Notice of Updated 39 GHz Reconfiguration Procedures; Preparation for Incentive Auction of Upper Microwave Flexible Use Service Licenses in the 37 GHz, 39 GHz, and 47 GHz Bands (Auction 103); Order of Modification, 25263-25274 [2019-11423]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 84, Number 105 (Friday, May 31, 2019)]
[Notices]
[Pages 25263-25274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11423]


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FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 19-59, GN Docket No. 14-177; 18-85; DA 19-397]


Notice of Updated 39 GHz Reconfiguration Procedures; Preparation 
for Incentive Auction of Upper Microwave Flexible Use Service Licenses 
in the 37 GHz, 39 GHz, and 47 GHz Bands (Auction 103); Order of 
Modification

AGENCY: Federal Communications Commission.

ACTION: Final action; requirements and procedures.

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SUMMARY: In this document, the Wireless Telecommunications Bureau, in 
cooperation with the Office of Economics and Analytics, adopts 
procedures to reconfigure and modify existing 39 GHz licenses in 
preparation for Auction 103, an incentive auction that will offer 
licenses the Upper 37 GHz, 39 GHz, and 47 GHz bands. The 
reconfiguration procedures in the Updated 39 GHz Reconfiguration 
Procedures Public Notice are a critical step toward offering new 
licenses in this incentive auction, and will enhance opportunities for 
both incumbents and new entrants to provide valuable 5G wireless, 
Internet of Things, and other advanced services.

DATES: Auction 103 is scheduled to begin on December 10, 2019.

FOR FURTHER INFORMATION CONTACT: For auction legal questions, Erik 
Salovaara in the Office of Economics and Analytics' Auctions Division 
at (202) 418-0660. For Upper Microwave Flexible Use Service (UMFUS) 
questions, Simon Banyai in the Wireless Telecommunications Bureau's 
Broadband Division at (202) 418-2487.

SUPPLEMENTARY INFORMATION: This is a summary of the Updated 39 GHz 
Reconfiguration Procedures Public Notice, AU Docket No. 19-59, GN 
Docket No. 14-177, DA 19-397, released on May 14, 2019. The complete 
text of the Updated 39 GHz Reconfiguration Procedures Public Notice, 
including attachments and any related document, is available for public 
inspection and copying from 8:00 a.m. to 4:30 p.m. ET Monday through 
Thursday or from 8:00 a.m. to 11:30 a.m. ET on Fridays in the FCC 
Reference Information Center, 445 12th Street SW, Room CY-A257, 
Washington, DC 20554. The Updated 39 GHz Reconfiguration Procedures 
Public Notice and related documents also are available on the internet 
at the Commission's web page: https://www.fcc.gov/auction/103, or by 
using the search function for AU Docket No. 19-59 or for GN Docket No. 
14-177 on the Commission's Electronic Comment Filing System (ECFS) web 
page at https://www.fcc.gov/ecfs/. Alternative formats are available to 
persons with disabilities by sending an email to [email protected] or by 
calling the Consumer & Governmental Affairs Bureau at (202) 418-0530 
(voice), (202) 418-0432 (TTY).

I. Introduction

    1. In the Updated 39 GHz Reconfiguration Procedures Public Notice, 
the Wireless Telecommunications Bureau (Bureau), in cooperation with 
the Office of

[[Page 25264]]

Economics and Analytics (OEA) (jointly Bureau/OEA), adopts procedures 
to reconfigure and modify existing 39 GHz licenses in preparation for 
Auction 103, an incentive auction that will offer new flexible use 
licenses in the Upper 37 GHz (37.6-38.6 GHz), 39 GHz (38.6-40 GHz), and 
47 GHz (47.2-48.2 GHz) bands. These reconfiguration procedures are a 
critical step toward offering new licenses in this incentive auction 
and will enhance opportunities for both incumbents and new entrants to 
provide valuable 5G wireless, Internet of Things, and other advanced 
services. On April 12, 2019, FCC Chairman Pai announced, at a White 
House Event, that the incentive auction will begin on December 10, 
2019.

II. Background

    2. In the Spectrum Frontiers Fourth Report & Order, the Commission 
provided that each 39 GHz incumbent will choose among three options for 
its existing 39 GHz licenses. Specifically, each incumbent may choose 
to: (1) Have its licenses modified based on the Commission's proposed 
reconfiguration of its license holdings (Option 1); (2) have its 
licenses modified based on an acceptable alternative reconfiguration 
that the incumbent proposes, provided that it satisfies certain 
specified conditions (Option 2); or (3) commit to relinquish the 
holdings provided by all its existing licenses in exchange for an 
incentive payment and the opportunity to bid for new licenses (Option 
3).
    3. In the Initial 39 GHz Reconfiguration Procedures Public Notice, 
the Bureau/OEA set forth reconfiguration procedures consistent with the 
framework established by the Commission. The Bureau sought comment 
generally on those procedures and more specifically on four particular 
proposals presented in the Initial 39 GHz Reconfiguration Procedures 
Public Notice. First, the Bureau sought comment on a proposed 
methodology for setting relative weights for spectrum holdings by PEA, 
to be used to combine ``partial PEA'' holdings across PEAs. Second, the 
Bureau sought comment on whether to increase the threshold for post-
reconfiguration de minimis rounding from 5% to 10%. Third, the Bureau 
sought comment on the proposed process for calculating the geographic 
boundaries of a modified license for a partial PEA. Fourth, the Bureau 
sought comment on how to direct the incentive payment for an incumbent 
that is made up of a group of commonly controlled licensees.
    4. Further, the Bureau implemented a temporary freeze on the 
acceptance and processing of applications relating to any future 
transfers or assignments of 39 GHz licenses. There was an exception to 
the freeze for transfers or assignments to or among commonly controlled 
entities, for which applications were required to be filed on or before 
April 15, 2019. In the Initial 39 GHz Reconfiguration Procedures Public 
Notice, incumbents were also instructed to make any corrections to 
their license information in the Universal Licensing System (ULS) no 
later than April 15, 2019. No applications seeking such transfers or 
assignments of 39 GHz licenses have been filed since implementation of 
the temporary freeze. The Bureau notes that pro forma corporate 
realignments that do not change the controlling interest holder or the 
licensee, e.g., a change in an intermediate corporate holding company, 
are not precluded by this freeze. In many cases, such realignments do 
not require application to the Commission for advance approval.
    5. The Initial 39 GHz Reconfiguration Procedures Public Notice also 
served as an order of modification for existing 39 GHz licenses. 
Specifically, the Bureau explained that, as proposed by the Commission 
in the Spectrum Frontiers Fourth Report & Order all existing 39 GHz 
licenses are subject to modification, regardless of whether an 
incumbent elects to receive modified licenses or relinquish its 
spectrum usage rights in exchange for an incentive payment, with the 
opportunity to bid on new licenses.
    6. The Updated 39 GHz Reconfiguration Procedures Public Notice also 
serves as an order of modification for existing 39 GHz licenses. The 
licenses of all 39 GHz band licensees are modified as specified in the 
Spectrum Frontiers Fourth Report & Order and further explained in the 
Updated 39 GHz Reconfiguration Procedures Public Notice. The Updated 39 
GHz Reconfiguration Procedures Public Notice is being sent by certified 
mail, return receipt requested, to each current 39 GHz licensee at the 
mailing address on file in ULS.

