license area by the end of the
license term, the unused portion of each
such EA in that licensee’s authorization
area will terminate automatically
without Commission action and will
become available for reassignment by
the Commission.
12. The Commission further
established a process governing the
reassignment of licenses made available
pursuant to the keep-what-you-use
rules. As part of this process, the
Commission provided that the licenses
will be subject to an initial 30-day
application period during which the
original licensee may not file an
application. Following this period, the
original licensee is permitted to file an
application for any remaining unserved
area where licenses have not been
issued and there are no pending
applications.
13. Several petitioners seek
reconsideration of the keep-what-youuse rules. Blooston requests that the
Commission provide a
more precise definition of how the take-back
process will work, and what propagation
model will be used.
MetroPCS requests that the Commission
modify the current rule to adopt a
triggered approach, under which the
original licensee would only lose
unserved areas if a third party files a
credible application, demonstrating
a bona fide desire, and the wherewithal, to
build-out the spectrum in the unserved
market, [and submits a] meaningful upfront
payment [that is] sufficiently large to deter
speculators.
MetroPCS also requests that the
incumbent should be allowed to
participate in any auction of the
unserved spectrum. Finally, Blooston
and MetroPCS request that an original
licensee of 700 MHz commercial
spectrum subject to loss of unused
license area under the keep-what-youuse rule be allowed to retain an
expansion area in addition to the area it
serves at the end of its license term.
14. The Commission denies the
requests to alter the keep-what-you-use
rules that the Commission adopted in
the 700 MHz Second Report and Order.
First, the Commission disagrees with
Blooston’s assertion that the
Commission needs to provide a more
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detailed explanation of how the process
will work and what propagation model
will be used. The Commission finds that
the 700 MHz Second Report and Order
already sets forth the process
implementing the keep-what-you use
provisions in significant detail, starting
with the filing of construction
notifications up through the
reassignment process, and that further
detail regarding the take-back process is
unnecessary at this time. Further, a
specific propagation model would be
contrary to the flexibility that the
Commission adopted. In establishing
the construction notification through
which licensees will demonstrate
compliance with performance
requirements, the Commission
recognized that
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demonstrations of coverage may vary across
licensees, [who] will likely use a variety of
technologies to provide a range of services
with this spectrum.
It specifically rejected a request for a
bright-line test for what constitutes
sufficient signal strength, provided
instead that licensees must provide the
assumptions they use to create coverage
maps, including the propagation model
and signal strength necessary to provide
service, and also delegated to the
Wireless Telecommunications Bureau
(Wireless Bureau) the authority to
establish further specifications for
filings and to determine coverage areas.
The Commission sees no reason to
reverse this decision, and therefore
rejects Blooston’s request.
15. The Commission also denies
proposals that the Commission revise
the keep-what-you-use rules to provide
for a triggered approach, under which a
licensee would not lose unused
spectrum until a party seeking the
spectrum first files an application for
the area meeting certain requirements
for sufficiency. The Commission notes
that the Commission sought comment
on a triggered keep-what-you-use
approach similar to MetroPCS’s
proposal prior to adopting the existing
rule. The Commission already has
application procedures to ensure that
license approvals are in the public
interest. Under the Commission’s
existing rules, before any application
will be granted, the applicant must
already demonstrate, inter alia, that it is
legally, technically, financially, and
otherwise qualified [and that a] grant of
the application would serve the public
interest, convenience, and necessity.
Requiring applicants seeking
authorization over unused spectrum to
demonstrate their bona fides in new
ways above and beyond such
established and familiar license
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application processes may in fact
discourage bona fide interest in such
spectrum, undermining the
Commission’s goal of putting this
spectrum to use. Further, because these
proposed revisions to the rules decrease
the original licensee’s risk of
consequences for failing to build-out,
they may lessen the incentive for the
licensee to expand service into parts of
its license areas by the end of its license
term. The Commission also does not
find persuasive MetroPCS’s argument
that a triggered approach reduces the
prospect that forfeited unserved license
areas will lie fallow in the
Commission’s hands. The rules already
address this possibility: if no
application is filed by third parties in 30
days, the original licensee is free to
apply for it.
16. The Commission also rejects
MetroPCS’s arguments that in the event
the original licensee loses its license or
parts thereof through application of the
keep-what-you-use rules, it should be
allowed to participate in any reauction
of the recaptured license areas. Under
the Commission’s build-out rules, the
original licensee has ample opportunity
to meet its build-out requirements.
Further, barring the original licensee
from participating during the initial
reauction of its unserved license areas is
a reasonable penalty for the licensee’s
failure to meet its build-out
requirements. This measure helps
ensure that the original licensee will
make all reasonable efforts to meet its
performance benchmarks and that the
Commission licenses spectrum to those
parties that are most likely to use it.
MetroPCS argues that the Commission’s
rule enhances the risk that the original
licensee will be subject to green mail
from speculators. The Commission
thinks the risk of speculators acquiring
unused spectrum for green mail
purposes is small, however, given that
the Commission also required new
licensees of spectrum made available
under the keep-what-you-use rule to
offer service to the entire license area
within one year, and provided that if
they fail to meet this requirement, they
lose the license automatically and are
ineligible to file an application to
provide service in the same area over
the same frequencies at any future date.
17. Finally, the Commission is not
persuaded that licensees that fail to
meet the end-of-term benchmark should
nevertheless retain a portion of the
unserved area of their licenses as an
expansion area. Parties argue that an
expansion area is justified for a number
of reasons including the potential need
to address changes in customer demand,
subsequent development of areas,
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population growth, and replacement of
base stations, or as a buffer to avoid
interference. The Commission finds,
however, that permitting licensees to
keep a part of their unused license areas
as petitioners propose would undermine
the Commission’s keep-what-you-use
policy goals of motivating licensees to
meet their benchmarks and promoting
access to spectrum that is not
adequately built out and deployment of
service to communities that might
otherwise not receive it. Further, the
rules adopted in the 700 MHz Second
Report and Order provide ample
opportunity for licensees to construct
facilities and provide service in their
licensed areas. The Commission
therefore rejects the requests for an
expansion area under the keep-whatyou-use rules.
4. Potential Enforcement Provisions for
Failure To Build Out
18. Blooston, MetroPCS, and RTG
seek reconsideration of the potential
mid-term and end-of-term construction
benchmarks enforcement provisions.
MetroPCS and RTG contend that the
Commission did not provide guidance
regarding under what circumstances
these potential enforcement actions
might be taken and they propose various
standards. Blooston argues that the
Commission should repeal these
enforcement provisions altogether, and
that the Commission did not provide the
notice required by the Administrative
Procedure Act (APA) before adopting
forfeitures as a potential enforcement
measure.
19. The Commission is not persuaded
that the Commission should adopt the
modifications to the potential
enforcement provisions proposed by
petitioners. Although petitioners argue
that their proposals would resolve
ambiguity in the Commission’s rules,
the Commission finds that their
proposals would substantially limit the
Commission’s enforcement options. For
example, MetroPCS argues that that the
option of license termination at end-ofterm should apply only in cases of
failure to provide substantial service. It
is already the case under the license
renewal requirement, however, that a
licensee’s failure to demonstrate that it
is providing substantial service results,
by operation of the rules, in loss of the
license. Thus, MetroPCS’s interpretation
would effectively eliminate license
termination as a separate mechanism for
enforcing the performance requirements
prior to the end of a license term. In
rejecting this proposal to partially
conflate the substantial service and
performance requirements, the
Commission also notes that it has
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previously emphasized that the
substantial service requirement at
renewal is distinct from the
performance requirements.
20. RTG’s proposal—that a licensee
should be subject to additional
enforcement only if it utterly fails to
construct a system—goes even further; it
not only eliminates license termination
as an enforcement mechanism prior to
the end of a license term, but it also
reduces this mechanism to a mere
subset of its existing form as a license
renewal requirement. Therefore, the
Commission is not persuaded that any
of the petitioners’ proposed
clarifications are consistent with the
Commission’s adoption of these
enforcement measures.
21. The Commission also disagrees
with arguments that the Commission
provided no justification in support of
the additional enforcement mechanisms
and should eliminate them entirely. In
adopting its requirements, the
Commission underscored that it
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expect[ed] that licensees will take these
construction requirements seriously and
proceed toward providing service with
utmost diligence, [and concluded that] these
set of stringent benchmarks * * * with
effective consequences for noncompliance
* * * are the most effective way to promote
rapid service to the public, especially in rural
areas.
