[Federal Register Volume 69, Number 247 (Monday, December 27, 2004)]
[Rules and Regulations]
[Pages 77522-77559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-27817]



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Part IV





Federal Communications Commission





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47 CFR Parts 1, 24, et al.



Promoting Efficient Use of Spectrum Through Elimination of Barriers to 
the Development of Secondary Markets; Final Rule and Proposed Rule

  Federal Register / Vol. 69, No. 247 / Monday, December 27, 2004 / 
Rules and Regulations  

[[Page 77522]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1, 24, and 90

[WT Docket No. 00-230; FCC 04-167]


Promoting Efficient Use of Spectrum Through Elimination of 
Barriers to the Development of Secondary Markets

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission 
(``Commission'') adopts final rules that take additional steps to 
facilitate the development of more robust secondary markets in radio 
spectrum usage rights. In particular, the Commission builds upon the 
policies adopted in 2003 to facilitate the ability of licensees in our 
Wireless Radio Services that hold ``exclusive'' authority to lease some 
or all of their spectrum usage rights to third parties and to 
streamline approval procedures for license assignments and transfers of 
control in these Wireless Radio Services. First, the Commission adopts 
immediate processing procedures for certain classes of spectrum leasing 
arrangements and license transfers and assignments that do not raise 
potential public interest concerns. In addition, the Commission extends 
the spectrum leasing policies to additional services. The Commission 
also adopts a new regulatory concept, the ``private commons.'' Finally, 
the Commission addresses several petitions for reconsideration, and 
revises and further clarifies the Commission's spectrum leasing 
policies and rules.

DATES: Effective February 25, 2005, except for Sec. Sec.  1.913(a)(5), 
1.948(j)(2), 1.2003, 1.9003, 1.9020(e)(2), 1.9030(e)(2), 1.9035(e), and 
1.9080, which contain information collection requirements that have not 
been approved by the Office of Management and Budget (OMB). The 
Commission will publish a document in the Federal Register announcing 
the effective date of these rules.

FOR FURTHER INFORMATION CONTACT: Paul Murray, Wireless 
Telecommunications Bureau, at (202) 418-7240, or via the Internet at 
[email protected]; for additional information concerning the 
information collections contained in this document, contact Judith B-
Herman at (202) 418-0214, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Report and Order and Order on Reconsideration portion (Second Report 
and Order and Order on Reconsideration, respectively) of the 
Commission's Second Report and Order, Order on Reconsideration, and 
Second Further Notice of Proposed Rulemaking, FCC 04-167, in WT Docket 
No. 00-230, adopted on July 8, 2004, and released on September 2, 2004. 
Contemporaneous with this document, the Commission issues a Second 
Proposed Rule of Proposed Rulemaking (Second FNPRM), published 
elsewhere in this publication. The full text of this document is 
available for inspection and copying during normal business hours in 
the FCC Reference Information Center, 445 12th Street, SW., Washington, 
DC 20554. The complete text may be purchased from the FCC's copy 
contractor, Best Copy & Printing, Inc., 445 12th Street, SW., Room CY-
B402, Washington, DC 20554. The full text may also be downloaded at: 
http://www.fcc.gov. Alternative formats are available to persons with 
disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 
418-7365 or at [email protected].

Paperwork Reduction Act

    This Second Report and Order contains two modified information 
collections, as described in the Final Regulatory Flexibility Analysis, 
which will become effective upon approval by the Office of Management 
and Budget (OMB). The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public to comment on the 
information collection(s) contained in this Second Report and Order as 
required by the Paperwork Reduction Act of 1995, Public Law 104-13. 
These information collection(s) will be submitted to the Office of 
Management and Budget (OMB) for review under Section 3507(d) of the 
PRA. OMB, the general public, and other Federal agencies are invited to 
comment on the new or modified information collection(s) contained in 
this proceeding. Public and agency comments are due February 25, 2005. 
Comments should address: (a) Whether the new or modified collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.

Synopsis of the Second Report and Order and Order on Reconsideration

I. Introduction

    1. In the Second Report and Order and the Order on Reconsideration, 
we build on the framework established in the Report and Order portion 
of the Commission's Report and Order and Further Notice of Proposed 
Rulemaking in WT Docket No. 00-230 (First Report and Order), 68 FR 
66252 (November 25, 2003), in which we adopted policies, rules, and 
procedures designed to facilitate the ability of many Wireless Radio 
Services licensees, including many small businesses, to lease spectrum 
usage rights and to transfer and assign licenses to third parties. In 
this Second Report and Order, we take additional steps to further 
reduce regulatory delay so that spectrum leasing parties in our 
Wireless Radio Services can implement certain classes of spectrum 
leasing arrangements and can transfer and assign licenses in a more 
timely fashion, in accordance with evolving marketplace demands and 
customer needs. In the Order on Reconsideration, we address a variety 
of issues addressed in the First Report and Order, including the 
respective responsibilities of licensees and spectrum lessees regarding 
particular service rules.
    2. As with the underlying First Report and Order, these actions 
take us further down the path toward greater reliance on the 
marketplace, thus expanding the scope of available wireless services 
and devices and enabling more efficient and dynamic use of spectrum to 
the ultimate benefit of consumers throughout the country. The steps 
taken in the Second Report and Order and in the Order on 
Reconsideration to facilitate the development of secondary markets in 
wireless spectrum expand upon and complement several of the 
Commission's major policy initiatives and public interest objectives. 
These include our efforts to encourage the development of broadband 
services for all Americans, promote increased facilities-based 
competition among service providers, enhance economic opportunities and 
access for the provision of communications services by designated 
entities, and enable development of additional and innovative services 
in rural areas.

II. Background

    3. In the First Report and Order, we took important first steps to 
facilitate significantly broader access to valuable spectrum resources 
by enabling a wide array of facilities-based providers of broadband and 
other communications

[[Page 77523]]

services to enter into spectrum leasing arrangements with Wireless 
Radio Service licensees. Specifically, we established two different 
spectrum leasing approaches based on the scope of the rights and 
responsibilities to be assumed by the spectrum lessee. Under the first 
leasing option--``spectrum manager'' leasing--we enabled parties to 
enter into spectrum leasing arrangements without prior Commission 
approval so long as the licensee retains both de jure control of the 
license and de facto control over the leased spectrum pursuant to the 
updated de facto control standard for leasing. Under the second 
option--``de facto transfer'' leasing--we permitted parties, pursuant 
to a streamlined approval process, to enter into leasing arrangements 
whereby the licensee retains de jure control of their licenses while de 
facto control over the use of the leased spectrum, and associated 
rights and responsibilities, are transferred for a defined period to 
the spectrum lessees. Parties may enter into either long-term or short-
term de facto transfer leases, with some variation in the policies and 
procedures that apply to each type. We also adopted streamlined 
Commission approval procedures for license assignments and transfers of 
control involving many of our Wireless Radio Services.
    4. In the Further Notice of Proposed Rulemaking portion of the 
Commission's Report and Order and Further Notice of Proposed Rulemaking 
in WT Docket No. 00-230 (FNPRM), 68 FR 66232 (November 25, 2003), we 
sought comment on various ways in which the Commission could further 
enhance opportunities for spectrum access, efficiency, and innovation 
by removing unnecessary regulatory barriers and implementing more 
market-oriented policies that would facilitate moving spectrum to its 
highest valued uses. In particular, we sought comment on whether we 
could further streamline our processing of spectrum leasing 
arrangements and license assignments and transfers of control that did 
not raise a specified set of potential public interest concerns--
relating to eligibility and use restrictions, foreign ownership, 
designated entity/entrepreneur issues, or competition--that would merit 
individualized Commission review. We requested comment on whether our 
spectrum leasing policies should be extended to additional services, 
and whether other actions should be taken to facilitate the development 
of secondary markets in spectrum usage rights. Finally, we inquired as 
to what specific steps we could take, in the context of secondary 
markets, to maximize the potential public benefits enabled by advanced 
technologies, such as opportunistic devices. In response to the FNPRM, 
we received twenty-one (21) comments and ten (10) reply comments. Five 
parties filed petitions for reconsideration of the First Report and 
Order, and several parties filed oppositions or comments in response.

III. Second Report and Order

A. Spectrum Leasing Arrangements

1. Additional Streamlining of Procedures for Certain Categories of 
Spectrum Leases
a. Immediate Approval of Certain Categories of de facto Transfer Leases 
That Are Subject to Our Forbearance Authority
    5. Under current spectrum leasing policies and procedures, as 
adopted in the First Report and Order, licensees and spectrum lessees 
may enter into both long- and short-term de facto transfer leases 
pursuant to streamlined application and approval procedures. 
Specifically, parties that seek to enter into long-term de facto 
transfer leasing arrangements submit their applications, which are then 
placed on public notice and subject to further individualized 
Commission review prior to grant. The applications then are approved 
(or denied) by the Wireless Telecommunications Bureau (Bureau) within 
twenty-one (21) days unless they are removed from streamlined 
processing for further review based on potential public interest 
concerns identified by the Commission or in petitions to deny. Parties 
that seek to enter into short-term de facto transfer leases do so 
pursuant to the same processes applicable to Special Temporary 
Authority authorizations (STAs). These applications, which are not 
placed on prior public notice, are acted upon by the Bureau within ten 
(10) days if specified conditions are met. Consistent with our policies 
for other approvals, approval of both of these types of de facto 
transfer lease applications also is subject to the Commission's 
reconsideration procedures.
    6. In the FNPRM, we sought comment on whether we could minimize 
delay in the timely implementation of de facto transfer leases by 
eliminating unnecessary regulatory review for certain classes of 
spectrum leases. For de facto transfer leases subject to our 
forbearance authority under Section 10 of the Communications Act, we 
proposed to forbear, to the extent necessary, from requiring prior 
public notice and individualized Commission review and approval for 
spectrum leasing arrangements that did not raise any of a specified set 
of potential public interest concerns.
    7. Consistent with the broad support by commenters for the general 
forbearance proposal set forth in the FNPRM, we adopt this proposal, 
with certain modifications, as discussed herein. Under the approach we 
adopt, spectrum leasing parties that seek to enter into de facto 
transfer spectrum leases that qualify under this forbearance approach 
may file their spectrum lease application with the Commission, which in 
turn will be immediately approved under the procedures set forth below. 
Because we determine that de facto transfer leases meeting the 
specifications described below do not raise potential public interest 
concerns that would necessitate prior public notice or more 
individualized review, we believe that removing this unnecessary round 
of notice and regulatory review is appropriate, pursuant to our 
forbearance authority. Elements of de facto transfer leasing 
transactions that would not require prior public notice and 
individualized Commission review.
(i) Elements of de facto Transfer Leasing Transactions That Would Not 
Require Prior Public Notice and Individualized Commission Review
    8. We will permit all de facto transfer spectrum leases that are 
subject to the Commission's forbearance authority and that do not 
potentially raise certain specified public interest concerns to proceed 
pursuant to the application and immediate grant procedures set forth 
herein. If a particular de facto transfer leasing arrangement does not 
raise potential concerns relating to eligibility and use restrictions, 
foreign ownership restrictions, designated entity/entrepreneur 
restrictions, or competition, we conclude, under our forbearance 
authority, that we need no longer require prior public notice and 
individualized Commission review before the spectrum lease may become 
effective. Therefore, once parties file a spectrum leasing application 
consistent with these requirements, it will immediately be approved 
under the policies and rules we are adopting herein, and spectrum 
lessees may commence operations as provided under the terms of the 
lease.
    9. Eligibility and use restrictions. As proposed in the FNPRM, 
parties seeking to use the application/immediate approval procedures 
adopted under this forbearance approach for de facto transfer spectrum 
leases must comply, inter alia, with the applicable eligibility

[[Page 77524]]

and use restrictions. Accordingly, we require that, in the spectrum 
leasing application submitted to the Commission, the spectrum lessee 
must certify that it meets the basic qualification requirements for 
holding the license authorization associated with the lease and that it 
will comply with all applicable use restrictions. We believe that 
spectrum lessee compliance with these requirements is necessary 
because, in many services, we continue to have eligibility and use 
restrictions that were adopted in furtherance of certain public 
interest objectives. While we seek to promote licensee flexibility and 
facilitate secondary markets where appropriate, we do not intend for 
policies adopted in this proceeding to be used as a means for evading 
requirements that remain in effect for a given service. Having spectrum 
lessees certify to the Commission that they will comply with applicable 
eligibility and use restrictions will ensure that spectrum leasing 
arrangements approved under the forbearance approach do not undermine 
these policies.
    10. Consistent with the policies we adopted in the First Report and 
Order, the applicable eligibility restrictions are the same for both 
long-term and short-term de facto transfer leases. The applicable use 
restrictions may, however, differ depending on whether a long or short-
term de facto transfer lease is involved. As provided in the First 
Report and Order, we permit some additional flexibility under short-
term de facto transfer leasing with respect to one particular set of 
use restrictions; specifically, we permit licensees with service 
authorizations that restrict use of spectrum to non-commercial uses to 
enter into short-term de facto transfer leases to allow the spectrum 
lessee to use it commercially.
    11. Foreign ownership. As we generally proposed in the FNPRM, we 
determine that spectrum lessees seeking to enter into de facto transfer 
leases under this forbearance approach must be able to certify that 
they comply with specific requirements, described below, to ensure that 
the spectrum lease does not raise foreign ownership concerns under 
Section 310 of the Act that remain unaddressed prior to implementation 
of the lease. This approach will enable most de facto transfer leases 
to proceed immediately, while ensuring that the Commission and the 
Executive Branch have the opportunity to review any lease that may 
raise potential foreign ownership concerns prior to that spectrum lease 
going into effect.
    12. Under the policy we are adopting, the spectrum lessee must 
certify that it is not a foreign government or representative thereof, 
consistent with the section 310(a) requirements. Second, if the 
spectrum lease involves a common carrier radio authorization, the 
spectrum lessee must certify that it is not an alien or representative 
thereof, a corporation organized under the laws of any foreign 
government, or have more than 20 percent direct foreign ownership, in 
accord with the requirements of sections 310(b)(1)-(3).
    13. Finally, consistent with our policies under section 310(b)(4), 
as explained in the FNPRM, the spectrum lessee must certify either (1) 
that it does not have more than 25 percent indirect foreign ownership 
or (2) that it has previously obtained a declaratory ruling from the 
Commission in advance of entering into the subject spectrum lease that 
establishes that the spectrum lease falls within the scope of that 
declaratory ruling (including the type of service and geographic 
coverage area) and that there has been no change in foreign ownership 
in the meantime. We emphasize that the spectrum lessee is primarily and 
directly responsible for ensuring that the scope of its prior 
declaratory ruling covers the proposed lease transaction. If it does 
not, the spectrum lessee must obtain a supplemental ruling that would 
apply to the particular transaction, and must do so prior to filing 
under the new immediate approval procedures. For example, a spectrum 
lessee may have previously received a ruling that approved its 
acquisition of a specific group of common carrier microwave licenses, 
or that approved its acquisition of a controlling interest in a carrier 
that holds a specific group of common carrier microwave licenses. Such 
a ruling would not cover a future spectrum lease of PCS spectrum. In 
such circumstances, in order for the spectrum lessee to be able to 
satisfy the certification requirement, it must first request and obtain 
from the Commission a supplemental ruling to cover the spectrum leasing 
arrangements involving PCS spectrum.
    14. We note that because the same foreign ownership policies apply 
to both long-term and short-term de facto transfer leasing 
arrangements, spectrum lessees under both of these types of de facto 
transfer lease applications will be required to make these 
certifications.
    15. Designated entity/entrepreneur eligibility. Because designated 
entity and entrepreneur licensees have been conferred special benefits 
(e.g., bidding credits, installment payment plans, or participation in 
closed bidding) by the Commission, and because these licensees may 
enter into long-term de facto transfer spectrum leasing arrangements 
only so long as such arrangements are consistent with our policies 
relating to applicable transfer restrictions and unjust enrichment 
payment obligations, we believe it is both necessary and appropriate to 
retain the ability to review all long-term de facto transfer spectrum 
leasing arrangements involving designated entity or entrepreneur 
licensees to ensure compliance with applicable policies and rules, and 
thus such leasing arrangements cannot be processed under these 
procedures. As we stated in the FNPRM, we do not intend for the 
forbearance approach to be used as a means to evade Commission rules, 
and we believe this to be especially important where the rules have 
been implemented to fulfill our statutory obligations. Given, however, 
that we have eliminated all of these restrictions with regard to short-
term de facto transfer leases, we determine that applications involving 
short-term de facto transfer leases do not raise any potential public 
interest concerns relating to our designated entity or entrepreneur 
policies that would preclude the spectrum leasing parties from 
proceeding under our forbearance approach.
    16. Competition. In light of the Commission's competition policies 
for Wireless Radio Services, we will permit spectrum leasing parties to 
proceed under our forbearance approach so long as the de facto transfer 
leasing arrangement does not raise potential competition concerns that 
merit prior public notice and Commission review before the application 
is approved. Consistent with our competition policies, however, we will 
exclude from this approach, at this time, all long-term de facto 
transfer leases involving spectrum that (1) is, or may reasonably be, 
used to provide interconnected mobile voice and/or data services and 
(2) creates a ``geographic overlap'' with other spectrum used to 
provide these services in which the spectrum lessee holds a direct or 
indirect interest (of 10 percent or more), either as a licensee or as a 
spectrum lessee. Because the latter class of de facto transfer leases 
potentially raise competition concerns, they will continue to be 
subject to case-by-case review and approval under the policies we 
adopted in the First Report and Order.
    17. As we noted in the First Report and Order, assessment of 
potential competitive effects of spectrum leasing transactions remains 
an important element of our policies to promote

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facilities-based competition and guard against the harmful effects of 
anticompetitive conduct, and we thus apply the Commission's general 
competition policies to transactions involving long-term de facto 
transfer spectrum leases (as well as to spectrum manager leases). The 
approach we adopt herein, pursuant to our forbearance authority, is 
designed to be consistent with our current competition policies with 
regard to Wireless Radio Services. In examining transactions for 
possible competitive harm, the Commission has primarily focused its 
efforts in recent years on services that could potentially affect the 
product market for mobile telephony, which includes interconnected 
mobile voice and/or data services. Cellular, broadband Personal 
Communications Service (PCS), and Specialized Mobile Radio (SMR) 
services currently are used to provide CMRS services that potentially 
affect the mobile telephony market, and expressly are subject to the 
Commission's competition policies. In addition, spectrum in several 
other services may currently, or at some time in the future, be used to 
provide such CMRS services; these services include several services 
licensed under part 27 of our rules--including the Wireless 
Communications Service (WCS), Broadband Radio Service, Advanced 
Wireless Service (AWS), the upper and lower 700 MHz bands, and the 
1390-1392 MHz, 1392-1395/1432-1435 MHz, and 2385-2390 MHz bands--as 
well as narrowband PCS, various paging services, and mobile satellite 
service where the use of ancillary terrestrial components (ATC) is 
permissible. Accordingly, under the policies we adopt herein, we find 
that long-term de facto transfer leasing transactions that involve a 
geographic overlap between or among any of these listed services, and 
are to be used to provide mobile telephony service, continue to merit 
public notice and case-by-case review by the Commission prior to 
approval. Such transactions potentially raise public interest concerns 
relating to competition, and thus will not be subject to our 
forbearance approach at this time.
    18. Other public interest concerns. Finally, we note that de facto 
transfer leasing arrangements that would require waiver of Commission 
policies or rules, or a declaratory ruling relating to them, may not 
use the streamlined processing we are adopting under this forbearance 
approach. Requests for a waiver or declaratory ruling implicates other 
potential public interest concerns associated with the license or 
spectrum leasing authorization, and would first need to be approved by 
the Commission. This policy will be applied with respect to both long- 
and short-term de facto transfer leasing arrangements.
(ii) Application and Immediate Approval Procedures
    19. Application/immediate approval procedures. Consistent with the 
general proposal set forth in the FNPRM, we will no longer require 
prior public notice and individualized Commission review of de facto 
transfer leases that meet the requirements specified above. Under the 
policies and rules adopted herein, parties seeking to enter into such 
leasing arrangements will notify the Commission by filing de facto 
transfer lease applications, which in turn will be immediately approved 
under the procedures we are adopting herein. Specifically, if the 
spectrum leasing parties file their de facto transfer lease application 
in the Universal Licensing System (ULS), and the application 
establishes the requisite elements explained above and are otherwise 
complete and the payment of the requisite filing fees have been 
confirmed, the Bureau will process the application and provide 
immediate approval through ULS processing. Approval will be reflected 
in ULS on the next business day after filing the application. Upon 
receiving approval, spectrum lessees will have the authority to 
commence operations under the terms of the spectrum lease. The Bureau 
also will place the approved application on public notice.
    20. Post-approval reconsideration procedures. We adopt the 
reconsideration procedures set forth in the FNPRM. Accordingly, we will 
place the approved de facto transfer leases on a weekly informational 
public notice. Any interested party may file a petition for 
reconsideration within 30 days of the public notice date. Similarly, 
the Bureau will be able to reconsider the grant on its own motion 
within 30 days of the public notice date, and the Commission can 
reconsider the grant on its own motion within 40 days of the public 
notice date.
    21. Other issues. Parties will be held accountable for any 
certifications they make in the spectrum leasing applications that 
enable them to take advantage of the immediate approval procedures set 
forth herein. To the extent that the Commission determines, post-
approval, that any certification provided on the application, by either 
the licensee or spectrum lessee, is not true, complete, correct, and 
made in good faith, the Commission will be vigilant in taking 
appropriate enforcement action, potentially including forfeitures or 
termination of the spectrum leasing arrangement.
(iii) Compliance With Forbearance Requirements
    22. As stated above, we determine that for all qualifying de facto 
transfer leases--i.e., those subject to our section 10 forbearance 
authority and satisfying the elements set forth above--we will forbear 
from the applicable prior public notice requirements and individualized 
review requirements of sections 308, 309, and 310(d) of the 
Communications Act, to the extent necessary, so that these spectrum 
leases may be approved pursuant to the procedures set forth above. Our 
decision to forbear meets the requirements of Section 10 of the Act, 
which enables the Commission to forbear from applying any regulation or 
provision of the Act to a telecommunications carrier or service, or 
class of telecommunications carriers or services, in any or some of its 
geographic markets, if the following three-prong test is satisfied: (1) 
Enforcement of such regulation or provision is not necessary to ensure 
that the charges, practices, classifications, or regulations by, for, 
or in connection with that telecommunications carrier or 
telecommunications service are just and reasonable and are not unjustly 
or unreasonably discriminatory; (2) enforcement of such regulation or 
provision is not necessary for the protection of consumers; and (3) 
forbearance from applying such provision or regulation is consistent 
with the public interest.
b. Immediate Approval of Certain Categories of de facto Transfer Leases 
That Are Not Subject to Forbearance
    23. We will permit de facto transfer leases involving non-
telecommunications providers and carriers, and thus are not eligible 
for section 10 forbearance, to proceed under the same application/
immediate approval policies as adopted above for de facto transfer 
leases subject to forbearance so long as the leasing parties can 
establish that the arrangements meet the same kinds of criteria as 
required for telecommunications providers. These procedures comply with 
the statutory requirements of Sections 308, 309, and 310(d). In 
addition, our decision accords with commenters' support of our goal to 
streamline de facto transfer lease transactions involving non-
telecommunications carriers in a manner similar to that adopted under 
the forbearance approach.

[[Page 77526]]

    24. Under the policies we are adopting, so long as the parties 
establish in their de facto transfer lease application--by provision of 
sufficient information and related certifications--that the spectrum 
lessee complies with the applicable eligibility, use, and foreign 
ownership-related requirements, and does not seek a waiver or 
declaratory ruling, the Commission will immediately approve the 
application as consistent with statutory requirements and the public 
interest. As with de facto transfer lease applications filed under our 
forbearance approach, we will announce the grant of these de facto 
transfer leases involving non-telecommunications services in a weekly 
informational public notice, subject to reconsideration within 30 days 
by interested parties or the Bureau, and within 40 days by the 
Commission on its own motion.
    25. Streamlined processing of qualifying spectrum leases involving 
non-telecommunications services serves the public interest and is 
necessary in order to place substantively similar wireless spectrum 
leasing transactions involving different types of licenses on a 
comparable basis and to minimize unnecessary regulatory discrimination. 
The policies and procedures we adopt are also consistent with the 
statutory requirements of sections 308, 309, and 310(d). First, 
consistent with these provisions, we continue to require an application 
and approval process. In addition, in order to determine whether to 
approve these transactions, the Commission requires that each 
application establish a distinct set of facts and representations 
concerning the particular spectrum leasing transaction before it will 
be approved. Thus, before any particular spectrum lease application 
will be approved, the Commission will determine, based on the 
particulars of that application, that all of the criteria relevant to 
establishing that the public interest would be served by the granting 
of the application have been established, and the statutory 
requirements for case-by-case review and approval of the application 
will have been satisfied.
c. Applying the Immediate Approval Procedures to Short-Term de facto 
Transfer Leases
    26. Under procedures adopted in the First Report and Order, short-
term de facto transfer leasing arrangements are processed in the same 
manner as authorized pursuant to section 309(f) of the Communications 
Act. Under these procedures, parties wishing to enter into short-term 
arrangements must establish through requisite certifications in their 
application that they qualify for these procedures and must also meet 
any additional requirements associated with our STA procedures.
    27. We determine that short-term de facto transfer leasing 
arrangements should qualify for processing under the application/
immediate grant procedures that we are adopting for qualifying long-
term de facto transfer leases. Accordingly, we determine to process 
these arrangements under the new procedures we are adopting, and we 
will no longer process them under the Special Temporary Authority (STA) 
procedures.
    28. Under the policies and rules adopted in the First Report and 
Order, short-term de facto transfer leases do not raise potential 
public interest concerns relating to eligibility, use restrictions, or 
foreign ownership that would require either prior public notice or 
additional Commission review before being approved. In order to qualify 
to enter into short-term de facto transfer leases, spectrum lessees are 
already required, under existing policies, to meet the same eligibility 
and foreign ownership restrictions that we have adopted above for 
determining whether a long-term de facto transfer lease qualifies for 
the application/immediate approval procedures. Short-term de facto 
transfer lease applicants must also certify that they would comply with 
certain applicable use restrictions. In addition, we have determined 
that short-term de facto transfer leasing arrangements do not raise 
potential public interest concerns relating either to designated 
entity/entrepreneur or competition matters. Accordingly, these issues 
do not prevent a short-term de facto transfer lease application from 
qualifying for the immediate approval procedures we are adopting 
herein.
    29. Eliminating the requirement that short-term de facto transfer 
leases be processed under the procedures applicable to STAs enables us 
to remove unnecessary regulatory requirements and simplify the 
applicable rules. First, we will no longer require short-term lease 
applicants to include a public interest statement in accordance with 
the applicable rules derived from our STA procedures. In addition, we 
will no longer require that the term of a short-term de facto transfer 
lease be limited to 180 days and renewable for up to a total of 360 
days. Instead, for purposes of administrative efficiency and general 
clarity, we will simplify the application requirements to do away with 
multiple filings, and to permit parties to enter into a short-term de 
facto transfer lease for a term of up to one year (365 days) by 
submitting a single application.
d. Immediate Processing of Certain Categories of Spectrum Manager 
Leases
    30. The First Report and Order provided that parties entering into 
spectrum manager leases are required to file the leasing notification 
with the Commission within 14 days of when they execute the lease and 
at least 21 days prior to commencing operations (10 days prior if the 
lease is for one year or less).
    31. Upon further consideration, we have decided to revise our 
policies for spectrum manager lease notifications to be consistent with 
the policies for de facto transfer leases as described above. 
Accordingly, where parties seek to enter into spectrum manager leases 
that do not raise specified potential public interest concerns--i.e., 
those relating to eligibility, use restrictions, foreign ownership, 
designated entity/entrepreneur, or competition--we will permit them to 
commence operations under those leasing arrangements once they have 
notified the Commission of the lease, have made the necessary 
certifications to qualify for immediate processing, and have 
determined, through ULS, that the notification has been successfully 
processed. These immediate processing procedures for spectrum manager 
leases will ensure parity in the regulatory treatment of spectrum 
manager and long-term de facto transfer leasing arrangements, thus 
eliminating unnecessary delay for parties seeking to enter into similar 
categories of spectrum manager leases and minimizing the possibility 
that our regulatory policies would be a factor in potential leasing 
parties' decision-making. Our determination also grants, in part, one 
party's petition for reconsideration, in which it sought elimination of 
unnecessary delay between the time the licensee filed a spectrum 
manager lease notification and the time in which leasing parties could 
commence operation under the spectrum leasing arrangement.
    32. We adopt these similar policies for spectrum manager leases 
because the public interest concerns relating to these leases are 
either identical or similar to those associated with long-term de facto 
transfer leases. In particular, the policies relating to eligibility 
and use restrictions, foreign ownership, and competition apply with 
equal force, regardless of whether the spectrum lease is a spectrum 
manager lease or a long-term de facto transfer lease. In addition, 
designated entity or entrepreneur licensees seeking to lease spectrum 
under spectrum manager leases are subject to certain restrictions 
associated with designated entity and entrepreneur