III. Preparing the 39 GHZ Band for Auction 103

    7. Consistent with Commission decisions in the Spectrum Frontiers 
Fourth Report & Order, the Bureau/OEA will reconfigure existing 39 GHz 
licenses to match the new 39 GHz band plan and license areas. With the 
Initial 39 GHz Reconfiguration Procedures Public Notice, the Bureau/OEA 
implemented the first steps toward quantifying the 39 GHz holdings of 
incumbents by aggregating existing licensees' holdings in terms of MHz-
pops by PEA and consolidating the holdings of commonly controlled 
licensees based on then existing ULS. For purposes of Auction 103, an 
``incumbent'' includes both an existing 39 GHz licensee, individually 
or together with other commonly controlled existing 39 GHz licensees. 
In the Spectrum Frontiers Fourth Report and Order, the Commission 
decided that separate licenses held by entities that control or are 
controlled by each other and/or have controlling ownership interests in 
common (``commonly controlled entities'') will be treated as being held 
by a single entity in the reconfiguration of existing 39 GHz licenses. 
As described in these procedures, an incumbent may represent one or 
more existing 39 GHz licensees with respect to reconfiguration of 
existing licenses, the receipt of an incentive payment, and bidding on 
new licenses.
    8. The Updated 39 GHz Reconfiguration Procedures Public Notice and 
its Appendices update the initial data on aggregate incumbent holdings 
and establish the final procedures that will be used for the remaining 
steps of the reconfiguration process. The Bureau/OEA resolve all open 
issues raised in the Initial 39 GHz Reconfiguration Procedures Public 
Notice and address the comments received from AT&T, T-Mobile, and 
Verizon. Verizon was the only party to file a reply comment.
    9. From the perspective of 39 GHz incumbents, the major remaining 
steps of the 39 GHz band reconfiguration process are as follows, with 
additional detail provided in subsequent sections of the Updated 39 GHz 
Reconfiguration Procedures Public Notice:
     Review Updated 39 GHz Reconfiguration Procedures Public 
Notice and Updated Aggregated Holdings Data. In Appendix B, the Bureau/
OEA provide each incumbent's updated 39 GHz aggregated (and 
consolidated, if applicable) holdings data in each Partial Economic 
Area (PEA) (``Updated Aggregated Holdings Data''). The data has been 
updated to reflect additional information obtained after the Initial 39 
GHz Reconfiguration Procedures Public Notice.
     Review Reconfigured 39 GHz Incumbent Holdings Public 
Notice. The procedures and methodologies the Bureau/OEA adopted in the 
Updated 39 GHz Reconfiguration Procedures Public Notice will be applied 
to reconfigure each incumbent's holdings to match the new band plan and 
service areas. The forthcoming Reconfigured 39 GHz Incumbent Holdings 
Public Notice will show the holdings in each PEA that will determine 
the 100 megahertz license(s)

[[Page 25265]]

that each incumbent would receive if it chose to accept modified 
licenses based on the Commission's proposed reconfiguration (Initial 
Commitment Option 1). Any incumbent receiving more than one modified 
license in a PEA will receive licenses for contiguous frequencies 
within the PEA. However, the final frequencies of the licenses will be 
determined only after the assignment of frequencies for new licenses 
won in the auction process. The Reconfigured 39 GHz Incumbent Holdings 
Public Notice also will announce the timeline for incumbents to file 
FCC Form 175-A and make Initial Commitments.
     File FCC Form 175-A. To be able to access the Commission's 
Initial Commitment System, each incumbent must file an Incumbent 39 GHz 
Licensee Short-Form Application (FCC Form 175-A). In the event that no 
FCC Form 175-A is submitted for an incumbent, that incumbent will be 
considered to have committed to accepting modified licenses based on 
the Commission's proposed reconfiguration and to forgoing any 
opportunity to relinquish any holdings for an incentive payment or to 
become eligible to bid in Auction 103 for new licenses in Upper 37 GHz, 
39 GHz, and 47 GHz (i.e., will be considered to have submitted Option 
1). Consistent with the Commission decision, a party that controls or 
is controlled by an existing 39 GHz licensee that is considered to have 
submitted Initial Commitment Option 1 or that has a controlling 
interest in common with an existing 39 GHz licensee that is considered 
to have submitted Initial Commitment Option 1 also will not be eligible 
to bid in Auction 103.
     Make an Initial Commitment. Each incumbent may commit to 
one of the three options: (Option 1) accepting modified licenses based 
on a reconfiguration of its holdings proposed by the Commission in the 
Reconfigured 39 GHz Holdings Public Notice; (Option 2) accepting 
modified licenses based on its acceptable alternative reconfiguration; 
or (Option 3) relinquishing spectrum usage rights under all its 39 GHz 
licenses in exchange for an incentive payment and being eligible to bid 
on new licenses. The deadline for submitting an option choice in the 
Initial Commitment system will be no sooner than 60 days after the 
release of the Reconfigured 39 GHz Incumbent Holdings Public Notice. An 
incumbent that for any reason does not submit an Initial Commitment by 
the deadline will be considered to have submitted Option 1 (i.e., it 
committed to accepting modified licenses based on the Commission's 
proposed reconfiguration and to forgoing any opportunity to relinquish 
any holdings for an incentive payment or to become eligible to bid in 
Auction 103 for new licenses in Upper 37 GHz, 39 GHz, and 47 GHz).
     Redistribute Holdings in Round Zero, if applicable. Each 
incumbent submitting Option 3 will have a limited opportunity during 
the Initial Commitment submission window to redistribute partial PEA 
holdings in its updated aggregated holdings. Such an incumbent may use 
weighted MHz-pops to make such redistributions as part of the Round 
Zero process in the Initial Commitment System. An incentive payment to 
a 39 GHz incumbent committing to Option 3 will be based on its holdings 
at the close of Round Zero, taking into account any redistributions 
that the incumbent makes.
     Bid for New Licenses, if applicable. As announced by the 
Commission in the Spectrum Frontiers Fourth Report and Order, an 
existing licensee that submits either Option 1 or 2 in the Initial 
Commitment System will not be eligible to bid for new licenses in 
Auction 103. Consistent with the Commission decision, a party with a 
controlling interest in an existing 39 GHz licensee that submits 
Initial Commitment Options 1 or 2 or that is controlled by a party that 
also controls an existing 39 GHz licensee that submits Initial 
Commitment Options 1 or 2 also will not be eligible to bid in Auction 
103. An existing licensee that submits Option 3 in the Initial 
Commitment System, however, may apply to bid for new licenses by filing 
a short-form application to participate in the auction (FCC Form 175), 
though it is not required to do so.
     Receive Modified 39 GHz Licenses, if applicable. Each 
licensee will retain its existing 39 GHz licenses until after the close 
of Auction 103. Modified licenses will not be issued until after the 
close of Auction 103. Any licenses won by an incumbent in Auction 103 
will be issued pursuant to the Commission's standard post-auction 
process of receiving payment for winning bids, reviewing license 
applications, and then granting the new licenses. Incumbents will be 
able to seek Special Temporary Authority as needed to transition from 
existing licenses to modified licenses or to new licenses that will be 
issued subsequently.
     Receive Incentive Payments, if applicable. The Commission 
will be ready to direct the United States Treasury to disburse 
incentive payments owed following the grant of new licenses based on 
winning bids in Auction 103. Each incentive payment will be determined 
based on an incumbent's holdings after Round Zero and the final clock 
phase price for related spectrum blocks. An incentive payment may 
reduce the amount of Auction 103 winning bids only if the same party 
using the same FCC Registration Number (FRN) is the applicant on both 
FCC Form 175-A (for Initial Commitments) and FCC Form 175 (for Auction 
103). In all other cases, regardless of any relationship between a 
winning bidder and existing licensees or the FCC Form 175-A applicant, 
the winning bidder will be obligated to pay its winning bids without 
reduction by any incentive payment. The incumbent may direct any 
incentive payment to more than one account, provided that the account 
owner is either the FCC Form 175-A applicant or one of the existing 39 
GHz licensees listed on the FCC Form 175-A.

IV. Quantifying Existing 39 GHZ Licenses

A. Updated Aggregated Holdings

    10. Appendix B of the Updated 39 GHz Reconfiguration Procedures 
Public Notice lists Updated Aggregated Holdings Data and reflects 
additional information obtained after the release of the Initial 
Aggregated Holdings Data with the Initial 39 GHz Reconfiguration 
Procedures Public Notice. Appendix B provides the updated data, 
including the extent of any changes. The additional information that 
resulted in changes includes a statement asserting Video Multipoint 
Inc.'s de facto common control of licenses held by licensee Ronna L 
Sauro. Accordingly, the holdings of those licensees are consolidated in 
Appendix B. Review of the data also identified a unique case where a 
single licensee, FiberTower Spectrum Holdings LLC, using two different 
FRNs, held RSA licenses on the same frequencies that overlapped 
geographically. Due to the different FRNs, the geographic overlap was 
not considered when determining the holdings with respect to each FRN, 
which resulted in the population in the overlap being counted twice. 
The Bureau/OEA have corrected that error and removed the double counted 
population. Finally, the updated data reflects minor corrections to the 
population totals of some incumbents' holdings. In a limited number of 
cases, the points of the population cells fell precisely on the border 
between PEAs and/or licenses and the automated system did not correctly 
assign the related population. These relatively small corrections 
result in some incumbents' holdings decreasing by at

[[Page 25266]]

most 0.7% or increasing by at most 0.3%.
    11. The Bureau/OEA list 39 GHz MHz-pops holdings based on the 
information available in the public ULS. The holdings have been 
determined by the population covered by a license within a PEA, 
aggregated by licensee, and consolidated for commonly controlled 
entities, if applicable. These Updated Aggregated Holdings will be used 
with respect to any option an incumbent submits as its Initial 
Commitment. The holdings in Appendix B of the Updated 39 GHz 
Reconfiguration Procedures Public Notice were calculated pursuant to 
the process described in the Initial 39 GHz Reconfiguration Procedures 
PN, using the formulas described in Appendix A of the Updated 39 GHz 
Reconfiguration Procedures Public Notice.