The additional enforcement
mechanisms thus reflect the importance
of effective enforcement to achieving the
Commission’s goals for the 700 MHz
Band and its determination that the
additional mechanisms would help to
ensure that enforcement would be
effective. Blooston objects that the
application of fines in particular is a
departure from prior Commission
practice with regard to enforcement of
buildout requirements. However, the
enforcement regime was also novel in
other respects, including its adoption of
the keep-what-you-use rules. Therefore,
the suggestion that the Commission
should eliminate one element in order
to conform to prior practice is
unpersuasive. The Commission also
rejects the assertion that the
Commission acted without notice. The
Commission twice sought comment
broadly on how to revise the
performance requirements, and the
Commission finds that adoption of
measures to enforce such requirements
are well within the scope of the issues
raised. The Commission also notes that
the Commission is not obligated to
provide APA notice to impose a
forfeiture pursuant to section 503 of the
Act.
22. The Commission rejects
Blooston’s argument that forfeitures are
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inappropriate because, in failing to meet
performance benchmarks, a licensee
does not actually violate a rule but
merely exercises an option under the
rules to lose a given area. The 700 MHz
Second Report and Order is clear that
the benchmarks are requirements, and
§ 27.14 imposes these buildout
requirements without qualification,
providing that EA and CMA licenses
shall provide signal coverage and offer
service over at least 35 percent of the
geographic area of each of their license
authorizations no later than June 13, 2013’’)
(emphasis added).
23. Finally, the Commission notes
that the Wireless Bureau has already
clarified the conditions under which
licensees may be subject to reduction in
license area at the interim stage. The
Commission does not rule out the
Wireless Bureau providing further
clarification, if necessary, regarding how
the potential end-of-term enforcement
measures will be applied after assessing
progress toward and compliance with
the interim benchmarks and any
necessary enforcement in connection
with those benchmarks.
5. Interim Construction Reports
24. In its petition for reconsideration,
Blooston requests that the Commission
eliminate the interim construction
reports for all small and rural licensees.
The Commission is not persuaded that
this modification is warranted. First, the
Commission does not agree that these
reports impose unnecessary burdens on
small licensees. The interim
construction reporting requirements
strengthen the Commission’s ability to
monitor build-out progress during the
license term. Under the circumstances,
where the Commission has stressed the
importance of a timely build-out of the
700 MHz spectrum and has adopted
performance requirements to meet this
end, the Commission considers the
information that is to be supplied in
these reports to be reasonable and in the
public interest. Further, the required
information is readily available to
licensees and can easily be reported to
the Commission. The Commission
merely requires licensees to provide the
Commission with a description of the
steps they have taken toward meeting
their construction obligations in a
timely manner, including the
technology or technologies and
service(s) they are providing and the
areas in which those services are
available. Accordingly, the Commission
denies Blooston’s request.
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B. Auction-Related Issues
1. Designated Entity Eligibility for a
Small Business Providing Wholesale
Service
25. In its petition for reconsideration,
Frontline argues that application of the
impermissible material relationship rule
to the C and D Blocks would be
prejudicial to small businesses,
especially those adopting a wholesale
business model. Frontline asks the
Commission to reinterpret the
designated entity rules to allow small
businesses with a wholesale model to
maintain their eligibility for a bidding
credit in the C and D Blocks. United
States Cellular Corp. (U.S. Cellular)
argues that the Commission properly
applied the impermissible material
relationship rule in the 700 MHz Second
Report and Order and opposes
Frontline’s proposal. PISC supports
making a small business bidding credit
available to a licensee that agrees to
wholesale 100 percent of its spectrum if
the Commission imposes specific
conditions to prevent warehousing
while ensuring non-discrimination,
transparency, and spectrum efficiency.
26. On November 15, 2007, on its own
motion, the Commission waived
application of the impermissible
material relationship rule for purposes
of determining designated entity
eligibility solely with respect to
arrangements for lease or resale
(including wholesale) of the spectrum
capacity of the D Block license. The
Commission found that the unique
regulations governing the D Block
license, which required the
establishment of the 700 MHz Band
Public/Private Partnership subject to a
Commission-approved Network Sharing
Agreement—together with the
application of the Commission’s other
designated entity eligibility
requirements—eliminated for the D
Block license the risks that led the
Commission to adopt the impermissible
material relationship rule. This waiver
applied to the D Block in Auction 73,
which began on January 24 and closed
on March 18, 2008.
27. Frontline did not qualify to
participate in Auction 73. Frontline
selected only the D Block license on its
short-form application, but was unable
to raise the $128.21 million necessary to
make the required upfront payment for
the D Block. The Wireless Bureau
denied Frontline’s request for a waiver
to allow it to add the A and B Blocks,
which included licenses that required
lower upfront payments, to its shortform application after the deadline.
28. In Council Tree Communications,
Inc. v. FCC, the U.S. Court of Appeals
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for the Third Circuit held that the
Commission’s impermissible material
relationship rule in § 1.2110(b)(3)(iv)(A)
had been adopted without the notice
and opportunity for comment required
by the Administrative Procedure Act.
The court vacated the rule, but also
concluded that it would be imprudent
and unfair to order rescission of the
auction results for Auction 73. The
Commission subsequently conformed
the Commission’s rules to the court’s
mandate by deleting
§ 1.2110(b)(3)(iv)(A).
29. The Commission’s November 15,
2007 waiver of the impermissible
material relationship rule rendered
moot Frontline’s petition for
reconsideration with respect to the D
Block license, and the Commission
therefore dismisses that portion of the
petition as moot. Frontline’s arguments
with respect to the D Block are also
moot because the D Block will not be reauctioned since Congress recently
directed the Commission to reallocate
the D Block spectrum for use by public
safety entities. 47 U.S.C. 1411(a);
Middle Class Tax Relief and Job
Creation Act of 2012, Public Law 112–
96, 126 Stat. 156 6101 (2012) (Spectrum
Act). The Commission also dismisses as
moot Frontline’s petition to the extent it
addresses designated entity status for
wholesale services in the C Block,
because the Third Circuit vacated the
impermissible material relationship rule
that is the subject of Frontline’s petition.
In accordance with the court’s mandate
the Commission has deleted the relevant
provision from the Commission’s Part 1
competitive bidding rules.
2. Amount of Reserve Prices
30. In order to promote the statutory
objectives in 47 U.S.C. 309(j)(3),
including the efficient and intensive use
of the electromagnetic spectrum as well
as the recovery for the public of a
portion of the value of the public
spectrum resource, in the 700 MHz
Second Report and Order the
Commission directed the Wireless
Bureau to adopt and publicly disclose
block-specific aggregate reserve prices
pursuant to its existing delegated
authority and its regular pre-auction
process. The Commission concluded
that the aggregate reserve prices should
reflect current assessments of the
potential market value of licenses for
the 700 MHz Band and directed that this
assessment be based on various factors,
including the characteristics of the band
and the value of other recently
auctioned licenses, such as licenses for
Advanced Wireless Services. The
Commission further indicated that if the
reserve price for a particular block was
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not met in the initial auction, a
subsequent auction of alternative
licenses in that block would be subject
to the same applicable reserve price as
the initial auction of licenses. The
Commission concluded
that in the event that auction results for
conditioned Upper 700 MHz C Block licenses
do not satisfy the aggregate reserve price for
the C Block, the Commission will offer as
soon as possible licenses for the C Block
without the open platform conditions.
With respect to the D Block, given the
unique service rules for the Public/
Private Partnership in that block, the
Commission concluded that if the
aggregate reserve was not met, that the
Commission would leave open the
possibility of re-offering the license on
the same terms in a subsequent auction,
as well as the possibility of reevaluating all or some of the applicable
license conditions. Based on the
Commission’s direction in the 700 MHz
Second Report and Order, and after
additional public notice and comment,
the Wireless Bureau set the following
aggregate reserve prices for Auction 73:
Block A, $1.807380 billion; Block B,
$1.374426 billion; Block C, $4.637854
billion; Block D, $1.330000 billion;
Block E, $0.903690 billion.
31. In its petition for reconsideration,
Frontline argues that the reserve prices
for the C and D Block licenses proposed,
and ultimately adopted, by the Wireless
Bureau based on the Commission’s
guidance in the 700 MHz Second Report
and Order are arbitrarily high and,
coupled with re-auction mechanisms,
undermine the open access provisions
for the C Block and the public safety
provisions for the D Block. MetroPCS
filed in opposition to Frontline’s
petition for reconsideration on this
issue.
32. Subsequent to the Commission’s
order waiving the impermissible
material relationship rule with respect
to leasing or resale of the spectrum
capacity of the D Block license,
Frontline filed an amendment to its
petition for reconsideration
withdrawing its argument that the
reserve prices were set arbitrarily high
and stating that it no longer advocates
altering the reserve prices for the 700
MHz auction.
33. In light of Frontline’s withdrawal
of its arguments with respect to the
Auction 73 reserve prices, the
Commission dismisses this portion of
Frontline’s petition for reconsideration.
