[Federal Register Volume 78, Number 62 (Monday, April 1, 2013)]
[Rules and Regulations]
[Pages 19424-19430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-07397]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1, 22, 24, 27 and 90

[WT Docket Nos. 06-150, 01-309, 03-264, 06-169, 96-86, 07-166, CC 
Docket No. 94,102, PS Docket No. 06-229; FCC 13-29]


Service Rules for the 698-746, 747-762 and 777-792 MHz Bands; 
Revision of the Commission's Rules To Ensure Compatibility With 
Enhanced 911 Emergency Calling Systems; et al.

AGENCY: Federal Communications Commission.

ACTION: Final rule; petition for reconsideration.

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SUMMARY: The Memorandum Opinion and Order on Reconsideration (MO&O) 
denies or dismisses petitions seeking reconsideration of certain 
decisions made by the Commission in the 700 MHz Second Report and 
Order, relating to the 698-806 MHz Band, including decisions regarding 
performance requirements, the auction and competitive bidding rules, 
the open platform rules, public safety narrowband relocation 
procedures, and the decisions not to impose wholesale requirements, 
eligibility restrictions, and spectrum aggregation limits. This MO&O 
also dismisses as moot petitions for reconsideration of rules 
establishing a Public/Private Partnership between the Upper 700 MHz D 
Block (D Block) licensee and the Public Safety Broadband Licensee in 
the 763-768 MHz and 793-798 MHz bands.

DATES: Effective May 1, 2013.

FOR FURTHER INFORMATION CONTACT: Peter Trachtenberg at (202) 418-7369 
or [email protected], Wireless Telecommunications Bureau, 
Spectrum and Competition Policy Division.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Memorandum Opinion and Order on Reconsideration, WT Docket Nos. 06-150, 
01-309, 03-264, 06-169, 96-86, 07-166, CC Docket No. 94,102, PS Docket 
No. 06-229; FCC 13-29, adopted February 28, 2013 and released March 1, 
2013. The full text of this document is available for inspection and 
copying during normal business hours in the FCC Reference Center (Room 
CY-A257), 445 12th Street SW., Washington, DC 20554. The complete text 
of this document also may be purchased from the Commission's copy 
contractor, Best Copy and Printing, Inc., 445 12th Street SW., Room, 
CY-B402, Washington, DC 20554. The full text may also be downloaded at: 
www.fcc.gov. People with Disabilities: To request materials in 
accessible formats for people with disabilities (braille, large print, 
electronic files, audio format), send an email to [email protected] or 
call the Consumer & Governmental Affairs Bureau at 202-418-0530 
(voice), 202-418-0432 (tty).

I. Introduction

    1. In this MO&O, the Commission addresses petitions that were filed 
seeking reconsideration of certain decisions made by the Commission in 
the 700 MHz Second Report and Order at 72 FR 48814, Aug. 24, 2007, 
relating to the 698-806 MHz Band (herein, the 700 MHz Band).

II. Discussion

A. Performance Requirements

    2. Below the Commission discusses the issues raised by petitioners 
with respect to the performance requirements that the Commission 
established in the 700 MHz Second Report and Order. After careful 
consideration of the arguments raised in the petitions for 
reconsideration, the Commission denies the requests to modify the 
existing performance requirements.
1. Geographic-Based Coverage Requirements for CMA and EA Licenses
    3. Blooston Rural Carriers (Blooston), MetroPCS Communications, 
Inc. (MetroPCS), and Rural Telecommunications Group, Inc. (RTG) filed 
petitions for reconsideration challenging various aspects of the 
geographic-based performance requirements.
    4. The Commission denies the petitioners' requests to alter the 
geographic-based coverage requirements. First, the Commission is 
unpersuaded by Blooston's arguments that a geographic-based performance 
requirement on CMA licensees (i.e. licensees in Lower 700 MHz B Block) 
is arbitrary and unworkable and should be supplemented with the option 
of meeting a population-based benchmark. The Commission provided 
reasonable justifications for its decision to adopt a geographic-based 
build-out requirement for CMA and EA licenses, and the Commission finds 
nothing in the record to persuade it to change this decision. The 
Commission particularly noted that:

[b]ecause [the Commission] adopt[s] smaller geographic license areas 
such as CMAs to facilitate the provision of service * * * in rural 
areas, [it] also adopt[s] performance requirements that are designed 
to ensure that such service is offered to consumers in these areas.