B. Methodology for Setting Relative Weights for Spectrum Holdings by 
PEA

    12. The Bureau/OEA adopt a methodology for calculating the index of 
relative PEA weights for the Auction 103 reconfiguration process using 
price data from Auctions 102 (24 GHz) and 1002 (600 MHz). For Auction 
102, the Bureau/OEA used data from bidding in the clock phase, which 
concluded on April 17, 2019. Based on input from commenters, the 
Bureau/OEA revise the methodology proposed in the Initial 39 GHz 
Reconfiguration Procedures Public Notice by not including data from 
Auction 97 (AWS-3), and the Bureau/OEA assign relative proportions 
between Auctions 102 and 1002 in the index.
    13. Auctions 102 and 1002 offered PEA licenses, which makes their 
prices directly comparable to those in Auction 103. Auction 97, in 
contrast, included licenses based on Economic Areas (EAs) and Cellular 
Market Areas (CMAs). Due to these licensing area differences, Verizon 
Wireless objects to using Auction 97 data and asserts that ``there is 
no sound reason to set a PEA-based price index using data from auctions 
of different license configurations that may reflect over- and under-
inclusive MHz-pops values.'' AT&T also warns of challenges inherent in 
using price data from the different geographic areas used in Auction 97 
and notes that, if data are not distributed appropriately, ``the impact 
would be to raise the weighted value of less densely populated PEAs and 
decrease the weighted value of the higher population density PEAs.'' In 
light of these concerns about the use of non-PEA data from Auction 97, 
and the fact that Auction 102 clock phase data is now available, the 
Bureau/OEA conclude that it will base the index only on Auctions 1002 
and 102.
    14. Commenters uniformly agree with the proposal not to include 
data from Auction 101 (28 GHz) in the index. The Initial 39 GHz 
Reconfiguration Procedures Public Notice addressed an alternative 
proposal that would take into account prices from the partial set of 
county-level licenses available in Auction 101 using a regression 
methodology, but no commenters support that approach.
    15. The Bureau/OEA also sought comment on its proposal to weight 
Auction 102 more heavily than Auction 1002, and on the specific weights 
the Bureau/OEA should use if it does so. T-Mobile asserts that Auction 
102 should be weighted more heavily because the millimeter wave 
spectrum in Auction 102 is more comparable to the frequency bands 
available in Auction 103. Verizon Wireless disagrees and asks that the 
Bureau/OEA weight Auctions 102 and 1002 equally, claiming that the 
``critical component of these valuations is license area, not spectrum 
band.'' Further, Verizon Wireless claims that weighting Auction 102 
more heavily ``is particularly problematic here where the Bureau is 
valuing an incumbent's existing spectrum holdings that could be 
exchanged for either a voucher to participate in Auction 103 or an 
incentive payment, potentially resulting in lost value to the existing 
licensee.'' The Bureau/OEA were not persuaded that weighting the 
results of Auction 102 more heavily is problematic. In addition to the 
frequency bands in Auction 102 being more similar to those in Auction 
103, the Auction 102 data reflect more recent market conditions. 
Moreover, the auction procedures the Bureau/OEA adopt allow an existing 
licensee to retain all of its existing blocks for full PEAs without 
making any additional payments, regardless of the weight assigned to 
the PEA. In addition, the incumbent may redistribute its holdings of 
partial PEA blocks in Round Zero if it feels the weight indices for 
those PEAs are inaccurate. Accordingly, consistent with T-Mobile's 
suggestion, The Bureau/OEA will assign a weight of two-thirds to 
Auction 102 in the index and one-third to Auction 1002.
    16. The Bureau/OEA do not adopt T-Mobile's suggestion that, within 
Auction 102, the Bureau/OEA weight the Upper Band blocks more heavily 
than the Lower Band blocks because of concerns expressed about the use 
of the Lower Band. The Bureau/OEA note that the Lower Band blocks 
represent only two-sevenths of the inventory in that auction, and 
consequently, prices for the Lower Band blocks will naturally have a 
lower weight than the Upper Band blocks in the index.
    17. As a result of these decisions, the procedures used to 
construct the index of weights set out in Appendix C of the Updated 39 
GHz Reconfiguration Procedures Public Notice, did not require 
converting all data to a PEA basis. Otherwise those procedures are 
consistent with those set forth in the Initial 39 GHz Reconfiguration 
Procedures Public Notice. Specifically, the weights were determined by: 
(i) Computing an average price for each PEA in Auctions 1002 and 102, 
(ii) calculating a relative price index value for each PEA in each 
auction, and (iii) taking a weighted average of index values, weighting 
Auction 102 data by two-thirds and Auction 1002 data by one-third to 
create the index for weighting the MHz-pops in each PEA. The weighted 
MHz-pops for a block in a PEA then can be calculated by multiplying the 
unweighted MHz-pops times the index value for the PEA.

V. Reconfigured Holdings for Modified Licenses

    18. The final procedures the Bureau/OEA adopted for reconfiguring 
the updated aggregated 39 GHz holdings are the same as those described 
generally in the Initial 39 GHz Reconfiguration Procedures Public 
Notice. The final procedures include procedures consistent with the 
tentative conclusion regarding de minimis rounding and our proposal for 
determining the boundaries of modified licenses for partial PEAs, each 
of which were supported by the only commenter that addressed the 
issues.

A. Proposed and Alternative Reconfigurations

    19. The Commission directed the Bureau to reconfigure 39 GHz 
holdings of existing licensees. Subject to specified constraints, the 
Commission will implement the reconfiguration using a mathematical 
optimization, as described further in the Initial 39 GHz 
Reconfiguration Procedures Public Notice and in the Updated 
Reconfiguration Technical Guide (Appendix A) of the Updated 39 GHz 
Reconfiguration Procedures Public Notice. In brief, the optimization 
will consider all possible ways to reconfigure the incumbent's holdings 
equivalent to a partial PEA license such that the incumbent will have 
at most a single modified partial PEA license while keeping constant 
the incumbent's total weighted MHz-pops. Among the reconfigurations 
that meet these criteria, the Commission will propose the 
reconfiguration that assigns the

[[Page 25267]]

modified license for a partial PEA, if any, in the available PEA that 
as a result will have the fewest remaining unassigned weighted MHz-
pops.
    20. An incumbent also will have an opportunity to provide an 
acceptable alternative reconfiguration in place of the Commission's 
proposed reconfiguration. To be an acceptable alternative 
reconfiguration, the incumbent's plan must satisfy the following 
constraints: (i) The incumbent's combined total MHz-pops holdings are 
kept constant; (ii) for every PEA with partial PEA holdings but one, 
the incumbent's holdings in the PEA are reduced down to the greatest 
integer (full block equivalents) less than or equal to the incumbent's 
updated aggregate holdings in the PEA or increased up to the least 
integer (full block equivalents) greater than or equal to its updated 
aggregate holdings in the PEA; and (iii) for at most a single PEA in 
which the incumbent has final aggregate holdings equivalent to a 
partial PEA license, those holdings are increased to less than the 
equivalent of a new license, or decreased to no less than zero, while 
maintaining the incumbent's combined holdings. Unlike the Commission's 
reconfiguration proposal, an incumbent's alternative reconfiguration 
need not locate any modified license for a partial PEA in the PEA with 
the fewest remaining unassigned weighted MHz-pops.