[[Page 77527]]

policies, just as long-term de facto transfer leases are subject to 
certain restrictions.
    33. Accordingly, under the new policies we are adopting, if the 
spectrum manager lease satisfies the same qualifying elements as 
required for long-term de facto transfer leases as set forth above--and 
thus does not raise potential public interest concerns regarding 
eligibility and use restrictions, foreign ownership restrictions, 
designated entity/entrepreneur restrictions, or competition--we do not 
believe it necessary to review these notifications in advance of 
operations, and the leasing parties are entitled to commence operations 
once they have received the requisite confirmation through ULS. As with 
de facto transfer leases, spectrum manager leases that proceed pursuant 
to these immediate processing procedures are subject to post-
notification review. Under these procedures, any interested party may 
file a petition for reconsideration within 30 days of the date of the 
public notice listing the notification as accepted. Similarly, the 
Bureau will have 30 days from the public notice date, and the 
Commission 40 days, to reconsider whether the spectrum manager lease is 
in the public interest.
    34. Finally, we determine to eliminate the requirement that parties 
file their spectrum lease notifications within 14 days of execution of 
their contractual agreement. We conclude that this requirement is 
superfluous so long as parties file the lease notification within the 
time frame required by our spectrum manager lease policies, either 
under the newly streamlined procedures adopted in this order (for 
qualifying spectrum manager leases) or at least 21 days in advance of 
commencing operations (10 days in advance if the lease is no longer 
than a year).
2. Extending Spectrum Leasing Policies to Additional Spectrum-Based 
Services
    35. In the FNPRM, we sought comment on whether the spectrum leasing 
policies should be extended to a variety of services that had been 
excluded from the spectrum leasing policies adopted in the First Report 
and Order. We determine that we will extend the spectrum leasing 
policies to some additional Wireless Radio Services, as identified 
below, but will not extend these policies to other services at this 
time, as explained herein.
    36. Public Safety Services. With regard to the Public Safety 
Services in part 90, we will permit public safety licensees with 
exclusive use rights to lease their spectrum usage rights to other 
public safety entities and entities providing communications in support 
of public safety operations. We, however, decline at this time to 
permit public safety licensees to enter into spectrum leasing 
arrangements for commercial or other non-public safety operations.
    37. We will permit public safety licensees in these services to 
enter into spectrum leasing arrangements with other public safety 
entities and entities that provide communications in support of public 
safety operations, consistent with the policies we adopted last year in 
concerning the 4.9GHz band. We established new licensing and service 
rules for the 4940-4990 MHz band (4.9 GHz band) that were designed to 
increase the effectiveness of public safety communications, foster 
interoperability, and further ongoing and future homeland security 
initiatives within the 4.9 GHz band. We believed that these objectives 
would be best accomplished by basing the eligibility criteria for being 
licensed in the 4.9 GHz band on the ``public safety services'' 
definition set forth in section 90.523 of our rules, which the 
Commission adopted in 1998 to implement section 337(f)(1) of the 
Communications Act. Under this definition, ``public safety services'' 
are services: (A) The sole or principal purpose of which is to protect 
the safety of life, health, or property; (B) that are provided--(i) by 
State or local government entities; or (ii) by nongovernmental 
organizations that are authorized by a government entity whose primary 
mission is the provision of such services; and (C) that are not made 
commercially available to the public. For the same reasons that we 
decided to permit non-traditional public safety entities to be licensed 
in the 4.9 GHz band for use in support of public safety operations, we 
now conclude that it is appropriate to permit public safety licensees 
to lease spectrum for such use. In addition, we believe that our 
decision herein to permit spectrum leasing among public safety entities 
achieves an appropriate balance between commenters that supported 
extension of our spectrum leasing policies to these services and those 
that expressed concern about possible abuses. Further, spectrum would 
not be used by commercial entities to the potential detriment of public 
safety operations.
    38. ITFS/MMDS services. All of the comments received in this docket 
were previously transferred to and considered in WT Docket No. 03-66, 
in which we comprehensively reviewed our policies and rules relating to 
the Instructional Television Fixed Services (ITFS) and Multipoint 
Distribution Service (MDS) services. In a recently issued order in that 
proceeding, we converted the MDS service into the Broadband Radio 
Service and the ITFS service into the Educational Radio Service, and 
extended the secondary markets spectrum leasing policies to those 
services, but included certain modifications in order to maintain the 
educational purpose of ITFS. We also grandfathered pre-existing 
``excess capacity'' leasing arrangements that were entered into under 
the previous ITFS-specific leasing rules.
    39. Maritime services. Consistent with the spectrum leasing 
policies adopted in the First Report and Order, we will extend the 
spectrum leasing rules to Automated Maritime Telecommunications Systems 
(AMTS) services in part 80. As discussed by commenters that supported 
this extension, the AMTS service involves a geographic licensing 
approach similar to another part 80 service, VHF Public Coast stations, 
which also involves exclusive use licenses and already is permitted to 
enter into spectrum leasing arrangements under the leasing policies 
pursuant to the First Report and Order. We do not, however, extend our 
spectrum leasing policies to any of our high seas public coast 
stations. No commenters supported extending our spectrum leasing 
policies to these services, and they differ significantly from that of 
VHF Public Coast and AMTS stations. These frequencies are allocated 
internationally by the International Telecommunication Union (ITU) to 
facilitate interoperable radio communications among vessels of all 
nations and stations on land worldwide. Flexible use is not permitted; 
instead, the ITU Radio Regulations specify how each frequency may be 
used (i.e., for radiotelephone, radiotelegraph, facsimile, narrow-band 
direct printing, or data transmission). In addition, unlike VHF Public 
Coast and AMTS stations, high seas public coast stations are not 
permitted to serve units on land. Finally, high seas stations are 
licensed only on a site-by-site basis. The Commission declined to adopt 
a geographic licensing approach for this spectrum because of special 
considerations relating to the extensive international coordination 
required, the need to conform to changing international allocations and 
allotments, and the fact that some of the spectrum is shared with the 
Federal Government.
    40. MVDDS services. We will extend our spectrum leasing policies to 
the Multichannel Video Distribution and Data Service (MVDDS) services 
consistent with the comments we have received. We conclude that 
licensees will have similar ``exclusive use'' rights

[[Page 77528]]

as other licensees to whom these policies currently apply, and that the 
benefits of spectrum leasing should be made available to licensees and 
potential spectrum lessees in these services. Consistent with the 
service rules for these services, which permit partitioning along 
county lines and prohibit disaggregation under any license 
authorization, we will permit MVDDS licensees to lease different 
geographic portions (divided along county borders) to eligible spectrum 
lessees, but will permit only one entity, either the licensee or 
spectrum lessee, to operate in a given geographic area.
    41. Services/authorizations involving shared frequencies. We will 
not extend spectrum leasing to shared services at this time. As we 
noted in the FNPRM, we had previously declined to allow leasing on 
shared frequencies because parties can readily obtain access to the 
spectrum by obtaining their own authorizations on shared frequencies 
and they are not foreclosed from applying for authorizations by the 
existence of another licensee in the same geographic area. Although we 
sought comment on whether there might nonetheless be reasons to extend 
spectrum leasing to shared services, commenters opposed extension of 
the leasing rules to services/authorizations involving shared 
frequencies services.
    42. Various part 90 services. We determine not to revise current 
spectrum leasing policies with regard to part 90 services. In 
particular, we will not extend these policies to Private Land Mobile 
Radio (PLMR) stations below 470 MHz (including those with ``FB8'' 
status). These stations share spectrum below 470 MHz, and while there 
is some degree of ``exclusivity'' (because the stations are trunked and 
cannot share in the usual way), the operations nonetheless are still on 
shared spectrum often occupied by others. Accordingly, we determine 
that, consistent with our current policies regarding shared services/
authorizations, these stations should not be included among those 
services to which the spectrum leasing policies apply. In addition, we 
do not extend our spectrum leasing policies to non-multilateration 
Location and Monitoring Service (LMS) services because licensing in 
these services is shared and non-exclusive. Entities seeking access to 
spectrum for these non-multilateration LMS uses can gain access to 
spectrum without the need to enter into spectrum leasing arrangements 
with licensees.
    43. Other services. We decline, at this time, to extend the 
spectrum leasing policies to any additional services on which we had 
sought comment, including the 700 MHz Guard Band Service, Amateur 
Services, Personal Radio Services, Aviation Services, Cable Television 
Relay Services, and satellite services.
    44. We do not believe it appropriate to extend the spectrum leasing 
policies adopted in the First Report and Order to the Guard Band 
Manager Service. This service already has its own distinct set of 
policies and rules regarding leasing arrangements, and no commenters 
proposed replacing those policies. Accordingly, we see no reason at 
this time to replace those policies at this time. Nor do we extend 
spectrum leasing policies to the part 97 Amateur Radio Services. An 
individual Amateur Radio licensee gains access to particular bands of 
spectrum after obtaining an operator license by successfully completing 
the relevant exam requirements for those particular bands. The amateur 
licensee must share access to the spectrum with all amateur operators 
who have also successfully passed examinations for the same privileges.
    45. We also do not extend our spectrum leasing policies to 
additional services among the part 95 Personal Radio Services. Apart 
from the 218-219 MHz service (to which spectrum leasing policies 
already apply), the Personal Radio Services are either licensed by rule 
and/or operate on shared spectrum. For example, Citizens Band Radio 
operators are authorized by rule to operate without individual licenses 
on any of 40 channels nationwide (choosing one at a time). Radio 
Control operators are authorized by rule to operate without individual 
licenses on any of the radio control channels nationwide.
    46. Nor do we extend our spectrum leasing policies to our part 87 
Aviation Services. No commenter proposed that the spectrum leasing 
policies be applied to these services. In addition, most of the 
spectrum in these services is licensed on a shared basis, and thus is 
not assigned for the exclusive use of any particular licensee. Finally, 
aviation safety concerns among the Aviation Services that do involve 
exclusive use rights--i.e., aeronautical advisory stations (unicoms) at 
uncontrolled airports and aeronautical enroute stations--recommend 
against extending our spectrum leasing policies to these services. In 
particular, the Commission has determined that the licensees in these 
services should, for aviation safety purposes, be limited to one 
operator at any one location.
    47. Finally, we do not extend our spectrum leasing policies 
applicable to Wireless Radio Services to two services, the Cable 
Television Relay Service and satellite services, that are administered 
by bureaus outside of the Wireless Telecommunications Bureau. No 
commenters proposed extending the spectrum leasing policies to these 
two services, and the general policies applicable to these two services 
differ, in many respects, from those administered by the Wireless 
Bureau. Accordingly, we will not extend our spectrum leasing policies 
to these two services at this time.
3. Spectrum Leasing Policies Applicable to Designated Entity/
Entrepreneur Licensees
    48. In the First Report and Order, we decided that designated 
entity and entrepreneur licensees would be permitted to enter into a 
spectrum manager lease with any qualified lessee, regardless of the 
lessee's designated entity or entrepreneur eligibility, and avoid the 
application of our unjust enrichment rules and transfer restrictions, 
so long as the lease did not result in the lessee's becoming a 
``controlling interest'' or affiliate of the licensee that would cause 
the licensee to lose its designated entity or entrepreneur eligibility 
under section 1.2110 of our rules. We further determined that, to the 
extent that any conflict arose between the revised de facto control 
standard for spectrum leasing arrangements as set forth in the First 
Report and Order and the controlling interest standard in our rules for 
determining designated entity and entrepreneur eligibility, we would 
apply the latter in determining whether the licensee had maintained the 
requisite degree of ownership and control to allow it to remain 
eligible for the licenses or for other benefits such as bidding credits 
and installment payments. We also decided in the First Report and Order 
that designated entity and entrepreneur licensees would be allowed to 
enter into long-term de facto transfer leasing arrangements subject to 
any existing transfer restrictions and unjust enrichment payment 
obligations.
    49. Affirmation of existing rules. We affirm the rules we 
established in the First Report and Order for spectrum leasing by 
designated entity and entrepreneur licensees, declining requests that 
we provide such licensees with the unfettered right to lease spectrum 
to any entity, without regard to our eligibility rules for designated 
entities and entrepreneurs.
    50. We decline to adopt the suggestion of some commenters (one of 
which is also a petitioner) that we allow designated entity and 
entrepreneur licensees to lease spectrum to any

[[Page 77529]]

entity, without regard to how the spectrum lease might affect the 
licensee's designated entity or entrepreneur eligibility. We believe 
that adopting such a change to our rules would contravene the 
requirements and objectives of Section 309(j) of the Act. Section 
309(j) requires, among other things, that the Commission ensure that 
small businesses are given the opportunity to participate in the 
provision of spectrum-based services and that, to further this goal, it 
consider the use of bidding preferences. These statutory directives 
were not intended to provide generalized economic assistance to small 
businesses, but rather to facilitate their ability to acquire licenses, 
build out systems, and provide service. In such a way, Congress sought 
to promote diversity among service providers, as well as the rapid 
deployment of new technologies for the benefit of, among others, rural 
customers.
    51. Section 309(j) also directs the Commission to prescribe anti-
trafficking restrictions and payment schedules as necessary to prevent 
designated entity benefits from giving rise to unjust enrichment. If we 
were to allow designated entities and entrepreneurs to enter into 
spectrum manager leasing arrangements without considering whether the 
spectrum lessee had acquired an attributable interest in the licensee, 
we would run the risk that designated entity and entrepreneur 
incentives would benefit, indirectly, entities that do not qualify for 
such incentives in the primary market. In other words, we would be 
paving the way for the very unjust enrichment Congress wanted us to 
prevent.
    52. We also reject recommendations that we allow licensees to avoid 
unjust enrichment payment obligations and transfer restrictions in 
situations where the spectrum lessee will use the spectrum lease to 
serve rural areas. Section 309(j) requires that the Commission ``seek 
to promote,'' as one of many, sometimes conflicting goals, the 
objective that service be developed and rapidly deployed to rural 
customers, and requires further that the Commission ensure that rural 
telephone companies be given the ``opportunity'' to participate in the 
provision of spectrum-based services.
    53. To facilitate these ends within the context of competitive 
bidding, the Commission has provided small businesses with bidding 
credits and entrepreneurs with license set-asides, while specifically 
declining to establish an independent bidding credit for large 
telephone companies serving rural areas. When initially considering 
whether to create a separate bidding credit for rural telephone 
companies, the Commission determined that telephone companies providing 
service in rural areas do not per se have the same difficulty accessing 
capital as other groups, such as small businesses. In subsequent 
decisions considering this issue, the Commission has not changed its 
determination. If we provided small businesses and entrepreneurs with 
the unrestricted ability to enter into spectrum leasing arrangements 
with non-eligible entities planning to serve rural areas, without 
regard to our eligibility rules, we would, in effect, be allowing small 
business and entrepreneur incentives to benefit, indirectly, the very 
entities which we had expressly found no basis for assisting in that 
fashion in the primary market.
    54. For similar reasons, we also reject a suggestion that we lift 
unjust enrichment repayment obligations and entrepreneur transfer 
restrictions for licensees owned and controlled by Alaska Native 
Corporations and Indian tribes that lease rural area spectrum rights to 
non-eligible entities pursuant to long-term de facto transfer leasing 
arrangements. Indian tribes and Alaska Regional or Village Corporations 
already enjoy enhanced access to designated entity and entrepreneur 
benefits through an exclusion from our affiliation rules available only 
to them.
    55. To summarize, in affirming our rules and in declining to adopt 
proposals to the contrary, we have determined that we will continue to 
rely on our existing attribution rules, including our definitions of 
controlling interest and affiliation, for all determinations of whether 
a licensee undertaking a lease has maintained its designated entity 
and/or entrepreneur eligibility. We, nonetheless, recognize that 
further guidance on the application of those rules in the context of 
leasing might be useful. Accordingly, we offer such guidance below.
    56. Application of Existing Attribution Rules to Spectrum Manager 
Leasing Arrangements. In response to requests from two commenters (one 
of which is also a petitioner), we clarify here how our attribution 
rules, including the criteria set forth in Intermountain Microwave, 12 
FCC Rcd 2d 559 (1963), are applied in determining whether spectrum 
manager leasing arrangements by designated entity and entrepreneur 
licensees satisfy our eligibility requirements. We note, as a 
preliminary matter, that we expect a licensee to conduct an analysis of 
possible control by, or affiliation with, the proposed spectrum lessee 
before entering into a spectrum manager leasing arrangement and before 
certifying that the spectrum lease does not affect the licensee's 
continued designated entity or entrepreneur eligibility. That analysis 
should take into account the Commission's definitions of control and 
affiliation, which will help to determine, as they do in non-spectrum 
leasing contexts, whether the gross revenues (and, in the case of 
entrepreneurs, the total assets) of a spectrum lessee are to be 
attributed to a designated entity or entrepreneur licensee. Such a 
determination will be made by evaluating the licensee's Commission-
regulated business in the context of a spectrum lessee's involvement 
with the licensee. For example, a spectrum lessee would become an 
attributable interest holder in the licensee if the lessee were to 
become an officer or director of the licensee. An attributable 
affiliation might also be created if a lease called for the licensee 
and spectrum lessee ``to combine their efforts, property, money, skill 
and knowledge.'' Similarly, a spectrum lease might create a contractual 
affiliation between licensee and spectrum lessee if the leasing 
arrangement represented a significant portion of the licensee's day-to-
day business operations. While one commenter suggests that a licensee 
can preserve its designated entity or entrepreneur eligibility simply 
by maintaining day-to-day control over a spectrum leasing business, we 
believe that, in order to satisfy the requirements of section 309(j) of 
the Act and avoid unjust enrichment obligations or transfer 
restrictions, the licensee cannot make spectrum leasing its primary 
business and must, as discussed above, continue to provide facilities-
based network services under its licenses.
    57. In examining whether a spectrum lessee would, under a spectrum 
manager lease, become a controlling interest or affiliate of the 
licensee, the licensee should look to all of the relevant 
circumstances, including how large a portion of its total capacity to 
provide spectrum-based services would be leased, what involvement it 
would have with the spectrum lessee as a result of the spectrum lease, 
and what relationship the two parties have with one another apart from 
the lease. Referring to an example provided by one commenter, we 
conclude that a spectrum manager lease between a designated entity or 
entrepreneur licensee and a non-designated entity/entrepreneur spectrum 
lessee with a prior business relationship where substantially all of 
the spectrum capacity of the licensee is to be leased

[[Page 77530]]

would cause the spectrum lessee to become an attributable affiliate of 
the licensee. Such affiliation would render the licensee ineligible for 
designated entity or entrepreneur benefits and, therefore, would make 
such a spectrum lease impermissible. On the other hand, a spectrum 
manager lease involving a small portion of the designated entity or 
entrepreneur licensee's spectrum capacity where no relationship existed 
between the licensee and spectrum lessee apart from the lease would 
likely be permissible. Situations falling somewhere between these two 
examples would have to be evaluated according to the individual 
circumstances involved.
    58. While we direct licensees to continue to rely on our existing 
attribution rules to determine whether a proposed spectrum manager 
leasing arrangement would affect their continuing eligibility for 
designated entity or entrepreneur benefits, we recognize that certain 
of our affiliation criteria do not contemplate spectrum leasing and are 
therefore incompatible with spectrum manager leasing arrangements. For 
instance, under our attribution rules, affiliation generally arises 
where another entity shares office space, employees, or other 
facilities with a designated entity or entrepreneur licensee and, 
through these sharing arrangements, gains control or potential control 
of the licensee. In addition, under Intermountain Microwave, one 
indication of affiliation is the use by another entity of the 
licensee's facilities and equipment. However, because spectrum leasing 
arrangements, by their very nature, always involve the spectrum 
lessee's construction or use of facilities in the licensee's service 
area and/or operation of those facilities over the licensee's 
bandwidth, it would be unworkable to apply our facilities-related 
indicia of affiliation in the customary manner to spectrum leasing 
situations. We clarify, therefore, that a spectrum lessee's 
construction or use of facilities in the licensee's service area or 
over its bandwidth does not, by itself, transform the lessee into a 
controlling interest or affiliate of the licensee. On the other hand, 
joint use of office space, employees, or equipment or other facilities 
by the licensee and the spectrum lessee might indicate affiliation and 
would require an analysis of whether the spectrum lessee would, through 
such use, acquire control or potential control of the licensee.
    59. Likewise, we clarify that the existence of spectrum manager 
leasing arrangement does not, by itself, create an ``identity of 
interest'' between the licensee and lessee resulting in an attributable 
affiliation under 47 CFR 1.2110(c)(5)(i)(D). However, every designated 
entity or entrepreneur licensee should take care to examine, and we 
will continue to review, whether there is an identity of interest 
between the licensee and its spectrum lessee beyond the mere existence 
of the spectrum lease that confers attributable affiliation under our 
rules. For example, members of the same family or entities with common 
investments should be considered affiliates and treated, for purposes 
of attribution, as one person or entity. Similarly, we clarify that a 
spectrum manager leasing arrangement does not, per se, constitute a 
management agreement or joint marketing arrangement resulting in the 
spectrum lessee's being considered a controlling interest of the 
licensee under 47 CFR 1.2110(c)(2)(ii)(H) through (c)(2)(ii)(I). We, 
nonetheless, caution designated entities and entrepreneurs that 
specific provisions in spectrum manager leasing arrangements, or other 
agreements with their spectrum lessees, might constitute management 
agreements or joint marketing arrangements. As our rules state, 
``affiliation generally arises where one concern is dependent upon 
another concern for contracts and business to such a degree that one 
concern has control or potential control, of the other concern.''
    60. When entering into a spectrum manager leasing arrangement, the 
licensee must retain both de jure and de facto control over the leased 
spectrum pursuant to the updated de facto control standard. Consistent 
with this requirement, a designated entity or entrepreneur licensee 
cannot use this spectrum leasing vehicle to circumvent our attribution 
rules. The designated entity or entrepreneur must, if it wishes to 
undertake a spectrum manager lease, preserve its existing eligibility. 
As we have discussed, to do so, the designated entity or entrepreneur 
must evaluate and certify that nothing concerning its spectrum manager 
lease alters its ongoing eligibility for the benefits it has received. 
Leasing arrangements that would create a controlling interest or 
attributable affiliation that altered the designated entity or 
entrepreneur licensee's eligibility are prohibited. In lieu of using a 
spectrum manager leasing arrangement in such a situation, designated 
entities or entrepreneurs are free to undertake a de facto transfer 
lease, subject to the Commission's unjust enrichment requirements and 
any applicable transfer restrictions.
    61. We will also amend the language of our rules to clarify that, 
subject to the other eligibility restrictions set forth in the First 
Report and Order and in 47 CFR 1.9020(d) of our rules, including those 
discussed above, a designated entity or entrepreneur licensee may enter 
into a spectrum manager leasing arrangement with any spectrum lessee, 
regardless of the lessee's eligibility for designated entity or 
entrepreneur benefits.
    62. Application of Controlling Interest Standard to Designated 
Entity and Entrepreneur Eligibility Determinations. Insofar as we have 
determined to continue to rely upon our existing attribution rules 
(including our definitions of controlling interest and affiliation) as 
well as existing Commission precedent for all determinations of 
designated entity and entrepreneur eligibility, we decline to follow 
recommendations that we should instead rely on the new de facto control 
standard adopted for leasing for our eligibility determinations. As we 
have earlier explained, Congress specifically intended that, in order 
to prevent unjust enrichment, the licensee receiving designated entity 
benefits actually provide facilities-based services as authorized by 
its license.
4. Application of the De facto Control Standard for Spectrum Leasing 
With Regard to Other Issues and Types of Arrangements
    63. In the First Report and Order, we limited the application of 
the revised de facto control standard to the context of spectrum 
leasing arrangements, while leaving in place the existing de facto 
control tests--including those based on Intermountain Microwave and 
other facilities-based analyses--for designated entity and entrepreneur 
eligibility issues, management agreements, and other similar types of 
agreements. We sought comment on whether and how the revised de facto 
control standard should be extended to apply in these and any other 
contexts.
    64. Based on the record before us, we decline in this proceeding to 
extend the revised de facto transfer standard applicable to spectrum 
leasing arrangements to other types of arrangements outside the context 
of spectrum leasing. Although commenters supported applying the revised 
standard more broadly, there are significant legal and practical 
difficulties that commenters have failed to address. It is not clear 
from the sparse record how such a change would affect existing rules 
and policies relating to management agreements or other spectrum 
transactions, or what benefits would be achieved, and we are concerned 
that revising our rules in these areas may cause a host of

[[Page 77531]]

unintended consequences or ambiguities.