The Commission further found that:

the uniqueness of the 700 MHz spectrum justifies the use of 
geographic benchmarks * * *.

Blooston argues that the Commission arbitrarily discriminated against 
CMA licenses by providing population-based requirements on both EA and 
REAG licensees. In fact, the Commission imposed identical geographic-
based requirements on EA and CMA licenses, and it reasonably justified 
its decision to adopt a different approach for the much larger REAG 
licenses. Blooston argues that for some licenses, meeting the 
geographic-based benchmarks will be impractical, and offers analysis of 
nine CMAs out of the 734 in Lower 700 MHz B Block. For specific cases 
of hardship, however, providers can seek waiver relief. Blooston offers 
no evidence demonstrating that a geographic-based benchmark is 
inherently impractical in the usual case.
    5. Indeed, the results of the auction of Lower 700 MHz B Block 
licenses provide further support for the reasonableness of the 
Commission's geographic-based performance requirements. In the 700 MHz 
Second Report and Order, the Commission decided that, if those 
geographic-based requirements caused a reduction in the monetary value 
of the licenses to such an extent that bidding in the auction resulted 
in the Lower 700 MHz B Block failing to meet its applicable aggregate 
reserve price, the licenses for that block would be re-auctioned 
subject to population-based performance requirements. Thus, the 
Commission relied in part on the auction results as a final check on 
whether its geographic-based performance requirements were in the 
public interest. When the licenses were auctioned in Auction 73, the 
Commission received provisionally winning bids on 728 out of 734 Lower 
700 MHz B Block licenses and the aggregate amount of the provisionally 
winning bids far exceeded the applicable aggregate reserve price. 
Accordingly, the Commission reaffirms the geographic-based coverage 
requirement for Lower 700 MHz B Block licensees and the Commission 
denies Blooston's request to add an optional population-based benchmark 
to Lower 700 MHz B Block. For similar reasons, the Commission rejects 
the requests of various commenters for a population-based buildout 
option for EA licensees.
    6. The Commission also rejects arguments that the Commission should 
broaden the exclusions from the

[[Page 19425]]