B. Reconfigured Holdings Equivalent to a Partial PEA

    21. In the Spectrum Frontiers Fourth Report and Order, the 
Commission determined that any modified license would be for 100 
megahertz, the complete bandwidth of a new license. Consequently, any 
single modified license for a ``partial PEA'' would be ``partial'' in 
relation to the geography of a full PEA covered by a new license. In 
the Initial 39 GHz Reconfiguration Procedures Public Notice, the 
Bureau/OEA sought comment on two issues relating to these partial PEA 
holdings: (1) The de minimis rounding threshold; and (2) how the 
Commission will calculate the boundaries of any modified license for a 
partial PEA holding.
    22. De Minimis Rounding and Option to Relinquish. The Commission 
concluded in the Spectrum Frontiers Fourth Report and Order that an 
incumbent accepting modified licenses should be assigned a modified 
license covering a full PEA if its reconfigured holdings equivalent to 
a partial PEA would leave a de minimis portion of the population 
uncovered. The Commission found such rounding would serve the public 
interest because it would ensure that an incumbent had the opportunity 
to serve the entire PEA, rather than leaving a small percentage of the 
population most likely unserved. The Commission set this de minimis 
threshold at 5% and directed the Bureau to determine whether it should 
be increased up to 10%. In the Initial 39 GHz Reconfiguration 
Procedures Public Notice, the Bureau/OEA tentatively concluded that it 
should increase the de minimis threshold to 10%.
    23. The Bureau/OEA adopt their tentative conclusion to increase the 
de minimis threshold to 10% for the partial PEA holding. The only party 
addressing this issue in the record, T-Mobile, supports the this 
conclusion. T-Mobile agrees that this approach will maximize the 
remaining number of full PEA licenses available for auction. This 
approach also will eliminate the possibility of having to offer 
separate licenses at auction that cover less than 10% of the PEA 
population, which would likely attract few significant bids, if any, 
and likely leave those populations unserved. Further, T-Mobile agrees 
that de minimis rounding should apply only where the incumbent commits 
to accept modified licenses, to avoid an incumbent receiving an 
incentive payment windfall from such de minimis rounding. Accordingly, 
an incumbent will receive a modified license for a full PEA if it has 
reconfigured holdings in the PEA that would cover 90% or more of the 
PEA population.
    24. Geographic Boundaries of Modified Licenses for Partial PEAs. As 
determined in the Spectrum Frontiers Fourth Report and Order, the 
license for an incumbent's one remaining partial PEA block after 
reconfiguration will be determined by adjusting the incumbent's 
currently licensed area in a PEA so that it corresponds to the 
incumbent's reconfigured holding in that PEA. The geographic boundaries 
of a modified license for a partial PEA will be ``as similar as 
possible to the incumbent's original holdings in that PEA, recognizing 
that the remaining partial PEA block may cover a larger or smaller 
percentage of pops than the existing license.''
    25. The Commission stated it would determine the geographic 
boundaries of this modified license even when the incumbent submits an 
acceptable alternative reconfiguration. The same methodology will be 
used to determine the geographic boundaries for any partial PEA, 
whether it results from a Commission reconfiguration proposal or an 
acceptable alternative submitted by the incumbent. The precise 
geographic boundaries of a modified license for a partial PEA will be 
determined only after an incumbent makes its Initial Commitment. In the 
Initial 39 GHz Reconfiguration Procedures Public Notice and in the 
Reconfiguration Technical Guide (Appendix A) of the Updated 39 GHz 
Reconfiguration Procedures Public Notice, the Bureau/OEA outlined their 
process by which the geographic boundaries of modified licenses for 
partial PEAs would be determined and the Bureau/OEA sought comment on 
this process.
    26. The Bureau/OEA adopt their proposal for determining the 
geographic boundaries of modified licenses for partial PEAs. 
Specifically, the Bureau/OEA conclude that the system will first 
determine an incumbent's current geographic coverage and then will add 
(or, in the case that the population in the coverage area exceeds the 
reconfigured holdings, subtract) two-by-two kilometer grid cells 
adjacent to this coverage area within the PEA. The system will do so 
until arriving at the population as close to the MHz-pops value of the 
incumbent's reconfigured holdings in the PEA as possible while not 
being less than the MHz-pops value of the reconfigured holdings. If 
multiple combinations of grid cells could yield the same outcome, the 
optimization will randomly choose one of the combinations. As noted by 
T-Mobile, the sole commenter on this issue, this approach will promote 
a result whereby an incumbent's post-reconfiguration boundaries will 
reflect, as closely as possible, an incumbent's pre-reconfiguration 
holdings, should it choose to accept modified licenses.

VI. Initial Commitments

    27. With one exception, the Bureau/OEA adopt as final procedures 
for the initial commitment process those described in the Initial 39 
GHz Reconfiguration Procedures Public Notice. In the Initial 39 GHz 
Reconfiguration Procedures Public Notice, the Bureau/OEA tentatively 
concluded that only one of the commonly controlled entities that holds 
an existing 39 GHz license would receive the single incentive payment 
for an incumbent's combined holdings relinquished in the incentive 
auction. In response to the record regarding incentive payments, the 
Bureau/OEA revised this approach. The Bureau/OEA will permit a party 
lacking an existing 39 GHz license that controls an incumbent's 39 GHz 
licensees or that is controlled by another party that controls the 
incumbent's 39 GHz licensees to receive an incentive payment. Using the 
procedures described below, this

[[Page 25268]]

approach will enable an incumbent using a party lacking 39 GHz licenses 
to bid on new licenses in Auction 103 and to reduce its winning bids by 
the amount of the incentive payment for the incumbent's holdings. In 
response to additional comments, the Bureau/OEA also permits the 
incumbent to divide its single incentive payment amount among accounts 
owned by the commonly controlled party that represents existing 39 GHz 
licensee(s), or by one or more of its 39 GHz licensees. Key aspects of 
the final procedures for the initial commitment process as also 
explained in the Initial 39 GHz Reconfiguration Procedures Public 
Notice and Appendix D: Updated Initial Commitment Technical Guide, of 
the Updated 39 GHz Reconfiguration Procedures Public Notice.
    28. The Reconfigured 39 GHz Incumbent Holdings Public Notice will 
announce the timeline for Initial Commitments. The timeline will 
include a window for filing the Incumbent 39 GHz Licensee Short-Form 
Application (FCC Form 175-A). Among other things, on the FCC Form 175-
A, an incumbent will identify the individuals who are authorized to act 
as the incumbent's Initial Commitment Representatives. The timeline 
will include a deadline for submitting a binding Initial Commitment 
regarding the combined 39 GHz holdings of the applicable incumbent 
through the Initial Commitment system. The window for filing FCC Form 
175-A will open no sooner than 30 days after the timeline is announced 
and the deadline for submitting Initial Commitments will be no sooner 
than 30 days after the FCC Form 175-A filing window opens.
    29. An incumbent that for any reason does not submit an Initial 
Commitment by the deadline will be considered to have committed to 
accepting modified licenses based on the Commission's proposed 
reconfiguration and to forgoing any opportunity to relinquish any 
partial PEA holdings for an incentive payment or to become eligible to 
bid for licenses in Auction 103 (Initial Commitment Option 1). A party 
with a controlling interest in an existing 39 GHz licensee that is 
considered to have submitted Initial Commitment Option 1, or that is 
controlled by a party that also controls an existing 39 GHz licensee 
that is considered to have submitted Initial Commitment Option 1 also 
will not be eligible to bid in Auction 103. If a 39 GHz incumbent has 
updated holdings for a group of commonly controlled entities and is 
considered to have submitted Initial Commitment Option 1, committing to 
accepting modified licenses, the modified licenses will be issued to 
the consolidated incumbent listed in Appendix B of the Updated 39 GHz 
Reconfiguration Procedures Public Notice.
    30. Based on the Initial Commitments, the Commission will announce 
the number of spectrum blocks in the Upper 37 GHz and 39 GHz bands that 
will be available in Auction 103. A number of spectrum blocks in the 
Upper 37 GHz and 39 GHz spectrum bands will be reserved in each PEA 
sufficient for any modified licenses that incumbents commit to accept. 
The number of remaining spectrum blocks then will be available to be 
assigned as new licenses in Auction 103. Other than information about 
the number of blocks available in Auction 103, the Commission will not 
make public any information relating to incumbents' Initial Commitments 
until after Auction 103 closes.
    31. The final changes to any existing licenses, whether 
modifications or cancellations based on voluntary relinquishment, will 
occur after the close of Auction 103. The incumbent will be bound to 
fulfill its Initial Commitment following the close of Auction 103.