3. Re-Auction Procedures
34. MetroPCS asks the Commission to
reconsider two issues related to the reauction of 700 MHz licenses
contemplated by the 700 MHz Second
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Report and Order. First, MetroPCS
requests reconsideration of the
Commission’s determination that, for
any 700 MHz re-auction, the auction of
alternative licenses would be subject to
the same applicable reserve prices as the
initial auction of licenses. Second,
MetroPCS requests reconsideration of
the Commission’s determination that
both the initial and any required followon auction would be treated as a single
auction for purposes of the application
of § 1.2105(c), the rule prohibiting
certain communications. The
prohibition generally applies to auction
applicants during the time period
between the deadline for filing shortform applications and the deadline for
winning bidders to make their down
payments. Treating the initial auction
and subsequent auction of alternative
licenses as a single auction would have
kept the prohibition in place for all
applicants to participate in the first
auction until the down payment
deadline for the second auction,
regardless of whether they were
applicants to participate in the second
auction. CTIA—The Wireless
Association (CTIA), U.S. Cellular,
Blooston, and RTG support MetroPCS’s
proposal that the Commission allow
applicants that do not wish to
participate in the second auction, to opt
out of the second auction to avoid
continued application of the rules
prohibiting certain communications.
35. The winning bids in Auction 73
for the Lower 700 MHz A, B, and E
Block licenses and the Upper 700 MHz
C Block licenses exceeded the aggregate
reserve prices for those blocks; however,
the provisionally winning bid for the
Upper 700 MHz D Block did not meet
the applicable reserve price. On March
20, 2008, two days after the close of
Auction 73, the Commission issued an
order electing not to re-offer the D Block
license immediately in Auction 76 in
order to allow additional time to
consider options for this spectrum.
More recently, Congress directed the
Commission to reallocate the D Block
spectrum for use by public safety
entities. As a result, the D Block
spectrum will not be assigned by
auction for commercial use.
36. Because the Commission decided
not to re-auction the D Block license
immediately, and Congress has since
directed the Commission to reallocate
the D Block for public safety use, the reauction of the D Block has not occurred
and will not occur. As a result, the
reserve price for any re-auction of the D
Block is now irrelevant. In addition, the
issue is also moot as to the other blocks
because the bids in those blocks
exceeded the applicable reserve prices,
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thereby obviating the need for any
follow-on auctions. Accordingly, the
§ 1.2105(c) prohibition on certain
communications, as applied to the
Auction 73 applicants for licenses in
those blocks, ended at the down
payment deadline for that auction. The
Commission therefore dismisses as moot
MetroPCS’s petition for reconsideration
of these issues related to the re-auction.
4. Prohibition of Certain
Communications
37. In its petition for reconsideration,
PISC requests that the Commission
declare that two or more bidders
working together to block another
bidder from winning any licenses would
violate § 1.2105(c) of the Commission’s
rules, which prohibits certain
communications. PISC argues that in the
700 MHz Second Report and Order, the
Commission failed to address PISC’s
request to clarify
whether a conspiracy to block a bidder from
winning any licenses, rather than a
conspiracy to distribute licenses or set the
price for licenses, [ violates section 1.2105(c).
PISC argues that] a conspiracy among bidders
to block potential rivals—even if they plan to
bid aggressively against one another—thwarts
the goals of Congress in distributing licenses
via auction.
pmangrum on DSK3VPTVN1PROD with RULES
38. The Commission denies PISC’s
request for a declaratory ruling on the
application of § 1.2105(c) to certain
types of activity by bidders who work
together. The Commission has
discretion whether to issue a declaratory
ruling, and rather than address PISC’s
request in this proceeding, the
Commission thinks it’s best to address
such issues as they arise. The
declaratory ruling PISC seeks would
likely be of very limited benefit given
the hypothetical general circumstances
it describes. The Commission also notes
that regardless of compliance with
§ 1.2105(c), auction applicants remain
subject to the antitrust laws, which are
designed to prevent anticompetitive
behavior in the marketplace, and
conduct that is permissible under the
Commission’s rules may be prohibited
by the antitrust laws.
5. Anonymous Bidding
39. In the 700 MHz Second Report
and Order, the Commission concluded
that the public interest would be served
by the use of anonymous bidding
procedures in Auction 73. The
Commission found that the record
indicated that implementing
anonymous bidding procedures would
reduce the potential for anti-competitive
bidding behavior, including bidding
activity that aims to prevent the entry of
new competitors. The Commission
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noted that its decision did not rely upon
studies conducted by Gregory Rose and
submitted by PISC, even though those
studies were offered as evidence that
anonymous bidding would be
beneficial. As described in detail in
footnotes 644 and 645 of the 700 MHz
Second Report and Order, the
Commission did not find the Rose
studies persuasive for a variety of
reasons.
40. PISC does not challenge the
Commission’s decision to employ
anonymous bidding in Auction 73, but
argues that the Commission’s
conclusions regarding the merits of the
Rose studies were inaccurate and
arbitrary, and that footnotes 644, 645,
and 655 (which relies upon footnotes
644 and 645) should be vacated. PISC
adds that given the Commission’s
decision to adopt anonymous bidding, it
was unnecessary and unusual for it to
address the merits of the Rose studies in
footnotes.
41. The Commission denies PISC’s
request to vacate the footnotes
describing potential flaws in the Rose
studies. PISC’s petition for
reconsideration presents additional
information regarding the Rose studies
that provides useful context but does
not change the validity of the footnotes
with respect to the studies as filed.
Footnotes 644, 645, and 655 in the 700
MHz Second Report and Order explain
that the Commission’s adoption of
anonymous bidding, although
advocated by the Rose studies, did not
depend upon those studies.
C. Spectrum Eligibility
42. Frontline, PISC, and RTG filed
petitions requesting that the
Commission reconsider its decision not
to impose spectrum aggregation limits.
Frontline requests that the Commission
implement a spectrum screen that
would trigger increased review of
certain long-form auction applications
for anticompetitive effects, similar to the
screen applied to merger and
acquisition transactions. PISC proposes
that the Commission adopt a rule
prohibiting the winner of the Upper 700
MHz D Block license from holding
Upper 700 MHz C Block licenses and
vice versa. RTG proposes an interim,
geographically based spectrum cap
applicable specifically to the 700 MHz
auction.
43. In the 700 MHz Second Report
and Order, the Commission considered
and declined to adopt license eligibility
restrictions, including rules that would
have excluded ILECs, incumbent cable
operators, and large wireless carriers
from holding licenses in the 700 MHz
Band. The Commission provided
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Fmt 4700
Sfmt 4700
19429
numerous reasonable justifications for
its decision, and the Commission finds
that Frontline, PISC, and RTG offer no
new evidence warranting the
Commission’s reconsideration of the
Commission’s decision on spectrum
aggregation limits at the initial licensing
stages of the 700 MHz Band. Further,
the Commission notes that the
appropriate policies regarding spectrum
holdings going forward are the subject
of a separate and pending rulemaking
proceeding, and any further
consideration of such issues is therefore
more appropriately considered in that
context. Therefore, the Commission
denies Frontline’s request for
heightened review of certain long-form
applications, and the Commission
denies PISC’s and RTG’s requests that
the Commission impose a spectrum cap.
Finally, the Commission concludes that
Congress’s direction that the
Commission reallocate the D Block
spectrum to public safety use has
rendered moot requests by Frontline
and PISC that the Commission not
permit the C Block auction winners to
hold a D Block license or D Block
auction winners to hold C Block
licenses.
D. Lower 700 MHz A Block Wholesale
Requirement
44. In its petition for reconsideration,
NTCH, Inc. (NTCH) argues that the
Commission should reform the current
Universal Service Funding (USF) system
by requiring Lower 700 MHz A Block
licensees to provide service on a
discounted wholesale basis to
designated Eligible Telecommunications
Companies. CTIA and U.S. Cellular
oppose NTCH’s proposal arguing,
among other assertions, that the
proposal is outside the scope of what
can be granted on reconsideration of the
700 MHz Second Report and Order.
45. NTCH presents a new proposal to
impose a discounted wholesale
obligation on Lower 700 MHz A Block
licensees and argues that the
Commission should adopt it as a means
of reforming the current USF system,
but does not challenge the
Commission’s refusal, in the 700 MHz
Second Report and Order, to adopt
wholesale requirements for the Upper
700 MHz C or D Block licensees. The
Commission agrees with CTIA and U.S.
Cellular that the USF issues raised in
NTCH’s proposal are outside the scope
of this proceeding and therefore denies
NTCH’s petition. The Commission notes
that, as with other 700 MHz licensees,
A Block licensees have the flexibility to
provide wholesale services if they
choose to based on their determination
of market need.
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E. First Amendment Analysis of Open
Platform Rule
46. In the 700 MHz Second Report
and Order, the Commission required
licensees in the C Block
to allow customers, device manufacturers,
third-party application developers, and
others to use or develop the devices and
applications of their choice, subject to certain
conditions[.]