Commission's geographic coverage requirements. The Commission's 
geographic coverage requirements already exclude government lands, and 
any further categorical exclusions could undermine the Commission's 
goals in adopting these requirements, which include taking advantage of 
the excellent propagation characteristics of 700 MHz spectrum to 
promote wireless coverage in remote and rural areas. Even with regard 
to bodies of water, there is a public interest benefit to wireless 
coverage to vessels near shore, and some level of coverage may be 
possible from infrastructure on land or, where relevant, through 
platforms or other facilities constructed out from the shore. In some 
cases, there may also be demand from economic activity that may benefit 
from access to advanced communications services over the relevant body 
of water. For example, for both EAs and CMAs, the Commission separately 
licenses the Gulf of Mexico as a service area, reflecting the 
Commission's recognition of the public interest in promoting the 
deployment of service there to help meet the growing communications 
needs of petroleum and natural gas providers in the area.
    7. Further, the Commission already specifically considered and 
rejected exclusions for Tribal lands, finding that it did not want to 
discourage deployment to these areas. While Blooston would limit 
exclusion of Tribal lands to cases where a licensee had made a good 
faith but unsuccessful attempt to obtain Tribal government consent, the 
Commission see no evidence that such consent will often be unreasonably 
withheld, and the Commission is concerned that an exclusion for Tribal 
lands may result in reduced efforts to obtain such consent and deploy 
in these areas.
    8. In sum, the Commission concludes that the requested categorical 
exclusions are not appropriate, but, as mentioned in the 700 MHz Second 
Report and Order itself, licensees may seek waivers of the Commission's 
rules if they believe the circumstances in a particular area warrant 
relief under the Commission waiver standard. If licensees seek to 
obtain such waivers, the Commission urges that they make these requests 
as soon as possible. These requests must be well founded and not based 
solely on grounds of low population density. The Commission staff will 
consider these types of requests on a case-by-case basis.
2. Benchmarks for REAG Licenses
    9. In the 700 MHz Second Report and Order, the Commission imposed a 
population-based performance requirement on Regional Economic Area 
Groupings (REAG) licensees, who occupy the Upper 700 MHz C Block. In 
its petition for reconsideration, RTG argues that a geographic-based 
coverage requirement will better ensure that REAG licensees deploy in 
rural areas.
    10. The Commission concludes that it will retain the requirement 
that REAG licensees must meet the population-based benchmarks. RTG 
argues that the REAG approach is inconsistent with the approach the 
Commission took with regard to EA and CMA licenses, but there is no 
requirement that the performance requirements be the same for all 
commercial wireless services, nor even for those of a certain type. The 
Commission explained its determination that population-based benchmarks 
were better suited for the much larger REAG licenses in some detail, 
and there is nothing new in the record to persuade the Commission to 
change this decision. This decision involved tradeoffs particular to 
the expectation that these licenses would lead to regional or even 
nationwide network deployment. Contrary to RTG's assertion, the 
Commission was mindful not only of the need to develop regional and 
nationwide networks, but also of the need to promote wireless services 
in less populated portions of the nation, including rural areas. To 
address this concern, it provided that REAG licensees must meet the 
population-based build-out requirements on an EA basis. RTG questions 
the Commission's expectation that the REAG licenses were more likely to 
be used to provide regional or nationwide service than the much smaller 
EA and CMA licenses but offers nothing to undermine the Commission's 
well-supported predictive judgment. Therefore, the Commission denies 
RTG's request that REAG licensees be required to meet a geographic-
based coverage requirement.
3. Keep-What-You-Use Provisions
    11. In the 700 MHz Second Report and Order, the Commission 
established both interim and end-of-term enforcement measures that 
would apply automatically in the event that licensees failed to meet 
the applicable benchmarks. For licensees that fail to meet the 
applicable interim benchmark, the Commission decided that the normal 
ten year license term would be reduced by two years, and the end-of-
term benchmark must then be met within eight years. The Commission 
determined that, at the end of the license term, licensees that fail to 
meet the end-of-term benchmark would be subject to a keep-what-you-use 
rule, which would make unused spectrum available to other potential 
users. For those CMAs or EAs in which the end-of-term performance 
requirements have not been met, the unused portion of the license will 
terminate automatically without Commission action and will become 
available for reassignment by the Commission. Similarly, if a REAG 
licensee fails to provide signal coverage and offer service to at least 
75 percent of the population in any EA comprising the REAG license area 
by the end of the license term, the unused portion of each such EA in 
that licensee's authorization area will terminate automatically without 
Commission action and will become available for reassignment by the 
Commission.
    12. The Commission further established a process governing the 
reassignment of licenses made available pursuant to the keep-what-you-
use rules. As part of this process, the Commission provided that the 
licenses will be subject to an initial 30-day application period during 
which the original licensee may not file an application. Following this 
period, the original licensee is permitted to file an application for 
any remaining unserved area where licenses have not been issued and 
there are no pending applications.
    13. Several petitioners seek reconsideration of the keep-what-you-
use rules. Blooston requests that the Commission provide a

more precise definition of how the take-back process will work, and 
what propagation model will be used.

MetroPCS requests that the Commission modify the current rule to adopt 
a triggered approach, under which the original licensee would only lose 
unserved areas if a third party files a credible application, 
demonstrating

a bona fide desire, and the wherewithal, to build-out the spectrum 
in the unserved market, [and submits a] meaningful upfront payment 
[that is] sufficiently large to deter speculators.

MetroPCS also requests that the incumbent should be allowed to 
participate in any auction of the unserved spectrum. Finally, Blooston 
and MetroPCS request that an original licensee of 700 MHz commercial 
spectrum subject to loss of unused license area under the keep-what-
you-use rule be allowed to retain an expansion area in addition to the 
area it serves at the end of its license term.
    14. The Commission denies the requests to alter the keep-what-you-
use rules that the Commission adopted in the 700 MHz Second Report and 
Order. First, the Commission disagrees with Blooston's assertion that 
the Commission needs to provide a more

[[Page 19426]]

detailed explanation of how the process will work and what propagation 
model will be used. The Commission finds that the 700 MHz Second Report 
and Order already sets forth the process implementing the keep-what-you 
use provisions in significant detail, starting with the filing of 
construction notifications up through the reassignment process, and 
that further detail regarding the take-back process is unnecessary at 
this time. Further, a specific propagation model would be contrary to 
the flexibility that the Commission adopted. In establishing the 
construction notification through which licensees will demonstrate 
compliance with performance requirements, the Commission recognized 
that

demonstrations of coverage may vary across licensees, [who] will 
likely use a variety of technologies to provide a range of services 
with this spectrum.