A. Incumbent 39 GHz Licensee Short-Form Application

    32. Each incumbent will use the Incumbent 39 GHz Licensee Short-
Form Application (FCC Form 175-A) to: (a) Provide identifying 
information for the applicant; (b) provide information for a contact 
person regarding the application; (c) list the FRNs of all existing 39 
GHz licensees with licenses being consolidated for purposes of Auction 
103; (d) name up to three Initial Commitment Representative(s); and (e) 
make required certifications. The Bureau/OEA will make available 
instructions and other educational materials prior to the opening of 
the FCC Form 175-A filing window.
    33. FCC Form 175-A Applicant. In the Spectrum Frontiers Fourth 
Report and Order, the Commission decided that each incumbent's 39 GHz 
license holdings would be treated on a combined basis, whether 
aggregated by PEA for an individual licensee or aggregated and 
consolidated by PEA for commonly controlled entities that are treated 
as a single incumbent. To implement our revised approach regarding the 
party eligible to receive an incumbent's incentive payment, the FCC 
Form 175-A applicant may be an existing 39 GHz licensee or it may be a 
party subject to common control with the existing 39 GHz licensee(s) 
listed in the FCC Form 175-A. The FCC Form 175-A applicant will 
represent the incumbent for purposes of making an initial commitment to 
accept modified licenses or relinquish all existing spectrum usage 
rights in exchange for an incentive payment and the opportunity to bid 
for new licenses in Auction 103. An FCC Form 175-A applicant must 
certify that it represents itself and all licensee(s) listed in the 
application with existing 39 GHz licenses being consolidated for 
purposes of Auction 103, all of which must be commonly controlled. The 
applicant may name up to three individuals as Initial Commitment 
Representatives, each of whom is authorized by the applicant to make an 
Initial Commitment regarding the holdings of the existing 39 GHz 
licensees listed in the application.
    34. The Commission will issue any modified licenses to the FCC Form 
175-A applicant that submits Initial Commitment Option 1 or 2. If an 
entity wishes to assign modified licenses to multiple commonly 
controlled entities, it may do so through the Commission's standard 
transfer and assignment process including making pro forma transfers or 
assignments, after the modified licenses have been issued to the FCC 
Form 175-A applicant. If the entity listed on FCC Form 175-A does not 
have a current FCC Form 602 Ownership Form on file, prior to modified 
licenses being issued, it will provide the necessary license ownership, 
basic eligibility, and qualification information required of FCC 
licensees. Similarly, the Commission will calculate a single incentive 
payment for spectrum usage rights relinquished by an incumbent. As 
discussed in connection with incentive payments, the FCC Form 175-A 
applicant then may direct that incentive payment to more than one 
account, provided the account owners are either the FCC Form 175-A 
applicant or one of the existing 39 GHz licensees listed on the FCC 
Form 175-A. In Auction 103, the bidding system automatically will 
calculate obligations toward winning bids reduced by any incentive 
payment for relinquished holdings if the FCC Form 175-A applicant also 
applies for and bids in Auction 103 using the same FRN. In all other 
cases, regardless of any relationship between an Auction 103 bidder and 
the FCC Form 175-A applicant or listed 39 GHz licensees, a winning 
bidder will be obligated to pay its winning bids at the close of the 
auction regardless of any incentive payment it may receive later.
    35. An incumbent bidding on new licenses and claiming a designated 
entity bidding credit, e.g., a small business bidding credit, in 
Auction 103

[[Page 25269]]

may receive a bidding credit only with respect to winning bid amounts 
that exceed any incentive payment to that incumbent. This remains the 
case even when an incumbent uses different parties as the applicant on 
the FCC Form 175-A for Initial Commitments and on the FCC Form 175 for 
bidding on new licenses. In such a case, i.e., when the FRN of the 
applicant on the FCC Form 175-A for Initial Commitments is not the same 
as the FRN on the FCC Form 175 for bidding on new license, the Bidding 
System will reflect the FCC Form 175 applicant's claimed bidding credit 
without taking into account the incumbent's incentive payment, payable 
at the direction of the FCC Form 175-A applicant. As a result, the 
bidding credit reflected in the bidding system may not be correct. The 
Commission will make the correct calculation during the post-auction 
licensing process and adjust the bidding credit discount accordingly.
    36. Rule Prohibiting Certain Communications. As of the deadline for 
filing FCC Form 175-A, any incumbent 39 GHz licensee listed in an FCC 
Form 175-A will be considered to be an applicant in Auction 103 for 
purposes of section 1.2105(c), the Commission's rule that prohibits 
certain auction-related communications from the short-form application 
deadline until the post-auction deadline for down payments on new 
licenses. Subject to specified exceptions, the rule provides that, 
after the application filing deadline, ``all applicants are prohibited 
from cooperating or collaborating with respect to, communicating with 
or disclosing, to each other or any nationwide provider [of 
communications services] that is not an applicant, or, if the applicant 
is a nationwide provider, any non-nationwide provider that is not an 
applicant, in any manner the substance of their own, or each other's, 
or any other applicants' bids or bidding strategies (including post-
auction market structure), or discussing or negotiating settlement 
agreements, until after the down payment deadline. . . .''
    37. The rule will apply to a covered incumbent from the deadline 
for filing FCC Form 175-A regardless of whether the incumbent 
ultimately relinquishes spectrum usage rights. In this respect, the 
applicant on FCC Form 175-A and any listed licensees are the ``covered 
incumbent,'' as all have an interest in the holdings and any resulting 
incentive payment. Any existing 39 GHz licensee that is listed on an 
FCC Form 175-A could relinquish existing spectrum usage rights in 
exchange for an incentive payment, even if ultimately it does not do 
so. In contrast, an incumbent that wants only to commit to accept the 
modification proposed by the Commission may do so without filing an FCC 
Form 175-A. In that case, it will be deemed to have committed to 
accepting modified licenses based on the Commission's proposed 
reconfiguration and to keeping any modified partial PEA license. 
Information on all covered incumbents will be available to the public 
since applicants and listed licensees on FCC Form 175-A and/or 
applicants filing FCC Form 175 will be identified by public notice 
subsequent to the respective filing deadlines for the forms. The rule 
prohibiting certain communications prohibits those communications 
between applicants and nationwide providers, regardless of whether 
those nationwide providers are applicants in the auction. Consistent 
with the procedures adopted for Auctions 101 and 102 with respect to 
millimeter wave bands, the Bureau/OEA identifiy AT&T, Sprint, T-Mobile, 
and Verizon Wireless as ``nationwide providers'' for the purpose of 
implementing our competitive bidding rules in Auction 103, including 
section 1.2105(c).
    38. A party covered by section 1.2105(c) must implement procedures 
to ensure that a party with a disclosable ownership interest in the 
covered party and in another applicant (also a covered party) does not 
have access to the bids and bidding strategies of more than one of the 
covered parties. Section 1.2105(c)(2) provides that a covered party 
``must implement internal controls that preclude any individual acting 
on behalf of the applicant as defined for purposes of this paragraph 
from possessing information about the bids or bidding strategies of 
more than one party submitting a short-form or communicating such 
information with respect to a party submitting a short-form application 
to anyone possessing such information regarding another party 
submitting a short-form application.''

B. Initial Commitment Options

    39. In the Initial Commitment System, after activating his or her 
own SecurID[supreg] token, the Initial Commitment Representative will 
commit the represented 39 GHz licensees to one of three Initial 
Commitment options: (1) Accept modified licenses based on the 
Commission's proposed reconfiguration of the holdings of the 39 GHz 
incumbent; (2) accept modified licenses based on an acceptable 
alternative reconfiguration submitted by the incumbent; or (3) 
relinquish all spectrum usage rights pursuant to the licensees' 
existing 39 GHz licenses in exchange for an incentive payment by having 
the licenses cancelled. To be able to bid for new licenses in Auction 
103, a 39 GHz incumbent must submit Initial Commitment Option 3 and 
commit to having its existing 39 GHz licenses cancelled. An incumbent 
that submits either Initial Commitment Option 1 or Option 2 cannot bid 
for new licenses in Auction 103.
    40. Additional description of Initial Commitment System details is 
provided in the Updated 39 GHz Reconfiguration Procedures Public 
Notice, Appendix D: Updated Initial Commitment Technical Guide. The 
Bureau/OEA will provide additional information and educational 
materials regarding the Initial Commitment System in advance of the 
opening of the Initial Commitment submission window.
    41. Reconfiguration by the Commission and Acceptable Alternatives 
(Options 1 and 2, respectively). An Initial Commitment Representative 
may commit the incumbent to accepting modified licenses based on the 
reconfiguration proposed by the Commission (Option 1). Alternatively, a 
representative may use the Initial Commitment system to submit an 
acceptable alternative reconfiguration (Option 2). The Initial 
Commitment System will enable a representative to consider various 
potential reconfigurations, if feasible, and to determine whether an 
alternative reconfiguration meets the necessary requirements.
    42. It may be possible for there to be more than one 
reconfiguration consistent with the Commission's requirements if an 
incumbent has weighted MHz-pops quantities equivalent to a partial PEA 
in multiple PEAs. In this case, the incumbent will be able to consider 
the available options using the Initial Commitment System (Option 2). 
More specifically, in accordance with the Commission's requirements for 
an acceptable reconfiguration, the Initial Commitment System will allow 
the representative to round holdings equivalent to a partial PEA either 
down to the greatest integer less than or equal to the incumbent's 
updated holdings or up to the least integer greater than or equal to 
the incumbent's updated holdings, for those PEAs, with at most one 
exception. The system will notify the representative if choices made 
are not consistent with having at most one PEA with the equivalent of a 
partial PEA license.
    43. For example, if the representative has indicated that it wishes 
to round down holdings equivalent to partial PEA licenses in all but 
one PEA, and the