The Commission rejected Verizon
Wireless’ arguments that the open
platform rule applicable to the Upper
700 MHz C Block violates the First
Amendment, finding that even if the
open platform rule did implicate the
First Amendment, it withstands the
applicable intermediate scrutiny test.
47. In late 2007, Verizon Wireless and
CTIA each filed and then withdrew
lawsuits in the DC Circuit Court
challenging the open platform
requirements on the grounds that they
violated the First Amendment. Prior to
Verizon Wireless’s withdrawal of its
petition for review from the DC Circuit
Court, PISC filed its petition for
reconsideration with the Commission
requesting, in pertinent part, that the
Commission clarify that
the proper framework for Verizon’s First
Amendment claim remains the ‘rational
basis’ flowing from the ‘scarcity rationale’
adopted by the Supreme Court in NBC v. U.S.
48. In light of the withdrawal of the
Verizon Wireless and CTIA First
Amendment challenges to the open
platform rule, PISC’s request for
clarification of the proper legal
framework for addressing Verizon
Wireless’s withdrawn challenge is moot,
and the Commission accordingly
dismisses PISC’s petition for
reconsideration as such, to the extent
the petition requested such clarification.
pmangrum on DSK3VPTVN1PROD with RULES
F. Open Platform Requirements for the
C Block if the Reserve Price Is Not Met
49. In its petition for reconsideration,
Frontline argues that stripping the C
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Block of the open platform conditions in
the event of a re-auction would be
contrary to the public interest and
would create perverse incentives for
bidders. The C Block auction was
successful and has been completed,
rendering any discussion of an
unsuccessful auction and the terms of a
re-auction of the C Block moot.
Therefore, the Commission dismisses
Frontline’s petition for reconsideration
to the extent that it seeks the
Commission to reconsider the
conditions of a re-auction of the C
Block.
G. 700 MHz Public/Private Partnership
50. Several of the pending petitions in
this proceeding seek reconsideration or
clarification of various aspects of the
regulatory requirements adopted by the
Commission to effectuate and govern
the Public/Private Partnership between
the Upper 700 MHz D Block licensee
and the future licensee of the 700 MHz
public safety broadband spectrum (the
Public Safety Broadband Licensee or
PSBL). The Commission finds that the
directives in the Spectrum Act regarding
the D Block render moot the requests for
reconsideration or clarification of the
Commission D Block commercial
service rules, and the Commission
therefore dismisses these requests.
H. Narrowband Relocation
51. Commonwealth of Virginia
(Virginia) and Pierce County Public
Transportation Benefit Area Corporation
(Pierce Transit) filed petitions seeking
reconsideration of certain aspects of the
decisions on public safety narrowband
relocation.
52. The 700 MHz Second Report and
Order assumed that the D Block would
be licensed to a commercial provider
that would be responsible, up to a cap,
for the costs of the narrowband
relocation. Now that the D Block has
been reallocated for public safety
services pursuant to the Spectrum Act,
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Frm 00038
Fmt 4700
Sfmt 9990
the approach that the Commission
established for effectuating the
consolidation of the narrowband
channels cannot be implemented, and
the Commission must revisit the entire
narrowband relocation process
(including elements such as those
relating to reimbursement and the
timing of relocation), which the
Commission will accomplish by
initiating a new rulemaking proceeding
where the Commission can address
more comprehensively what rules need
to be adopted, deleted, or modified to
implement the Spectrum Act.
Accordingly, the Commission dismisses
the petitions for reconsideration by
Virginia and Pierce Transit as moot.
III. Ordering Clause
53. Accordingly, it is ordered,
pursuant to sections 4(i), 302, 303(e),
303(f), 303(g), 303(r) and 405 of the
Communications Act of 1934, as
amended, 47 U.S.C. 154(i), 302, 303(e),
303(f), 303(g) and 405, that the petitions
for reconsideration of Blooston Rural
Carriers, NTCH, Inc., and Rural
Telecommunications Group, Inc. Are
denied; the petitions for reconsideration
of AT&T, Inc., Commonwealth of
Virginia, Cyren Call Communications
Corporation, and Pierce County Public
Transportation Benefit Area Corporation
are dismissed; and petitions for
reconsideration of Frontline Wireless,
LLC, MetroPCS Communications, Inc.,
and Ad Hoc Public Interest Spectrum
Coalition are denied in part and
dismissed in part as described herein.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2013–07397 Filed 3–29–13; 8:45 am]
BILLING CODE 6712–01–P
E:\FR\FM\01APR1.SGM
01APR1
Agencies
[Federal Register Volume 78, Number 62 (Monday, April 1, 2013)]
[Rules and Regulations]
[Pages 19424-19430]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-07397]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 1, 22, 24, 27 and 90
[WT Docket Nos. 06-150, 01-309, 03-264, 06-169, 96-86, 07-166, CC
Docket No. 94,102, PS Docket No. 06-229; FCC 13-29]
Service Rules for the 698-746, 747-762 and 777-792 MHz Bands;
Revision of the Commission's Rules To Ensure Compatibility With
Enhanced 911 Emergency Calling Systems; et al.
AGENCY: Federal Communications Commission.
ACTION: Final rule; petition for reconsideration.
-----------------------------------------------------------------------
SUMMARY: The Memorandum Opinion and Order on Reconsideration (MO&O)
denies or dismisses petitions seeking reconsideration of certain
decisions made by the Commission in the 700 MHz Second Report and
Order, relating to the 698-806 MHz Band, including decisions regarding
performance requirements, the auction and competitive bidding rules,
the open platform rules, public safety narrowband relocation
procedures, and the decisions not to impose wholesale requirements,
eligibility restrictions, and spectrum aggregation limits. This MO&O
also dismisses as moot petitions for reconsideration of rules
establishing a Public/Private Partnership between the Upper 700 MHz D
Block (D Block) licensee and the Public Safety Broadband Licensee in
the 763-768 MHz and 793-798 MHz bands.
DATES: Effective May 1, 2013.
FOR FURTHER INFORMATION CONTACT: Peter Trachtenberg at (202) 418-7369
or peter.trachtenberg@fcc.gov, Wireless Telecommunications Bureau,
Spectrum and Competition Policy Division.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
Memorandum Opinion and Order on Reconsideration, WT Docket Nos. 06-150,
01-309, 03-264, 06-169, 96-86, 07-166, CC Docket No. 94,102, PS Docket
No. 06-229; FCC 13-29, adopted February 28, 2013 and released March 1,
2013. The full text of this document is available for inspection and
copying during normal business hours in the FCC Reference Center (Room
CY-A257), 445 12th Street SW., Washington, DC 20554. The complete text
of this document also may be purchased from the Commission's copy
contractor, Best Copy and Printing, Inc., 445 12th Street SW., Room,
CY-B402, Washington, DC 20554. The full text may also be downloaded at:
www.fcc.gov. People with Disabilities: To request materials in
accessible formats for people with disabilities (braille, large print,
electronic files, audio format), send an email to fcc504@fcc.gov or
call the Consumer & Governmental Affairs Bureau at 202-418-0530
(voice), 202-418-0432 (tty).
I. Introduction
1. In this MO&O, the Commission addresses petitions that were filed
seeking reconsideration of certain decisions made by the Commission in
the 700 MHz Second Report and Order at 72 FR 48814, Aug. 24, 2007,
relating to the 698-806 MHz Band (herein, the 700 MHz Band).
II. Discussion
A. Performance Requirements
2. Below the Commission discusses the issues raised by petitioners
with respect to the performance requirements that the Commission
established in the 700 MHz Second Report and Order. After careful
consideration of the arguments raised in the petitions for
reconsideration, the Commission denies the requests to modify the
existing performance requirements.
1. Geographic-Based Coverage Requirements for CMA and EA Licenses
3. Blooston Rural Carriers (Blooston), MetroPCS Communications,
Inc. (MetroPCS), and Rural Telecommunications Group, Inc. (RTG) filed
petitions for reconsideration challenging various aspects of the
geographic-based performance requirements.
4. The Commission denies the petitioners' requests to alter the
geographic-based coverage requirements. First, the Commission is
unpersuaded by Blooston's arguments that a geographic-based performance
requirement on CMA licensees (i.e. licensees in Lower 700 MHz B Block)
is arbitrary and unworkable and should be supplemented with the option
of meeting a population-based benchmark. The Commission provided
reasonable justifications for its decision to adopt a geographic-based
build-out requirement for CMA and EA licenses, and the Commission finds
nothing in the record to persuade it to change this decision. The
Commission particularly noted that:
[b]ecause [the Commission] adopt[s] smaller geographic license areas
such as CMAs to facilitate the provision of service * * * in rural
areas, [it] also adopt[s] performance requirements that are designed
to ensure that such service is offered to consumers in these areas.
The Commission further found that:
the uniqueness of the 700 MHz spectrum justifies the use of
geographic benchmarks * * *.