It specifically rejected a request for a bright-line test for what 
constitutes sufficient signal strength, provided instead that licensees 
must provide the assumptions they use to create coverage maps, 
including the propagation model and signal strength necessary to 
provide service, and also delegated to the Wireless Telecommunications 
Bureau (Wireless Bureau) the authority to establish further 
specifications for filings and to determine coverage areas. The 
Commission sees no reason to reverse this decision, and therefore 
rejects Blooston's request.
    15. The Commission also denies proposals that the Commission revise 
the keep-what-you-use rules to provide for a triggered approach, under 
which a licensee would not lose unused spectrum until a party seeking 
the spectrum first files an application for the area meeting certain 
requirements for sufficiency. The Commission notes that the Commission 
sought comment on a triggered keep-what-you-use approach similar to 
MetroPCS's proposal prior to adopting the existing rule. The Commission 
already has application procedures to ensure that license approvals are 
in the public interest. Under the Commission's existing rules, before 
any application will be granted, the applicant must already 
demonstrate, inter alia, that it is legally, technically, financially, 
and otherwise qualified [and that a] grant of the application would 
serve the public interest, convenience, and necessity.
    Requiring applicants seeking authorization over unused spectrum to 
demonstrate their bona fides in new ways above and beyond such 
established and familiar license application processes may in fact 
discourage bona fide interest in such spectrum, undermining the 
Commission's goal of putting this spectrum to use. Further, because 
these proposed revisions to the rules decrease the original licensee's 
risk of consequences for failing to build-out, they may lessen the 
incentive for the licensee to expand service into parts of its license 
areas by the end of its license term. The Commission also does not find 
persuasive MetroPCS's argument that a triggered approach reduces the 
prospect that forfeited unserved license areas will lie fallow in the 
Commission's hands. The rules already address this possibility: if no 
application is filed by third parties in 30 days, the original licensee 
is free to apply for it.
    16. The Commission also rejects MetroPCS's arguments that in the 
event the original licensee loses its license or parts thereof through 
application of the keep-what-you-use rules, it should be allowed to 
participate in any reauction of the recaptured license areas. Under the 
Commission's build-out rules, the original licensee has ample 
opportunity to meet its build-out requirements. Further, barring the 
original licensee from participating during the initial reauction of 
its unserved license areas is a reasonable penalty for the licensee's 
failure to meet its build-out requirements. This measure helps ensure 
that the original licensee will make all reasonable efforts to meet its 
performance benchmarks and that the Commission licenses spectrum to 
those parties that are most likely to use it. MetroPCS argues that the 
Commission's rule enhances the risk that the original licensee will be 
subject to green mail from speculators. The Commission thinks the risk 
of speculators acquiring unused spectrum for green mail purposes is 
small, however, given that the Commission also required new licensees 
of spectrum made available under the keep-what-you-use rule to offer 
service to the entire license area within one year, and provided that 
if they fail to meet this requirement, they lose the license 
automatically and are ineligible to file an application to provide 
service in the same area over the same frequencies at any future date.
    17. Finally, the Commission is not persuaded that licensees that 
fail to meet the end-of-term benchmark should nevertheless retain a 
portion of the unserved area of their licenses as an expansion area. 
Parties argue that an expansion area is justified for a number of 
reasons including the potential need to address changes in customer 
demand, subsequent development of areas, population growth, and 
replacement of base stations, or as a buffer to avoid interference. The 
Commission finds, however, that permitting licensees to keep a part of 
their unused license areas as petitioners propose would undermine the 
Commission's keep-what-you-use policy goals of motivating licensees to 
meet their benchmarks and promoting access to spectrum that is not 
adequately built out and deployment of service to communities that 
might otherwise not receive it. Further, the rules adopted in the 700 
MHz Second Report and Order provide ample opportunity for licensees to 
construct facilities and provide service in their licensed areas. The 
Commission therefore rejects the requests for an expansion area under 
the keep-what-you-use rules.
4. Potential Enforcement Provisions for Failure To Build Out
    18. Blooston, MetroPCS, and RTG seek reconsideration of the 
potential mid-term and end-of-term construction benchmarks enforcement 
provisions. MetroPCS and RTG contend that the Commission did not 
provide guidance regarding under what circumstances these potential 
enforcement actions might be taken and they propose various standards. 
Blooston argues that the Commission should repeal these enforcement 
provisions altogether, and that the Commission did not provide the 
notice required by the Administrative Procedure Act (APA) before 
adopting forfeitures as a potential enforcement measure.
    19. The Commission is not persuaded that the Commission should 
adopt the modifications to the potential enforcement provisions 
proposed by petitioners. Although petitioners argue that their 
proposals would resolve ambiguity in the Commission's rules, the 
Commission finds that their proposals would substantially limit the 
Commission's enforcement options. For example, MetroPCS argues that 
that the option of license termination at end-of-term should apply only 
in cases of failure to provide substantial service. It is already the 
case under the license renewal requirement, however, that a licensee's 
failure to demonstrate that it is providing substantial service 
results, by operation of the rules, in loss of the license. Thus, 
MetroPCS's interpretation would effectively eliminate license 
termination as a separate mechanism for enforcing the performance 
requirements prior to the end of a license term. In rejecting this 
proposal to partially conflate the substantial service and performance 
requirements, the Commission also notes that it has