[[Page 25270]]

remaining weighted MHz-pops would increase those holdings in the 
remaining PEA to more than a full PEA license, the system will require 
the representative to readjust its holdings. Once the representative 
has provided input that leads to an acceptable alternative 
reconfiguration, it may ``submit'' the reconfiguration and commit the 
represented 39 GHz licensees to accept modified licenses based on the 
submitted acceptable alternative reconfiguration.
    44. The Commission will issue modified licenses to the FCC Form 
175-A applicant. If the FCC Form 175-A applicant does not have a 
current FCC Form 602 on file, prior to modified licenses being issued, 
it will file an FCC Form 602 Ownership Form along with basic 
eligibility, and qualification information required of FCC licensees. 
Specific filing instructions will be provided, if necessary, in the 
Auction 103 Closing Public Notice announcing winning bidders. As 
detailed below in connection with incentive payments, in the event that 
the incumbent chooses to relinquish its partial PEA holdings, a single 
incentive payment will be made to the FCC Form 175-A applicant 
representing the incumbent after the conclusion of Auction 103.
    45. In the Spectrum Frontiers Fourth Report and Order, the 
Commission decided that 39 GHz licensees that accept modified licenses, 
based on Initial Commitment Option 1 or 2 will not be eligible to bid 
in Auction 103. Consequently, a party with control over such 39 GHz 
licensees or that is controlled by a party capable of controlling such 
39 GHz licensees will not be eligible to bid in Auction 103.
    46. If an incumbent submits Initial Commitment Option 1 or 2 to 
receive modified licenses, and the modified licenses will include a 
license for a partial PEA, the incumbent's Initial Commitment 
Representative will choose either to keep the modified license for a 
partial PEA or to relinquish the spectrum usage rights for the partial 
PEA license in exchange for an incentive payment. If the representative 
elects to keep the modified partial PEA license, the de minimis 
rounding rules will apply, potentially rounding the partial PEA block 
up to a modified license for a full PEA block. In the case of a 
relinquishment, the incentive payment will be based on the actual MHz-
pops of the relinquished holdings.
    47. Round Zero Reallocations for an Incumbent Submitting Initial 
Commitment Option 3. As part of submitting Initial Commitment Option 3, 
an incumbent will have an opportunity to reallocate, within 
constraints, any updated aggregated partial PEA holdings in Round Zero. 
The Initial Commitment Representative may reallocate the incumbent's 
updated aggregated partial PEA holdings among the PEAs in which it has 
such holdings. The reallocation will be done by transferring weighted 
MHz-pops among eligible PEAs. The Initial Commitment System will notify 
the representative if a reallocation does not use all of the weighted 
MHz-pops available. The representative will be permitted to submit a 
proposed reallocation that does not use all of the weighted MHz-pops 
available. If a representative does so, the system automatically will 
apportion any unused weighted MHz-pops to the partial PEAs in the 
incumbent's updated aggregated holdings by PEA, starting with the 
lowest numbered PEA.

C. Transition for Existing 39 GHz Licenses

    48. Each 39 GHz licensee will hold its existing licenses until 
after the announcement of winning bidders for new licenses in Auction 
103. The incumbent's binding Initial Commitment then will be 
implemented as part of the post-auction transition.
    49. For an incumbent with an Initial Commitment to accept modified 
licenses (Options 1 or 2), the modified licenses will be issued after 
winning bidders are announced in Auction 103. The incumbent will know 
the number of all the modified licenses in each PEA based on its 
submitted Initial Commitment. The specific frequency blocks for which 
modified licenses will be issued will be assigned in the assignment 
phase of the auction and will be announced after the close of bidding 
along with the geographic boundaries of any modified license for a 
partial PEA.
    50. Incumbents that will be issued modified licenses already have 
existing licenses in the PEA and may be able to transition any existing 
operations to new frequencies (or geographic areas in the case of 
licenses that either covered or now cover only part of a PEA) before 
any new licenses are granted, as new licenses won pursuant to Auction 
103 will not be issued until after post-auction payments are made and 
license applications are accepted and reviewed. The Bureau will support 
this transition by designating the time period after the close of the 
auction and before new licenses are granted as the transition period 
for incumbents receiving modified licenses to make the transition. 
Specifically, the Bureau will issue modified licenses after the close 
of the auction but not cancel these incumbents' authorizations on their 
original frequencies to allow for a limited transition period. The 
Bureau will cancel their original authorizations only after the 
transition has been made to the new frequencies or when the original 
frequencies are needed for new licenses, whichever is sooner. If an 
incumbent choosing to have its licenses modified is moving to 
frequencies where another incumbent with modified licenses holds its 
original licenses, the Bureau will need to ensure only one 
authorization is active. In this case, the Commission would develop a 
plan to accommodate the transition of both incumbents, which may 
include granting Special Temporary Authorizations (STAs) to effectuate 
the transition. The Commission may also consider granting STAs if an 
incumbent's transition to its new modified frequencies has not been 
completed before the Commission is ready to grant new licenses in the 
same frequencies.
    51. For an incumbent that commits to relinquish all existing 39 GHz 
spectrum usage rights in exchange for an incentive payment (Option 3), 
the Bureau will cancel the existing licenses after the winning bidders 
are announced in Auction 103. This will make associated spectrum 
available for authorization for licenses under the new band plan, i.e., 
modified licenses and new licenses won at auction. The Bureau 
recognizes that, if these incumbents have existing operations at the 
time of the close of the auction, they will need a transition period to 
continue to operate after their existing licenses are canceled and 
before their new licenses are issued (or until they can transition 
existing operations to other spectrum bands in which they hold 
licenses). This transition period will be accommodated through Special 
Temporary Authorizations (STAs).
    52. STA Process. Incumbents that have existing operations and need 
continuing authority to operate as they transition to new frequencies 
can apply for an STA, if needed, to ensure continuity of service. An 
incumbent will need to explain in its STA request the nature of its 
existing operations and identify how much time it needs for transition 
and/or why it was unable to complete the transition in the initial time 
allotted (if applicable). Any STAs granted will authorize the incumbent 
to operate only on a secondary, non-interfering basis, and only up to 
180 days. Although these STAs will be secondary, incumbents should have 
sole use of the frequencies authorized for a period of time because the 
Commission will not be able to grant its first set of new licenses 
immediately after the

[[Page 25271]]

auction closes, due to the additional time required for application 
submission, payments and the period to deny period, among other things. 
These STAs will not be renewed absent extraordinary circumstances. As 
these STAs will be issued on a secondary, non-interfering basis, and 
therefore new licensees in these frequencies have primary operating 
authority. Incumbents that need additional time to transition also have 
the option to negotiate leases or other arrangements with the new 
licensee(s) authorized to operate in those frequencies. The Bureau/OEA 
will provide the filing deadline for these types of STA requests in the 
Auction 103 Closing Public Notice announcing winning bidders.