B. Policies To Facilitate Advanced Technologies

    65. In the FNPRM, we emphasized the benefits of ``smart'' or 
``opportunistic'' technologies, especially the potential for increased 
access to unused spectrum. In addition, the Commission's recently 
issued notice of proposed rulemaking in the Cognitive Radio proceeding, 
on the use of advanced technologies, ET Docket No. 03-108, 69 FR 7397 
(February 17, 2004), describes how they may enable devices to search 
across many bands, sense the level of emissions, and then operate in 
spectrum that is either not in use by other parties or below a certain 
level of emissions. The FNPRM sought comment on the use of advanced 
technologies in licensed bands in the context of secondary markets and, 
in particular, requested comment on whether the Commission should focus 
on advancing and improving access to spectrum by opportunistic devices 
through a secondary markets approach, at least in the near term. The 
FNPRM also inquired as to whether the First Report and Order provided 
sufficient flexibility for more ``dynamic'' leasing arrangements made 
possible by opportunistic devices.
1. Facilitating Advanced Technologies Within Existing Regulatory 
Frameworks, Including Dynamic Spectrum Leasing Arrangements
    66. We clarify that our spectrum leasing policies and rules permit 
parties to enter into a variety of dynamic forms of spectrum leasing 
arrangements that take advantage of the capabilities associated with 
advanced technologies. Such a clarification generally accords with 
comments we received. For example, one commenter specifically 
recommended that the Commission's secondary markets policies and rules 
be expanded to accommodate ``dynamic'' spectrum leasing arrangements, 
and other commenters also endorsed adoption of spectrum leasing 
policies in which licensees could take fuller advantage of 
technological advances, including opportunistic use devices, through 
secondary markets arrangements. Consistent with these views, we clarify 
that parties may enter into spectrum leasing arrangements in which 
licensees and spectrum lessees share use of the same spectrum, on a 
non-exclusive basis, during the term of the lease. For example, a 
licensee and spectrum lessee may enter into a spectrum manager or de 
facto transfer lease in which use of the same spectrum is shared with 
each other by employing opportunistic devices. In another variation, a 
licensee could enter into a spectrum manager lease with one party that 
has access to the spectrum on a priority basis, while also leasing use 
of the same spectrum to another party on a lower-priority basis, with 
the requirement that the lower-priority spectrum lessee employ 
opportunistic technology to avoid interfering with the priority lessee. 
Of course, the licensee may not lease spectrum usage rights that exceed 
the rights it currently holds and, as these examples illustrate, the 
licensee may choose to lease a more restricted bundle of usage rights.
    67. Significantly, these arrangements could facilitate 
opportunistic use by parties operating at the same power level and 
under similar technical parameters as the licensee, or they could 
promote such use at lower power levels. We also emphasize that neither 
scenario would affect unlicensed operations to the extent they are 
permitted in that particular licensed band pursuant to Commission rules 
under part 15. For example, as set forth in Sec.  15.209 of the 
Commission's rules and augmented on a band-by-band basis, part 15 users 
(e.g., Ultra-Wide Band operators) can operate pursuant to applicable 
technical and operational rules whether or not opportunistic use or 
other advanced technologies are employed or authorized by the licensee. 
We would also expect that new and innovative radiofrequency devices 
would be agile enough to function on an unlicensed basis or as part of 
licensed operations.
2. Private Commons
    68. To facilitate the use of advanced technologies, and thus better 
promote access to and the efficient use of spectrum, we expand the 
spectrum licensing framework by identifying an additional option that 
may be utilized by current and future licensees and spectrum lessees. 
This concept, which we call a ``private commons,'' will allow licensees 
and spectrum lessees to make spectrum available to individual users or 
groups of users that do not fit squarely within the current options for 
spectrum leasing or within the traditional end-user arrangements 
associated with the licensee's (or spectrum lessee's) subscriber-based 
services and network infrastructures. New technologies enable users, 
through use of advanced devices, to engage in a wide range of 
communications that do not require use of a licensee's (or lessee's) 
network infrastructure. To facilitate the use of these technologies, we 
adopt the private commons option, which will permit, and be restricted 
to, peer-to-peer communications between devices in a non-hierarchical 
network arrangement that does not utilize the network infrastructure of 
the licensee (or spectrum lessee).
    69. The private commons option provides a cooperative mechanism for 
licensees (or lessees) to make licensed spectrum available to users 
employing these advanced technologies in a manner similar to that by 
which unlicensed users gain access to spectrum to suit their particular 
needs, and to do so without the necessity of entering into individual 
spectrum leasing arrangements under our existing rules. In the 2.4 GHz 
and 5 GHz bands, for instance, users gain access and use of the 
spectrum with specified types of low-power communications devices 
provided they comply with technical requirements established by the 
Commission and set forth in our part 15 rules. In these bands, users 
then can create their own networks--such as those that are ad hoc or 
``mesh'' in nature--using equipment that complies with Commission-
established requirements. The private commons option provides a 
potentially complementary access model, in which licensees (or spectrum 
lessees) would determine to make access available to a similar class of 
users, and would do so under technical requirements for sharing use of 
the licensed band established and managed by the licensee (or lessee). 
The nature of these types of users' access to spectrum under this 
private commons option thus differs qualitatively from the nature of 
access provided to spectrum lessees under the Commission's spectrum 
leasing policies and procedures. In the private commons, the licensee 
(or lessee) authorizes users of devices operating at particular 
technical parameters specified by the licensee (or lessee) to operate 
on the licensed frequencies, consistent with the applicable technical 
requirements and use restrictions under the license authorization, 
using peer-to-peer (device-to-device) technologies. In spectrum leasing 
arrangements, individually negotiated spectrum access rights are 
provided to entities that traditionally obtained licenses and that 
would then provide traditional network-based services to end-users.
    70. These private commons arrangements may take a variety of forms, 
but will share a number of defining characteristics, as described 
herein. The private commons option will allow for flexible uses of 
licensed spectrum rights in which the licensee or lessee does not 
necessarily offer services (in whole or part) over its own end-to-end 
physical network of base stations, mobile stations, and other elements. 
The

[[Page 77532]]

licensee or spectrum lessee, as a manager of a private commons, will 
set terms and conditions for use in the private commons by users 
(consistent with the terms of the license and applicable service 
rules), and retain both de facto control of the use of the spectrum 
within the private commons and direct responsibility for compliance 
with the Commission's rules. And, while private commons arrangements 
will not be subject to the same notification requirements that are 
required by our spectrum leasing rules, licensees (or spectrum lessees) 
managing the commons will be required at this time to notify the 
Commission about any private commons they establish prior to users 
being permitted to operate within that private commons.
    71. We anticipate at least two types of private commons that 
licensees (or spectrum lessees) could make available to individuals or 
groups of users. In the first example, a private commons could be 
created by a licensee (or spectrum lessee), which may or may not 
otherwise have a network infrastructure to provide services, by 
granting access for a fee (e.g., on a transaction, usage, fixed, or 
other basis) to users who employ smart or opportunistic wireless 
devices that conform to the terms and conditions established by the 
licensee (or lessee), such as a requirement that devices operating in 
the licensed band use a particular technology, hardware, or software. 
The users' devices may be used to engage in peer-to-peer (device-to-
device) communications, such as by becoming part of compatible ad hoc 
or ``mesh'' wireless networks. Such users may need access to a 
particular licensed spectrum band in lieu of (or perhaps in addition 
to) gaining access to other bands that may be more heavily used or that 
do not allow for the quality of service necessary for a particular 
application. This type of private commons might be particularly 
valuable to users that find existing bands that provide for unlicensed 
operations to be crowded or otherwise less desirable.
    72. Under a second potential type of private commons arrangement, 
the licensee (or spectrum lessee) would not charge an ongoing access 
fee or otherwise have any direct relationship with the users. For 
instance, manufacturers of smart or opportunistic devices, or the 
developers of software or hardware used within such devices, may wish, 
as licensees or spectrum lessees, to provide spectrum access to anyone 
who purchases their devices, or devices with their hardware or 
software. This type of arrangement might be particularly effective in 
promoting new technologies or new uses by providing an opportunity for 
equipment developers to capitalize on their investments and innovations 
without having to get a license directly from the Commission, but could 
arrange for users of the equipment to access the spectrum usage rights 
from an existing licensee. Because a licensee (or spectrum lessee) 
could offer to private commons users the interference protection rights 
of its license, this arrangement could provide some additional benefits 
as compared with possible lower-powered, unlicensed operation in the 
same or other bands.
    73. We will require licensees and spectrum lessees that seek to 
allow spectrum access on a private commons basis to notify the 
Commission of the arrangement at this time. This notification will be 
similar to, but simpler than, the notification required for spectrum 
manager leases. It would provide certain information and certifications 
regarding the general terms and conditions for spectrum access to users 
in the private commons, including the term and coverage area of the 
arrangement, general information on the technical requirements and the 
equipment that the licensee or spectrum lessee has approved for 
operation in the private commons, as well as a description of the types 
of uses that are allowed. Consistent with our approach to part 15 
devices, we will not require the notification to include specific 
information about each individual user. We examine this notification 
requirement, and the continued need for the notification, in the Second 
FNPRM. We also recognize the need to clearly identify the 
distinguishing elements of spectrum leases, managed private commons, 
and end-user arrangements, respectively, as means to create spectrum 
access. Accordingly, in the Second FNPRM, we seek comment on the 
specifications necessary to make such distinctions consistent with the 
Commission's regulatory and enforcement objectives, and we seek comment 
on other arrangements and regulatory changes that may facilitate 
spectrum access and that should be considered within a private commons 
framework.

C. License Assignments and Transfers of Control

1. Immediate Approval Procedures for Certain Categories of License 
Assignments and Transfers of Control
    74. In the First Report and Order, we streamlined the regulatory 
process for transfers of control and license assignments in the same 
Wireless Radio Services covered by our new spectrum leasing policies. 
In the FNPRM, we proposed to take additional steps to remove 
unnecessary delay in processing certain categories of transfers of 
control and license assignments to the extent doing so would be 
consistent with our statutory obligation to determine whether such 
transactions would be in the public interest. In particular, we 
inquired whether the policies that we adopted with regard to de facto 
transfer leasing under our forbearance authority should also be applied 
to license assignments and transfers of control.
    75. We adopt immediate approval procedures for the same categories 
of license assignments and transfers of control involving Wireless 
Radio Services as are subject to our immediate approval procedures for 
de facto transfer spectrum leasing arrangements, as set forth 
previously. This decision comports with the comments we received. 
Accordingly, we conclude that an application for assignment or transfer 
of control of Wireless Radio Service licenses qualifies for immediate 
approval if, consistent with our policies for de facto transfer leases, 
the application establishes, through required certifications, that the 
transaction does not raise any specified potential public interest 
concerns relating to eligibility and use restrictions, foreign 
ownership restrictions, designated entity/entrepreneur restrictions, or 
competition, or does not require a waiver or declaratory ruling. In 
such cases, we will not require prior public notice or additional 
individualized Commission review before the transaction is approved. In 
addition, the applications must not involve license authorizations that 
are subject to Commission review or investigation that potentially 
affects the status of the license authorization itself. Finally, as 
with the approach we adopt with regard to de facto transfer leasing, 
our approval of the license assignment or transfer of control will be 
placed on public notice, subject to reconsideration by interested 
parties or the Bureau within 30 days, and by the Commission within 40 
days. The additional streamlining of our processing of these specified 
categories of license assignments and transfers of control helps us to 
achieve these goals while at the same time meeting our statutory 
obligations, under sections 308, 309, and 310(d), to review license 
assignments and transfers of control to ensure that they are consistent 
with the public interest.
    76. License assignments and transfers of control subject to our 
forbearance authority. Thus, for license assignment and transfer of 
control applications that

[[Page 77533]]

fall within the scope of our forbearance authority and that meet the 
specified requirements (i.e., do not raise any of the potential public 
interest concerns identified above) for immediate approval, we will 
forbear from prior public notice and additional individualized review 
requirements. We find that such forbearance satisfies each prong of the 
test under section 10, and will serve the public interest.
    77. License assignments and transfers of control not subject to 
forbearance. Similarly, we also determine that the streamlined approach 
we are adopting for qualifying license assignments and transfers of 
control involving services that are not subject to our forbearance 
authority is consistent with the statutory requirements of sections 
308, 309, and 310(d). Consistent with these provisions, we continue to 
require an application and approval process. In addition, in order to 
determine whether to approve these transactions, the Commission 
requires that each application establish a distinct set of facts and 
representations concerning the particular license assignment or 
transfer of control application before it can be approved. Thus, before 
any particular application will be approved under these immediate 
approval procedures, the Commission will have determined, based on the 
particulars of that application, that all of the criteria relevant to 
establishing that the public interest would be served by the granting 
of the application had been supplied, and the statutory requirements 
for case-by-case review and approval of the application will have been 
satisfied.
2. Extending the Streamlined Processing Policies Relating to License 
Assignments and Transfers of Control to Additional Wireless Radio 
Services
    78. In the First Report and Order, we limited our streamlined 
processing policies relating to license assignments and transfers of 
control to include only those services to which our spectrum leasing 
policies applied. In the FNPRM, we inquired whether we should expand 
these streamlined processing rules to include additional services.
    79. We will apply the streamlined processing procedures adopted in 
the First Report and Order for license assignment and transfer of 
control applications, as modified by this order for qualifying 
applications, to all license assignment and transfer of control 
applications involving Wireless Radio Services authorizations regulated 
by the Bureau. Thus, under the policies we are adopting herein, license 
assignment and transfer of control applications that raise potential 
public interest concerns (i.e., concerns relating to eligibility and 
use restrictions, foreign ownership restrictions, designated entity/
entrepreneur restrictions, or competition) will be processed according 
to the 21-day processing procedures for license assignments and 
transfers of control set forth in the First Report and Order, while 
those applications that qualify under the immediate approval procedures 
adopted in this order will be processed under the procedures adopted 
for license assignments and transfers of control set forth herein. We 
believe that there should be parity among these Wireless Radio Services 
when it comes to processing of license assignments and transfers of 
control. This will allow licensees and assignees/transferees in each 
service to benefit from streamlined processing that minimizes 
administrative delay, reduces transaction costs, and otherwise 
generally facilitates the movement of spectrum toward new, higher 
valued uses.

D. The Commission's Role in Providing Secondary Markets Information and 
Facilitating Exchanges

    80. In the FNPRM, we sought comment on a variety of approaches the 
Commission could take to promote access to the information needed to 
make possible spectrum leases or exchanges of spectrum usage rights in 
the secondary market. We also sought comment on whether the Commission 
should collect additional information, support establishment of 
services such as listing offers to transfer, assign, or lease, or 
support the establishment of exchange mechanisms or brokering 
exchanges. Finally, we invited comment on the potential for independent 
third parties to emerge as ``market-makers'' that negotiate, broker, or 
otherwise facilitate spectrum leasing transactions.
    81. We recognize that the Commission plays a critical role in the 
development of efficient secondary markets for spectrum usage rights. 
We believe that the spectrum leasing procedures established in the 
First Report and Order, combined with the information made available 
through our ULS database, will help in the development of these 
secondary markets. At the same time, we recognize that it may be 
necessary to evaluate, and perhaps expand, the information made 
available by the Commission as secondary markets in spectrum usage 
rights develop.
    82. We continue to believe that the private sector is better suited 
both to determine what types of information parties might demand, and 
to develop and maintain information on the licensed spectrum that might 
be available for use by third parties. Our decision is consistent with 
most of the comments we received on this question. Accordingly, while 
we will continue to collect and make available to the public the basic 
details related to spectrum licensees and lessees as provided in the 
First Report and Order, we will not gather or provide additional 
information at this time. We take no action at this time to establish 
the Commission as either a market-maker or exchange, nor do we take 
action to favor any particular type of private exchange mechanism. 
Similarly, we decline at this time to establish requirements for 
market-makers or other parties that may emerge to facilitate 
transactions. We will, however, continue to monitor the development of 
information services and market mechanisms in the private sector, and 
are prepared to revisit this issue at a later time if circumstances 
warrant.

IV. Order on Reconsideration

    83. Five groups--rural carriers represented by the Blooston Law 
Firm (Blooston Rural Carriers), Cingular Wireless, First Avenue 
Networks, National Telecommunications Cooperative Association (NTCA), 
and Verizon Wireless--filed petitions for reconsideration seeking 
clarification or revision of a number of different issues addressed in 
the First Report and Order. Four parties filed responses to these 
petitions.
    84. Blooston Rural Carriers, Cingular Wireless, and NTCA each 
sought clarification of the licensee's responsibility for ensuring that 
spectrum lessees comply with Commission policies and rules, while 
Verizon Wireless sought clarification of the licensee's ability to 
terminate a spectrum lease for non-compliance by the lessee. Cingular 
Wireless and Verizon Wireless requested additional procedural 
protections for licensees and spectrum lessees in the event the 
Commission sought to terminate a spectrum lease, while Blooston Rural 
Carriers, Cingular Wireless, and NTCA sought additional procedural 
protections for spectrum lessees if the license was terminated, either 
as a result of the licensee's bankruptcy or for some other 
unanticipated reason. Blooston Rural Carriers also sought clarification 
of Commission policies regarding the licensee's responsibility for 
meeting application construction requirements when entering into 
spectrum leasing arrangements. And, Cingular Wireless requested 
clarification with respect to the licensee's responsibility for the 
cost-

[[Page 77534]]

sharing obligations associated with relocation of incumbent microwave 
licensees in broadband PCS spectrum. We address these issues and 
petitions below. Issues raised by two of the petitioners overlap with 
matters that we already have addressed in the Second Report and Order, 
above. First Avenue Networks recommended that we eliminate the 
requirement that parties file spectrum manager leases days in advance 
of being permitted to commence operations under the lease, an issue we 
addressed in the Second Report and Order, above. Cingular Wireless 
sought clarification of the Commission's policies regarding spectrum 
leasing by designated entities and entrepreneurs, which we also have 
addressed in Second Report and Order. Because we have already 
considered and addressed the substance of these petitions, we will not 
discuss them further in this section.

A. Licensee Responsibility To Ensure That Spectrum Lessees Comply With 
Commission Policies and Rules

1. The licensee's Responsibility To Ensure the Spectrum Lessee's 
Compliance With Commission Policies and Rules
a. Spectrum Manager Leasing Arrangements
    85. Background. In the First Report and Order, we provided that 
licensees in spectrum manager leasing arrangements will be held 
directly accountable for lessee violations. In addition, we stated that 
if the licensee or the Commission determines that there is any 
violation of the Commission's rules or that the lessee's system is 
causing harmful interference, the licensee must immediately take steps 
to remedy the violation, resolve the interference, suspend or terminate 
the operation of the system, or take other measures to prevent further 
harmful interference until the situation can be remedied. Finally, if 
the spectrum lessee refuses to resolve the interference, remedy the 
violation, or suspend or terminate operations, either at the direction 
of the licensee or by order of the Bureau or Commission, we provided 
that the licensee ``must use all legal means necessary to enforce the 
order,'' as codified in 47 CFR 1.9010(b)(1)(iii).
    86. In its petition for reconsideration, Cingular Wireless 
contended that a spectrum manager licensee should not be held 
accountable for the spectrum lessee's violations of any rules if the 
licensee exercises some form of ``due diligence.'' In their petition, 
Blooston Rural Carriers asserted that requiring that a spectrum manager 
licensee use ``all legal means necessary'' to ensure that a spectrum 
lessee does not continue to violate rules imposes an ambiguous and 
potentially onerous requirement on the licensee even if the licensee 
takes reasonable steps to ensure compliance; they requested that we 
clarify the provision by including a ``reasonableness'' element in the 
requirement.
    87. Discussion. We affirm the First Report and Order in holding 
that licensees in spectrum manager leasing arrangements are directly 
responsible and accountable for violations of Commission policies and 
rules by their spectrum lessees, and thus we deny Cingular Wireless's 
petition. In entering into spectrum manager leasing arrangements, 
licensees have chosen to retain de facto control of the leased 
spectrum, which includes ongoing oversight responsibilities as well as 
direct accountability for ensuring their lessees' compliance with the 
rules. Spectrum lessees in this type of leasing arrangement are not 
held directly accountable, but instead are secondarily liable. 
Accordingly, holding spectrum manager licensees directly accountable is 
the only means of ensuring that some entity is directly accountable for 
compliance with Commission rules pertaining to the use of the leased 
spectrum. We note, however, that while licensees, as a policy and legal 
matter, will be held accountable for their lessees' compliance, the 
Commission retains discretion, based on the facts and circumstances 
regarding the licensee's exercise of its oversight responsibilities, as 
to whether and how it may proceed against the licensee when a spectrum 
lessee violates Commission policies. Thus, we agree with Cingular 
Wireless that the extent of a licensee's due diligence should be 
considered in determining the appropriate course of action.
    88. In addition, consistent with the concerns raised by Blooston 
Rural Carriers, we modify 47 CFR 1.9010(b)(1)(iii) of the Commission's 
rules by adding a reasonableness element to the provision. As modified, 
the rule will now state that the spectrum manager licensee must ``use 
all reasonable legal means necessary to enforce compliance.'' This 
clarification should ameliorate any concern that the licensee would 
have to exhaust all legal means, no matter how unreasonable, to ensure 
its lessees' compliance. Nevertheless, we emphasize that licensees that 
enter into spectrum manager leasing arrangements must maintain de facto 
control over the leased spectrum, which includes retention of the 
necessary legal rights, and the responsibility for taking legal action 
when necessary, to enforce their lessees' compliance with Commission 
policies and rules.
b. De facto Transfer Leasing Arrangements
    89. Background. In contrast to licensee responsibilities in 
spectrum manager leasing arrangements, we significantly limited 
licensee responsibilities in de facto transfer leasing arrangements by 
relieving licensees of primary and direct responsibility for ensuring 
that their lessees' operations comply with Commission policies and 
rules. We did, nonetheless, provide that licensees in de facto transfer 
leases retain ``some residual responsibilities'' regarding the leased 
spectrum. While noting that we were seeking to carefully limit licensee 
responsibilities so as not to impede commercially viable leasing 
arrangements, we also stated that it ``may be appropriate to hold the 
licensee responsible in specific cases for ongoing violations or other 
egregious behavior on the part of the spectrum lessee about which the 
licensee has knowledge or should have knowledge.''
    90. In its petition, Cingular Wireless objected to stating that the 
Commission ``may'' hold licensees potentially responsible for ``ongoing 
violations'' or ``egregious behavior,'' subject to forfeitures or 
license cancellation, contending that this standard is ``extremely 
vague'' and provides licensees insufficient guidance. Cingular Wireless 
sought either elimination of the licensee's residual responsibility 
with regard to de facto transfer leases or clarification of the 
standard to which the licensee would be held accountable. Blooston 
Rural Carriers objected to holding the licensee accountable for what it 
``should have known,'' and requested that the Commission clarify that 
the licensee will have fully discharged its oversight responsibilities 
if it includes certain express covenants in a spectrum lease; under 
such a revised standard, if a licensee becomes aware of a violation, 
the licensee would then be accountable for enforcing the lease terms. 
Finally, NTCA requested in its petition that the Commission not hold 
the licensee liable for its lessee's violations so long as the licensee 
abides by some basic guidelines; NTCA recommended that we establish a 
safe harbor for de facto transfer leasing with regard to a licensee's 
residual responsibilities, but did not elaborate on what that safe 
harbor would entail.
    91. Discussion. We affirm the First Report and Order and deny the 
petitions

[[Page 77535]]

for reconsideration on this issue. We believe that the language in the 
First Report and Order achieves the right balance with regard to the 
accountability of licensees in de facto transfer leasing arrangements 
for the violations of Commission policies and rules by their spectrum 
lessees.
    92. In the First Report and Order, we significantly limited 
licensee responsibilities in de facto transfer leasing arrangements by 
relieving licensees of primary and direct responsibility for ensuring 
that their lessees' operations comply with Commission policies and 
rules. Instead, as we made clear in the First Report and Order, 
spectrum lessees are primarily and directly responsible for ensuring 
such compliance, and we will first approach the lessee when we have 
questions about interference or other technical performance issues to 
demand that it bring its operations into compliance. We also have the 
direct authority to pursue remedies against lessees under Section 
503(b) of the Communications Act. Thus, although licensees are 
generally relieved of responsibility for their lessees' actions, they 
are not relieved of all responsibility no matter the circumstance. 
Given that licensees under this type of leasing arrangement continue to 
hold de jure control of the leased spectrum, as well as non-delegable 
duties regarding their license, we find that holding them potentially 
accountable, in certain limited circumstances, is commensurate with 
their ongoing responsibilities, as licensees, to the Commission.
    93. As we have indicated, such potential residual accountability is 
quite circumscribed, and would only attach to ongoing violations or 
other egregious behavior by the spectrum lessees about which the 
licensee had knowledge or should have knowledge. For instance, our 
rules require that any agreement between a licensee and spectrum lessee 
must contain provisions that the spectrum lessee comply at all times 
with applicable Commission rules. Accordingly, to the extent that a 
licensee is found complicit with ongoing violations by the spectrum 
lessee about which the licensee is aware and does nothing to ensure 
compliance, we believe it is appropriate to hold that licensee 
accountable. While we would expect that instances in which licensees 
that have entered into de facto transfer leases may be held accountable 
for ongoing or egregious acts of their lessees will be quite rare 
indeed, we cannot relieve these licensees altogether, in all cases no 
matter how egregious, for responsibility for any act of their spectrum 
lessees. Finally, although we decline to adopt petitioners' proposals 
for codifying dispositive rules as to what would or would not 
constitute such ongoing violations or other egregious acts of a 
spectrum lessee for which a licensee would be held accountable, we do 
believe that the kinds of factors proposed by them could be relevant to 
our case-by-case review of whether a particular licensee had in fact 
appropriately exercised its residual, non-delegable duties with regard 
to such actions by its spectrum lessee.
2. The Licensee's Responsibility To Terminate a Spectrum Lease for 
Violations by the Spectrum Lessee
    94. Background. In the First Report and Order, we required that the 
licensee always retain broad authority to terminate a lease if the 
spectrum lessee was violating Commission rules. Section 1.9040(a)(i) of 
our rules codified this policy in part, stating: ``The spectrum lessee 
must comply at all times with applicable rules set forth in this 
chapter and other applicable law, and the spectrum leasing arrangement 
may be revoked, cancelled, or terminated by the licensee or Commission 
if the spectrum lessee fails to comply with applicable requirements.''
    95. In its petition, Verizon Wireless asserted that the wording of 
47 CFR 1.9040(a)(i) is overly broad, and would discourage potential 
spectrum lessees from entering into spectrum leases. Specifically, 
Verizon Wireless contended that the provision, as worded, could be read 
to allow the licensee to terminate a lease for the lessee's failure to 
comply with any of the Commission's rules or any other applicable law. 
Such a broad interpretation, it contended, could enable a licensee to 
claim the absolute right to terminate a spectrum lease even in the 
event of the most minor infraction, regardless of any agreement 
otherwise reached between the leasing parties. Verizon Wireless argued 
that a licensee might use this provision as pretext for terminating a 
lease when economic circumstances might make it no longer in the 
licensee's interest to honor the leasing arrangement. Accordingly, 
Verizon Wireless requested that we clarify that our rules do not create 
an absolute right to terminate a lease for any violation whatsoever 
regardless of the contractual terms of the spectrum lease.
    96. Discussion. In establishing policies that promote use of 
spectrum leasing arrangements, we have been careful to distinguish 
between the rights of licensees and spectrum lessees. Licensees, who 
always retain de jure control of the license and retain certain core 
obligations that cannot be delegated to spectrum lessees, always retain 
greater rights and authority over the license and leased spectrum than 
spectrum lessees. Consistent with these policies, we require that 
licensees retain broad authority and, as provided in 47 CFR 
1.9040(a)(1), that they may terminate a spectrum lease if the spectrum 
lessee violates Commission rules. We did not intend, however, to 
provide licensees with completely arbitrary authority to terminate a 
spectrum lease for any violation whatsoever, regardless of the 
contractual agreement between the parties. Such a broad reading of 47 
CFR 1.9040(a)(1) could have a chilling effect on parties' incentives to 
enter into a spectrum lease. Accordingly, we grant Verizon Wireless's 
petition in part by clarifying our intent with regard to this 
provision.
    97. We expect that leasing parties will negotiate certain terms in 
their lease agreement that delineate the circumstances under which the 
licensee would have the right to terminate the spectrum lease. We will 
not dictate the specific terms of such a provision. We will, however, 
require that those terms be consistent with the respective rights of 
licensees and spectrum lessees as defined by our policies and rules on 
spectrum manager and de facto transfer leases, respectively. As a 
general matter, licensees entering into spectrum manager leases retain 
both de jure control of the license and de facto control of the leased 
spectrum, and are directly responsible to the Commission for ensuring 
their lessees' compliance with Commission policies and rules. 
Accordingly, such licensees' retention of the contractual right to 
terminate spectrum leases for their spectrum lessees' non-compliance 
must be commensurate with the licensees' retention of de facto control 
over the leased spectrum and their ongoing responsibilities to the 
Commission, as spectrum manager licensees, to ensure compliance. As for 
de facto transfer leases, licensees retain de jure control of the 
license and have certain residual responsibilities for ensuring that 
spectrum lessees do not commit ongoing or other egregious violations, 
as discussed previously. In sum, these licensees' retention of the 
contractual right to terminate a spectrum lease for lessee non-
compliance must be commensurate with the licensees' ongoing residual 
responsibilities. Thus, as long as the licensee retains sufficient 
ability to ensure its spectrum lessee's compliance with Commission 
policies and rules, and retains the authority to

[[Page 77536]]

terminate a spectrum leasing arrangement commensurate with the 
licensee's responsibilities under our policies and rules (as discussed 
above), the spectrum leasing arrangement may contain specific 
provisions that offer the spectrum lessee certain protections against 
the licensee's otherwise arbitrary termination of the spectrum lease.