[[Page 19427]]

previously emphasized that the substantial service requirement at 
renewal is distinct from the performance requirements.
    20. RTG's proposal--that a licensee should be subject to additional 
enforcement only if it utterly fails to construct a system--goes even 
further; it not only eliminates license termination as an enforcement 
mechanism prior to the end of a license term, but it also reduces this 
mechanism to a mere subset of its existing form as a license renewal 
requirement. Therefore, the Commission is not persuaded that any of the 
petitioners' proposed clarifications are consistent with the 
Commission's adoption of these enforcement measures.
    21. The Commission also disagrees with arguments that the 
Commission provided no justification in support of the additional 
enforcement mechanisms and should eliminate them entirely. In adopting 
its requirements, the Commission underscored that it

expect[ed] that licensees will take these construction requirements 
seriously and proceed toward providing service with utmost 
diligence, [and concluded that] these set of stringent benchmarks * 
* * with effective consequences for noncompliance * * * are the most 
effective way to promote rapid service to the public, especially in 
rural areas.

The additional enforcement mechanisms thus reflect the importance of 
effective enforcement to achieving the Commission's goals for the 700 
MHz Band and its determination that the additional mechanisms would 
help to ensure that enforcement would be effective. Blooston objects 
that the application of fines in particular is a departure from prior 
Commission practice with regard to enforcement of buildout 
requirements. However, the enforcement regime was also novel in other 
respects, including its adoption of the keep-what-you-use rules. 
Therefore, the suggestion that the Commission should eliminate one 
element in order to conform to prior practice is unpersuasive. The 
Commission also rejects the assertion that the Commission acted without 
notice. The Commission twice sought comment broadly on how to revise 
the performance requirements, and the Commission finds that adoption of 
measures to enforce such requirements are well within the scope of the 
issues raised. The Commission also notes that the Commission is not 
obligated to provide APA notice to impose a forfeiture pursuant to 
section 503 of the Act.
    22. The Commission rejects Blooston's argument that forfeitures are 
inappropriate because, in failing to meet performance benchmarks, a 
licensee does not actually violate a rule but merely exercises an 
option under the rules to lose a given area. The 700 MHz Second Report 
and Order is clear that the benchmarks are requirements, and Sec.  
27.14 imposes these buildout requirements without qualification, 
providing that EA and CMA licenses

shall provide signal coverage and offer service over at least 35 
percent of the geographic area of each of their license 
authorizations no later than June 13, 2013'') (emphasis added).

    23. Finally, the Commission notes that the Wireless Bureau has 
already clarified the conditions under which licensees may be subject 
to reduction in license area at the interim stage. The Commission does 
not rule out the Wireless Bureau providing further clarification, if 
necessary, regarding how the potential end-of-term enforcement measures 
will be applied after assessing progress toward and compliance with the 
interim benchmarks and any necessary enforcement in connection with 
those benchmarks.
5. Interim Construction Reports
    24. In its petition for reconsideration, Blooston requests that the 
Commission eliminate the interim construction reports for all small and 
rural licensees. The Commission is not persuaded that this modification 
is warranted. First, the Commission does not agree that these reports 
impose unnecessary burdens on small licensees. The interim construction 
reporting requirements strengthen the Commission's ability to monitor 
build-out progress during the license term. Under the circumstances, 
where the Commission has stressed the importance of a timely build-out 
of the 700 MHz spectrum and has adopted performance requirements to 
meet this end, the Commission considers the information that is to be 
supplied in these reports to be reasonable and in the public interest. 
Further, the required information is readily available to licensees and 
can easily be reported to the Commission. The Commission merely 
requires licensees to provide the Commission with a description of the 
steps they have taken toward meeting their construction obligations in 
a timely manner, including the technology or technologies and 
service(s) they are providing and the areas in which those services are 
available. Accordingly, the Commission denies Blooston's request.