Blooston argues that the Commission arbitrarily discriminated against
CMA licenses by providing population-based requirements on both EA and
REAG licensees. In fact, the Commission imposed identical geographic-
based requirements on EA and CMA licenses, and it reasonably justified
its decision to adopt a different approach for the much larger REAG
licenses. Blooston argues that for some licenses, meeting the
geographic-based benchmarks will be impractical, and offers analysis of
nine CMAs out of the 734 in Lower 700 MHz B Block. For specific cases
of hardship, however, providers can seek waiver relief. Blooston offers
no evidence demonstrating that a geographic-based benchmark is
inherently impractical in the usual case.
5. Indeed, the results of the auction of Lower 700 MHz B Block
licenses provide further support for the reasonableness of the
Commission's geographic-based performance requirements. In the 700 MHz
Second Report and Order, the Commission decided that, if those
geographic-based requirements caused a reduction in the monetary value
of the licenses to such an extent that bidding in the auction resulted
in the Lower 700 MHz B Block failing to meet its applicable aggregate
reserve price, the licenses for that block would be re-auctioned
subject to population-based performance requirements. Thus, the
Commission relied in part on the auction results as a final check on
whether its geographic-based performance requirements were in the
public interest. When the licenses were auctioned in Auction 73, the
Commission received provisionally winning bids on 728 out of 734 Lower
700 MHz B Block licenses and the aggregate amount of the provisionally
winning bids far exceeded the applicable aggregate reserve price.
Accordingly, the Commission reaffirms the geographic-based coverage
requirement for Lower 700 MHz B Block licensees and the Commission
denies Blooston's request to add an optional population-based benchmark
to Lower 700 MHz B Block. For similar reasons, the Commission rejects
the requests of various commenters for a population-based buildout
option for EA licensees.
6. The Commission also rejects arguments that the Commission should
broaden the exclusions from the
[[Page 19425]]
Commission's geographic coverage requirements. The Commission's
geographic coverage requirements already exclude government lands, and
any further categorical exclusions could undermine the Commission's
goals in adopting these requirements, which include taking advantage of
the excellent propagation characteristics of 700 MHz spectrum to
promote wireless coverage in remote and rural areas. Even with regard
to bodies of water, there is a public interest benefit to wireless
coverage to vessels near shore, and some level of coverage may be
possible from infrastructure on land or, where relevant, through
platforms or other facilities constructed out from the shore. In some
cases, there may also be demand from economic activity that may benefit
from access to advanced communications services over the relevant body
of water. For example, for both EAs and CMAs, the Commission separately
licenses the Gulf of Mexico as a service area, reflecting the
Commission's recognition of the public interest in promoting the
deployment of service there to help meet the growing communications
needs of petroleum and natural gas providers in the area.
7. Further, the Commission already specifically considered and
rejected exclusions for Tribal lands, finding that it did not want to
discourage deployment to these areas. While Blooston would limit
exclusion of Tribal lands to cases where a licensee had made a good
faith but unsuccessful attempt to obtain Tribal government consent, the
Commission see no evidence that such consent will often be unreasonably
withheld, and the Commission is concerned that an exclusion for Tribal
lands may result in reduced efforts to obtain such consent and deploy
in these areas.
8. In sum, the Commission concludes that the requested categorical
exclusions are not appropriate, but, as mentioned in the 700 MHz Second
Report and Order itself, licensees may seek waivers of the Commission's
rules if they believe the circumstances in a particular area warrant
relief under the Commission waiver standard. If licensees seek to
obtain such waivers, the Commission urges that they make these requests
as soon as possible. These requests must be well founded and not based
solely on grounds of low population density. The Commission staff will
consider these types of requests on a case-by-case basis.
2. Benchmarks for REAG Licenses
9. In the 700 MHz Second Report and Order, the Commission imposed a
population-based performance requirement on Regional Economic Area
Groupings (REAG) licensees, who occupy the Upper 700 MHz C Block. In
its petition for reconsideration, RTG argues that a geographic-based
coverage requirement will better ensure that REAG licensees deploy in
rural areas.
10. The Commission concludes that it will retain the requirement
that REAG licensees must meet the population-based benchmarks. RTG
argues that the REAG approach is inconsistent with the approach the
Commission took with regard to EA and CMA licenses, but there is no
requirement that the performance requirements be the same for all
commercial wireless services, nor even for those of a certain type. The
Commission explained its determination that population-based benchmarks
were better suited for the much larger REAG licenses in some detail,
and there is nothing new in the record to persuade the Commission to
change this decision. This decision involved tradeoffs particular to
the expectation that these licenses would lead to regional or even
nationwide network deployment. Contrary to RTG's assertion, the
Commission was mindful not only of the need to develop regional and
nationwide networks, but also of the need to promote wireless services
in less populated portions of the nation, including rural areas. To
address this concern, it provided that REAG licensees must meet the
population-based build-out requirements on an EA basis. RTG questions
the Commission's expectation that the REAG licenses were more likely to
be used to provide regional or nationwide service than the much smaller
EA and CMA licenses but offers nothing to undermine the Commission's
well-supported predictive judgment. Therefore, the Commission denies
RTG's request that REAG licensees be required to meet a geographic-
based coverage requirement.
3. Keep-What-You-Use Provisions
11. In the 700 MHz Second Report and Order, the Commission
established both interim and end-of-term enforcement measures that
would apply automatically in the event that licensees failed to meet
the applicable benchmarks. For licensees that fail to meet the
applicable interim benchmark, the Commission decided that the normal
ten year license term would be reduced by two years, and the end-of-
term benchmark must then be met within eight years. The Commission
determined that, at the end of the license term, licensees that fail to
meet the end-of-term benchmark would be subject to a keep-what-you-use
rule, which would make unused spectrum available to other potential
users. For those CMAs or EAs in which the end-of-term performance
requirements have not been met, the unused portion of the license will
terminate automatically without Commission action and will become
available for reassignment by the Commission. Similarly, if a REAG
licensee fails to provide signal coverage and offer service to at least
75 percent of the population in any EA comprising the REAG license area
by the end of the license term, the unused portion of each such EA in
that licensee's authorization area will terminate automatically without
Commission action and will become available for reassignment by the
Commission.
12. The Commission further established a process governing the
reassignment of licenses made available pursuant to the keep-what-you-
use rules. As part of this process, the Commission provided that the
licenses will be subject to an initial 30-day application period during
which the original licensee may not file an application. Following this
period, the original licensee is permitted to file an application for
any remaining unserved area where licenses have not been issued and
there are no pending applications.
13. Several petitioners seek reconsideration of the keep-what-you-
use rules. Blooston requests that the Commission provide a
more precise definition of how the take-back process will work, and
what propagation model will be used.
MetroPCS requests that the Commission modify the current rule to adopt
a triggered approach, under which the original licensee would only lose
unserved areas if a third party files a credible application,
demonstrating
a bona fide desire, and the wherewithal, to build-out the spectrum
in the unserved market, [and submits a] meaningful upfront payment
[that is] sufficiently large to deter speculators.
MetroPCS also requests that the incumbent should be allowed to
participate in any auction of the unserved spectrum. Finally, Blooston
and MetroPCS request that an original licensee of 700 MHz commercial
spectrum subject to loss of unused license area under the keep-what-
you-use rule be allowed to retain an expansion area in addition to the
area it serves at the end of its license term.
14. The Commission denies the requests to alter the keep-what-you-
use rules that the Commission adopted in the 700 MHz Second Report and
Order. First, the Commission disagrees with Blooston's assertion that
the Commission needs to provide a more
[[Page 19426]]
detailed explanation of how the process will work and what propagation
model will be used. The Commission finds that the 700 MHz Second Report
and Order already sets forth the process implementing the keep-what-you
use provisions in significant detail, starting with the filing of
construction notifications up through the reassignment process, and
that further detail regarding the take-back process is unnecessary at
this time. Further, a specific propagation model would be contrary to
the flexibility that the Commission adopted. In establishing the
construction notification through which licensees will demonstrate
compliance with performance requirements, the Commission recognized
that
demonstrations of coverage may vary across licensees, [who] will
likely use a variety of technologies to provide a range of services
with this spectrum.
It specifically rejected a request for a bright-line test for what
constitutes sufficient signal strength, provided instead that licensees
must provide the assumptions they use to create coverage maps,
including the propagation model and signal strength necessary to
provide service, and also delegated to the Wireless Telecommunications
Bureau (Wireless Bureau) the authority to establish further
specifications for filings and to determine coverage areas. The
Commission sees no reason to reverse this decision, and therefore
rejects Blooston's request.
15. The Commission also denies proposals that the Commission revise
the keep-what-you-use rules to provide for a triggered approach, under
which a licensee would not lose unused spectrum until a party seeking
the spectrum first files an application for the area meeting certain
requirements for sufficiency. The Commission notes that the Commission
sought comment on a triggered keep-what-you-use approach similar to
MetroPCS's proposal prior to adopting the existing rule. The Commission
already has application procedures to ensure that license approvals are
in the public interest. Under the Commission's existing rules, before
any application will be granted, the applicant must already
demonstrate, inter alia, that it is legally, technically, financially,
and otherwise qualified [and that a] grant of the application would
serve the public interest, convenience, and necessity.