B. Protections for Licensees and Spectrum Lessees in the Event of 
Termination of the Spectrum Lease or the License

1. Procedural Protections for Licensees and Spectrum Lessees With 
Regard to Commission Termination of a Spectrum Leasing Arrangement
a. Spectrum Manager Leasing Arangements
    98. Background. Under the spectrum leasing policies we adopted in 
the First Report and Order, leasing parties must notify the Commission 
of their spectrum manager leasing arrangement at least 21 days before 
commencing operations (or, if a spectrum lease for a year or less, at 
least 10 days before commencing operations). As we explained in the 
First Report and Order, while Commission approval is not required for 
spectrum manager leases, we determined that the Commission retains the 
authority to investigate and terminate a spectrum manager leasing 
arrangement under certain circumstances. Specifically, the Commission 
can terminate any spectrum manager leasing arrangement to the extent it 
determines, post-notification, that the arrangement constitutes an 
unauthorized transfer of de facto control under our new standard or 
raises foreign ownership, competitive, or other public interest 
concerns.
    99. Cingular Wireless petitioned the Commission to adopt a policy 
by which licensees would have the procedural protections, under 
sections 312 and 316 of the Act, including notice and opportunity to be 
heard, prior to the Commission deciding to terminate a spectrum manager 
lease.
    100. Discussion. We conclude that the procedural protections 
afforded licensees under sections 312 and 316 do not apply to decisions 
by the Commission to terminate spectrum manager leasing arrangements. 
Sections 312 and 316 of the Act expressly apply only to revocation or 
modification of licenses or construction permits, and spectrum manager 
leases, which do not involve an authorization or permit under the Act, 
are neither. Accordingly, we deny Cingular Wireless's petition.
    101. We affirm and further clarify our procedures for Commission 
examination, and possible termination, of spectrum manager leasing 
arrangements to the extent that these arrangements do not qualify for 
immediate processing under the procedures discussed in the Second 
Report and Order. As noted above, leasing parties that seek to enter 
into spectrum manager leases pursuant to the policies established in 
the First Report and Order (i.e., those that do not qualify for 
immediate processing) must file their notifications at least 21 days 
before commencing operations (or, if a lease for a year or less, at 
least 10 days before commencing operations), thus giving the Commission 
the opportunity to review these arrangements prior to commencement of 
operations. Interested parties may then seek informal guidance or a 
formal determination from the Commission regarding the particular 
spectrum manager lease by means of a letter, a complaint, or a petition 
for reconsideration. To the extent the Bureau determines that the 
leasing arrangement may raise potential public interest concerns 
relating to eligibility, foreign ownership, designated entity or 
entrepreneur policies, or competition, and believes further 
investigation is necessary prior to commencement of operations under 
the spectrum manager lease, it will take whatever steps it deems 
appropriate to investigate or address those concerns, including 
notifying the licensee and possibly requiring that parties not commence 
operations under the lease until such concerns have been resolved. The 
Commission also retains the right to terminate any lease to the extent 
that it determines at any time, post-notification, that the arrangement 
constitutes an unauthorized transfer of control under the de facto 
control standard for spectrum leasing or otherwise is found to violate 
Commission policies regarding spectrum leasing. In addition, if the 
Commission determines, post-notification, that any certification 
provided in the notification, by either the licensee or spectrum 
lessee, is not true, complete, correct, and made in good faith, the 
Commission will be vigilant in taking appropriate enforcement action, 
potentially including forfeitures or termination of the spectrum 
manager leasing arrangement.
b. De facto Transfer Leasing Arrangements
    102. Background. In the First Report and Order, we provided that 
spectrum lessees entering into de facto transfer leases will be granted 
an instrument of authorization when the Commission approves of the 
leasing application, and that they will be held primarily and directly 
responsible for compliance with Commission policies and rules and will 
be subject to forfeiture proceedings under section 503(b) of the 
Communications Act. Verizon Wireless petitioned to request that the 
Commission clarify that the spectrum lessee will be subject to the same 
due process protections as licensees with regard to the notice, 
forfeiture, and other enforcement procedures currently applicable to 
licensees, including the Commission's decision to terminate the de 
facto transfer spectrum leasing authorization.
    103. Discussion. We agree with Verizon Wireless that because 
spectrum lessees in de facto transfer leasing arrangements receive an 
instrument of authorization, and are directly accountable to the 
Commission and subject to forfeiture proceedings under section 503(b), 
they are entitled to the same procedural protections as licensees 
pertaining to the forfeiture proceedings. Accordingly, to the extent 
the Commission pursues forfeiture actions against a de facto transfer 
spectrum lessee for alleged violation of Commission policies or rules, 
the spectrum lessee is entitled to the procedural protections afforded 
other holders of authorizations under section 503(b).
    104. However, we do not agree with Verizon Wireless to the extent 
it requests that spectrum lessees in de facto transfer leases be 
accorded the same rights as licensees in cases where the Commission 
decides to terminate the lease. Termination of a spectrum lease is not 
the equivalent of a license revocation, and thus spectrum lessees are 
not subject to the same procedural protections afforded licensees under 
sections 312 and 316. As noted above, those procedural protections only 
apply to revocations or modifications of licenses or construction 
permits. A termination of a spectrum lease, in which a spectrum lessee 
holds temporary and subsidiary rights to the leased spectrum, does not 
rise to the level of either a revocation of a license or construction 
permit. Thus, spectrum lessees that gain their limited and temporary 
rights to access to spectrum through a spectrum leasing arrangement 
with licensees are not entitled to the same procedural protections, 
vis-a-vis the Commission, as a licensee that is authorized by the 
Commission to hold their authorizations.

[[Page 77537]]

2. Protections for Spectrum Lessees in the Event of License Termination
    105. Background. In the First Report and Order, we stated that, in 
the event the licensee's authorization was revoked or cancelled, the 
spectrum lessee under either a spectrum manager or de facto transfer 
lease arrangement would have to terminate its operations. As we noted, 
termination was necessary because the spectrum lessee gains access to 
the licensed spectrum only through the licensee's authorization. We 
recognized that termination of the spectrum lease might require service 
termination by the lessee and, accordingly, we stated that the 
Commission would take into account the public interest in affording a 
reasonable transition period to users of the service in order to 
minimize disruption to consumers, ongoing businesses, and other 
activities. In addition, we determined that the spectrum lessee would 
have no greater right to obtain a comparable license than any other 
interested parties.
    106. Three petitioners sought additional protections for spectrum 
lessees in the event that the license is cancelled or terminated, or if 
the licensee goes bankrupt. Specifically, Cingular Wireless requested 
clarification that, in the event of an unanticipated license 
termination, a valid spectrum lease does not terminate simply because 
the license is sold, unless the lease so provides. Blooston Rural 
Carriers, meanwhile, asserted that the Commission should provide more 
protection for lessees in the event of licensee bankruptcy or license 
termination. They believed that merely stating that the Commission 
would provide a spectrum lessee a reasonable transition period is too 
vague and does not adequately protect the spectrum lessee's 
investments. Instead, Blooston Rural Carriers contended that, in event 
of bankruptcy, the Commission should either require the leased spectrum 
to be partitioned/disaggregated to the lessee, or require the new 
licensee to assume the lease on substantially the same terms as the 
original licensee. Finally, NTCA asserted that lack of certain 
protections for lessees is a disincentive to spectrum leasing, and that 
the Commission should provide that long-term de facto transfer lessees 
retain some rights if the licensee goes bankrupt; in particular, NTCA 
argued that the Commission should permit spectrum lessees to continue 
operations and take over as the primary licensee, or have time to 
gradually transition to other available spectrum. RTG, in reply to the 
latter two petitions, generally supported Blooston Rural Carriers' and 
NTCA's contentions.
    107. Discussion. Because we conclude that the First Report and 
Order achieves the right balance respecting the rights of spectrum 
lessees with regard to the license authorization itself, in the event 
of license cancellation, we deny these petitions. Axiomatic to spectrum 
leasing is that spectrum lessees do not hold the underlying license 
authorization and that they lease spectrum usage rights contingent on 
the licensee continuing to hold that authorization. Since spectrum 
lessees do not hold the authorization, they do not, as spectrum 
lessees, have the same rights as licensees. Similarly, because spectrum 
lessees do not hold the license authorization, and lease spectrum only 
contingent upon the licensee continuing to hold that authorization, the 
lessees' rights to the leased spectrum terminates in the event the 
license is cancelled and from that point forward they have no greater 
rights than any other entity to the license itself.
    108. While spectrum lessees are not granted special protections by 
the Commission with regard to the license itself, they are of course 
free to obtain certain appropriate contractual protections from 
licensees when they enter into spectrum leasing arrangements. For 
instance, to address the concerns that Cingular Wireless has raised, 
spectrum lessees could enter into agreements to protect their interests 
in the event the licensee sells the license. Similarly, the concerns 
raised in the petitions regarding the potential bankruptcy of the 
licensee could be addressed contractually by requiring the licensee to 
alert the spectrum lessee in the event the licensee begins to 
experience financial problems that may pose a risk of bankruptcy. 
Finally, as discussed above, if there is an unanticipated termination 
or cancellation of the license that requires service termination by the 
spectrum lessee, we provide spectrum lessees adequate protections by 
affording them the opportunity to obtain certain protections during a 
reasonable transition period in order to minimize disruption to 
business and other activities.

C. Licensee Responsibility for Meeting Construction Obligations

    109. Background. The spectrum leasing rules adopted in the First 
Report and Order permit licensees to rely on the activities of their 
lessees, if they so choose, for purposes of complying with the buildout 
obligations that are conditions of the license authorization. In the 
event that the licensee chooses to rely on its lessee's activities, but 
the lessee fails to build out, the Commission will enforce the rules 
against the licensee consistent with existing rules. In their petition, 
Blooston Rural Carriers argued that the Commission should be more 
flexible regarding construction requirements when a licensee's failure 
to meet those obligations is jeopardized by the spectrum lessee's 
breach of its lease agreement with the licensee. They contended that 
strict enforcement of the Commission's policy would discourage spectrum 
leasing, and proposed that licensees be given a reasonable extension of 
buildout deadlines if they can show that they entered into good faith, 
arms-length leases with spectrum lessees and reasonably depended on the 
lessees to meet the applicable buildout requirements. RTG supported 
this petition.
    110. Discussion. We reaffirm the First Report and Order in holding 
that meeting the applicable buildout obligations remains a condition of 
the license authorization, such that a licensee is ultimately 
responsible for meeting those requirements regardless of whether it 
seeks to rely on spectrum lessees to meet some of those obligations. As 
a condition of the license authorization, the licensee must remain 
responsible to the Commission for meeting these licensee obligations, 
and cannot escape those obligations by delegating them to another 
entity that does not hold the license. We note that a licensee is free 
to negotiate a contractual provision in its leasing agreement with a 
spectrum lessee that could protect the licensee against the spectrum 
lessee's failure to meet such obligations.

D. Responsibility for Compliance With Cost-Sharing Obligations for 
Relocation of Microwave Licensees in Broadband PCS

    111. Background. The First Report and Order did not directly 
address which entity, licensee or spectrum lessee, would be deemed the 
``PCS entity'' for purposes of certain relocation responsibilities 
applicable in the broadband PCS services. Under 47 CFR 24.239 through 
24.253 of the Commission's rules, which govern the relocation of 
microwave incumbents from certain frequencies in the 1850-1990 MHz 
Broadband PCS band, any ``PCS entity'' that benefits from spectrum 
clearance performed either by other PCS entities or by microwave 
incumbents that voluntarily relocate must contribute to such relocation 
costs.
    112. In its petition, Cingular Wireless requested that we clarify 
whether, in the context of spectrum leasing and absent

[[Page 77538]]

specific lease provisions to the contrary, the licensee or the spectrum 
lessee would be deemed a ``PCS entity'' under the microwave relocation 
rules. In reply, the Fixed Wireless Communications Coalition asserted 
that a licensee's microwave relocation obligations cannot be delegated 
to spectrum lessees under either the spectrum manager or the de facto 
transfer option. PCIA's Microwave Cost Sharing Clearinghouse, which 
administers the cost sharing plan, contended that licensees should be 
responsible for all cost-sharing obligations triggered by spectrum 
lessees in spectrum manager leases, while spectrum lessees in de facto 
transfer leases should assume the obligations and rights of the 
licensee under the cost sharing rules because they are akin to holders 
of partitioned or disaggregated spectrum.
    113. Discussion. We clarify that broadband PCS licensees are the 
``PCS entities'' responsible, under Sec. Sec.  24.239 through 24.253 of 
our rules, for cost sharing obligations triggered by spectrum lessees 
under both spectrum manager and de facto transfer leases. Thus, we 
agree with the Fixed Wireless Communications Coalition that these 
responsibilities cannot be delegated to spectrum lessees, and disagree 
with the contention of PCIA's Microwave Cost Sharing Clearinghouse that 
spectrum lessees under de facto transfer leases are tantamount to 
partitionees or disaggregatees and therefore should be treated alike 
under the relocation rules. Spectrum lessees under de facto transfer 
leases, unlike partitionees and disaggregatees, are not licensees and, 
in particular, do not exercise de jure control over the leased 
spectrum. We find that it is reasonable to hold licensees responsible 
for the cost sharing obligations triggered by spectrum lessees of both 
spectrum manager and de facto transfer leases because licensees may 
attribute lessee buildout towards meeting their own buildout 
obligations. It would be incongruous to allow licensees to benefit from 
the spectrum lessees' buildout while allowing them to avoid cost-
sharing obligations triggered by such buildout. Under our 
clarification, any party that is owed reimbursement under the cost-
sharing rules will have direct recourse to the licensee. We recognize 
that a licensee may, by contract, account for a spectrum lessee's 
obligations to the licensee should the spectrum lessee trigger a 
reimbursement obligation. Finally, relocations performed by licensees 
and spectrum lessees do not trigger obligations between the parties 
under our rules, although leasing parties may account for this 
possibility by contract.

E. Miscellaneous Additional Clarifications and Revisions

    114. Finally, on our own motion for reconsideration of the First 
Report and Order, we determine that the following clarifications and 
revisions are appropriate.
    115. Term of a spectrum leasing arrangement. Under the spectrum 
leasing policies established in the First Report and Order, we permit 
spectrum lessees to lease spectrum usage rights for any period or time 
during the term of the license. We also stated that existing spectrum 
leasing arrangements could also be renewable provided that the licensee 
obtained renewal of the underlying license authorization. We limit the 
term of spectrum leases in such a manner because spectrum lessees 
cannot have any greater right to the use of licensed spectrum than the 
licensee. Accordingly, although spectrum leasing parties are free to 
extend an existing spectrum leasing arrangement beyond the term of the 
license authorization if the license is renewed, no spectrum manager 
lease notification or de facto transfer lease application can propose a 
lease term that extends beyond the term of the license authorization 
itself. We will clarify our rules to reflect this policy.
    116. Leasing of excess capacity by part 101 licensees. We note 
that, prior to adoption of policies and rules for spectrum leasing 
arrangements, as set forth in our part 1 subpart X rules, licensees in 
Part 101 services have been permitted to lease excess capacity, as set 
forth in 47 CFR 101.603(b) for private operational fixed services and 
47 CFR 101.701 for common carriers. Nothing in our secondary markets 
rules established in the First Report and Order supplants the excess 
capacity leasing rules for part 101 services, and licensees may 
continue to lease excess capacity consistent with 47 CFR 101.603(b) and 
101.701 of our rules.
    117. Loading requirements relating to certain services. Another 
issue we wish to clarify regards channel loading requirements 
pertaining to applications for obtaining licenses in certain services, 
and how our spectrum leasing policies will be applied with respect to 
those applications. In some services, our rules require an applicant to 
demonstrate that it will ``load'' a channel with a certain number of 
mobile units in order to obtain exclusive use of that channel, or 
require a licensee to load a channel to full capacity before it can 
request additional spectrum. An applicant must demonstrate a genuine 
need for the number of mobile units for which it seeks authorization, 
and the uses for which those channels can be obtained are governed by 
the rules governing the channel in question.
    118. The spectrum leasing rules do not relax or otherwise modify 
the initial eligibility requirements for any Commission license. 
Indeed, we specifically stated in the First Report and Order that the 
spectrum leasing policies could not be used as a tool for evading 
applicable requirements that remain in effect, and that we were not 
taking any action that could lead to the evisceration of rules and 
policies that have not been directly and specifically revised by us in 
this proceeding. That is, an entity that does not qualify under our 
existing loading rules for a particular authorization cannot use the 
prospect of spectrum leasing to other entities in order to establish 
its own eligibility for that license. Consequently, we hereby clarify 
that an applicant's required showing of loading under our rules must 
consist only of that entity's mobile units, consistent with the rules 
governing the channel in question, rather than mobile units that would 
be operated by spectrum lessees pursuant to the spectrum leasing rules. 
Counting spectrum lessees' mobile units toward the applicant's initial 
loading would in effect make the applicant eligible for something it 
could not otherwise obtain under the relevant service rules. Such a 
result would contravene our stated intent in the First Report and 
Order.
    119. Definition of ``spectrum lessee.'' We revise the definition of 
``spectrum lessee,'' as set forth in the under 47 CFR 1.9003 of our 
rules, to state: ``Spectrum lessee. Any third-party entity that leases, 
pursuant to the spectrum leasing rules set forth in this subpart, 
certain spectrum usage rights held by a licensee. This term includes 
reference to third-party entities that lease spectrum usage rights as 
spectrum sublessees under spectrum subleasing arrangements.'' Such a 
revision clarifies that spectrum lessees include spectrum lessees that 
lease spectrum usage rights under spectrum subleasing arrangements.
    120. Section 1.9045(b). We revise the language of 47 CFR 1.9045(b) 
of our rules to read as follows: ``(b) If a licensee holds a license 
subject to the installment payment program rules (see Sec.  1.2110 and 
related service-specific rules), the licensee and any spectrum lessee 
must execute the Commission-approved financing documents. No licensee 
or potential spectrum lessee may file a spectrum leasing notification 
or application without having first executed such Commission-approved

[[Page 77539]]

financing documentation. In addition, they must certify in the spectrum 
leasing notification or application that they have both executed such 
documentation.'' This revision more clearly effectuates the intent of 
the applicable spectrum leasing policies regarding installment payment 
licensees, as set forth in the First Report and Order, which require 
that each such licensee has executed Commission-approved financing 
documents that establish, in every spectrum leasing arrangement, that 
the licensee bears sole responsibility to repay the entire amount of 
its debt obligation(s) to the Commission, and that each such licensee 
and spectrum lessee entering into a spectrum leasing arrangement with 
such a licensee have included, as part of the lease agreement, all 
Commission-required provisions.
    121. Requirements relating to cellular cross-interests. The First 
Report and Order applied the existing policies relating to cellular 
cross-interests to spectrum leasing arrangements. Because we have 
recently eliminated the cellular cross-interest rule in another 
proceeding, we also will eliminate reference in our spectrum leasing 
rules to these policies and their applicability to such arrangements.
    122. Spectrum leasing forms. In the rules adopted to implement the 
First Report and Order, we required that spectrum leasing parties file 
spectrum manager lease notifications and de facto transfer lease 
applications using a modified FCC Form 603, a form previously used in 
the context of assignments of existing authorizations and transfers of 
control involving entities holding authorizations. In the interest of 
administrative efficiency, we now determine to create a separate filing 
form, FCC Form 608 that pertains specifically to spectrum leasing 
arrangements, and our rules will be revised to so reflect.

V. Procedural Matters

    123. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), see 5 U.S.C. 603, an Initial Regulatory Flexibility 
Analysis (IRFA) was incorporated in the FNPRM. The Commission sought 
written public comment on the proposals in the FNPRM, including comment 
on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) 
conforms to the RFA.

A. Need for, and Objectives of, the Second Report and Order and Order 
on Reconsideration

    124. In the Second Report and Order and the Order on 
Reconsideration, we build on the framework established in the First 
Report and Order, in which we adopted policies, rules, and procedures 
designed to facilitate the ability of many Wireless Radio Services 
licensees, including many small businesses, to lease spectrum usage 
rights and to transfer and assign licenses to third parties. In this 
Second Report and Order, we take additional steps to further reduce 
regulatory delay so that spectrum leasing parties in our Wireless Radio 
Services can implement certain classes of spectrum leasing arrangements 
and can transfer and assign licenses in a more timely fashion, in 
accordance with evolving marketplace demands and customer needs. In the 
Order on Reconsideration, we address a variety of issues addressed in 
the First Report and Order, including the respective responsibilities 
of licensees and spectrum lessees regarding particular service rules.
    125. As with the underlying First Report and Order, these actions 
take us further down the path toward greater reliance on the 
marketplace, thus expanding the scope of available wireless services 
and devices and enabling more efficient and dynamic use of spectrum to 
the ultimate benefit of consumers throughout the country. The steps 
taken in the Second Report and Order and in the Order on 
Reconsideration to facilitate the development of secondary markets in 
wireless spectrum expand upon and complement several of the 
Commission's major policy initiatives and public interest objectives. 
These include our efforts to encourage the development of broadband 
services for all Americans, promote increased facilities-based 
competition among service providers, enhance economic opportunities and 
access for the provision of communications services by designated 
entities, and enable development of additional and innovative services 
in rural areas.
    126. Second Report and Order. Consistent with the proposals set 
forth in the FNPRM, the Second Report and Order further streamlines our 
processing of certain classes of spectrum leasing transactions--both de 
facto transfer and spectrum manager leases--by adopting immediate 
processing procedures (i.e., overnight processing through the Universal 
Licensing System (ULS)) for transactions that do not raise certain 
specified potential public interest concerns. Thus, leasing parties 
submitting qualifying spectrum leasing transactions will be able to 
proceed immediately with implementation of their spectrum leases, 
instead of having to wait 21 days (10 days if a short-term lease), as 
required under existing spectrum leasing rules for both de facto 
transfer and spectrum manager leases.
    127. With respect to both long-term and short-term de facto 
transfer leasing, we adopt immediate approval procedures for certain 
categories of de facto transfer leasing arrangements that do not raise 
potential public interest concerns relating to eligibility and use, 
foreign ownership, designated entity/entrepreneur matters, or 
competition. For transactions that involve telecommunications carriers 
subject to the Commission's section 10 forbearance authority, the 
Second Report and Order forbears from the 21-day prior public notice 
requirements (10 days for short-term de facto transfer spectrum 
leasing). For transactions that do not involve telecommunications 
carriers (and thus are not subject to forbearance), we permit spectrum 
leases to proceed under the immediate approval procedures because their 
application establishes all of the requisite elements necessary for 
determining that approval is consistent with the public interest. The 
Second Report and Order also adopts similar immediate processing for 
qualifying spectrum manager lease notifications. Post-approval 
reconsideration procedures (for de facto transfer leases) and post-
notification reconsideration procedures (for spectrum manager leases) 
apply, providing interested parties an opportunity to seek 
reconsideration, and similarly providing the Wireless 
Telecommunications Bureau (Bureau) 30 days, and the Commission 40 days, 
to reconsider whether the spectrum leasing is in the public interest. 
The Bureau (or Commission) also retains the right to take appropriate 
action for any false certifications that leasing parties make in their 
application or notification.
    128. The Second Report and Order affirms and further clarifies the 
policy set forth in the First Report and Order that permits designated 
entity (DE) and entrepreneur licensees to enter into spectrum manager 
leases with any entity, but only provided that the lease does not cause 
the DE or entrepreneur licensee to lose its eligibility under the 
applicable Commission policies and rules. DE and entrepreneur licensees 
must therefore undertake the same kind of determination required when 
evaluating eligibility for auctions or license transfers prior to 
certifying that their spectrum leasing arrangement is in compliance 
with our rules. Because spectrum leasing arrangements entered into by 
DE and entrepreneur licensees are not subject to the immediate 
processing procedures, the Commission

[[Page 77540]]

will have the ability to review, on a case-by-case basis, any leasing 
certification that it believes gives rise to a question of the 
licensee's continued eligibility.
    129. Also, the Second Report and Order extends spectrum leasing 
policies to three additional services. Specifically, it permits public 
safety licensees in the part 90 Radio Safety Pool to lease spectrum to 
other public safety entities and to entities that provide 
communications in support of public safety operations. In addition, it 
extends the spectrum leasing policies to the Multichannel Video 
Distribution and Data Service (MVDDS) and Automated Maritime 
Communications Systems (AMTS) Services in which licensees hold 
exclusive use rights. It does not, however, extend the spectrum leasing 
policies to other wireless radio services that involve sharing of the 
authorizations or to services in which the spectrum leasing policies 
might undermine policies related to the underlying authorization.
    130. Furthermore, the Second Report and Order establishes the new 
regulatory concept of a ``private commons'' that would be available to 
individual users or groups of users that do not fit squarely within the 
current options for spectrum leasing or within traditional end-user 
models associated with subscriber-based services and network 
architectures. The private commons option is similar to ``public'' 
commons of the kind associated with the current uses and applications 
of unlicensed devices under part 15 rules, except that it would involve 
licensed spectrum in which the licensee (or spectrum lessee) would not 
necessarily offer services over its own end-to-end physical network of 
base stations, mobile stations, and other elements; as manager of the 
commons, the licensee (or lessee) sets the terms and conditions for 
users, notifies the Commission about the private commons prior to 
users' operations, and retains direct responsibility for users' 
compliance with the rules.
    131. In addition, the Second Report and Order extends immediate 
approval procedures for certain classes of license assignments and 
transfers of control. The order adopts the same immediate approval 
procedures for license assignments and transfer of control transactions 
that would not raise specified public interest concerns (i.e., those 
relating to eligibility and use, foreign ownership, designated entity, 
or competition), consistent with the policies adopted in the order for 
de facto transfer leases. The Second Report and Order also extends the 
applicable streamlined approval procedures--either the immediate 
approval or 21-day streamlined approval (or longer if additional review 
is necessary)--to all wireless radio services regulated by the Bureau, 
regardless of whether spectrum leasing is permitted.
    132. Finally, in the Second Report and Order we conclude that the 
information already provided by spectrum leasing parties when they file 
applications or notifications relating to entering into spectrum 
leasing arrangements is sufficient for enabling secondary markets the 
development of efficient markets in spectrum usage rights. Accordingly, 
we determine that we will not, at this time, require the spectrum 
leasing parties to provide the Commission with any additional 
information than that already required under existing rules. We also 
decline, at this time, to take action to establish the Commission as 
either a market-maker or exchange.
    133. Order on Reconsideration. In the Order on Reconsideration, we 
address five petitions for reconsideration that we received with regard 
to the First Report and Order. These petitions touched on a variety of 
issues, including the licensee's responsibility to ensure its spectrum 
lessee's compliance with Commission policies and rules, protections for 
the licensee or spectrum lessee in the event a spectrum lease or a 
license is terminated, and the respective responsibilities of licensees 
and spectrum lessees regarding particular service rules. In the Order 
on Reconsideration, we provide additional clarification to our spectrum 
leasing policies and rules.

B. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    134. Second Report and Order. We received no comments in response 
to the previous IRFA. We note, however that several commenting parties 
that represent small entities or rural carriers expressed support for 
the Commission's efforts to provide additional streamlining of our 
processing of certain categories of spectrum leasing arrangements and 
license assignments and transfers of control.
    135. For instance, the Rural Telecommunications Group (RTG) 
supported additional streamlining of Commission processing of certain 
classes of spectrum leasing arrangements and licensee transfer and 
assignments. It asserted that such a process would help stimulate 
secondary market transactions by substantially lowering the cost of 
such transactions and decreasing the time in which such transactions 
may be completed. Similarly, Blooston Rural Carriers supported the 
Commission's general proposal, set forth in the FNPRM, to remove 
unnecessary regulatory barriers to the development of secondary 
markets, and believed that the kinds of rules proposed, and ultimately 
adopted in the Second Report and Order, would further facilitate 
broader access to spectrum resources. In addition, Blooston Rural 
Carriers supported that Commission's decision to forbear from certain 
categories of spectrum leases and assignments, stating that such 
forbearance would beneficially affect a significant number of 
arrangements without undermining the Commission's public interest 
objectives.
    136. In addition to these general observations, we inquired in the 
FNPRM whether the Commission should alter the de facto transfer leasing 
policies adopted in the First Report and Order and allow a designated 
entity or entrepreneur licensee to lease some or all of its spectrum 
usage rights to any entity, regardless of whether that entity would 
qualify for the same eligibility status as that of the licensee. In 
particular, we sought comment on how, if such a policy change were 
made, the Commission could ensure continued compliance with our 
statutory obligations to prevent unjust enrichment. We also sought 
comment on whether to use the new de facto control standard, rather 
than the existing controlling interest standard (including the criteria 
set forth in Intermountain Microwave, 12 FCC 2d 559 (1963)), when 
evaluating affiliation and eligibility for designated entity and 
entrepreneur benefits. We specifically asked whether this latter change 
would be consistent with the statutory objectives of section 309(j).
    137. Some commenters, including AT&T Wireless, Cingular Wireless 
(which also is a petitioner), Council Tree, and Salmon PCS, suggested 
that the Commission should permit designated entity and entrepreneur 
licensees to enter into spectrum leasing arrangements with any entity, 
regardless of how that arrangement might affect the licensee's 
designated entity or entrepreneur eligibility. One of these commenters, 
Council Tree, further suggested that the Commission should eliminate 
unjust enrichment obligations and entrepreneur transfer restrictions 
for licensees owned and controlled by Alaska Native Corporations and 
Indian tribes. These commenters argued generally that designated entity 
and entrepreneur licensees should benefit from the same flexibility 
with regard to entering into spectrum leasing

[[Page 77541]]

arrangements as any other licensees. In addition, while two commenters 
acknowledged the importance of ensuring the spectrum leasing by 
designated entity and entrepreneur licensees did not undermine the 
Commission's designated entity or entrepreneur policies, Blooston Rural 
Carriers and RTG recommended that if such licensees enter into spectrum 
leasing arrangements that serve rural areas, they should not be subject 
to any unjust enrichment obligations or transfer restrictions. They 
generally contended that such a result would be consistent with the 
purpose of those policies to promote services in rural communities.
    138. The Commission devoted significant consideration to the 
applicability of its designated entity qualification rules to potential 
spectrum lessees seeking access to spectrum licensed to designated 
entities, as well as the applicability of its unjust enrichment 
policies. Reaching a decision on these issues required a balancing of 
complex competing considerations. The Commission concluded, however, 
that its statutory obligations under section 309(j) of the 
Communications Act and its goals to promote opportunities for 
designated entities (which includes a significant number of small 
businesses) would be better served by affirming, but clarifying, its 
designated entity and unjust enrichment policies adopted in the First 
Report and Order in the context of spectrum leases involving both 
spectrum manager leasing arrangements and long-term de facto transfer 
leasing arrangements.
    139. Order on Reconsideration. Five parties petitioned the 
Commission seeking revision or clarification of the First Report and 
Order on several particular issues pertaining to the spectrum leasing 
policies that were adopted. These included Cingular Wireless' and 
NTCA's petitions for clarification of the licensee's responsibility for 
ensuring that spectrum lessees comply with Commission policies and 
rules, Verizon Wireless' petition for Cingular Wireless' and Verizon 
Wireless' petitions for clarification of the licensee's ability to 
terminate a spectrum lease for non-compliance by the lessee, Blooston 
Rural Carriers' petition for clarification of Commission policies 
regarding the licensee's responsibility for meeting application 
construction requirements when entering into spectrum leasing 
arrangements, and Cingular Wireless's petition for clarification with 
respect to the licensee's responsibility for the cost-sharing 
obligations associated with relocation of incumbent microwave licensees 
in broadband PCS spectrum. Four parties, requested additional 
procedural protections for licensees and spectrum lessees. 
Specifically, Cingular Wireless and Verizon Wireless sought additional 
protections for licensees in the event the Commission sought to 
terminate a spectrum lease, while Blooston Rural Carriers, Cingular 
Wireless, and NTCA requested additional procedural protections for 
spectrum lessees if the license was terminated, either as a result of 
the licensee's bankruptcy or for some other unanticipated reason. In 
the Order on Reconsideration, the Commission generally affirmed, and 
further clarified, the spectrum leasing policies adopted in the First 
Report and Order with regard to these issues. None of these petitioners 
noted that revisions or clarifications should be made in order to 
better accommodate the needs of small businesses.
    140. In addition, as noted above, Cingular Wireless petitioned the 
Commission, requesting that it permit designated entity and 
entrepreneur licensees to enter into spectrum leasing arrangements with 
any entity, regardless of how that arrangement might affect the 
licensee's designated entity or entrepreneur eligibility. Because this 
issue was addressed in the Second Report and Order, it will not be 
discussed again here.

C. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply

    141. 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 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 Small Business 
Administration (SBA).
    142. In the following paragraphs, we further describe and estimate 
the number of small entity licensees that may be affected by the rules 
we adopt in the Second Report and Order. Since this rulemaking 
proceeding applies to multiple services, we will analyze the number of 
small entities affected on a service-by-service basis. Because we have 
adopted streamlined processing procedures for all license assignment 
and transfer of control applications involving Wireless Radio Services 
authorizations regulated by the Bureau, we describe all of the services 
regulated by the Bureau.
    143. As adopted, the Second Report and Order will further 
streamline the processing of certain spectrum leasing arrangements and 
license assignments and transfers of control, as well as create new 
opportunities and obligations for three additional Wireless Radio 
Services licensees to enter into spectrum leasing arrangements with 
third parties. When identifying small entities that could be affected 
by our new rules, we provide information describing auctions results, 
including the number of small entities that are winning bidders. We 
note, however, that the number of winning bidders that qualify as small 
businesses at the close of an auction does not necessarily reflect the 
total number of small entities currently in a particular service. The 
Commission does not generally require that applicants provide business 
size information, except in the context of an assignment or transfer of 
control application where unjust enrichment issues are implicated.
    144. Cellular Licensees. The SBA has developed a small business 
size standard for small businesses in the category ``Cellular and Other 
Wireless Telecommunications.'' Under that SBA category, a business is 
small if it has 1,500 or fewer employees. According to the Bureau of 
the Census, only twelve firms out of a total of 977 cellular and other 
wireless telecommunications firms that operated for the entire year in 
1997 had 1,000 or more employees. Therefore, even if all twelve of 
these firms were cellular telephone companies, nearly all cellular 
carriers are small businesses under the SBA's definition.
    145. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. Phase I licensing was conducted 
by lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and four nationwide licensees currently authorized 
to operate in the 220 MHz band. The Commission has not developed a 
definition of small entities specifically applicable to such incumbent 
220 MHz Phase I licensees. To estimate the number of such licensees 
that are small businesses, we apply the small business size standard 
under the SBA rules applicable to ``Cellular and Other Wireless 
Telecommunications'' companies. This category provides that a small 
business is a wireless company employing no

[[Page 77542]]

more than 1,500 persons. According to the Census Bureau data for 1997, 
only twelve firms out of a total of 977 such firms that operated for 
the entire year in 1997, had 1,000 or more employees. If this general 
ratio continues in the context of Phase I 220 MHz licensees, the 
Commission estimates that nearly all such licensees are small 
businesses under the SBA's small business standard.
    146. 220 MHz Radio Service--Phase II Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. The Phase II 220 MHz service is 
subject to spectrum auctions. We adopted a small business size standard 
for defining ``small'' and ``very small'' businesses for purposes of 
determining their eligibility for special provisions such as bidding 
credits and installment payments. This small business standard 
indicates that a ``small business'' is an entity that, together with 
its affiliates and controlling principals, has average gross revenues 
not exceeding $15 million for the preceding three years. A ``very small 
business'' is defined as an entity that, together with its affiliates 
and controlling principals, has average gross revenues that do not 
exceed $3 million for the preceding three years. The SBA has approved 
these small size standards. Auctions of Phase II licenses commenced on 
September 15, 1998, and closed on October 22, 1998. In the first 
auction, 908 licenses were auctioned in three different-sized 
geographic areas: three nationwide licenses, 30 Regional Economic Area 
Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 
licenses auctioned, 693 were sold. Thirty-nine small businesses won 373 
licenses in the first 220 MHz auction. A second auction included 225 
licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies 
claiming small business status won 158 licenses. A third auction 
included four licenses: 2 BEA licenses and 2 EAG licenses in the 220 
MHz Service. No small or very small business won any of these licenses.
    147. Lower 700 MHz Band Licenses. We adopted criteria for defining 
three groups of small businesses for purposes of determining their 
eligibility for special provisions such as bidding credits. We have 
defined a small business as an entity that, together with its 
affiliates and controlling principals, has average gross revenues not 
exceeding $40 million for the preceding three years. A very small 
business is defined as an entity that, together with its affiliates and 
controlling principals, has average gross revenues that are not more 
than $15 million for the preceding three years. Additionally, the lower 
700 MHz Service has a third category of small business status that may 
be claimed for Metropolitan/Rural Service Area (MSA/RSA) licenses. The 
third category is entrepreneur, which is defined as an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues that are not more than $3 million for the preceding 
three years. The SBA has approved these small size standards. An 
auction of 740 licenses (one license in each of the 734 MSAs/RSAs and 
one license in each of the six Economic Area Groupings (EAGs)) 
commenced on August 27, 2002, and closed on September 18, 2002. Of the 
740 licenses available for auction, 484 licenses were sold to 102 
winning bidders. Seventy-two of the winning bidders claimed small 
business, very small business or entrepreneur status and won a total of 
329 licenses. A second auction commenced on May 28, 2003, and closed on 
June 13, 2003, and included 256 licenses: 5 EAG licenses and 476 CMA 
licenses. Seventeen winning bidders claimed small or very small 
business status and won sixty licenses, and nine winning bidders 
claimed entrepreneur status and won 154 licenses.
    148. Upper 700 MHz Band Licenses. The Commission released a Report 
and Order, authorizing service in the upper 700 MHz band. This auction, 
previously scheduled for January 13, 2003, has been postponed.
    149. Paging. We adopted a size standard for ``small businesses'' 
for purposes of determining their eligibility for special provisions 
such as bidding credits and installment payments. A small business is 
an entity that, together with its affiliates and controlling 
principals, has average gross revenues not exceeding $15 million for 
the preceding three years. The SBA has approved this definition. An 
auction of Metropolitan Economic Area (MEA) licenses commenced on 
February 24, 2000, and closed on March 2, 2000. Of the 2,499 licenses 
auctioned, 985 were sold. Fifty-seven companies claiming small business 
status won 440 licenses. An auction of Metropolitan Economic Area (MEA) 
and Economic Area (EA) licenses commenced on October 30, 2001, and 
closed on December 5, 2001. Of the 15,514 licenses auctioned, 5,323 
were sold. 132 companies claiming small business status purchased 3,724 
licenses. A third auction, consisting of 8,874 licenses in each of 175 
EAs and 1,328 licenses in all but three of the 51 MEAs commenced on May 
13, 2003, and closed on May 28, 2003. Seventy-seven bidders claiming 
small or very small business status won 2,093 licenses. Currently, 
there are approximately 24,000 Private Paging site-specific licenses 
and 74,000 Common Carrier Paging licenses. According to one 2002 study, 
608 private and common carriers reported that they were engaged in the 
provision of either paging or ``other mobile'' services. Of these, we 
estimate that 589 are small, under the SBA-approved small business size 
standard. We estimate that the majority of private and common carrier 
paging providers would qualify as small entities under the SBA 
definition.
    150. Broadband Personal Communications Service (PCS). The broadband 
PCS spectrum is divided into six frequency blocks designated A through 
F, and the Commission has held auctions for each block. The Commission 
has created a small business size standard for Blocks C and F as an 
entity that has average gross revenues of less than $40 million in the 
three previous calendar years. For Block F, an additional small 
business size standard for ``very small business'' was added and is 
defined as an entity that, together with its affiliates, has average 
gross revenues of not more than $15 million for the preceding three 
calendar years. These small business size standards, in the context of 
broadband PCS auctions, have been approved by the SBA. No small 
businesses within the SBA-approved small business size standards bid 
successfully for licenses in Blocks A and B. There were 90 winning 
bidders that qualified as small entities in the Block C auctions. A 
total of 93 ``small'' and ``very small'' business bidders won 
approximately 40 percent of the 1,479 licenses for Blocks D, E, and F. 
On March 23, 1999, the Commission re-auctioned 155 C, D, E, and F Block 
licenses; there were 113 small business winning bidders.
    151. Narrowband PCS. The Commission held an auction for Narrowband 
PCS licenses that commenced on July 25, 1994, and closed on July 29, 
1994. A second commenced on October 26, 1994 and closed on November 8, 
1994. For purposes of the first two Narrowband PCS auctions, ``small 
businesses'' were entities with average gross revenues for the prior 
three calendar years of $40 million or less. Through these auctions, 
the Commission awarded a total of forty-one licenses, 11 of which were 
obtained by four small businesses. To ensure meaningful participation 
by small business entities in future auctions, the Commission adopted a 
two-tiered small business size standard. A ``small business'' is an 
entity that, together with affiliates and controlling

[[Page 77543]]

interests, has average gross revenues for the three preceding years of 
not more than $40 million. A ``very small business'' is an entity that, 
together with affiliates and controlling interests, has average gross 
revenues for the three preceding years of not more than $15 million. 
The SBA has approved these small business size standards. A third 
auction commenced on October 3, 2001 and closed on October 16, 2001. 
Here, five bidders won 317 (MTA and nationwide) licenses. Three of 
these claimed status as a small or very small entity and won 311 
licenses.
    152. Specialized Mobile Radio (SMR). The Commission awards ``small 
entity'' bidding credits in auctions for Specialized Mobile Radio (SMR) 
geographic area licenses in the 800 MHz and 900 MHz bands to firms that 
had revenues of no more than $15 million in each of the three previous 
calendar years. The Commission awards ``very small entity'' bidding 
credits to firms that had revenues of no more than $3 million in each 
of the three previous calendar years. The SBA has approved these small 
business size standards for the 900 MHz Service. The Commission has 
held auctions for geographic area licenses in the 800 MHz and 900 MHz 
bands. The 900 MHz SMR auction began on December 5, 1995, and closed on 
April 15, 1996. Sixty bidders claiming that they qualified as small 
businesses under the $15 million size standard won 263 geographic area 
licenses in the 900 MHz SMR band. The 800 MHz SMR auction for the upper 
200 channels began on October 28, 1997, and was completed on December 
8, 1997. Ten bidders claiming that they qualified as small businesses 
under the $15 million size standard won 38 geographic area licenses for 
the upper 200 channels in the 800 MHz SMR band. A second auction for 
the 800 MHz band was held on January 10, 2002 and closed on January 17, 
2002 and included 23 BEA licenses. One bidder claiming small business 
status won five licenses.
    153. The auction of the 1,050 800 MHz SMR geographic area licenses 
for the General Category channels began on August 16, 2000, and was 
completed on September 1, 2000. Eleven bidders won 108 geographic area 
licenses for the General Category channels in the 800 MHz SMR band 
qualified as small businesses under the $15 million size standard. In 
an auction completed on December 5, 2000, a total of 2,800 Economic 
Area licenses in the lower 80 channels of the 800 MHz SMR service were 
sold. Of the 22 winning bidders, 19 claimed ``small business'' status 
and won 129 licenses. Thus, combining all three auctions, 40 winning 
bidders for geographic licenses in the 800 MHz SMR band claimed status 
as small business. In addition, there are numerous incumbent site-by-
site SMR licensees and licensees with extended implementation 
authorizations in the 800 and 900 MHz bands. We do not know how many 
firms provide 800 MHz or 900 MHz geographic area SMR pursuant to 
extended implementation authorizations, nor how many of these providers 
have annual revenues of no more than $15 million. One firm has over $15 
million in revenues. We assume, for purposes of this analysis, that all 
of the remaining existing extended implementation authorizations are 
held by small entities, as that small business size standard is 
established by the SBA.
    154. Private Land Mobile Radio (PLMR). PLMR systems serve an 
essential role in a range of industrial, business, land transportation, 
and public safety activities. These radios are used by companies of all 
sizes operating in all U.S. business categories, and are often used in 
support of the licensee's primary (non-telecommunications) business 
operations. For the purpose of determining whether a licensee of a PLMR 
system is a small business as defined by the SBA, we could use the 
definition for ``Cellular and Other Wireless Telecommunications.'' This 
definition provides that a small entity is any such entity employing no 
more than 1,500 persons. The Commission does not require PLMR licensees 
to disclose information about number of employees, so the Commission 
does not have information that could be used to determine how many PLMR 
licensees constitute small entities under this definition. Moreover, 
because PMLR licensees generally are not in the business of providing 
cellular or other wireless telecommunications services but instead use 
the licensed facilities in support of other business activities, we are 
not certain that the Cellular and Other Wireless Telecommunications 
category is appropriate for determining how many PLMR licensees are 
small entities for this analysis. Rather, it may be more appropriate to 
assess PLMR licensees under the standards applied to the particular 
industry sub-sector to which the licensee belongs.
    155. Fixed Microwave Services. Fixed microwave services include 
common carrier, private-operational fixed, and broadcast auxiliary 
radio services. Currently, there are approximately 22,015 common 
carrier fixed licensees and 61,670 private operational-fixed licensees 
and broadcast auxiliary radio licensees in the microwave services. The 
Commission has not yet defined a small business with respect to 
microwave services. For purposes of this FRFA, we will use the SBA's 
definition applicable to ``Cellular and Other Wireless 
Telecommunications'' companies--that is, an entity with no more than 
1,500 persons. The Commission does not have data specifying the number 
of these licensees that have more than 1,500 employees, and thus is 
unable at this time to estimate with greater precision the number of 
fixed microwave service licensees that would qualify as small business 
concerns under the SBA's small business size standard. Consequently, 
the Commission estimates that there are 22,015 or fewer small common 
carrier fixed licensees and 61,670 or fewer small private operational-
fixed licensees and small broadcast auxiliary radio licensees in the 
microwave services that may be affected by the rules and policies 
adopted herein. The Commission notes, however, that the common carrier 
microwave fixed licensee category includes some large entities.
    156. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission defined ``small business'' for the wireless 
communications services (WCS) auction as an entity with average gross 
revenues of $40 million for each of the three preceding years, and a 
``very small business'' as an entity with average gross revenues of $15 
million for each of the three preceding years. The SBA has approved 
these definitions. The FCC auctioned geographic area licenses in the 
WCS service. In the auction, which commenced on April 15, 1997 and 
closed on April 25, 1997, there were seven bidders that won 31 licenses 
that qualified as very small business entities, and one bidder that won 
one license that qualified as a small business entity. An auction for 
one license in the 1670-1674 MHz band commenced on April 30, 2003 and 
closed the same day. One license was awarded. The winning bidder was 
not a small entity.
    157. 39 GHz Service. The Commission defines ``small entity'' for 39 
GHz licenses as an entity that has average gross revenues of less than 
$40 million in the three previous calendar years. ``Very small 
business'' is defined as an entity that, together with its affiliates, 
has average gross revenues of not more than $15 million for the 
preceding three calendar years. The SBA has approved these definitions. 
The auction of the 2,173 39 GHz licenses began on April 12, 2000, and 
closed on May 8, 2000.

[[Page 77544]]

The 18 bidders who claimed small business status won 849 licenses.
    158. Local Multipoint Distribution Service. An auction of the 986 
Local Multipoint Distribution Service (LMDS) licenses began on February 
18, 1998, and closed on March 25, 1998. The Commission defined ``small 
entity'' for LMDS licenses as an entity that has average gross revenues 
of less than $40 million in the three previous calendar years. An 
additional classification for ``very small business'' was added and is 
defined as an entity that, together with its affiliates, has average 
gross revenues of not more than $15 million for the preceding three 
calendar years. These regulations defining ``small entity'' in the 
context of LMDS auctions have been approved by the SBA. There were 93 
winning bidders that qualified as small entities in the LMDS auctions. 
A total of 93 small and very small business bidders won approximately 
277 A Block licenses and 387 B Block licenses. On March 27, 1999, the 
Commission re-auctioned 161 licenses; there were 32 small and very 
small business winning bidders that won 119 licenses.
    159. 218-219 MHz Service. The first auction of 218-219 MHz 
(previously referred to as the Interactive and Video Data Service or 
IVDS) spectrum resulted in 178 entities winning licenses for 594 
Metropolitan Statistical Areas (MSAs). Of the 594 licenses, 567 were 
won by 167 entities qualifying as a small business. For that auction, 
we defined a small business as an entity that, together with its 
affiliates, has no more than a $6 million net worth and, after federal 
income taxes (excluding any carry over losses), has no more than $2 
million in annual profits each year for the previous two years. We 
defined a small business as an entity that, together with its 
affiliates and persons or entities that hold interests in such an 
entity and their affiliates, has average annual gross revenues not 
exceeding $15 million for the preceding three years. A very small 
business is defined as an entity that, together with its affiliates and 
persons or entities that hold interests in such an entity and its 
affiliates, has average annual gross revenues not exceeding $3 million 
for the preceding three years. The SBA has approved of these 
definitions. At this time, we cannot estimate the number of licenses 
that will be won by entities qualifying as small or very small 
businesses under our rules in future auctions of 218-219 MHz spectrum. 
Given the success of small businesses in the previous auction, and the 
prevalence of small businesses in the subscription television services 
and message communications industries, we assume for purposes of this 
FRFA that in future auctions, many, and perhaps all, of the licenses 
may be awarded to small businesses.
    160. Location and Monitoring Service (LMS). Multilateration LMS 
systems use non-voice radio techniques to determine the location and 
status of mobile radio units. For purposes of auctioning LMS licenses, 
the Commission has defined ``small business'' as an entity that, 
together with controlling interests and affiliates, has average annual 
gross revenues for the preceding three years not exceeding $15 million. 
A ``very small business'' is defined as an entity that, together with 
controlling interests and affiliates, has average annual gross revenues 
for the preceding three years not exceeding $3 million. These 
definitions have been approved by the SBA. An auction for LMS licenses 
commenced on February 23, 1999, and closed on March 5, 1999. Of the 528 
licenses auctioned, 289 licenses were sold to four small businesses. We 
cannot accurately predict the number of remaining licenses that could 
be awarded to small entities in future LMS auctions.
    161. Rural Radiotelephone Service. We use the SBA definition 
applicable to cellular and other wireless telecommunication companies, 
i.e., an entity employing no more than 1,500 persons. There are 
approximately 1,000 licensees in the Rural Radiotelephone Service, and 
the Commission estimates that there are 1,000 or fewer small entity 
licensees in the Rural Radiotelephone Service that may be affected by 
the rules and policies adopted herein.
    162. Air-Ground Radiotelephone Service. We use the SBA definition 
applicable to cellular and other wireless telecommunication companies, 
i.e., an entity employing no more than 1,500 persons. There are 
approximately 100 licensees in the Air-Ground Radiotelephone Service, 
and the Commission estimates that almost all of them qualify as small 
entities under the SBA definition.
    163. Offshore Radiotelephone Service. This service operates on 
several ultra high frequency (UHF) TV broadcast channels that are not 
used for TV broadcasting in the coastal area of the states bordering 
the Gulf of Mexico. At present, there are approximately 55 licensees in 
this service. We use the SBA definition applicable to cellular and 
other wireless telecommunication companies, i.e., an entity employing 
no more than 1,500 persons. The Commission is unable at this time to 
estimate the number of licensees that would qualify as small entities 
under the SBA definition. The Commission assumes, for purposes of this 
FRFA, that all of the 55 licensees are small entities, as that term is 
defined by the SBA.
    164. Multiple Address Systems (MAS). Entities using MAS spectrum, 
in general, fall into two categories: (1) those using the spectrum for 
profit-based uses, and (2) those using the spectrum for private 
internal uses. With respect to the first category, the Commission 
defines ``small entity'' for MAS licenses as an entity that has average 
gross revenues of less than $15 million in the three previous calendar 
years. ``Very small business'' is defined as an entity that, together 
with its affiliates, has average gross revenues of not more than $3 
million for the preceding three calendar years. The SBA has approved of 
these definitions. The majority of these entities will most likely be 
licensed in bands where the Commission has implemented a geographic 
area licensing approach that would require the use of competitive 
bidding procedures to resolve mutually exclusive applications. The 
Commission's licensing database indicates that, as of January 20, 1999, 
there were a total of 8,670 MAS station authorizations. Of these, 260 
authorizations were associated with common carrier service. In 
addition, an auction for 5,104 MAS licenses in 176 EAs began November 
14, 2001, and closed on November 27, 2001. Seven winning bidders 
claimed status as small or very small businesses and won 611 licenses.
    165. With respect to the second category, which consists of 
entities that use, or seek to use, MAS spectrum to accommodate their 
own internal communications needs, we note that MAS serves an essential 
role in a range of industrial, safety, business, and land 
transportation activities. MAS radios are used by companies of all 
sizes, operating in virtually all U.S. business categories, and by all 
types of public safety entities. For the majority of private internal 
users, the definitions developed by the SBA would be more appropriate. 
The applicable definition of small entity in this instance appears to 
be the ``Cellular and Other Wireless Telecommunications'' definition 
under the SBA rules. This definition provides that a small entity is 
any entity employing no more than 1,500 persons. The Commission's 
licensing database indicates that, as of January 20, 1999, of the 8,670 
total MAS station authorizations, 8,410 authorizations were for private 
radio service, and of these, 1,433 were for private land mobile radio 
service.
    166. Incumbent 24 GHz Licensees. The rules that we adopt could 
affect incumbent licensees who were relocated

[[Page 77545]]

to the 24 GHz band from the 18 GHz band, and applicants who wish to 
provide services in the 24 GHz band. The Commission did not develop a 
definition of small entities applicable to existing licensees in the 24 
GHz band. Therefore, the applicable definition of small entity is the 
definition under the SBA rules for ``Cellular and Other Wireless 
Telecommunications.'' This definition provides that a small entity is 
any entity employing no more than 1,500 persons. We believe that there 
are only two licensees in the 24 GHz band that were relocated from the 
18 GHz band, Teligent and TRW, Inc. It is our understanding that 
Teligent and its related companies have less than 1,500 employees, 
though this may change in the future. TRW is not a small entity. Thus, 
only one incumbent licensee in the 24 GHz band is a small business 
entity.
    167. Future 24 GHz Licensees. With respect to new applicants in the 
24 GHz band, we have defined ``small business'' as an entity that, 
together with controlling interests and affiliates, has average annual 
gross revenues for the three preceding years not exceeding $15 million. 
``Very small business'' in the 24 GHz band is defined as an entity 
that, together with controlling interests and affiliates, has average 
gross revenues not exceeding $3 million for the preceding three years. 
The SBA has approved these definitions. The Commission will not know 
how many licensees will be a small or very small business until the 
auction, if required, is held.
    168. 700 MHz Guard Band Licenses. We adopted size standards for 
``small businesses'' and ``very small businesses'' for purposes of 
determining their eligibility for special provisions such as bidding 
credits and installment payments. A small business in this service is 
an entity that, together with its affiliates and controlling 
principals, has average gross revenues not exceeding $40 million for 
the preceding three years. Additionally, a ``very small business'' is 
an entity that, together with its affiliates and controlling 
principals, has average gross revenues that are not more than $15 
million for the preceding three years. SBA approval of these 
definitions is not requires. An auction of 52 Major Economic Area (MEA) 
licenses commenced on September 6, 2000, closed on September 21, 2000. 
Of the 104 licenses auctioned, 96 licenses were sold to nine bidders. 
Five of these bidders were small businesses that won a total of 26 
licenses. A second auction of 700 MHz Guard Band licenses commenced on 
February 13, 2001, and closed on February 21, 2001. All eight of the 
licenses auctioned were sold to three bidders. One of these bidders was 
a small business that won a total of two licenses.
    169. Broadband Radio Service (formerly Multipoint Distribution 
Service) and Educational Broadband Service (formerly Instructional 
Television Fixed Service). Multichannel Multipoint Distribution Service 
(MMDS) systems often referred to as ``wireless cable,'' transmit video 
programming to subscribers using the microwave frequencies of the 
Multipoint Distribution Service (MDS) and Instructional Television 
Fixed Service (ITFS). In an order issued in July 2004 in WT Docket No. 
03-66, the Commission comprehensively reviewed our policies and rules 
relating to the ITFS and MDS services, and replacing the Multipoint 
Distribution Service (MDS) with the Broadband Radio Service and 
Instructional Television Fixed Service (ITFS) with the Educational 
Broadband Service. In connection with the 1996 MDS auction, the 
Commission defined ``small business'' as an entity that, together with 
its affiliates, has average gross annual revenues that are not more 
than $40 million for the preceding three calendar years. The SBA has 
approved of this standard. The MDS auction resulted in 67 successful 
bidders obtaining licensing opportunities for 493 Basic Trading Areas 
(BTAs). Of the 67 auction winners, 61 claimed status as a small 
business. At this time, we estimate that of the 61 small business MDS 
auction winners, 48 remain small business licensees. In addition to the 
48 small businesses that hold BTA authorizations, there are 
approximately 392 incumbent MDS licensees that have gross revenues that 
are not more than $40 million and are thus considered small entities.
    170. In addition, the SBA has developed a small business size 
standard for Cable and Other Program Distribution, which includes all 
such companies generating $12.5 million or less in annual receipts. 
According to Census Bureau data for 1997, there were a total of 1,311 
firms in this category, total, that had operated for the entire year. 
Of this total, 1,180 firms had annual receipts of under $10 million, 
and an additional 52 firms had receipts of $10 million or more but less 
than $25 million. Consequently, we estimate that the majority of 
providers in this service category are small businesses that may be 
affected by the rules and policies in the Second Report and Order.
    171. Finally, while SBA approval for a Commission-defined small 
business size standard applicable to ITFS is pending, educational 
institutions are included in this analysis as small entities. There are 
currently 2,032 ITFS licensees, and all but 100 of these licenses are 
held by educational institutions. Thus, we tentatively conclude that at 
least 1,932 ITFS licensees are small businesses.
    172. Multichannel Video Distribution and Data Service. MVDDS is a 
terrestrial fixed microwave service operating in the 12.2-12.7 GHz 
band. Licenses in this service were auctioned in January 2004, with 10 
winning bidders for 192 licenses. Eight of these 10 winning bidders 
claimed small businesses status for 144 of these licenses.
    173. Aviation and Marine Services. Small businesses in the aviation 
and marine radio services use a very high frequency (VHF) marine or 
aircraft radio and, as appropriate, an emergency position-indicating 
radio beacon (and/or radar) or an emergency locator transmitter. The 
Commission has not developed a small business size standard 
specifically applicable to these small businesses. For purposes of this 
analysis, the Commission uses the SBA small business size standard for 
the category ``Cellular and Other Telecommunications,'' which is 1,500 
or fewer employees. Most applicants for recreational licenses are 
individuals. Approximately 581,000 ship station licensees and 131,000 
aircraft station licensees operate domestically and are not subject to 
the radio carriage requirements of any statute or treaty. For purposes 
of our evaluations in this analysis, we estimate that there are up to 
approximately 712,000 licensees that are small businesses (or 
individuals) under the SBA standard. In addition, between December 3, 
1998 and December 14, 1998, the Commission held an auction of 42 VHF 
Public Coast licenses in the 157.1875-157.4500 MHz (ship transmit) and 
161.775-162.0125 MHz (coast transmit) bands. For purposes of the 
auction, the Commission defined a ``small'' business as an entity that, 
together with controlling interests and affiliates, has average gross 
revenues for the preceding three years not to exceed $15 million 
dollars. In addition, a ``very small'' business is one that, together 
with controlling interests and affiliates, has average gross revenues 
for the preceding three years not to exceed $3 million dollars. There 
are approximately 10,672 licensees in the Marine Coast Service, and the 
Commission estimates that almost all of them qualify as ``small'' 
businesses under the above special small business size standards.
    174. Public Safety Radio Services. Public Safety radio services 
include police, fire, local government, forestry

[[Page 77546]]

conservation, highway maintenance, and emergency medical services. 
There are a total of approximately 127,540 licensees in these services. 
Governmental entities as well as private businesses comprise the 
licensees for these services. All governmental entities with 
populations of less than 50,000 fall within the definition of a small 
entity.

D. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements

    175. The projected reporting, recordkeeping, and other compliance 
requirements resulting from the Second Report and Order and the Order 
on Reconsideration will apply to all entities in the same manner, 
consistent with the approach we adopted in the First Report and Order. 
We believe that applying the same rules equally to all entities helps 
to promote fairness in the spectrum leasing process, as well in the 
license assignment and transfer of control process, and we do not 
believe that the costs and/or administrative burdens associated with 
the rules, as revised for certain classes of spectrum leasing and 
license transfer and assignment transactions will disproportionately or 
unduly burden small entities. The revisions we adopt today should 
benefit small entities by giving them more information, more 
flexibility, and more options for gaining access to valuable wireless 
spectrum.
    176. Immediate processing procedures for qualifying transactions. 
One of our goals is to further streamline Commission processing of 
certain spectrum leasing arrangements and of license assignment and 
transfer of control applications in order to minimize administrative 
delays, reduce transaction costs, encourage more efficient use of 
spectrum, and otherwise facilitate the movement of spectrum toward new 
and higher valued uses. Additional streamlining, including adoption of 
immediate processing procedures for certain categories of these 
transactions that do not raise specified potential public interest 
concerns, helps us to achieve these goals while at the same time 
meeting our statutory obligations, under sections 308, 309, and 310(d), 
to review license assignments and transfers of control to ensure that 
they are consistent with the public interest.
    177. Under the rules adopted in the Second Report and Order, 
parties seeking to benefit from the Commission's immediate processing 
procedures for spectrum leasing arrangements and for license transfers 
and assignments must submit filings with the Commission using our 
Universal Licensing System (ULS), just as such filings were required 
under the procedures adopted in the underlying First Report and Order. 
In order to qualify for such immediate processing under these new 
procedures, we require parties to make certain additional 
certifications. Otherwise, the reporting requirements are not 
substantially different that those already required when parties seek 
to enter into spectrum leasing arrangements, as already established 
under the underlying First Report and Order. If parties qualify, they 
benefit by having their arrangements processed immediately, and thus 
have less delay in gaining access to the spectrum by implementing the 
transactions.
    178. Extending spectrum leasing policies to additional spectrum-
based services. We extend the spectrum leasing policies to permit 
public safety licensees in the part 90 Radio Safety Pool to lease 
spectrum to other public safety entities and to entities that provide 
communications in support of public safety operations. We also extend 
the spectrum leasing policies to two other services in which licensees 
hold exclusive use rights, the Multichannel Video Distribution and Data 
Services (MVDDS) and the Automated Maritime Communications Systems 
(AMTS) Services. The reporting requirements for these services are no 
different from the reporting requirements already required for all 
other services to which our spectrum leasing policies apply.
    179. Adoption of the ``private commons'' option. In the Second 
Report and Order, we adopt the private commons option under which 
licensees and spectrum lessees may make licensed spectrum available to 
individuals or groups of users employing certain advanced wireless 
technologies in a manner similar to that by which unlicensed users gain 
access to spectrum, and to do so without the need for entering into 
individual spectrum leasing arrangements. While we do require that 
licensees or spectrum lessees that establish a private commons to 
notify the Commission, we do not require the same amount of information 
as required for spectrum leasing arrangements.
    180. Immediate approval procedures for certain categories of 
license assignment and transfer of control applications. We adopt 
streamlined application processes for license assignments and transfers 
of control involving Wireless Radio similar to those we have adopted 
for de facto transfer spectrum leasing arrangements. As with de facto 
transfer leasing arrangements, in order to qualify for such immediate 
processing under these new procedures, we require parties to make 
certain additional certifications. Otherwise, the reporting 
requirements are not substantially different that those already 
required when parties seek to enter into spectrum leasing arrangements.
    181. Extending the streamlined processing policies relating to 
license assignments and transfers of control to additional wireless 
services. We also determine to apply the streamlined processing 
procedures adopted in the First Report and Order for license 
assignments and transfer of control applications, as well as the 
immediate approval processing for qualifying transactions as adopted in 
this Second Report and Order, to all of the Wireless Radio Services 
authorizations regulated by the Bureau. Thus, while new services now 
may benefit from more streamlined processing of license transfer and 
assignment applications, the reporting requirements do not differ from 
those already required for licensees and assignees/transferees under 
the policies established in the First Report and Order.
    182. Order on Reconsideration. In the Order on Reconsideration, we 
generally affirm the spectrum leasing policies and rules established in 
the underlying First Report and Order, and do not impose any additional 
reporting requirements on licensees and spectrum lessees.

E. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    183. The RFA requires an agency to describe any significant 
alternatives that it considered in reaching its final decision, 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 or reporting requirements under the rule for 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 small 
entities.''
    184. Immediate processing of certain categories de facto transfer 
leasing arrangements. Consistent with the broad support by commenters, 
we generally adopt the forbearance proposal set forth in the FNPRM with 
a few modifications. We do not anticipate any adverse impact on small 
entities as a result of our decision to adopt immediate processing of 
certain categories of spectrum leasing arrangements, both de

[[Page 77547]]

facto transfer leases and spectrum manager leases.
    185. In particular, we permit all de facto transfer leases 
involving telecommunications services that are subject to the 
Commission's forbearance authority to proceed pursuant to the 
application and immediate grant procedures set forth in the Second 
Report and Order. In particular, we require that, in the spectrum 
leasing application submitted to the Commission, the spectrum lessee 
must make certain additional certifications (e.g., those in which the 
spectrum leasing arrangement involves license authorizations that 
permit interconnected mobile voice and/or data services) in order to 
qualify for immediate approval processing (in lieu of the general 21-
day processing procedures under the rules adopted in the First Report 
and Order). Consistent with the general proposal set forth in the 
FNPRM, we will no longer require prior public notice and individualized 
Commission review of these leases that meet the requirements specified 
above. Specifically, if the spectrum leasing parties file their de 
facto transfer lease application in the Universal Licensing System 
(ULS), and the application established the requisite elements explained 
above, and are otherwise complete, the Bureau will process the 
application and provide immediate approval through ULS processing, 
reflected on the next business day after filing the application. We 
believe that forbearing from pubic notice and additional Commission 
review of the qualifying de facto transfer spectrum leasing 
arrangements that do not raise potential public interest concerns, is 
consistent with the public interest and will benefit all entities, 
including small entities, by allowing them gain immediate access to 
spectrum to implement their business plans with reduced regulatory 
delay and transaction costs.
    186. We also permit de facto transfer leases that involve spectrum 
leasing arrangements not subject to forbearance to proceed under the 
same application/immediate approval policies as adopted above for de 
facto transfer leases subject to forbearance, so long as the leasing 
parties can establish that the arrangements are consistent with the 
public interest because they establish the same specified 
qualifications. As above, permitting entities that seek to enter into 
these leasing arrangements that qualify for immediate approval serves 
to benefit all such entities, including small entities.
    187. In addition, we revise our rules for processing short-term de 
facto transfer leases so that they may be approved pursuant to the 
immediate approval procedures. Because such short-term de facto 
transfer leasing arrangements, under the policies applicable to them, 
would qualify for immediate approval processing because they do not 
potential public interest concerns that merit prior public notice or 
additional review, we no longer will require such applications to be 
processed pursuant to our Special Temporary Authority (STA) 10-day 
review procedures. These immediate processing procedures benefit all 
entities entering into short-term de facto transfer leases, including 
small entities.
    188. Immediate processing of certain categories of spectrum manager 
leasing arrangements. We also revise our policies for spectrum manager 
lease notifications to be consistent with the policies for de facto 
transfer leases as described previously. Accordingly, where parties 
seek to enter into spectrum manager leases that do not raise specified 
potential public interest concerns (e.g., potential competition 
concerns), we will permit them to commence operations under those 
leasing arrangements once they have notified the Commission of the 
lease, and have made the necessary certifications to qualify for 
immediate processing. If the spectrum manager lease satisfies the 
qualifying elements, we do not believe it necessary to review these 
notifications in advance of operations. The immediate processing 
procedures adopted for these qualifying spectrum manager leases will 
benefit all entities that qualify, including small entities, and will 
facilitate more rapid and efficient use of wireless radio spectrum.
    189. Extending spectrum leasing policies to additional spectrum-
based services. We extend the spectrum leasing policies to permit 
public safety licensees in the part 90 Radio Safety Pool to lease 
spectrum to other public safety entities and to entities that provide 
communications in support of public safety operations. We also extend 
the spectrum leasing policies to two other services in which licensees 
hold exclusive use rights, the Multichannel Video Distribution and Data 
Services (MVDDS) and the Automated Maritime Communications Systems 
(AMTS) Services. For these public safety licensees, we facilitate more 
efficient and effective use of public safety communications, foster 
interoperability, and further our various homeland security 
initiatives. For MVDDS and AMTS, we permit the same benefits of 
spectrum leasing to be extended to these services as well. Extension of 
our spectrum leasing policies in these services will benefit all 
entities in these services, both small and large.
    190. Clarification of the spectrum leasing policies applicable to 
designated entity and entrepreneur licensees. We affirm and clarify the 
rules established in the First Report and Order for spectrum leasing by 
designated entity and entrepreneur licensees. On so doing, we decline 
requests that we choose an alternative providing such licensees with 
the right to lease spectrum to any entity, without regard to our 
eligibility rules for designated entities and entrepreneurs. Although a 
few commenters suggest that we adopt the alternative policy, we believe 
that adopting such a change would contravene the requirements and 
objectives of section 309(j) of the Act. Under section 309(j), Congress 
sought to promote diversity among service providers, as well as the 
rapid deployment of new technologies for the benefit of, among others, 
rural customers. If we allow designated entities and entrepreneurs to 
enter into spectrum manager leasing arrangements without considering 
whether the spectrum lessee acquires an interest in the licensee, we 
run the risk that entities that do not qualify for such incentives in 
the primary market will be unjustly enriched.
    191. We also reject recommendations that we allow licensees to 
maintain their designated entity and/or entrepreneur eligibility 
without the imposition of unjust enrichment payment obligations and 
transfer restrictions in situations where the spectrum lessee will use 
the lease to serve rural areas. The Commission is not required to 
ensure both the rapid deployment of service to telecommunications 
service to rural areas and the participation of rural telephone 
companies. Section 309(j) only requires that the Commission seek to 
promote the objective that service be developed and rapidly deployed to 
rural customers and only ensure that rural telephone companies are 
given the opportunity to participate. The Commission has provided small 
businesses with bidding credits and entrepreneurs with license set-
asides in order for them to have the opportunity to participate in the 
provision of spectrum based services. The Commission has determined 
that telephone companies providing service in rural areas do not have 
per se the same difficulty accessing capital as other groups and 
allowing unrestricted ability to lease to non-eligible entities 
planning to serve rural areas would be allowing the larger entities to 
benefit indirectly from small businesses.

[[Page 77548]]

    192. Clarification that ``dynamic'' spectrum leasing arrangements 
are permitted. We clarify that our spectrum leasing policies and rules 
permit spectrum leasing parties to enter into a variety of dynamic 
forms of spectrum leasing arrangements that take advantage of the 
capabilities associated with advanced technologies. Thus, spectrum 
leasing parties may enter into spectrum leasing arrangements in which 
licensees and spectrum lessees share use of the same spectrum, on a 
non-exclusive basis, during the term of the spectrum lease. For 
example, a licensee and spectrum lessee may enter into a spectrum 
manager or de facto transfer lease in which use of the same spectrum is 
shared with each other by employing opportunistic devices. In another 
variation, a licensee could enter into a spectrum manager lease with 
one party that has access to the spectrum on a priority basis, while 
also leasing use of the same spectrum to another party on a lower-
priority basis, with the requirement that the lower-priority spectrum 
lessee employ opportunistic technology to avoid interfering with the 
priority lessee. Both small and large entities will benefit from these 
dynamic leasing arrangements.
    193. Adoption of the ``private commons'' option. We adopt the 
private commons option in the Second Report and Order to facilitate the 
use of advanced technologies and thus better promote access to and the 
efficient use of spectrum. The private commons option will allow 
licensees or spectrum lessees to make spectrum available to individual 
users or groups of users that may not fit squarely within the current 
options for spectrum leasing or within the traditional models 
associated with subscriber-based services and network architectures. 
The private commons would be similar to ``public'' commons of the kind 
associated with the current uses and applications of unlicensed devices 
under part 15 rules, except that is would involve licensed spectrum in 
which the licensee (or lessee) would not necessarily offer services 
over its own end-to-end physical network of base stations, mobile 
stations, and other elements. As manager of the commons, the licensee 
(or lessee) would set terms and conditions for users, retain direct 
responsibility for users' compliance with the rules, and notify the 
Commission about the private commons prior to users' operations. The 
private commons option will help small (and large) entities by allowing 
for more flexible uses of licensed spectrum to incorporate new means of 
implementing advanced technologies and provides an important complement 
to the spectrum leasing policies we have already adopted to facilitate 
spectrum access.
    194. Immediate approval procedures for certain categories of 
license assignment and transfer of control applications. We adopt 
streamlined application processes for license assignments and transfers 
of control involving Wireless Radio similar to those we have adopted 
for de facto transfer spectrum leasing arrangements. This policy will 
help all entities, including small entities, by reducing transaction 
costs, minimizing administrative delay, and encouraging more efficient 
use of spectrum.
    195. Extending the streamlined processing policies relating to 
license assignments and transfers of control to additional wireless 
services. We will apply the streamlined processing procedures adopted 
in the First Report and Order for license assignments and transfer of 
control applications, as well as the immediate approval processing for 
qualifying transactions as adopted in this Second Report and Order, to 
all of the Wireless Radio Services authorizations regulated by the 
Bureau. This decision enables all license transfers and assignments 
involving these Wireless Radio Services, not just those Wireless Radio 
Services for which spectrum leasing is permitted, to benefit from 
streamlined processing or immediate processing, whichever is 
applicable. This ensures that an addition set of Wireless Radio 
Services licensees, both small entities and large ones, may now take 
advantage of these procedures that minimize administrative delays and 
reduce transaction costs.
    196. Clarification of spectrum leasing policies and rules in the 
Order on Reconsideration. The Order on Reconsideration addresses 
petitions that seek clarification on a variety of issues, including: 
(1) the licensee's responsibility to ensure its spectrum lessee's 
compliance with Commission policies and rules; (2) protections for the 
licensee or spectrum lessee in the event of a spectrum lease or a 
license is terminated; and (3) the respective responsibilities of 
licensees and spectrum lessees regarding particular service rules. As a 
general matter, the Order on Reconsideration affirms and further 
clarifies the policies adopted in the underlying First Report and 
Order. We do not anticipate any adverse impact on small entities as a 
result of this action. Our approach here should benefit small entities 
by reducing regulatory uncertainty and further enhancing the 
development of a more robust secondary markets and access to spectrum.

F. Report to Congress

    197. The Commission will send a copy of the Second Report and Order 
and the Order on Reconsideration, including this FRFA, in a report to 
be sent to Congress pursuant to the Congressional Review Act. In 
addition, the Commission will send a copy of the Second Report and 
Order and the Order on Reconsideration, including this FRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration. A copy 
of the Second Report and Order, the Order on Reconsideration, and the 
FRFA (or summaries thereof) will also be published in the Federal 
Register.
    198. In addition, the Commission's Consumer and Governmental 
Affairs Bureau, Reference Information Center, shall send a copy of this 
Second Report and Order and the Order on Reconsideration, including the 
FRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration.

VI. Ordering Clauses

    199. Pursuant to sections 1, 4(i), 8, 9, 10, 301, 303(r), 308, 309, 
310, 332, and 503 of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 154(i), 158, 161, 301, 303(r), 308, 309, 310, 332, and 503, 
this Second Report and Order and Order on Reconsideration and the 
policies set forth herein are adopted, and that parts 1, 24, and 90 of 
the Commission's rules, 47 CFR parts 1, 24, and 90, are amended, as 
specified in the discussion of ``Rule Changes'' below, to revise rules 
and procedures to further facilitate spectrum leasing arrangements 
under the policies enunciated in the Second Report and Order and Order 
on Reconsideration, to establish rules and procedures applicable to 
private commons arrangements established in the Second Report and 
Order, and to further streamline the processing of license assignment 
and transfer of control applications under the policies enunciated in 
the Second Report and Order, effective February 25, 2005, except for 
Sec. Sec.  1.913(a)(5), 1.948(j)(2), 1.2003, 1.9003, 1.9020(e)(2), 
1.9030(e)(2), 1.9035(e), and 1.9080, which contain information 
collection requirements that have not been approved by the Office of 
Management and Budget (OMB). The Commission will publish a document in 
the Federal Register announcing the effective date of these rules.
    200. Pursuant to the authority of section 5(c) of the 
Communications Act of 1934, as amended, 47 U.S.C. 5(c), the Wireless 
Telecommunications Bureau

[[Page 77549]]

and the Office of the Managing Director are granted delegated authority 
to implement the policies set forth in this Second Report and Order, 
including, but not limited to, the development and implementation of 
the revised forms necessary to implement the policies adopted in this 
Second Report and Order.
    201. Pursuant to the authority of sections 4(i), 5(b), 5(c)(1), and 
303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 
155(b), 155(c)(1), and 303(r), Blooston Rural Carrier's Petition for 
Partial Reconsideration and/or Clarification is granted in part and 
denied in all other respects.
    202. Pursuant to the authority of sections 4(i), 5(b), 5(c)(1), and 
303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 
155(b), 155(c)(1), and 303(r), Cingular Wireless' Petition for 
Reconsideration and Clarification is granted in part and denied in all 
other respects.
    203. Pursuant to the authority of sections 4(i), 5(b), 5(c)(1), and 
303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 
155(b), 155(c)(1), and 303(r), First Avenue Network's Petition for 
Reconsideration is granted in part and denied in all other respects.
    204. Pursuant to the authority of sections 4(i), 5(b), 5(c)(1), and 
303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 
155(b), 155(c)(1), and 303(r), NTCA's Petition for Partial 
Reconsideration is denied.
    205. Pursuant to the authority of sections 4(i), 5(b), 5(c)(1), and 
303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 
155(b), 155(c)(1), and 303(r), Verizon Wireless's Petition for 
Reconsideration and Clarification is granted in part and denied in all 
other respects.
    206. The Commission's Consumer Information Bureau, Reference 
Information Center, shall send a copy of the Second Report and Order 
and Order on Reconsideration, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects

47 CFR Part 1

    Administrative practice and procedure, Communications common 
carriers, Radio, Reporting and recordkeeping requirements, 
Telecommunications.

47 CFR Part 24

    Personal communications services, Radio.

47 CFR Part 90

    Business and industry, Common carriers, Radio, Reporting and 
recordkeeping requirements.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.

Rule Changes

0
For the reasons discussed in the preamble, the Federal Communications 
Commission amends 47 CFR parts 1, 24, and 90, as follows:

PART 1--PRACTICE AND PROCEDURE

0
1. The authority citation for part 1 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 154(j), 155, 225, 303(r), 309 
and 325(e).

0
2. Amend Sec.  1.913 by revising paragraphs (a)(3), (b) introductory 
text, and (d)(1) introductory text, and by adding paragraph (a)(5), to 
read as follows:


Sec.  1.913  Application and notification forms; electronic and manual 
filing.

    (a) * * *
    (3) FCC Form 603, Application for Assignment of Authorization or 
Transfer of Control. FCC Form 603 is used by applicants and licensees 
to apply for Commission consent to assignments of existing 
authorizations, to apply for Commission consent to transfer control of 
entities holding authorizations, to notify the Commission of the 
consummation of assignments or transfers, and to request extensions of 
time for consummation of assignments or transfers. It is also used for 
Commission consent to partial assignments of authorization, including 
partitioning and disaggregation.
* * * * *
    (5) FCC Form 608, Notification or Application for Spectrum Leasing 
Arrangement. FCC Form 608 is used by licensees and spectrum lessees 
(see Sec.  1.9003) to notify the Commission regarding spectrum manager 
leasing arrangements and to apply for Commission consent for de facto 
transfer leasing arrangements pursuant to the rules set forth in part 
1, subpart X. It is also used to notify the Commission if a licensee or 
spectrum lessee establishes a private commons (see Sec.  1.9080).
* * * * *
    (b) Electronic filing. Except as specified in paragraph (d) of this 
section or elsewhere in this chapter, all applications and other 
filings using FCC Forms 601 through 608 or associated schedules must be 
filed electronically in accordance with the electronic filing 
instructions provided by ULS. For each Wireless Radio Service that is 
subject to mandatory electronic filing, this paragraph is effective on 
July 1, 1999, or six months after the Commission begins use of ULS to 
process applications in the service, whichever is later. The Commission 
will announce by public notice the deployment date of each service in 
ULS.
* * * * *
    (d) * * *
    (1) ULS Forms 601, 603, 605, and 608 may be filed manually or 
electronically by applicants and licensees in the following services:
* * * * *

0
3. Amend Sec.  1.948 by revising paragraph (j) to read as follows:


Sec.  1.948  Assignment of authorization or transfer of control, 
notification of consummation.

* * * * *
    (j) Processing of applications. Applications for assignment of 
authorization or transfer of control relating to the Wireless Radio 
Services will be processed pursuant either to general approval 
procedures or the immediate approval procedures, as discussed herein.
    (1) General approval procedures. Applications will be processed 
pursuant to the general approval procedures set forth in this paragraph 
unless they are submitted and qualify for the immediate approval 
procedures set forth in paragraph (j)(2) of this section.
    (i) To be accepted for filing under these general approval 
procedures, the application must be sufficiently complete and contain 
all necessary information and certifications requested on the 
applicable form, FCC Form 603, including any information and 
certifications (including those of the proposed assignee or transferee 
relating to eligibility, basic qualifications, and foreign ownership) 
required by the rules of this chapter and any rules pertaining to the 
specific service for which the application is filed, and must include 
payment of the required application fee(s) (see Sec.  1.1102).
    (ii) Once accepted for filing, the application will be placed on 
public notice, except no prior public notice will be required for 
applications involving authorizations in the Private Wireless Services, 
as specified in Sec.  1.933(d)(9).
    (iii) Petitions to deny filed in accordance with section 309(d) of 
the Communications Act must comply with the provisions of Sec.  1.939, 
except that such petitions must be filed no later than 14 days 
following the date of the

[[Page 77550]]

public notice listing the application as accepted for filing.
    (iv) No later than 21 days following the date of the public notice 
listing an application as accepted for filing, the Wireless 
Telecommunications Bureau (Bureau) will affirmatively consent to the 
application, deny the application, or determine to subject the 
application to further review. For applications for which no prior 
public notice is required, the Bureau will affirmatively consent to the 
application, deny the application, or determine to subject the 
application to further review no later than 21 days following the date 
on which the application has been filed, if filed electronically, and 
any required application fee has been paid (see Sec.  1.1102); if filed 
manually, the Bureau will affirmatively consent to the application, 
deny the application, or determine to subject the application to 
further review no later than 21 days after the necessary data in the 
manually filed application is entered into ULS.
    (v) If the Bureau determines to subject the application to further 
review, it will issue a public notice so indicating. Within 90 days 
following the date of that public notice, the Bureau will either take 
action upon the application or provide public notice that an additional 
90-day period for review is needed.
    (vi) Consent to the application is not deemed granted until the 
Bureau affirmatively acts upon the application.
    (vii) Grant of consent to the application will be reflected in a 
public notice (see Sec.  1.933(a)) promptly issued after the grant.
    (viii) If any petition to deny is filed, and the Bureau grants the 
application, the Bureau will deny the petition(s) and issue a concise 
statement of the reason(s) for denial, disposing of all substantive 
issues raised in the petition(s).
    (2) Immediate approval procedures. Applications that meet the 
requirements of paragraph (j)(2)(i) of this section qualify for the 
immediate approval procedures.
    (i) To qualify for the immediate approval procedures, the 
application must be sufficiently complete, contain all necessary 
information and certifications (including those relating to 
eligibility, basic qualifications, and foreign ownership), and include 
payment of the requisite application fee(s), as required for an 
application processed under the general approval procedures set forth 
in paragraph (j)(1) of this section, and also must establish, through 
certifications, that the following additional qualifications are met:
    (A) The license does not involve spectrum licensed in a Wireless 
Radio Service that may be used to provide interconnected mobile voice 
and/or data services under the applicable service rules and that would, 
if assigned or transferred, create a geographic overlap with spectrum 
in any licensed Wireless Radio Service (including the same service) in 
which the proposed assignee or transferee already holds a direct or 
indirect interest of 10% or more (see Sec.  1.2112), either as a 
licensee or a spectrum lessee, and that could be used by the assignee 
or transferee to provide interconnected mobile voice and/or data 
services;
    (B) The licensee is not a designated entity or entrepreneur subject 
to unjust enrichment requirements and/or transfer restrictions under 
applicable Commission rules (see Sec. Sec.  1.2110 and 1.2111, and 
Sec. Sec.  24.709, 24.714, and 24.839 of this chapter); and,
    (C) The assignment or transfer of control does not require a waiver 
of, or declaratory ruling pertaining to, any applicable Commission 
rules, and there is no pending issue as to whether the license is 
subject to revocation, cancellation, or termination by the Commission.
    (ii) Provided that the application establishes that it meets all of 
the requisite elements to qualify for these immediate approval 
procedures, consent to the assignment or transfer of control will be 
reflected in ULS. If the application is filed electronically, consent 
will be reflected in ULS on the next business day after the filing of 
the application; if filed manually, consent will be reflected in ULS on 
the next business day after the necessary data in the manually filed 
application is entered into ULS. Consent to the application is not 
deemed granted until the Bureau affirmatively acts upon the 
application.
    (iii) Grant of consent to the application under these immediate 
approval procedures will be reflected in a public notice (see Sec.  
1.933(a)) promptly issued after the grant, and is subject to 
reconsideration (see Sec. Sec.  1.106(f), 1.108, 1.113).