D. Incentive Payments

    53. For incumbents that submit Initial Commitment Option 3, the 
incentive payment will be determined based on the incumbent's MHz-pops 
holdings in a PEA after Round Zero and the final clock phase price for 
a spectrum block in the same PEA at the close of the clock phase of the 
auction and summed across all PEAs in which the incumbent had such 
holdings. For such an incumbent, the holdings in a PEA after Round Zero 
will be the incumbent's Updated Aggregated Holdings as modified by the 
incumbent during Round Zero. For an incumbent that accepts modified 
licenses for whole blocks based on reconfigured holdings and elects to 
relinquish reconfigured holdings that are equivalent to a partial PEA, 
these holdings will be the reconfigured holdings in the PEA with MHz-
pops equivalent to less than a full block. As previously noted, 
holdings equivalent to less than a full block that are relinquished 
will not include any post-reconfiguration rounding.
    54. Based on the authority referred to in the Initial 39 GHz 
Reconfiguration Procedures Public Notice, and so long as such treatment 
of the incentive payment is consistent with Federal financial 
management principles and guidance, the Commission will collect from 
any winning bidder that also is the applicant on an FCC Form 175-A, 
amounts net of any incentive payment for the holdings based on the 
relevant FCC Form 175-A. As already noted, for Auction 103, the 
Commission bidding system automatically will calculate obligations 
toward winning bids net of any incentive payment for relinquished 
holdings when the same party with the same FRN is the applicant for an 
FCC Form 175-A and for an FCC Form 175.
    55. In general, winning bidders must pay their winning bids in full 
within approximately one month after release of the public notice 
announcing the close of an auction. However, those winning bid payments 
are recognized as auction proceeds available to be shared as incentive 
payments only after the Commission grants licenses associated with 
winning bid payments. Until then, the Commission holds winning bid 
payments while it processes the license application(s) of winning 
bidders and does not disburse them. Accordingly, cash incentive 
payments will be made only after the Commission grants new licenses 
that result in the recognition of sufficient auction proceeds needed to 
make the incentive payments.
    56. The auction process will determine a single incentive payment 
amount with respect to any holdings relinquished by an incumbent. As 
the Bureau/OEA noted in the Initial 39 GHz Reconfiguration Procedures 
Public Notice: ``Once the combined holdings [of an incumbent] are 
redistributed by weighted MHz-pops across PEAs, incumbent holdings in a 
particular PEA may no longer be clearly derived from any particular 
existing license or, in the case of consolidated licensees, from any 
particular existing licensee.'' In the Initial 39 GHz Reconfiguration 
Procedures Public Notice, the Bureau/OEA tentatively concluded that 
such a single payment may be directed to only one of the commonly 
controlled existing licensees and we sought comment on whether there is 
a need to permit the designation of a commonly controlled entity that 
does not already hold a 39 GHz license.
    57. Commission auction rules in 47 CFR 1.2105(a)(3) permit only one 
entity from a group of commonly controlled entities to be an applicant 
in a Commission auction of new spectrum licenses. The Commission 
mandated that a defining characteristic of Auction 103 should be that 
``incumbents will have the opportunity to replace at no additional cost 
all existing spectrum usage rights equivalent to a full 100 megahertz 
blocks with new licenses that are offered in the auction and provide 
equivalent rights.'' This mandate is achieved in part by handling 
incentive payments for incumbent holdings on a combined basis in order 
to net them against the winning bids of a single applicant. 
Accordingly, the Commission's bidding system automatically will 
calculate obligations toward winning bids net of any incentive payment 
for relinquished holdings when the same party with the same FRN is the 
applicant on an FCC Form 175-A and an FCC Form 175. The alternative 
proposal in the Initial 39 GHz Reconfiguration Procedures Public Notice 
recognized that an incumbent might have reasons to use an entity to bid 
for new licenses that differed from the existing licensee.
    58. As reflected in the FCC Form 175-A procedures already 
described, the Bureau/OEA adopt an alternative proposal to address the 
interests raised in the record. This decision will enable an incumbent 
to have its incentive payments reduce the winning bids of its FCC Form 
175-A applicant even though that applicant does not hold the 39 GHz 
licenses being relinquished. T-Mobile supports the alternative proposal 
and no commenter opposes it. This approach would allow an incumbent to 
select a new party that controls, is controlled by, or is subject to 
common control with existing licensees, to be its vehicle for bidding 
on new licenses. That party's winning bids, if any, then may be reduced 
by the incumbent's incentive payment, even though the party does not 
itself hold existing 39 GHz licensees. All this may be done consistent 
with the treatment of holdings on a combined basis.
    59. While not objecting to this approach, Verizon would go farther. 
In response to the Initial 39 GHz Procedures Public Notice, Verizon 
contends that handling incentive payments, or the issuance of licenses, 
could have potentially adverse tax consequences. To remedy its concern, 
Verizon proposes that participating parties be permitted to designate 
multiple specific commonly controlled entities to receive licenses and/
or incentive payments upon completion of the auction. Verizon 
acknowledges that the Initial 39 GHz Reconfiguration Procedures Public 
Notice deemed holdings combined for purposes of reconfiguration and 
Auction 103 pursuant to an express Commission decision in the Spectrum 
Frontiers Fourth Report and Order. Nevertheless, Verizon asserts that 
its proposal to unwind that consolidation is not inconsistent with the 
Commission's decision.
    60. As an initial matter, in the Spectrum Frontiers Fourth Report 
and Order, the Commission indicated that all existing licenses are 
subject to change, regardless of the licensee's participation in the 
incentive auction, in order to implement the Commission's transition to 
a new band plan and service rules for the 39 GHz band. The Commission 
also indicated that, although affected by an incumbent's decision 
whether to bid in the incentive auction for new licenses, the exact 
form each license will take by the end of the auction will be 
determined by the overall process we are implementing. The Spectrum 
Frontiers Fourth Report

[[Page 25272]]

and Order noted that ultimately the Internal Revenue Service can 
determine the tax consequences resulting from this process.
    61. Further, Verizon's proposal is in tension with the procedures 
needed to implement the Commission's reconfiguration framework. For the 
reasons described, Auction 103 will determine a single incentive 
payment amount for an incumbent's holdings and, moreover, will net that 
amount against the winning bid obligations of an incumbent that also 
bids for new licenses. Given this treatment, it is not feasible for the 
Commission's systems to unwind the process so that each existing 
licensee may receive new licenses and/or an incentive payment that 
correlates precisely with the licenses that it held prior to the 
process, separate and apart from those held by other commonly 
controlled licensees. Accordingly, the Bureau/OEA cannot afford 
incumbents all the flexibility suggested by Verizon's proposal.
    62. With respect to Verizon's suggestion regarding the distribution 
of licenses won by the bidder, the Commission's rules require the 
winning bidder as identified on FCC Form 175 to be the same entity that 
applies for the licenses on the FCC Form 601 subject to certain 
exceptions. Section 1.2107(g) provides a limited exception for a 
winning bidder claiming a bidding credit as a consortium. However, if 
an entity wishes to assign licenses won in Auction 103 to multiple 
commonly controlled entities, it may do so through the Commission's 
standard transfer and assignment process, including making pro forma 
transfers or assignments, after the licenses have been issued to the 
winning bidder (47 CFR 1.948). For Auction 103 only, we will permit a 
winning bidder that represents an incumbent group of commonly 
controlled entities to notify the Commission in its FCC Form 601 of its 
intent to make pro forma transfers or assignments of licenses won in 
Auction 103 immediately upon grant of such licenses, if applicable, 
which will allow the incumbent to ensure that its modified licenses are 
assigned to the existing licensees that relinquished the 39 GHz 
licenses originally. The Bureau emphasizes that a licensee cannot 
assign or transfer licenses won in Auction 103 until after the FCC Form 
601 application associated with those licenses has been granted.
    63. In addition, an incumbent's Initial Commitment Representative 
will be able to direct any incentive payment to more than one account, 
provided the account owners are either the FCC Form 175-A applicant or 
one of the existing 39 GHz licensees listed on the FCC Form 175-A.
    64. The Bureau/OEA will provide instructions in a later public 
notice regarding how an Initial Commitment Representative will provide 
information near the conclusion of Auction 103 regarding the account(s) 
to which any incentive payment should be made.

VII. Procedural Matters

    65. Paperwork Reduction Act Analysis. The Updated 39 GHz 
Reconfiguration Procedures Public Notice adopts procedures that include 
information collection requirements that are subject to the Paperwork 
Reduction Act of 1995 (PRA), Pub. Law 104-13. As described in the 
Initial 39 GHz Reconfiguration Public Notice, the Commission previously 
commenced the PRA approval process for the new information collection 
requirements associated with the Incumbent 39 GHz Licensee Short Form 
Application (FCC Form 175-A). As part of that process, the Office of 
Management and Budget (OMB), the general public, and other Federal 
agencies have been invited to comment on the new information collection 
requirements contained in the Updated 39 GHz Reconfiguration Procedures 
Public Notice. More recently, the Commission has submitted the FCC Form 
175-A to OMB for review. Pursuant to the Small Business Paperwork 
Relief Act of 2002 (44 U.S.C. 3506(c)(4)), the Bureau/OEA also sought 
specific comment in the Initial 39 GHz Reconfiguration Public Notice on 
how the Bureau/OEA might further reduce the information collection 
burden for small business concerns with fewer than 25 employees. No 
comments were received in response to these issues.
    66. Supplemental Final Regulatory Flexibility Analysis. As required 
by the Regulatory Flexibility Act of 1980, as amended (RFA), a 
Supplemental Initial Regulatory Flexibility Analysis (Supplemental 
IRFA) was incorporated in the Initial 39 GHz Reconfiguration Procedures 
Public Notice, released in March 2019. The Commission sought written 
public comments on the proposals in the Initial 39 GHz Reconfiguration 
Procedures Public Notice, including comments on the Supplemental IFRA. 
No comments were received in response to the Supplemental IRFA. In 
conjunction with the Initial 39 GHz Reconfiguration Procedures Public 
Notice, the Updated 39 GHz Reconfiguration Procedures Public Notice 
develops and details the procedures necessary to implement the pre-
auction process for Auction 103. The Initial 39 GHz Reconfiguration 
Procedures Public Notice, the Updated 39 GHz Reconfiguration Procedures 
Public Notice and the supplemental Regulatory Flexibility analyses 
contained therein supplement the Initial and Final Regulatory 
Flexibility Analyses completed in the Spectrum Frontiers Fourth Report 
and Order, Spectrum Frontiers Orders, and other Commission orders 
pursuant to which Auction 103 will be conducted. This present 
Supplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) 
conforms to the RFA (5 U.S.C. 604).
    67. Need for, and Objectives of, the Rules. The Updated 39 GHz 
Reconfiguration Procedures Public Notice explains the updated 
procedures the Bureau/OEA will use to implement the steps described in 
the Spectrum Frontiers Fourth Report and Order to reconfigure 
incumbents' 39 GHz licenses to better match the new 39 GHz band plan 
and service rules adopted by the Commission and allow incumbents to 
make binding Initial Commitments through the Commission's Initial 
Commitment System. It also describes the process by which an incumbent 
39 GHz licensee will have an opportunity to make a binding Initial 
Commitment through the Commission's Initial Commitment System to (1) 
have its licenses modified based on the Commission's proposed 
reconfiguration of its license holdings (and forgo bidding for new 
licenses in Auction 103); (2) have its licenses modified based on an 
acceptable alternative reconfiguration that the incumbent proposes, 
provided that it satisfies certain specified conditions (and forgo 
bidding for new licenses in Auction 103); or (3) commit to relinquish 
its licenses in exchange for an incentive payment and have its licenses 
cancelled, with the ability to bid for new licenses if it so chooses. 
The procedures in the Updated 39 GHz Reconfiguration Procedures Public 
Notice constitute the more specific implementation of the decisions 
contemplated by the underlying rulemaking orders, including the 
Spectrum Frontiers Orders and relevant competitive bidding orders, and 
are fully consistent therewith.
    68. Summary of Significant Issues Raised by Public Comments in 
Response to the Supplemental IRFA. No comments were filed that 
specifically addressed the proposed rules and policies presented in the 
Supplemental IRFA.
    69. Response to Comments by the Chief Counsel for Advocacy of the 
Small Business Administration. Pursuant to the Small Business Jobs Act 
of 2010, which amended the RFA, the