Requiring applicants seeking authorization over unused spectrum to
demonstrate their bona fides in new ways above and beyond such
established and familiar license application processes may in fact
discourage bona fide interest in such spectrum, undermining the
Commission's goal of putting this spectrum to use. Further, because
these proposed revisions to the rules decrease the original licensee's
risk of consequences for failing to build-out, they may lessen the
incentive for the licensee to expand service into parts of its license
areas by the end of its license term. The Commission also does not find
persuasive MetroPCS's argument that a triggered approach reduces the
prospect that forfeited unserved license areas will lie fallow in the
Commission's hands. The rules already address this possibility: if no
application is filed by third parties in 30 days, the original licensee
is free to apply for it.
16. The Commission also rejects MetroPCS's arguments that in the
event the original licensee loses its license or parts thereof through
application of the keep-what-you-use rules, it should be allowed to
participate in any reauction of the recaptured license areas. Under the
Commission's build-out rules, the original licensee has ample
opportunity to meet its build-out requirements. Further, barring the
original licensee from participating during the initial reauction of
its unserved license areas is a reasonable penalty for the licensee's
failure to meet its build-out requirements. This measure helps ensure
that the original licensee will make all reasonable efforts to meet its
performance benchmarks and that the Commission licenses spectrum to
those parties that are most likely to use it. MetroPCS argues that the
Commission's rule enhances the risk that the original licensee will be
subject to green mail from speculators. The Commission thinks the risk
of speculators acquiring unused spectrum for green mail purposes is
small, however, given that the Commission also required new licensees
of spectrum made available under the keep-what-you-use rule to offer
service to the entire license area within one year, and provided that
if they fail to meet this requirement, they lose the license
automatically and are ineligible to file an application to provide
service in the same area over the same frequencies at any future date.
17. Finally, the Commission is not persuaded that licensees that
fail to meet the end-of-term benchmark should nevertheless retain a
portion of the unserved area of their licenses as an expansion area.
Parties argue that an expansion area is justified for a number of
reasons including the potential need to address changes in customer
demand, subsequent development of areas, population growth, and
replacement of base stations, or as a buffer to avoid interference. The
Commission finds, however, that permitting licensees to keep a part of
their unused license areas as petitioners propose would undermine the
Commission's keep-what-you-use policy goals of motivating licensees to
meet their benchmarks and promoting access to spectrum that is not
adequately built out and deployment of service to communities that
might otherwise not receive it. Further, the rules adopted in the 700
MHz Second Report and Order provide ample opportunity for licensees to
construct facilities and provide service in their licensed areas. The
Commission therefore rejects the requests for an expansion area under
the keep-what-you-use rules.
4. Potential Enforcement Provisions for Failure To Build Out
18. Blooston, MetroPCS, and RTG seek reconsideration of the
potential mid-term and end-of-term construction benchmarks enforcement
provisions. MetroPCS and RTG contend that the Commission did not
provide guidance regarding under what circumstances these potential
enforcement actions might be taken and they propose various standards.
Blooston argues that the Commission should repeal these enforcement
provisions altogether, and that the Commission did not provide the
notice required by the Administrative Procedure Act (APA) before
adopting forfeitures as a potential enforcement measure.
19. The Commission is not persuaded that the Commission should
adopt the modifications to the potential enforcement provisions
proposed by petitioners. Although petitioners argue that their
proposals would resolve ambiguity in the Commission's rules, the
Commission finds that their proposals would substantially limit the
Commission's enforcement options. For example, MetroPCS argues that
that the option of license termination at end-of-term should apply only
in cases of failure to provide substantial service. It is already the
case under the license renewal requirement, however, that a licensee's
failure to demonstrate that it is providing substantial service
results, by operation of the rules, in loss of the license. Thus,
MetroPCS's interpretation would effectively eliminate license
termination as a separate mechanism for enforcing the performance
requirements prior to the end of a license term. In rejecting this
proposal to partially conflate the substantial service and performance
requirements, the Commission also notes that it has
[[Page 19427]]
previously emphasized that the substantial service requirement at
renewal is distinct from the performance requirements.
20. RTG's proposal--that a licensee should be subject to additional
enforcement only if it utterly fails to construct a system--goes even
further; it not only eliminates license termination as an enforcement
mechanism prior to the end of a license term, but it also reduces this
mechanism to a mere subset of its existing form as a license renewal
requirement. Therefore, the Commission is not persuaded that any of the
petitioners' proposed clarifications are consistent with the
Commission's adoption of these enforcement measures.
21. The Commission also disagrees with arguments that the
Commission provided no justification in support of the additional
enforcement mechanisms and should eliminate them entirely. In adopting
its requirements, the Commission underscored that it
expect[ed] that licensees will take these construction requirements
seriously and proceed toward providing service with utmost
diligence, [and concluded that] these set of stringent benchmarks *
* * with effective consequences for noncompliance * * * are the most
effective way to promote rapid service to the public, especially in
rural areas.
The additional enforcement mechanisms thus reflect the importance of
effective enforcement to achieving the Commission's goals for the 700
MHz Band and its determination that the additional mechanisms would
help to ensure that enforcement would be effective. Blooston objects
that the application of fines in particular is a departure from prior
Commission practice with regard to enforcement of buildout
requirements. However, the enforcement regime was also novel in other
respects, including its adoption of the keep-what-you-use rules.
Therefore, the suggestion that the Commission should eliminate one
element in order to conform to prior practice is unpersuasive. The
Commission also rejects the assertion that the Commission acted without
notice. The Commission twice sought comment broadly on how to revise
the performance requirements, and the Commission finds that adoption of
measures to enforce such requirements are well within the scope of the
issues raised. The Commission also notes that the Commission is not
obligated to provide APA notice to impose a forfeiture pursuant to
section 503 of the Act.
22. The Commission rejects Blooston's argument that forfeitures are
inappropriate because, in failing to meet performance benchmarks, a
licensee does not actually violate a rule but merely exercises an
option under the rules to lose a given area. The 700 MHz Second Report
and Order is clear that the benchmarks are requirements, and Sec.
27.14 imposes these buildout requirements without qualification,
providing that EA and CMA licenses
shall provide signal coverage and offer service over at least 35
percent of the geographic area of each of their license
authorizations no later than June 13, 2013'') (emphasis added).
23. Finally, the Commission notes that the Wireless Bureau has
already clarified the conditions under which licensees may be subject
to reduction in license area at the interim stage. The Commission does
not rule out the Wireless Bureau providing further clarification, if
necessary, regarding how the potential end-of-term enforcement measures
will be applied after assessing progress toward and compliance with the
interim benchmarks and any necessary enforcement in connection with
those benchmarks.
5. Interim Construction Reports
24. In its petition for reconsideration, Blooston requests that the
Commission eliminate the interim construction reports for all small and
rural licensees. The Commission is not persuaded that this modification
is warranted. First, the Commission does not agree that these reports
impose unnecessary burdens on small licensees. The interim construction
reporting requirements strengthen the Commission's ability to monitor
build-out progress during the license term. Under the circumstances,
where the Commission has stressed the importance of a timely build-out
of the 700 MHz spectrum and has adopted performance requirements to
meet this end, the Commission considers the information that is to be
supplied in these reports to be reasonable and in the public interest.
Further, the required information is readily available to licensees and
can easily be reported to the Commission. The Commission merely
requires licensees to provide the Commission with a description of the
steps they have taken toward meeting their construction obligations in
a timely manner, including the technology or technologies and
service(s) they are providing and the areas in which those services are
available. Accordingly, the Commission denies Blooston's request.
B. Auction-Related Issues
1. Designated Entity Eligibility for a Small Business Providing
Wholesale Service
25. In its petition for reconsideration, Frontline argues that
application of the impermissible material relationship rule to the C
and D Blocks would be prejudicial to small businesses, especially those
adopting a wholesale business model. Frontline asks the Commission to
reinterpret the designated entity rules to allow small businesses with
a wholesale model to maintain their eligibility for a bidding credit in
the C and D Blocks. United States Cellular Corp. (U.S. Cellular) argues
that the Commission properly applied the impermissible material
relationship rule in the 700 MHz Second Report and Order and opposes
Frontline's proposal. PISC supports making a small business bidding
credit available to a licensee that agrees to wholesale 100 percent of
its spectrum if the Commission imposes specific conditions to prevent
warehousing while ensuring non-discrimination, transparency, and
spectrum efficiency.