0
4. Amend Sec.  1.2003 by revising the paragraph entitled ``FCC 603'' 
and by adding a paragraph entitled ``FCC 608,'' in numerical order, to 
read as follows:


Sec.  1.2003  Applications affected.

* * * * *
    FCC 603 Wireless Telecommunications Bureau Application for 
Assignment of Authorization and Transfer of Control;
* * * * *
    FCC 608 Notification or Application for Spectrum Leasing 
Arrangement;
* * * * *

0
5. Amend Sec.  1.9001 by revising paragraph (a) to read as follows:


Sec.  1.9001  Purpose and scope.

    (a) The purpose of part 1, subpart X is to implement policies and 
rules pertaining to spectrum leasing arrangements between licensees in 
the services identified in this subpart and spectrum lessees. This 
subpart also implements policies for private commons arrangements. 
These policies and rules also implicate other Commission rule parts, 
including parts 1, 2, 20, 22, 24, 26, 27, 80, 90, 95, and 101 of title 
47, chapter I of the Code of Federal Regulations.
* * * * *

0
6. Amend Sec.  1.9003 by removing the definition of ``FCC Form 603,'' 
revising the definitions of ``Long-term de facto transfer leasing 
arrangement,'' ``Short-term de facto transfer leasing arrangement,'' 
and ``Spectrum lessee,'' and by adding the new definition ``Private 
commons,'' in alphabetical order, to read as follows:


Sec.  1.9003  Definitions.

* * * * *
    FCC Form 608. FCC Form 608 is the form to be used by licensees and 
spectrum lessees that enter into spectrum leasing arrangements pursuant 
to the rules set forth in this subpart. Parties are required to submit 
this form electronically when entering into spectrum leasing 
arrangements under this subpart, except that licensees falling within 
the provisions of Sec.  1.913(d), may file the form either 
electronically or manually.
    Long-term de facto transfer leasing arrangement. A long-term de 
facto transfer leasing arrangement is a de facto transfer leasing 
arrangement that has an individual term, or series of combined terms, 
of more than one year.
    Private commons. A ``private commons'' arrangement is an 
arrangement, distinct from a spectrum leasing arrangement but permitted 
in the same services for which spectrum leasing arrangements are 
allowed, in which a licensee or spectrum lessee makes certain spectrum 
usage rights under a particular license authorization available to a 
class of third-party users employing advanced communications 
technologies that involve peer-to-peer (device-to-device) 
communications and that do not involve use of the licensee's or 
spectrum lessee's end-to-end physical network infrastructure (e.g., 
base stations, mobile stations, or other related elements).

[[Page 77551]]

    Short-term de facto transfer leasing arrangement. A short-term de 
facto transfer leasing arrangement is a de facto transfer leasing 
arrangement that has an individual or combined term of not longer than 
one year.
* * * * *
    Spectrum lessee. Any third-party entity that leases, pursuant to 
the spectrum leasing rules set forth in this subpart, certain spectrum 
usage rights held by a licensee. This term includes reference to third-
party entities that lease spectrum usage rights as spectrum sublessees 
under spectrum subleasing arrangements.
* * * * *

0
7. Section 1.9005 is revised to read as follows:


Sec.  1.9005  Included services.

    The spectrum leasing policies and rules of this subpart apply to 
the following services in the Wireless Radio Services in which 
commercial or private licensees hold exclusive use rights:
    (a) The Paging and Radiotelephone Service (part 22 of this 
chapter);
    (b) The Rural Radiotelephone Service (part 22 of this chapter);
    (c) The Air-Ground Radiotelephone Service (part 22 of this 
chapter);
    (d) The Cellular Radiotelephone Service (part 22 of this chapter);
    (e) The Offshore Radiotelephone Service (part 22 of this chapter);
    (f) The narrowband Personal Communications Service (part 24 of this 
chapter);
    (g) The broadband Personal Communications Service (part 24 of this 
chapter);
    (h) The Broadband Radio Service (part 27 of this chapter);
    (i) The Educational Broadband Service (part 27 of this chapter);
    (j) The Wireless Communications Service in the 698-746 MHz band 
(part 27 of this chapter);
    (k) The Wireless Communications Service in the 746-764 MHz and 776-
794 MHz bands (part 27 of this chapter);
    (l) The Wireless Communications Service in the 1390-1392 MHz band 
(part 27 of this chapter);
    (m) The Wireless Communications Service in the paired 1392-1395 MHz 
and 1432-1435 MHz bands (part 27 of this chapter);
    (n) The Wireless Communications Service in the 1670-1675 MHz band 
(part 27 of this chapter);
    (o) The Wireless Communications Service in the 2305-2320 and 2345-
2360 MHz bands (part 27 of this chapter);
    (p) The Wireless Communications Service in the 2385-2390 MHz band 
(part 27 of this chapter);
    (q) The Advanced Wireless Services (part 27 of this chapter);
    (r) The VHF Public Coast Station service (part 80 of this chapter);
    (s) The Automated Maritime Telecommunications Systems service (part 
80 of this chapter);
    (t) The Public Safety Radio Services (part 90 of this chapter);
    (u) The 220 MHz Service (excluding public safety licensees) (part 
90 of this chapter);
    (v) The Specialized Mobile Radio Service in the 800 MHz and 900 MHz 
bands (including exclusive use SMR licenses in the General Category 
channels) (part 90 of this chapter);
    (w) The Location and Monitoring Service (LMS) with regard to 
licenses for multilateration LMS systems (part 90 of this chapter);
    (x) Paging operations under part 90 of this chapter;
    (y) The Business and Industrial/Land Transportation (B/ILT) 
channels (part 90 of this chapter) (including all B/ILT channels above 
512 MHz and those in the 470-512 MHz band where a licensee has achieved 
exclusivity, but excluding B/ILT channels in the 470-512 MHz band where 
a licensee has not achieved exclusivity and those channels below 470 
MHz, including those licensed pursuant to 47 CFR 90.187(b)(2)(v));
    (z) The 218-219 MHz band (part 95 of this chapter);
    (aa) The Local Multipoint Distribution Service (part 101 of this 
chapter);
    (bb) The 24 GHz Band (part 101 of this chapter);
    (cc) The 39 GHz Band (part 101 of this chapter);
    (dd) The Multiple Address Systems band (part 101 of this chapter);
    (ee) The Local Television Transmission Service (part 101 of this 
chapter);
    (ff) The Private-Operational Fixed Point-to-Point Microwave Service 
(part 101 of this chapter);
    (gg) The Common Carrier Fixed Point-to-Point Microwave Service 
(part 101 of this chapter); and,
    (hh) The Multipoint Video Distribution and Data Service (part 101 
of this chapter).

0
8. Amend Sec.  1.9010 by revising the last sentence of paragraph 
(b)(1)(iii), and by revising paragraph (b)(2)(i), to read as follows:


Sec.  1.9010  De facto control standard for spectrum leasing 
arrangements.

* * * * *
    (b) * * *
    (1) * * *
    (iii) * * * If the spectrum lessee refuses to resolve the 
interference, remedy the violation, or suspend or terminate operations, 
either at the direction of the licensee or by order of the Commission, 
the licensee must use all reasonable legal means necessary to enforce 
compliance.
    (2) * * *
    (i) The licensee must file the necessary notification with the 
Commission, as required under Sec.  1.9020(e).
* * * * *

0
9. Section 1.9020 is amended by revising paragraphs (a) and (d) through 
(l), and by adding paragraph (m) to read as follows:


Sec.  1.9020  Spectrum manager leasing arrangements.

    (a) Overview. Under the provisions of this section, a licensee (in 
any of the included services) and a spectrum lessee may enter into a 
spectrum manager leasing arrangement, without the need for prior 
Commission approval, provided that the licensee retains de jure control 
of the license and de facto control, as defined and explained in this 
subpart, of the leased spectrum. The licensee must notify the 
Commission of the spectrum leasing arrangement pursuant to the rules 
set forth in this section. The term of a spectrum manager leasing 
arrangement may be no longer than the term of the license 
authorization.
* * * * *
    (d) Applicability of particular service rules and policies. Under a 
spectrum manager leasing arrangement, the service rules and policies 
apply in the following manner to the licensee and spectrum lessee:
    (1) Interference-related rules. The interference and radiofrequency 
(RF) safety rules applicable to use of the spectrum by the licensee as 
a condition of its license authorization also apply to the use of the 
spectrum leased by the spectrum lessee.
    (2) General eligibility rules. (i) The spectrum lessee must meet 
the same eligibility and qualification requirements that are applicable 
to the licensee under its license authorization, with the following 
exceptions. A spectrum lessee entering into a spectrum leasing 
arrangement involving a licensee in the Educational Broadband Service 
(see Sec.  27.1201 of this chapter) is not required to comply with the 
eligibility requirements pertaining to such a licensee so long as the 
spectrum lessee meets the other eligibility and qualification 
requirements applicable to part 27 services (see Sec.  27.12 of this 
chapter). A spectrum lessee entering into a spectrum leasing 
arrangement involving a licensee in the Public Safety Radio Services 
(see part 90, subpart B

[[Page 77552]]

and Sec.  90.311(a)(1)(i) of this chapter) is not required to comply 
with the eligibility requirements pertaining to such a licensee so long 
as the spectrum lessee is an entity providing communications in support 
of public safety operations (see Sec.  90.523(b) of this chapter).
    (ii) The spectrum lessee must meet applicable foreign ownership 
eligibility requirements (see sections 310(a), 310(b) of the 
Communications Act).
    (iii) The spectrum lessee must satisfy any qualification 
requirements, including character qualifications, applicable to the 
licensee under its license authorization.
    (iv) The spectrum lessee must not be a person subject to the denial 
of Federal benefits under the Anti-Drug Abuse Act of 1988 (see Sec.  
1.2001 et seq. of subpart P of this part).
    (v) The licensee may reasonably rely on the spectrum lessee's 
certifications that it meets the requisite eligibility and 
qualification requirements contained in the notification required by 
this section.
    (3) Use restrictions. To the extent that the licensee is restricted 
from using the licensed spectrum to offer particular services under its 
license authorization, the use restrictions apply to the spectrum 
lessee as well.
    (4) Designated entity/entrepreneur rules. A licensee that holds a 
license pursuant to small business and/or entrepreneur provisions (see 
Sec.  1.2110 and Sec.  24.709 of this chapter) and continues to be 
subject to unjust enrichment requirements (see Sec.  1.2111 and Sec.  
24.714 of this chapter) and/or transfer restrictions (see Sec.  24.839 
of this chapter) may enter into a spectrum manager leasing arrangement 
with a spectrum lessee, regardless of whether the spectrum lessee meets 
the Commission's designated entity eligibility requirements (see Sec.  
1.2110) or its entrepreneur eligibility requirements to hold certain C 
and F block licenses in the broadband personal communications services 
(see Sec.  1.2110 and Sec.  24.709 of this chapter), so long as the 
spectrum manager leasing arrangement does not result in the spectrum 
lessee's becoming a ``controlling interest'' or ``affiliate'' (see 
Sec.  1.2110) of the licensee such that the licensee would lose its 
eligibility as a designated entity or entrepreneur. To the extent there 
is any conflict between the revised de facto control standard for 
spectrum leasing arrangements, as set forth in this subpart, and the 
definition of controlling interest (including its de facto control 
standard) set forth in Sec.  1.2110, the latter definition governs for 
determining whether the licensee has maintained the requisite degree of 
ownership and control to allow it to remain eligible for the license or 
for other benefits such as bidding credits and installment payments.
    (5) Construction/performance requirements. Any performance or 
build-out requirement applicable under a license authorization (e.g., a 
requirement that the licensee construct and operate one or more 
specific facilities, cover a certain percentage of geographic area, 
cover a certain percentage of population, or provide substantial 
service) always remains a condition of the license, and legal 
responsibility for meeting such obligation is not delegable to the 
spectrum lessee(s).
    (i) The licensee may attribute to itself the build-out or 
performance activities of its spectrum lessee(s) for purposes of 
complying with any applicable performance or build-out requirement.
    (ii) If a licensee relies on the activities of a spectrum lessee to 
meet the licensee's performance or build-out obligation, and the 
spectrum lessee fails to engage in those activities, the Commission 
will enforce the applicable performance or build-out requirements 
against the licensee, consistent with the applicable rules.
    (iii) If there are rules applicable to the license concerning the 
discontinuance of operation, the licensee is accountable for any such 
discontinuance and the rules will be enforced against the licensee 
regardless of whether the licensee was relying on the activities of a 
lessee to meet particular performance requirements.
    (6) Regulatory classification. If the regulatory status of the 
licensee (e.g., common carrier or non-common carrier status) is 
prescribed by rule, the regulatory status of the spectrum lessee is 
prescribed in the same manner, except that Sec.  20.9(a) of this 
chapter shall not preclude a licensee in the services covered by that 
rule from entering into a spectrum leasing arrangement with a spectrum 
lessee that chooses to operate on a Private Mobile Radio Service 
(PMRS), private, or non-commercial basis.
    (7) Regulatory fees. The licensee remains responsible for payment 
of the required regulatory fees that must be paid in advance of its 
license term (see Sec.  1.1152). Where, however, regulatory fees are 
paid annually on a per-unit basis (such as for Commercial Mobile Radio 
Services (CMRS) pursuant to Sec.  1.1152), the licensee and spectrum 
lessee are each required to pay fees for those units associated with 
its respective operations.
    (8) E911 requirements. If E911 obligations apply to the licensee 
(see Sec.  20.18 of this chapter), the licensee retains the obligations 
with respect to leased spectrum.
    (e) Notifications regarding spectrum manager leasing arrangements. 
A licensee that seeks to enter into a spectrum manager leasing 
arrangement must notify the Commission of the arrangement in advance of 
the spectrum lessee's commencement of operations. The spectrum manager 
lease notification will be processed pursuant either to the general 
notification procedures or the immediate processing procedures, as set 
forth herein. The licensee must submit the notification to the 
Commission by electronic filing using the Universal Licensing System 
(ULS) and FCC Form 608, except that a licensee falling within the 
provisions of Sec.  1.913(d) may file the notification either 
electronically or manually.
    (1) General notification procedures. Notifications of spectrum 
manager leasing arrangements will be processed pursuant the general 
notification procedures set forth in this paragraph unless they are 
submitted and qualify for the immediate processing procedures set forth 
in paragraph (e)(2) of this section.
    (i) To be accepted under these general notification procedures, the 
notification must be sufficiently complete and contain all information 
and certifications requested on the applicable form, FCC Form 608, 
including any information and certifications (including those of the 
spectrum lessee relating to eligibility, basic qualifications, and 
foreign ownership) required by the rules in this chapter and any rules 
pertaining to the specific service for which the notification is filed. 
No application fees are required for the filing of a spectrum manager 
leasing notification.
    (ii) The licensee must submit such notification at least 21 days in 
advance of commencing operations unless the arrangement is for a term 
of one year or less, in which case the licensee must provide 
notification to the Commission at least ten (10) days in advance of 
operation. If the licensee and spectrum lessee thereafter seek to 
extend this leasing arrangement for an additional term beyond the 
initial term, the licensee must provide the Commission with 
notification of the new spectrum leasing arrangement at least 21 days 
in advance of operation under the extended term.
    (iii) A notification filed pursuant to these general notification 
procedures will be placed on an informational public notice on a weekly 
basis (see Sec.  1.933(a)) once accepted, and is subject

[[Page 77553]]

to reconsideration (see Sec. Sec.  1.106(f), 1.108, 1.113).
    (2) Immediate processing procedures. Notifications that meet the 
requirements of paragraph (e)(2)(i) of this section qualify for the 
immediate processing procedures.
    (i) To qualify for these immediate processing procedures, the 
notification must be sufficiently complete and contain all necessary 
information and certifications (including those relating to 
eligibility, basic qualifications, and foreign ownership) required for 
notifications processed under the general notification procedures set 
forth in paragraph (e)(1)(i) of this section, and also must establish, 
through certifications, that the following additional qualifications 
are met:
    (A) The license does not involve spectrum licensed in a Wireless 
Radio Service that may be used to provide interconnected mobile voice 
and/or data services under the applicable service rules and that would, 
if the spectrum leasing arrangement were consummated, create a 
geographic overlap with spectrum in any licensed Wireless Service 
(including the same service) in which the proposed spectrum lessee 
already holds a direct or indirect interest of 10% or more (see Sec.  
1.2112), either as a licensee or a spectrum lessee, and that could be 
used by the spectrum lessee to provide interconnected mobile voice and/
or data services;
    (B) The licensee is not a designated entity or entrepreneur subject 
to unjust enrichment requirements and/or transfer restrictions under 
applicable Commission rules (see Sec. Sec.  1.2110 and 1.2111, and 
Sec. Sec.  24.709, 24.714, and 24.839 of this chapter); and,
    (C) The spectrum leasing arrangement does not require a waiver of, 
or declaratory ruling pertaining to, any applicable Commission rules.
    (ii) Provided that the notification establishes that the proposed 
spectrum manager leasing arrangement meets all of the requisite 
elements to qualify for these immediate processing procedures, ULS will 
reflect that the notification has been accepted. If a qualifying 
notification is filed electronically, the acceptance will be reflected 
in ULS on the next business day after filing of the notification; if 
filed manually, the acceptance will be reflected in ULS on the next 
business day after the necessary data from the manually filed 
notification is entered into ULS. Once the notification has been 
accepted, as reflected in ULS, the spectrum lessee may commence 
operations under the spectrum leasing arrangement, consistent with the 
term of the arrangement.
    (iii) A notification filed pursuant to these immediate processing 
procedures will be placed on an informational public notice on a weekly 
basis (see Sec.  1.933(a)) once accepted, and is subject to 
reconsideration (see Sec. Sec.  1.106(f), 1.108, 1.113).
    (f) Effective date of a spectrum manager leasing arrangement. The 
spectrum manager leasing arrangement will be deemed effective in the 
Commission's records, and for purposes of the application of the rules 
set forth in this section, as of the beginning date of the term as 
specified in the spectrum leasing notification.
    (g) Commission termination of a spectrum manager leasing 
arrangement. The Commission retains the right to investigate and 
terminate any spectrum manager leasing arrangement if it determines, 
post-notification, that the arrangement constitutes an unauthorized 
transfer of de facto control of the leased spectrum, is otherwise in 
violation of the rules in this chapter, or raises foreign ownership, 
competitive, or other public interest concerns. Information concerning 
any such termination will be placed on public notice.
    (h) Expiration, extension, or termination of a spectrum leasing 
arrangement. (1) Absent Commission termination or except as provided in 
paragraph (h)(2) or (h)(3) of this section, a spectrum leasing 
arrangement entered into pursuant to this section will expire on the 
termination date set forth in the spectrum leasing notification.
    (2) A spectrum leasing arrangement may be extended beyond the 
initial term set forth in the spectrum leasing notification provided 
that the licensee notifies the Commission of the extension in advance 
of operation under the extended term and does so pursuant to the 
general notification procedures or immediate processing procedures set 
forth in this section, whichever is applicable. If the general 
notification procedures are applicable, the licensee must notify the 
Commission at least 21 days in advance of operation under the extended 
term.
    (3) If a spectrum leasing arrangement is terminated earlier than 
the termination date set forth in the notification, either by the 
licensee or by the parties' mutual agreement, the licensee must file a 
notification with the Commission, no later than ten (10) days after the 
early termination, indicating the date of the termination. If the 
parties fail to put the spectrum leasing arrangement into effect, they 
must so notify the Commission consistent with the provisions of this 
section.
    (4) The Commission will place information concerning an extension 
or an early termination of a spectrum leasing arrangement on public 
notice.
    (i) Assignment of a spectrum leasing arrangement. The spectrum 
lessee may assign its spectrum leasing arrangement to another entity 
provided that the licensee has agreed to such an assignment, is in 
privity with the assignee, and notifies the Commission before the 
consummation of the assignment, pursuant to the applicable notification 
procedures set forth in this section. In the case of a non-substantial 
(pro forma) assignment that falls within the class of pro forma 
transactions for which prior Commission approval would not be required 
under Sec.  1.948(c)(1), the licensee must file notification of the 
assignment with the Commission, using FCC Form 608 and providing any 
necessary updates of ownership information, within 30 days of its 
completion. The Commission will place information related to the 
assignment, whether substantial or pro forma, on public notice.
    (j) Transfer of control of a spectrum lessee. The licensee must 
notify the Commission of any transfer of control of a spectrum lessee 
before the consummation of the transfer of control, pursuant to the 
applicable notification procedures of this section. In the case of a 
non-substantial (pro forma) transfer of control that falls within the 
class of pro forma transactions for which prior Commission approval 
would not be required under Sec.  1.948(c)(1), the licensee must file 
notification of the transfer of control with the Commission, using FCC 
Form 608 and providing any necessary updates of ownership information, 
within 30 days of its completion. The Commission will place information 
related to the transfer of control, whether substantial or pro forma, 
on public notice.
    (k) Revocation or automatic cancellation of a license or a spectrum 
lessee's operating authority. (1) In the event an authorization held by 
a licensee that has entered into a spectrum leasing arrangement is 
revoked or cancelled, the spectrum lessee will be required to terminate 
its operations no later than the date on which the licensee ceases to 
have any authority to operate under the license, except as provided in 
paragraph (j)(2) of this section.
    (2) In the event of a license revocation or cancellation, the 
Commission will consider a request by the spectrum lessee for special 
temporary authority (see Sec.  1.931) to provide the spectrum

[[Page 77554]]

lessee with an opportunity to transition its users in order to minimize 
service disruption to business and other activities.
    (3) In the event of a license revocation or cancellation, and the 
required termination of the spectrum lessee's operations, the former 
spectrum lessee does not, as a result of its former status, receive any 
preference over any other party should the spectrum lessee seek to 
obtain the revoked or cancelled license.
    (l) Subleasing. A spectrum lessee may sublease the leased spectrum 
usage rights subject to the licensee's consent and the licensee's 
establishment of privity with the spectrum sublessee. The licensee must 
submit a notification regarding the spectrum subleasing arrangement in 
accordance with the applicable notification procedures set forth in 
this section.
    (m) Renewal. Although the term of a spectrum manager leasing 
arrangement may not be longer than the term of a license authorization, 
a licensee and spectrum lessee that have entered into an arrangement 
whose term continues to the end of the current term of the license 
authorization may, contingent on the Commission's grant of the license 
renewal, renew the spectrum leasing arrangement to extend into the term 
of the renewed license authorization. The Commission must be notified 
of the renewal of the spectrum leasing arrangement at the same time 
that the licensee submits its application for license renewal (see 
Sec.  1.949). The spectrum lessee may operate under the extended term, 
without further action by the Commission, until such time as the 
Commission shall make a final determination with respect to the renewal 
of the license authorization and the extension of the spectrum leasing 
arrangement into the term of the renewed license authorization.

0
10. Section 1.9030 is amended by revising paragraphs (a) and (d) 
through (k), and by adding paragraph (l) to read as follows:


Sec.  1.9030  Long-term de facto transfer leasing arrangements.