[[Page 25273]]

Commission is required to respond to any comments filed by the Chief 
Counsel of the Small Business Administration (SBA), and to provide a 
detailed statement of any change made to the proposed rule(s) as a 
result of those comments. The Chief Counsel did not file any comments 
in response to the proposals in this proceeding.
    70. Description and Estimate of the Number of Small Entities to 
Which the Rules Would Apply. The RFA directs agencies to provide a 
description of, and, where feasible, an estimate of the number of small 
entities that may be affected by the rules and policies, adopted 
herein. The RFA generally defines the term ``small entity'' as having 
the same meaning as the terms ``small business,'' ``small 
organization,'' and ``small governmental jurisdiction.'' In addition, 
the term ``small business'' has the same meaning as the term ``small 
business concern'' under the Small Business Act. A ``small business 
concern'' is one which: (1) Is independently owned and operated; (2) is 
not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the SBA.
    71. Regulatory Flexibility Analyses were incorporated into the 
Spectrum Frontiers Orders and in those analyses, the Commission 
described in detail the small entities that might be significantly 
affected. Accordingly, in the Updated 39 GHz Reconfiguration Procedures 
Public Notice, the Bureau/OEA hereby incorporate by reference the 
descriptions and estimates of the number of small entities from the 
previous Regulatory Flexibility Analyses in the Spectrum Frontiers 
Orders.
    72. Based on the information available in the Commission's public 
Universal Licensing System (ULS), the Commission estimates there are 
currently 16 incumbent 39 GHz licensees. Of these incumbent 39 GHz 
licensees, the Commission estimates that up to 8 could be considered a 
``small entity'' under the RFA.
    73. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities. The Commission designed the 
reconfiguration and Initial Commitment processes to minimize reporting 
and compliance requirements for participating incumbent licensees, 
including those that are small entities. For example, incumbent 39 GHz 
licensees desiring to make an Initial Commitment will need to file an 
Incumbent 39 GHz Licensee Short-Form Application (FCC Form 175-A), 
which the Commission will use to provide an incumbent 39 GHz licensee 
(or, if applicable, a group of commonly controlled entities that hold 
39 GHz licenses) with access to the Initial Commitment System in order 
to make an Initial Commitment regarding existing 39 GHz spectrum 
holdings. The information that must be provided on FCC Form 175-A is 
limited to that which is necessary to enable the Commission to provide 
incumbent 39 GHz licensees with access Initial Commitment System for 
purposes of making their Initial Commitments.
    74. The Bureau/OEA do not expect that the reconfiguration and 
Initial Commitment processes and procedures will require small entities 
to hire attorneys, engineers, consultants, or other professionals 
because the information necessary to comply with these processes and 
procedures should be available and maintained as part of the customary 
and usual business or private practice of all incumbent 39 GHz 
licensees. In addition, to comply with some of the requirements small 
entities will be able to rely on the Commission's systems rather than 
having to perform calculations which might have required the use of 
professionals. For example, for an incumbent submitting Initial 
Commitment Option 3, if a Round Zero reallocation does not use all of 
the weighted MHz-pops available, the small entity's Initial Commitment 
representative will be permitted to submit a proposed reallocation that 
does not use all of the weighted MHz-pops available. If the 
representative does so, the system will automatically apportion any 
unused weighted MHz-pops to the partial PEAs in the incumbent's updated 
aggregated holdings by PEA, starting with the lowest numbered PEA. 
Further, with regard to incentive payments, for Auction 103, the 
Commission's bidding system will automatically calculate obligations 
toward winning bids net of any incentive payment for relinquished 
holdings when the same party with the same FRN is the applicant for an 
FCC Form 175-A and for an FCC Form 175.
    75. Steps Taken to Minimize the Significant Economic Impact on 
Small Entities, and Significant Alternatives Considered. The RFA 
requires an agency to describe any significant, specifically small 
business, alternatives that it has considered in reaching its approach, 
which may include the following four alternatives (among others): ``(1) 
the establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance and reporting requirements under the rule for such small 
entities; (3) the use of performance rather than design standards; and 
(4) an exemption from coverage of the rule, or any part thereof, for 
such small entities.''
    76. The Commission has taken steps that should minimize any 
economic impact that the proposed reconfiguration and Initial 
Commitment processes and procedures may have on small businesses. As an 
initial matter, the procedures only apply to incumbent 39 GHz 
licensees. Moreover, the Commission has made an effort to minimize the 
burden on all participating incumbent 39 GHz licensees, regardless of 
size, by limiting the information collected on FCC Form 175-A to that 
which is necessary to enable the Commission to provide an incumbent 39 
GHz licensee (or, if applicable a group of commonly controlled entities 
that hold 39 GHz licenses) with access to the Initial Commitment System 
in order to make an Initial Commitment regarding existing 39 GHz 
spectrum holdings. Detailed instructions and guidance to incumbent 39 
GHz licensees about filing FCC Form 175-A, including the filing 
deadline, will be provided in advance of the start of the FCC Form 175-
A filing window, and the Bureau/OEA staff will conduct outreach to all 
incumbents to ensure that they are informed of their options, thereby 
further minimizing any burdens on incumbent 39 GHz licensees that 
desire to make an Initial Commitment, including those that are small 
entities.
    77. As described in the Updated 39 GHz Reconfiguration Procedures 
Public Notice, small entities will be able to rely on Commission 
systems rather than having to use their own resources to comply with 
some of the processes and procedures adopted in the Updated 39 GHz 
Reconfiguration Procedures Public Notice, which will minimize some 
economic impact. Where a small entity is an existing 39 GHz licensee 
with existing operations that commits to relinquish all existing 39 GHz 
spectrum usage rights in exchange for an incentive payment and needs 
continuing authority to operate as it transitions to new frequencies, 
that entity will be afforded a transition period where it can continue 
to operate after its existing licenses are canceled and before its new 
licenses are issued. This transition period will be accommodated 
through Special Temporary Authorizations (STAs) granted by the 
Commission authorizing it to operate on a secondary, non-interfering 
basis, for up to 180 days. This process will ensure that an existing 39 
GHz licensee can maintain continuity of service and minimize the

[[Page 25274]]

economic impact for small entities that could occur if there was a gap 
or lapse in service.
    Report to Congress. The Commission will send a copy of the Updated 
39 GHz Reconfiguration Procedures Public Notice, including this 
Supplemental FRFA, in a report to Congress pursuant to the 
Congressional Review Act. In addition, the Commission will send a copy 
of the Updated 39 GHz Reconfiguration Procedures Public Notice, 
including this Supplemental FRFA, to the Chief Counsel for Advocacy of 
the SBA. A copy of the Updated 39 GHz Reconfiguration Procedures Public 
Notice (or summaries thereof) will also be published in the Federal 
Register.

Federal Communications Commission.
Gary Michaels,
Deputy Chief, Auctions Division, Office of Economics and Analytics.
[FR Doc. 2019-11423 Filed 5-30-19; 8:45 am]
BILLING CODE 6712-01-P