26. On November 15, 2007, on its own motion, the Commission waived
application of the impermissible material relationship rule for
purposes of determining designated entity eligibility solely with
respect to arrangements for lease or resale (including wholesale) of
the spectrum capacity of the D Block license. The Commission found that
the unique regulations governing the D Block license, which required
the establishment of the 700 MHz Band Public/Private Partnership
subject to a Commission-approved Network Sharing Agreement--together
with the application of the Commission's other designated entity
eligibility requirements--eliminated for the D Block license the risks
that led the Commission to adopt the impermissible material
relationship rule. This waiver applied to the D Block in Auction 73,
which began on January 24 and closed on March 18, 2008.
27. Frontline did not qualify to participate in Auction 73.
Frontline selected only the D Block license on its short-form
application, but was unable to raise the $128.21 million necessary to
make the required upfront payment for the D Block. The Wireless Bureau
denied Frontline's request for a waiver to allow it to add the A and B
Blocks, which included licenses that required lower upfront payments,
to its short-form application after the deadline.
28. In Council Tree Communications, Inc. v. FCC, the U.S. Court of
Appeals
[[Page 19428]]
for the Third Circuit held that the Commission's impermissible material
relationship rule in Sec. 1.2110(b)(3)(iv)(A) had been adopted without
the notice and opportunity for comment required by the Administrative
Procedure Act. The court vacated the rule, but also concluded that it
would be imprudent and unfair to order rescission of the auction
results for Auction 73. The Commission subsequently conformed the
Commission's rules to the court's mandate by deleting Sec.
1.2110(b)(3)(iv)(A).
29. The Commission's November 15, 2007 waiver of the impermissible
material relationship rule rendered moot Frontline's petition for
reconsideration with respect to the D Block license, and the Commission
therefore dismisses that portion of the petition as moot. Frontline's
arguments with respect to the D Block are also moot because the D Block
will not be re-auctioned since Congress recently directed the
Commission to reallocate the D Block spectrum for use by public safety
entities. 47 U.S.C. 1411(a); Middle Class Tax Relief and Job Creation
Act of 2012, Public Law 112-96, 126 Stat. 156 6101 (2012) (Spectrum
Act). The Commission also dismisses as moot Frontline's petition to the
extent it addresses designated entity status for wholesale services in
the C Block, because the Third Circuit vacated the impermissible
material relationship rule that is the subject of Frontline's petition.
In accordance with the court's mandate the Commission has deleted the
relevant provision from the Commission's Part 1 competitive bidding
rules.
2. Amount of Reserve Prices
30. In order to promote the statutory objectives in 47 U.S.C.
309(j)(3), including the efficient and intensive use of the
electromagnetic spectrum as well as the recovery for the public of a
portion of the value of the public spectrum resource, in the 700 MHz
Second Report and Order the Commission directed the Wireless Bureau to
adopt and publicly disclose block-specific aggregate reserve prices
pursuant to its existing delegated authority and its regular pre-
auction process. The Commission concluded that the aggregate reserve
prices should reflect current assessments of the potential market value
of licenses for the 700 MHz Band and directed that this assessment be
based on various factors, including the characteristics of the band and
the value of other recently auctioned licenses, such as licenses for
Advanced Wireless Services. The Commission further indicated that if
the reserve price for a particular block was not met in the initial
auction, a subsequent auction of alternative licenses in that block
would be subject to the same applicable reserve price as the initial
auction of licenses. The Commission concluded
that in the event that auction results for conditioned Upper 700 MHz
C Block licenses do not satisfy the aggregate reserve price for the
C Block, the Commission will offer as soon as possible licenses for
the C Block without the open platform conditions.
With respect to the D Block, given the unique service rules for the
Public/Private Partnership in that block, the Commission concluded that
if the aggregate reserve was not met, that the Commission would leave
open the possibility of re-offering the license on the same terms in a
subsequent auction, as well as the possibility of re-evaluating all or
some of the applicable license conditions. Based on the Commission's
direction in the 700 MHz Second Report and Order, and after additional
public notice and comment, the Wireless Bureau set the following
aggregate reserve prices for Auction 73: Block A, $1.807380 billion;
Block B, $1.374426 billion; Block C, $4.637854 billion; Block D,
$1.330000 billion; Block E, $0.903690 billion.
31. In its petition for reconsideration, Frontline argues that the
reserve prices for the C and D Block licenses proposed, and ultimately
adopted, by the Wireless Bureau based on the Commission's guidance in
the 700 MHz Second Report and Order are arbitrarily high and, coupled
with re-auction mechanisms, undermine the open access provisions for
the C Block and the public safety provisions for the D Block. MetroPCS
filed in opposition to Frontline's petition for reconsideration on this
issue.
32. Subsequent to the Commission's order waiving the impermissible
material relationship rule with respect to leasing or resale of the
spectrum capacity of the D Block license, Frontline filed an amendment
to its petition for reconsideration withdrawing its argument that the
reserve prices were set arbitrarily high and stating that it no longer
advocates altering the reserve prices for the 700 MHz auction.
33. In light of Frontline's withdrawal of its arguments with
respect to the Auction 73 reserve prices, the Commission dismisses this
portion of Frontline's petition for reconsideration.
3. Re-Auction Procedures
34. MetroPCS asks the Commission to reconsider two issues related
to the re-auction of 700 MHz licenses contemplated by the 700 MHz
Second Report and Order. First, MetroPCS requests reconsideration of
the Commission's determination that, for any 700 MHz re-auction, the
auction of alternative licenses would be subject to the same applicable
reserve prices as the initial auction of licenses. Second, MetroPCS
requests reconsideration of the Commission's determination that both
the initial and any required follow-on auction would be treated as a
single auction for purposes of the application of Sec. 1.2105(c), the
rule prohibiting certain communications. The prohibition generally
applies to auction applicants during the time period between the
deadline for filing short-form applications and the deadline for
winning bidders to make their down payments. Treating the initial
auction and subsequent auction of alternative licenses as a single
auction would have kept the prohibition in place for all applicants to
participate in the first auction until the down payment deadline for
the second auction, regardless of whether they were applicants to
participate in the second auction. CTIA--The Wireless Association
(CTIA), U.S. Cellular, Blooston, and RTG support MetroPCS's proposal
that the Commission allow applicants that do not wish to participate in
the second auction, to opt out of the second auction to avoid continued
application of the rules prohibiting certain communications.
35. The winning bids in Auction 73 for the Lower 700 MHz A, B, and
E Block licenses and the Upper 700 MHz C Block licenses exceeded the
aggregate reserve prices for those blocks; however, the provisionally
winning bid for the Upper 700 MHz D Block did not meet the applicable
reserve price. On March 20, 2008, two days after the close of Auction
73, the Commission issued an order electing not to re-offer the D Block
license immediately in Auction 76 in order to allow additional time to
consider options for this spectrum. More recently, Congress directed
the Commission to reallocate the D Block spectrum for use by public
safety entities. As a result, the D Block spectrum will not be assigned
by auction for commercial use.
36. Because the Commission decided not to re-auction the D Block
license immediately, and Congress has since directed the Commission to
reallocate the D Block for public safety use, the re-auction of the D
Block has not occurred and will not occur. As a result, the reserve
price for any re-auction of the D Block is now irrelevant. In addition,
the issue is also moot as to the other blocks because the bids in those
blocks exceeded the applicable reserve prices,
[[Page 19429]]
thereby obviating the need for any follow-on auctions. Accordingly, the
Sec. 1.2105(c) prohibition on certain communications, as applied to
the Auction 73 applicants for licenses in those blocks, ended at the
down payment deadline for that auction. The Commission therefore
dismisses as moot MetroPCS's petition for reconsideration of these
issues related to the re-auction.
4. Prohibition of Certain Communications
37. In its petition for reconsideration, PISC requests that the
Commission declare that two or more bidders working together to block
another bidder from winning any licenses would violate Sec. 1.2105(c)
of the Commission's rules, which prohibits certain communications. PISC
argues that in the 700 MHz Second Report and Order, the Commission
failed to address PISC's request to clarify
whether a conspiracy to block a bidder from winning any licenses,
rather than a conspiracy to distribute licenses or set the price for
licenses, [ violates section 1.2105(c). PISC argues that] a
conspiracy among bidders to block potential rivals--even if they
plan to bid aggressively against one another--thwarts the goals of
Congress in distributing licenses via auction.
38. The Commission denies PISC's request for a declaratory ruling
on the application of Sec. 1.2105(c) to certain types of activity by
bidders who work together. The Commission has discretion whether to
issue a declaratory ruling, and rather than address PISC's request in
this proceeding, the Commission thinks it's best to address such issues
as they arise. The declaratory ruling PISC seeks would likely be of
very limited benefit given the hypothetical general circumstances it
describes. The Commission also notes that regardless of compliance with
Sec. 1.2105(c), auction applicants remain subject to the antitrust
laws, which are designed to prevent anticompetitive behavior in the
marketplace, and conduct that is permissible under the Commission's
rules may be prohibited by the antitrust laws.