    (a) Overview. Under the provisions of this section, a licensee (in 
any of the included services) and a spectrum lessee may enter into a 
long-term de facto transfer leasing arrangement in which the licensee 
retains de jure control of the license while de facto control of the 
leased spectrum is transferred to the spectrum lessee for the duration 
of the spectrum leasing arrangement, subject to prior Commission 
consent pursuant to the application procedures set forth in this 
section. A ``long-term'' de facto transfer leasing arrangement has an 
individual term, or series of combined terms, of more than one year. 
The term of a long-term de facto transfer leasing arrangement may be no 
longer than the term of the license authorization.
* * * * *
    (d) Applicability of particular service rules and policies. Under a 
long-term de facto transfer leasing arrangement, the service rules and 
policies apply in the following manner to the licensee and spectrum 
lessee:
    (1) Interference-related rules. The interference and radiofrequency 
(RF) safety rules applicable to use of the spectrum by the licensee as 
a condition of its license authorization also apply to the use of the 
spectrum leased by the spectrum lessee.
    (2) General eligibility rules. (i) The spectrum lessee must meet 
the same eligibility and qualification requirements that are applicable 
to the licensee under its license authorization. A spectrum lessee 
entering into a spectrum leasing arrangement involving a licensee in 
the Educational Broadband Service (see Sec.  27.1201 of this chapter) 
is not required to comply with the eligibility requirements pertaining 
to such a licensee so long as the spectrum lessee meets the other 
eligibility and qualification requirements applicable to part 27 
services (see Sec.  27.12 of this chapter). A spectrum lessee entering 
into a spectrum leasing arrangement involving a licensee in the Public 
Safety Radio Services (see part 90, subpart B and Sec.  90.311(a)(1)(i) 
of this chapter) is not required to comply with the eligibility 
requirements pertaining to such a licensee so long as the spectrum 
lessee is an entity providing communications in support of public 
safety operations (see Sec.  90.523(b) of this chapter).
    (ii) The spectrum lessee must meet applicable foreign ownership 
eligibility requirements (see sections 310(a), 310(b) of the 
Communications Act).
    (iii) The spectrum lessee must satisfy any qualification 
requirements, including character qualifications, applicable to the 
licensee under its license authorization.
    (iv) The spectrum lessee must not be a person subject to denial of 
Federal benefits under the Anti-Drug Abuse Act of 1988 (see Sec.  
1.2001 et seq. of subpart P of this part).
    (3) Use restrictions. To the extent that the licensee is restricted 
from using the licensed spectrum to offer particular services under its 
license authorization, the use restrictions apply to the spectrum 
lessee as well.
    (4) Designated entity/entrepreneur rules. (i) A licensee that holds 
a license pursuant to small business and/or entrepreneur provisions 
(see Sec.  1.2110 and Sec.  24.709 of this chapter) and continues to be 
subject to unjust enrichment requirements (see Sec.  1.2111 and Sec.  
24.714 of this chapter) and/or transfer restrictions (see Sec.  24.839 
of this chapter) may enter into a long-term de facto transfer leasing 
arrangement with any entity under the streamlined processing procedures 
described in this section, subject to any applicable unjust enrichment 
payment obligations and/or transfer restrictions (see Sec.  1.2111 and 
Sec.  24.839 of this chapter).
    (ii) A licensee holding a license won in closed bidding (see Sec.  
24.709 of this chapter) may, during the first five years of the license 
term, enter into a spectrum leasing arrangement with an entity not 
eligible to hold such a license pursuant to the requirements of Sec.  
24.709(a) of this chapter so long as it has met its five-year 
construction requirement (see Sec. Sec.  24.203, 24.839(a)(6) of this 
chapter).
    (iii) The amount of any unjust enrichment payment will be 
determined by the Commission as part of its review of the application 
under the same rules that apply in the context of a license assignment 
or transfer of control (see Sec.  1.2111 and Sec.  24.714 of this 
chapter). If the spectrum leasing arrangement involves only part of the 
license area and/or part of the bandwidth covered by the license, the 
unjust enrichment obligation will be apportioned as though the license 
were being partitioned and/or disaggregated (see Sec.  1.2111(e) and 
Sec.  24.714(c) of this chapter). A licensee will receive no reduction 
in its unjust enrichment payment obligation for a spectrum leasing 
arrangement that ends prior to the end of the fifth year of the license 
term.
    (iv) A licensee that participates in the Commission's installment 
payment program (see Sec.  1.2110(g) may enter into a long-term de 
facto transfer leasing arrangement without triggering unjust enrichment 
obligations provided that the lessee would qualify for as favorable a 
category of installment payments. A licensee using installment payment 
financing that seeks to lease to an entity not meeting the eligibility 
standards for as favorable a category of installment payments must make 
full payment of the remaining unpaid principal and any unpaid interest 
accrued through the effective date of the spectrum leasing arrangement 
(see Sec.  1.2111(c)). This requirement applies regardless of whether 
the licensee is leasing all or a portion of its bandwidth and/or 
license area.
    (5) Construction/performance requirements. Any performance or

[[Page 77555]]

build-out requirement applicable under a license authorization (e.g., a 
requirement that the licensee construct and operate one or more 
specific facilities, cover a certain percentage of geographic area, 
cover a certain percentage of population, or provide substantial 
service) always remains a condition of the license, and the legal 
responsibility for meeting such obligation is not delegable to the 
spectrum lessee(s).
    (i) The licensee may attribute to itself the build-out or 
performance activities of its spectrum lessee(s) for purposes of 
complying with any applicable build-out or performance requirement.
    (ii) If a licensee relies on the activities of a spectrum lessee to 
meet the licensee's performance or build-out obligation, and the 
spectrum lessee fails to engage in those activities, the Commission 
will enforce the applicable performance or build-out requirements 
against the licensee, consistent with the applicable rules.
    (iii) If there are rules applicable to the license concerning the 
discontinuance of operation, the licensee is accountable for any such 
discontinuance and the rules will be enforced against the licensee 
regardless of whether the licensee was relying on the activities of a 
lessee to meet particular performance requirements.
    (6) Regulatory classification. If the regulatory status of the 
licensee (e.g., common carrier or non-common carrier status) is 
prescribed by rule, the regulatory status of the spectrum lessee is 
prescribed in the same manner, except that Sec.  20.9(a) of this 
chapter shall not preclude a licensee in the services covered by that 
rule from entering into a spectrum leasing arrangement with a spectrum 
lessee that chooses to operate on a PMRS, private, or non-commercial 
basis.
    (7) Regulatory fees. The licensee remains responsible for payment 
of the required regulatory fees that must be paid in advance of its 
license term (see Sec.  1.1152). Where, however, regulatory fees are 
paid annually on a per-unit basis (such as for CMRS services pursuant 
to Sec.  1.1152), the licensee and spectrum lessee each are required to 
pay fees for those units associated with its respective operations.
    (8) E911 requirements. To the extent the licensee is required to 
meet E911 obligations (see Sec.  20.18 of this chapter), the spectrum 
lessee is required to meet those obligations with respect to the 
spectrum leased under the spectrum leasing arrangement insofar as the 
spectrum lessee's operations are encompassed within the E911 
obligations.
    (e) Applications for long-term de facto transfer leasing 
arrangements. Applications for long-term de facto transfer leasing 
arrangements will be processed either pursuant to the general approval 
procedures or the immediate approval procedures, as discussed herein. 
Spectrum leasing parties must submit the application by electronic 
filing using ULS and FCC Form 608, and obtain Commission consent prior 
to consummating the transfer of de facto control of the leased 
spectrum, except that parties falling within the provisions of Sec.  
1.913(d) may file the application either electronically or manually.
    (1) General approval procedures. Applications for long-term de 
facto transfer leasing arrangements will be processed pursuant to the 
general approval procedures set forth in this paragraph unless they are 
submitted and qualify for the immediate approval procedures set forth 
in paragraph (e)(2) of this section.
    (i) To be accepted for filing under these general approval 
procedures, the application must be sufficiently complete and contain 
all information and certifications requested on the applicable form, 
FCC Form 608, including any information and certifications (including 
those of the spectrum lessee relating to eligibility, basic 
qualifications, and foreign ownership) required by the rules in this 
chapter and any rules pertaining to the specific service for which the 
application is filed. In addition, the spectrum leasing application 
must include payment of the required application fee(s); for purposes 
of determining the applicable application fee(s), the application will 
be treated as a transfer of control (see Sec.  1.1102).
    (ii) Once accepted for filing, the application will be placed on 
public notice, except no prior public notice will be required for 
applications involving authorizations in the Private Wireless Services, 
as specified in Sec.  1.933(d)(9).
    (iii) Petitions to deny filed in accordance with section 309(d) of 
the Communications Act must comply with the provisions of Sec.  1.939, 
except that such petitions must be filed no later than 14 days 
following the date of the public notice listing the application as 
accepted for filing.
    (iv) No later than 21 days following the date of the public notice 
listing an application as accepted for filing, the Wireless 
Telecommunications Bureau (Bureau) will affirmatively consent to the 
application, deny the application, or determine to subject the 
application to further review. For applications for which no prior 
public notice is required, the Bureau will affirmatively consent to the 
application, deny the application, or determine to subject the 
application to further review no later than 21 days following the date 
on which the application has been filed and any required application 
fee has been paid (see Sec.  1.1102).
    (v) If the Bureau determines to subject the application to further 
review, it will issue a public notice so indicating. Within 90 days 
following the date of that public notice, the Bureau will either take 
action upon the application or provide public notice that an additional 
90-day period for review is needed.
    (vi) Consent to the application is not deemed granted until the 
Bureau affirmatively acts upon the application.
    (vii) Grant of consent to the application will be reflected in a 
public notice (see Sec.  1.933(a)) promptly issued after the grant, and 
is subject to reconsideration (see Sec. Sec.  1.106(f), 1.108, 1.113).
    (viii) If any petition to deny is filed, and the Bureau grants the 
application, the Bureau will deny the petition(s) and issue a concise 
statement of the reason(s) for denial, disposing of all substantive 
issues raised in the petition(s).
    (2) Immediate approval procedures. Applications that meet the 
requirements of paragraph (e)(2)(i) of this section qualify for the 
immediate approval procedures.
    (i) To qualify for the immediate approval procedures, the 
application must be sufficiently complete, contain all necessary 
information and certifications (including those relating to 
eligibility, basic qualifications, and foreign ownership), and include 
payment of the requisite application fee(s), as required for an 
application processed under the general approval procedures set forth 
in paragraph (e)(1)(i) of this section, and also must establish, 
through certifications, that the following additional qualifications 
are met:
    (A) The license does not involve spectrum licensed in a Wireless 
Radio Service that may be used to provide interconnected mobile voice 
and/or data services under the applicable service rules and that would, 
if the spectrum leasing arrangement were consummated, create a 
geographic overlap with spectrum in any licensed Wireless Service 
(including the same service) in which the proposed spectrum lessee 
already holds a direct or indirect interest of 10% or more (see Sec.  
1.2112), either as a licensee or a spectrum lessee, and that could be 
used by the spectrum lessee to provide

[[Page 77556]]

interconnected mobile voice and/or data services;
    (B) The licensee is not a designated entity or entrepreneur subject 
to unjust enrichment requirements and/or transfer restrictions under 
applicable Commission rules (see Sec. Sec.  1.2110 and 1.2111, and 
Sec. Sec.  24.709, 24.714, and 24.839 of this chapter); and,
    (C) The spectrum leasing arrangement does not require a waiver of, 
or declaratory ruling pertaining to, any applicable Commission rules.
    (ii) Provided that the application establishes that it meets all of 
the requisite elements to qualify for these immediate approval 
procedures, consent to the de facto transfer spectrum leasing 
arrangement will be reflected in ULS. If the application is filed 
electronically, consent will be reflected in ULS on the next business 
day after filing of the application; if filed manually, consent will be 
reflected in ULS on the next business day after the necessary data from 
the manually filed application is entered into ULS. Consent to the 
application is not deemed granted until the Bureau affirmatively acts 
upon the application, as reflected in ULS.
    (iii) Grant of consent to the application under these immediate 
approval procedures will be reflected in a public notice (see Sec.  
1.933(a)) promptly issued after grant, and is subject to 
reconsideration (see Sec. Sec.  1.106(f), 1.108, 1.113).
    (f) Effective date of a de facto transfer leasing arrangement. If 
the Commission consents to the de facto transfer leasing arrangement, 
the de facto transfer leasing arrangement will be deemed effective in 
the Commission's records, and for purposes of the application of the 
rules set forth in this section, on the date set forth in the 
application. If the Commission consents to the arrangement after that 
specified date, the spectrum leasing application will become effective 
on the date of the Commission affirmative consent.
    (g) Expiration, extension, or termination of spectrum leasing 
arrangement. (1) Except as provided in paragraph (g)(2) or (g)(3) of 
this section, a spectrum leasing arrangement entered into pursuant to 
this section will expire on the termination date set forth in the 
application. The Commission's consent to the de facto transfer leasing 
application includes consent to return the leased spectrum to the 
licensee at the end of the term of the spectrum leasing arrangement.
    (2) A spectrum leasing arrangement may be extended beyond the 
initial term set forth in the spectrum leasing application pursuant to 
the applicable application procedures set forth in Sec.  1.9030(e). 
Where there is pending before the Commission at the date of termination 
of the spectrum leasing arrangement a proper and timely application 
seeking to extend the arrangement, the parties may continue to operate 
under the original spectrum leasing arrangement without further action 
by the Commission until such time as the Commission shall make a final 
determination with respect to the application.
    (3) If a spectrum leasing arrangement is terminated earlier than 
the termination date set forth in the notification, either by the 
licensee or by the parties' mutual agreement, the licensee must file a 
notification with the Commission, no later than ten (10) days after the 
early termination, indicating the date of the termination. If the 
parties fail to put the spectrum leasing arrangement into effect, they 
must so notify the Commission consistent with the provisions of this 
section.
    (4) The Commission will place information concerning an extension 
or an early termination of a spectrum leasing arrangement on public 
notice.
    (h) Assignment of spectrum leasing arrangement. The spectrum lessee 
may assign its lease to another entity provided that the licensee has 
agreed to such an assignment, there is privity between the licensee and 
the assignee, and the assignment is approved by the Commission pursuant 
to the same application and approval procedures set forth in this 
section. In the case of a non-substantial (pro forma) assignment that 
falls within the class of pro forma transactions for which prior 
Commission approval would not be required under Sec.  1.948(c)(1), the 
parties involved in the assignment must file notification of the 
assignment with the Commission, using FCC Form 608 and providing any 
necessary updates of ownership information, within 30 days of its 
completion. The Commission will place information related to the 
assignment, whether substantial or pro forma, on public notice.
    (i) Transfer of control of a spectrum lessee. A spectrum lessee 
seeking the transfer of control must obtain Commission consent using 
the same application and Commission consent procedures set forth in 
this section. In the case of a non-substantial (pro forma) transfer of 
control that falls within the class of pro forma transactions for which 
prior Commission approval would not be required under Sec.  
1.948(c)(1), the parties involved in the transfer of control must file 
notification of the transfer of control with the Commission, using FCC 
Form 608 and providing any necessary updates of ownership information, 
within 30 days of its completion. The Commission will place information 
related to the transfer of control, whether substantial or pro forma, 
on public notice.
    (j) Revocation or automatic cancellation of a license or the 
spectrum lessee's operating authority. (1) In the event an 
authorization held by a licensee that has entered into a spectrum 
leasing arrangement is revoked or cancelled, the spectrum lessee will 
be required to terminate its operations no later than the date on which 
the licensee ceases to have authority to operate under the license, 
except as provided in paragraph (i)(2) of this section.
    (2) In the event of a license revocation or cancellation, the 
Commission will consider a request by the spectrum lessee for special 
temporary authority (see Sec.  1.931) to provide the spectrum lessee 
with an opportunity to transition its users in order to minimize 
service disruption to business and other activities.
    (3) In the event of a license revocation or cancellation, and the 
required termination of the spectrum lessee's operations, the former 
spectrum lessee does not, as a result of its former status, receive any 
preference over any other party should the spectrum lessee seek to 
obtain the revoked or cancelled license.
    (k) Subleasing. A spectrum lessee may sublease spectrum usage 
rights subject to the following conditions. Parties entering into a 
spectrum subleasing arrangement are required to comply with the 
Commission's rules for obtaining approval for spectrum leasing 
arrangements provided in this subpart and are governed by those same 
policies. The application filed by parties to a spectrum subleasing 
arrangement must include written consent from the licensee to the 
proposed arrangement. Once a spectrum subleasing arrangement has been 
approved by the Commission, the sublessee becomes the party primarily 
responsible for compliance with Commission rules and policies.
    (l) Renewal. Although the term of a long-term de facto transfer 
spectrum leasing arrangement may not be longer than the term of a 
license authorization, a licensee and spectrum lessee that have entered 
into an arrangement whose term continues to the end of the current term 
of the license authorization may, contingent on the Commission's grant 
of the license renewal, extend the spectrum leasing arrangement into 
the term of the renewed license authorization. The Commission must be 
notified of the renewal of the spectrum

[[Page 77557]]

leasing arrangement at the same time that the licensee submits its 
application for license renewal (see Sec.  1.949). The spectrum lessee 
may operate under the extended term, without further action by the 
Commission, until such time as the Commission shall make a final 
determination with respect to the renewal of the license authorization 
and the extension of the spectrum leasing arrangement into the term of 
the renewed license authorization.

0
11. Section 1.9035 is amended by revising paragraphs (a) and (d) 
through (m), and by adding paragraph (n) to read as follows:


Sec.  1.9035  Short-term de facto transfer leasing arrangements.

    (a) Overview. Under the provisions of this section, a licensee (in 
any of the included services) and a spectrum lessee may enter into a 
short-term de facto transfer leasing arrangement in which the licensee 
retains de jure control of the license while de facto control of the 
leased spectrum is transferred to the spectrum lessee for the duration 
of the spectrum leasing arrangement, subject to prior Commission 
consent pursuant to the application procedures set forth in this 
section. A ``short-term'' de facto transfer leasing arrangement has an 
individual or combined term of not longer than one year. The term of a 
short-term de facto transfer leasing arrangement may be no longer than 
the term of the license authorization.
* * * * *
    (d) Applicability of particular service rules and policies. Under a 
short-term de facto leasing arrangement, the service rules and policies 
apply to the licensee and spectrum lessee in the same manner as under 
long-term de facto transfer leasing arrangements (see Sec.  1.9030(d)), 
except as provided herein:
    (1) Use restrictions and regulatory classification. Use 
restrictions applicable to the licensee also apply to the spectrum 
lessee except that Sec.  20.9(a) of this chapter shall not preclude a 
licensee in the services covered by that rule from entering into a 
spectrum leasing arrangement with a spectrum lessee that chooses to 
operate on a PMRS, private, or non-commercial basis, and except that a 
licensee with an authorization that restricts use of spectrum to non-
commercial uses may enter into a short-term de facto transfer leasing 
arrangement that allows the spectrum lessee to use the spectrum 
commercially.
    (2) Designated entity/entrepreneur rules. Unjust enrichment 
provisions (see Sec.  1.2111) and transfer restrictions (see Sec.  
24.839 of this chapter) do not apply with regard to a short-term de 
facto transfer leasing arrangement.
    (3) Construction/performance requirements. The licensee is not 
permitted to attribute to itself the activities of its spectrum lessee 
when seeking to establish that performance or build-out requirements 
applicable to the licensee have been met.
    (4) E911 requirements. If E911 obligations apply to the licensee 
(see Sec.  20.18 of this chapter), the licensee retains the obligations 
with respect to leased spectrum. A spectrum lessee entering into a 
short-term de facto transfer leasing arrangement is not separately 
required to comply with any such obligations in relation to the leased 
spectrum.
    (e) Spectrum leasing application. Short-term de facto transfer 
leasing arrangements will be processed pursuant to immediate approval 
procedures, as discussed herein. Parties entering into a short-term de 
facto transfer leasing arrangement are required to file an electronic 
application with the Commission, using FCC Form 608, and obtain 
Commission consent prior to consummating the transfer of de facto 
control of the leased spectrum, except that parties falling within the 
provisions of Sec.  1.913(d) may file the application either 
electronically or manually.
    (1) To be accepted for filing under these immediate approval 
procedures, the application must be sufficiently complete and contain 
all information and certifications requested on the applicable form, 
FCC Form 608, including any information and certifications (including 
those relating to the spectrum lessee relating to eligibility, basic 
qualifications, and foreign ownership) required by the rules of this 
chapter and any rules pertaining to the specific service for which the 
application is required. In addition, the application must include 
payment of the required application fee; for purposes of determining 
the applicable application fee, the application will be treated as a 
transfer of control (see Sec.  1.1102). Finally, the spectrum leasing 
arrangement must not require a waiver of, or declaratory ruling, 
pertaining to any applicable Commission rules.
    (2) Provided that the application establishes that it meets all of 
the requisite elements to qualify for these immediate approval 
procedures, consent to the short-term de facto transfer spectrum 
leasing arrangement will be reflected in ULS. If the application is 
filed electronically, consent will be reflected in ULS on the next 
business day after filing of the application; if filed manually, 
consent will be reflected in ULS on the next business day after the 
necessary data from the manually filed application is entered into ULS. 
Consent to the application is not deemed granted until the Bureau 
affirmatively acts upon the application, as reflected in ULS.
    (3) Grant of consent to the application under these procedures will 
be reflected in a public notice (see Sec.  1.933(a)) promptly issued 
after grant, and is subject to reconsideration (see Sec. Sec.  
1.106(f), 1.108, 1.113).
    (f) Effective date of spectrum leasing arrangement. The spectrum 
leasing arrangement will be deemed effective in the Commission's 
records, and for purposes of the application of the rules set forth in 
this section, on the date set forth in the application. If the 
Commission consents to the arrangement after that specified date, the 
spectrum leasing application will become effective on the date of the 
Commission affirmative consent.
    (g) Restrictions on the use of short-term de facto transfer leasing 
arrangements. (1) The licensee and spectrum lessee are not permitted to 
use the special rules and expedited procedures applicable to short-term 
de facto transfer leasing arrangements for arrangements that in fact 
will exceed one year, or that the parties reasonably expect to exceed 
one year.
    (2) The licensee and spectrum lessee must submit, in sufficient 
time prior to the expiration of the short-term de facto transfer 
spectrum leasing arrangement, the appropriate application under the 
rules and procedures applicable to long-term de facto leasing 
arrangements, and obtain Commission consent pursuant to those 
procedures.
    (h) Expiration, extension, or termination of the spectrum leasing 
arrangement. (1) Except as provided in paragraph (h)(2) or (h)(3) of 
this section, a spectrum leasing arrangement entered into pursuant to 
this section will expire on the termination date set forth in the 
short-term de facto transfer leasing arrangement. The Commission's 
approval of the short-term de facto transfer leasing application 
includes consent to return the leased spectrum to the licensee at the 
end of the term of the spectrum leasing arrangement.
    (2) Upon proper application (see paragraph (e) of this section), a 
short-term de facto transfer leasing arrangement may be extended beyond 
the initial term set forth in the application provided that the initial 
term and extension(s) together would not result in a leasing 
arrangement that exceeds a total of one year.
    (3) If a spectrum leasing arrangement is terminated earlier than 
the

[[Page 77558]]

termination date set forth in the notification, either by the licensee 
or by the parties' mutual agreement, the licensee must file a 
notification with the Commission, no later than ten (10) days after the 
early termination, indicating the date of the termination. If the 
parties fail to put the spectrum leasing arrangement into effect, they 
must so notify the Commission consistent with the provisions of this 
section.
    (i) Conversion of a short-term spectrum leasing arrangement into a 
long-term de facto transfer leasing arrangement. (1) In the event the 
licensee and spectrum lessee involved in a short-term de facto transfer 
leasing arrangement seek to extend the spectrum leasing arrangement 
beyond the one-year limit for short-term de facto transfer leasing 
arrangements, the parties may do so provided that they meet the 
conditions set forth in paragraphs (i)(2) and (i)(3) of this section.
    (2) If a licensee that holds a license that continues to be subject 
to transfer restrictions and/or requirements relating to unjust 
enrichment pursuant to the Commission's small business and/or 
entrepreneur provisions (see Sec.  1.2110 and Sec.  24.709 of this 
chapter) seeks to extend a short-term de facto transfer leasing 
arrangement with its spectrum lessee (or related entities, as 
determined pursuant to Sec.  1.2110(b)(2)) beyond one year, it may 
convert its arrangement into a long-term de facto transfer spectrum 
leasing arrangement provided that it complies with the procedures for 
entering into a long-term de facto transfer leasing arrangement and 
that it pays any unjust enrichment that would have been owed had the 
licensee filed a long-term de facto transfer spectrum leasing 
application at the time it applied for the initial short-term de facto 
transfer leasing arrangement.
    (3) The licensee and spectrum lessee are not permitted to convert a 
short-term de facto transfer leasing arrangement into a long-term de 
facto transfer leasing arrangement if the parties would have been 
restricted, in the first instance, from entering into a long-term de 
facto transfer leasing arrangement because of a transfer, use, or other 
restriction applicable to the particular service (see Sec.  1.9030).
    (j) Assignment of spectrum leasing arrangement. The rule applicable 
to long-term de facto transfer leasing arrangements (see Sec.  
1.9030(g)) applies in the same manner to short-term de facto transfer 
leasing arrangements.
    (k) Transfer of control of spectrum lessee. The rule applicable to 
long-term de facto transfer leasing arrangements (see Sec.  1.9030(h)) 
applies in the same manner to short-term de facto transfer leasing 
arrangements.
    (l) Revocation or automatic cancellation of a license or the 
spectrum lessee's operating authority. The rule applicable to long-term 
de facto transfer leasing arrangements (see Sec.  1.9030(i)) applies in 
the same manner to short-term de facto transfer leasing arrangements.
    (m) Subleasing. A spectrum lessee that has entered into a short-
term de facto transfer leasing arrangement is not permitted to enter 
into a spectrum subleasing arrangement.
    (n) Renewal. The rule applicable with regard to long-term de facto 
transfer leasing arrangements (see Sec.  1.9030(l)) applies in the same 
manner to short-term de facto transfer leasing arrangements, except 
that the renewal of the short-term de facto transfer leasing 
arrangement to extend into the term of the renewed license 
authorization cannot enable the combined terms of the short-term de 
facto transfer leasing arrangements to exceed one year. The Commission 
must be notified of the renewal of the spectrum leasing arrangement at 
the same time that the licensee submits its application for license 
renewal (see Sec.  1.949).

0
12. Amend Sec.  1.9045 by revising paragraph (b) to read as follows:


Sec.  1.9045  Requirements for spectrum leasing arrangements entered 
into by licensees participating in the installment payment program.

* * * * *
    (b) If a licensee holds a license subject to the installment 
payment program rules (see Sec.  1.2110 and related service-specific 
rules), the licensee and any spectrum lessee must execute the 
Commission-approved financing documents. No licensee or potential 
spectrum lessee may file a spectrum leasing notification or application 
without having first executed such Commission-approved financing 
documentation. In addition, they must certify in the spectrum leasing 
notification or application that they have both executed such 
documentation.

0
13. Add Sec.  1.9048 to read as follows:


Sec.  1.9048  Special provisions relating to spectrum leasing 
arrangements involving licensees in the Public Safety Radio Services.

    Licensees in the Public Safety Radio Services (see part 90, subpart 
B and Sec.  90.311(a)(1)(i) of this chapter) may enter into spectrum 
leasing arrangements with other public safety entities eligible for 
such a license authorization as well as with entities providing 
communications in support of public safety operations (see Sec.  
90.523(b) of this chapter).

0
14. Add Sec.  1.9080 to read as follows:


Sec.  1.9080  Private commons.

    (a) Overview. A ``private commons'' arrangement is an arrangement, 
distinct from a spectrum leasing arrangement but permitted in the same 
services for which spectrum leasing arrangements are allowed, in which 
a licensee or spectrum lessee makes certain spectrum usage rights under 
a particular license authorization available to a class of third-party 
users employing advanced communications technologies that involve peer-
to-peer (device-to-device) communications and that do not involve use 
of the licensee's or spectrum lessee's end-to-end physical network 
infrastructure (e.g., base stations, mobile stations, or other related 
elements). In a private commons arrangement, the licensee or spectrum 
lessee authorizes users of certain communications devices employing 
particular technical parameters, as specified by the licensee or 
spectrum lessee, to operate under the license authorization. A private 
commons arrangement differs from a spectrum leasing arrangement in 
that, unlike spectrum leasing arrangements, a private commons 
arrangement does not involve individually negotiated spectrum access 
rights with entities that seek to provide network-based services to 
end-users. A private commons arrangement does not affect unlicensed 
operations in a particular licensed band to the extent that they are 
permitted pursuant to part 15.
    (b) Licensee/spectrum lessee responsibilities. As the manager of 
any private commons, the licensee or spectrum lessee:
    (1) Establishes the technical and operating terms and conditions of 
use by users of the private commons, including those relating to the 
types of communications devices that may be used within the private 
commons, consistent with the terms and conditions of the underlying 
license authorization;
    (2) Retains de facto control of the use of spectrum by users within 
the private commons, including maintaining reasonable oversight over 
the users' use of the spectrum in the private commons so as to ensure 
that the use of the spectrum, and communications equipment employed, 
comply with all applicable technical and service rules (including 
requirements relating to radiofrequency radiation) and maintaining the 
ability to ensure such compliance; and,
    (3) Retains direct responsibility for ensuring that the users of 
the private

[[Page 77559]]

commons, and the equipment employed, comply with all applicable 
technical and service rules, including requirements relating to 
radiofrequency radiation and requirements relating to interference.
    (c) Notification requirements. Prior to permitting users to 
commence operations within a private commons, the licensee or spectrum 
lessee must notify the Commission, using FCC Form 608, that it is 
establishing a private commons arrangement. This notification must 
include information that describes: the location(s) or coverage area(s) 
of the private commons under the license authorization; the term of the 
arrangement; the general terms and conditions for users that would be 
gaining spectrum access to the private commons; the technical 
requirements and equipment that the licensee or spectrum lessee has 
approved for use within the private commons; and, the types of 
communications uses that are to be allowed within the private commons.

PART 24--PERSONAL COMMUNICATIONS SERVICES

0
15. The authority citation for part 24 continues to read as follows:

    Authority: 47 U.S.C. 154, 301, 302, 303, 309 and 332.


0
16. Amend Sec.  24.239 by adding the following sentence at the end of 
the paragraph, to read as follows:


Sec.  24.239  Cost-sharing requirements for broadband PCS.

    * * * If a licensee in the Broadband PCS Service enters into a 
spectrum leasing arrangement (as set forth in part 1, subpart X of this 
chapter) and the spectrum lessee triggers a cost-sharing obligation, 
the licensee is the PCS entity responsible for satisfying the cost-
sharing obligations under Sec. Sec.  24.239 through 24.253.

PART 90--PRIVATE LAND MOBILE RADIO SERVICES

0
17. The authority citation for part 90 continues to read as follows:

    Authority: Sections 4(i), 11, 303(g), 303(r), and 332(c)(7) of 
the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 161, 
303(g), 303(r), and 332(c)(7).


0
18. Amend Sec.  90.20 by adding a new paragraph (h) to read as follows:


Sec.  90.20  Public safety pool.

    (h) Spectrum leasing arrangements. Notwithstanding any other 
provisions of this section to the contrary, licensees in the Public 
Safety Radio Services (see part 90, subpart B) may enter into spectrum 
leasing arrangements (see part 1, subpart X of this chapter) with 
entities providing communications in support of public safety 
operations.

[FR Doc. 04-27817 Filed 12-23-04; 8:45 am]
BILLING CODE 6712-01-P