5. Anonymous Bidding
39. In the 700 MHz Second Report and Order, the Commission
concluded that the public interest would be served by the use of
anonymous bidding procedures in Auction 73. The Commission found that
the record indicated that implementing anonymous bidding procedures
would reduce the potential for anti-competitive bidding behavior,
including bidding activity that aims to prevent the entry of new
competitors. The Commission noted that its decision did not rely upon
studies conducted by Gregory Rose and submitted by PISC, even though
those studies were offered as evidence that anonymous bidding would be
beneficial. As described in detail in footnotes 644 and 645 of the 700
MHz Second Report and Order, the Commission did not find the Rose
studies persuasive for a variety of reasons.
40. PISC does not challenge the Commission's decision to employ
anonymous bidding in Auction 73, but argues that the Commission's
conclusions regarding the merits of the Rose studies were inaccurate
and arbitrary, and that footnotes 644, 645, and 655 (which relies upon
footnotes 644 and 645) should be vacated. PISC adds that given the
Commission's decision to adopt anonymous bidding, it was unnecessary
and unusual for it to address the merits of the Rose studies in
footnotes.
41. The Commission denies PISC's request to vacate the footnotes
describing potential flaws in the Rose studies. PISC's petition for
reconsideration presents additional information regarding the Rose
studies that provides useful context but does not change the validity
of the footnotes with respect to the studies as filed. Footnotes 644,
645, and 655 in the 700 MHz Second Report and Order explain that the
Commission's adoption of anonymous bidding, although advocated by the
Rose studies, did not depend upon those studies.
C. Spectrum Eligibility
42. Frontline, PISC, and RTG filed petitions requesting that the
Commission reconsider its decision not to impose spectrum aggregation
limits. Frontline requests that the Commission implement a spectrum
screen that would trigger increased review of certain long-form auction
applications for anticompetitive effects, similar to the screen applied
to merger and acquisition transactions. PISC proposes that the
Commission adopt a rule prohibiting the winner of the Upper 700 MHz D
Block license from holding Upper 700 MHz C Block licenses and vice
versa. RTG proposes an interim, geographically based spectrum cap
applicable specifically to the 700 MHz auction.
43. In the 700 MHz Second Report and Order, the Commission
considered and declined to adopt license eligibility restrictions,
including rules that would have excluded ILECs, incumbent cable
operators, and large wireless carriers from holding licenses in the 700
MHz Band. The Commission provided numerous reasonable justifications
for its decision, and the Commission finds that Frontline, PISC, and
RTG offer no new evidence warranting the Commission's reconsideration
of the Commission's decision on spectrum aggregation limits at the
initial licensing stages of the 700 MHz Band. Further, the Commission
notes that the appropriate policies regarding spectrum holdings going
forward are the subject of a separate and pending rulemaking
proceeding, and any further consideration of such issues is therefore
more appropriately considered in that context. Therefore, the
Commission denies Frontline's request for heightened review of certain
long-form applications, and the Commission denies PISC's and RTG's
requests that the Commission impose a spectrum cap. Finally, the
Commission concludes that Congress's direction that the Commission
reallocate the D Block spectrum to public safety use has rendered moot
requests by Frontline and PISC that the Commission not permit the C
Block auction winners to hold a D Block license or D Block auction
winners to hold C Block licenses.
D. Lower 700 MHz A Block Wholesale Requirement
44. In its petition for reconsideration, NTCH, Inc. (NTCH) argues
that the Commission should reform the current Universal Service Funding
(USF) system by requiring Lower 700 MHz A Block licensees to provide
service on a discounted wholesale basis to designated Eligible
Telecommunications Companies. CTIA and U.S. Cellular oppose NTCH's
proposal arguing, among other assertions, that the proposal is outside
the scope of what can be granted on reconsideration of the 700 MHz
Second Report and Order.
45. NTCH presents a new proposal to impose a discounted wholesale
obligation on Lower 700 MHz A Block licensees and argues that the
Commission should adopt it as a means of reforming the current USF
system, but does not challenge the Commission's refusal, in the 700 MHz
Second Report and Order, to adopt wholesale requirements for the Upper
700 MHz C or D Block licensees. The Commission agrees with CTIA and
U.S. Cellular that the USF issues raised in NTCH's proposal are outside
the scope of this proceeding and therefore denies NTCH's petition. The
Commission notes that, as with other 700 MHz licensees, A Block
licensees have the flexibility to provide wholesale services if they
choose to based on their determination of market need.
[[Page 19430]]
E. First Amendment Analysis of Open Platform Rule
46. In the 700 MHz Second Report and Order, the Commission required
licensees in the C Block
to allow customers, device manufacturers, third-party application
developers, and others to use or develop the devices and
applications of their choice, subject to certain conditions[.]
The Commission rejected Verizon Wireless' arguments that the open
platform rule applicable to the Upper 700 MHz C Block violates the
First Amendment, finding that even if the open platform rule did
implicate the First Amendment, it withstands the applicable
intermediate scrutiny test.
47. In late 2007, Verizon Wireless and CTIA each filed and then
withdrew lawsuits in the DC Circuit Court challenging the open platform
requirements on the grounds that they violated the First Amendment.
Prior to Verizon Wireless's withdrawal of its petition for review from
the DC Circuit Court, PISC filed its petition for reconsideration with
the Commission requesting, in pertinent part, that the Commission
clarify that
the proper framework for Verizon's First Amendment claim remains the
`rational basis' flowing from the `scarcity rationale' adopted by
the Supreme Court in NBC v. U.S.
48. In light of the withdrawal of the Verizon Wireless and CTIA
First Amendment challenges to the open platform rule, PISC's request
for clarification of the proper legal framework for addressing Verizon
Wireless's withdrawn challenge is moot, and the Commission accordingly
dismisses PISC's petition for reconsideration as such, to the extent
the petition requested such clarification.
F. Open Platform Requirements for the C Block if the Reserve Price Is
Not Met
49. In its petition for reconsideration, Frontline argues that
stripping the C Block of the open platform conditions in the event of a
re-auction would be contrary to the public interest and would create
perverse incentives for bidders. The C Block auction was successful and
has been completed, rendering any discussion of an unsuccessful auction
and the terms of a re-auction of the C Block moot. Therefore, the
Commission dismisses Frontline's petition for reconsideration to the
extent that it seeks the Commission to reconsider the conditions of a
re-auction of the C Block.
G. 700 MHz Public/Private Partnership
50. Several of the pending petitions in this proceeding seek
reconsideration or clarification of various aspects of the regulatory
requirements adopted by the Commission to effectuate and govern the
Public/Private Partnership between the Upper 700 MHz D Block licensee
and the future licensee of the 700 MHz public safety broadband spectrum
(the Public Safety Broadband Licensee or PSBL). The Commission finds
that the directives in the Spectrum Act regarding the D Block render
moot the requests for reconsideration or clarification of the
Commission D Block commercial service rules, and the Commission
therefore dismisses these requests.
H. Narrowband Relocation
51. Commonwealth of Virginia (Virginia) and Pierce County Public
Transportation Benefit Area Corporation (Pierce Transit) filed
petitions seeking reconsideration of certain aspects of the decisions
on public safety narrowband relocation.
52. The 700 MHz Second Report and Order assumed that the D Block
would be licensed to a commercial provider that would be responsible,
up to a cap, for the costs of the narrowband relocation. Now that the D
Block has been reallocated for public safety services pursuant to the
Spectrum Act, the approach that the Commission established for
effectuating the consolidation of the narrowband channels cannot be
implemented, and the Commission must revisit the entire narrowband
relocation process (including elements such as those relating to
reimbursement and the timing of relocation), which the Commission will
accomplish by initiating a new rulemaking proceeding where the
Commission can address more comprehensively what rules need to be
adopted, deleted, or modified to implement the Spectrum Act.
Accordingly, the Commission dismisses the petitions for reconsideration
by Virginia and Pierce Transit as moot.
III. Ordering Clause
53. Accordingly, it is ordered, pursuant to sections 4(i), 302,
303(e), 303(f), 303(g), 303(r) and 405 of the Communications Act of
1934, as amended, 47 U.S.C. 154(i), 302, 303(e), 303(f), 303(g) and
405, that the petitions for reconsideration of Blooston Rural Carriers,
NTCH, Inc., and Rural Telecommunications Group, Inc. Are denied; the
petitions for reconsideration of AT&T, Inc., Commonwealth of Virginia,
Cyren Call Communications Corporation, and Pierce County Public
Transportation Benefit Area Corporation are dismissed; and petitions
for reconsideration of Frontline Wireless, LLC, MetroPCS
Communications, Inc., and Ad Hoc Public Interest Spectrum Coalition are
denied in part and dismissed in part as described herein.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2013-07397 Filed 3-29-13; 8:45 am]
BILLING CODE 6712-01-P