B. Auction-Related Issues

1. Designated Entity Eligibility for a Small Business Providing 
Wholesale Service
    25. In its petition for reconsideration, Frontline argues that 
application of the impermissible material relationship rule to the C 
and D Blocks would be prejudicial to small businesses, especially those 
adopting a wholesale business model. Frontline asks the Commission to 
reinterpret the designated entity rules to allow small businesses with 
a wholesale model to maintain their eligibility for a bidding credit in 
the C and D Blocks. United States Cellular Corp. (U.S. Cellular) argues 
that the Commission properly applied the impermissible material 
relationship rule in the 700 MHz Second Report and Order and opposes 
Frontline's proposal. PISC supports making a small business bidding 
credit available to a licensee that agrees to wholesale 100 percent of 
its spectrum if the Commission imposes specific conditions to prevent 
warehousing while ensuring non-discrimination, transparency, and 
spectrum efficiency.
    26. On November 15, 2007, on its own motion, the Commission waived 
application of the impermissible material relationship rule for 
purposes of determining designated entity eligibility solely with 
respect to arrangements for lease or resale (including wholesale) of 
the spectrum capacity of the D Block license. The Commission found that 
the unique regulations governing the D Block license, which required 
the establishment of the 700 MHz Band Public/Private Partnership 
subject to a Commission-approved Network Sharing Agreement--together 
with the application of the Commission's other designated entity 
eligibility requirements--eliminated for the D Block license the risks 
that led the Commission to adopt the impermissible material 
relationship rule. This waiver applied to the D Block in Auction 73, 
which began on January 24 and closed on March 18, 2008.
    27. Frontline did not qualify to participate in Auction 73. 
Frontline selected only the D Block license on its short-form 
application, but was unable to raise the $128.21 million necessary to 
make the required upfront payment for the D Block. The Wireless Bureau 
denied Frontline's request for a waiver to allow it to add the A and B 
Blocks, which included licenses that required lower upfront payments, 
to its short-form application after the deadline.
    28. In Council Tree Communications, Inc. v. FCC, the U.S. Court of 
Appeals

[[Page 19428]]

for the Third Circuit held that the Commission's impermissible material 
relationship rule in Sec.  1.2110(b)(3)(iv)(A) had been adopted without 
the notice and opportunity for comment required by the Administrative 
Procedure Act. The court vacated the rule, but also concluded that it 
would be imprudent and unfair to order rescission of the auction 
results for Auction 73. The Commission subsequently conformed the 
Commission's rules to the court's mandate by deleting Sec.  
1.2110(b)(3)(iv)(A).
    29. The Commission's November 15, 2007 waiver of the impermissible 
material relationship rule rendered moot Frontline's petition for 
reconsideration with respect to the D Block license, and the Commission 
therefore dismisses that portion of the petition as moot. Frontline's 
arguments with respect to the D Block are also moot because the D Block 
will not be re-auctioned since Congress recently directed the 
Commission to reallocate the D Block spectrum for use by public safety 
entities. 47 U.S.C. 1411(a); Middle Class Tax Relief and Job Creation 
Act of 2012, Public Law 112-96, 126 Stat. 156 6101 (2012) (Spectrum 
Act). The Commission also dismisses as moot Frontline's petition to the 
extent it addresses designated entity status for wholesale services in 
the C Block, because the Third Circuit vacated the impermissible 
material relationship rule that is the subject of Frontline's petition. 
In accordance with the court's mandate the Commission has deleted the 
relevant provision from the Commission's Part 1 competitive bidding 
rules.
2. Amount of Reserve Prices
    30. In order to promote the statutory objectives in 47 U.S.C. 
309(j)(3), including the efficient and intensive use of the 
electromagnetic spectrum as well as the recovery for the public of a 
portion of the value of the public spectrum resource, in the 700 MHz 
Second Report and Order the Commission directed the Wireless Bureau to 
adopt and publicly disclose block-specific aggregate reserve prices 
pursuant to its existing delegated authority and its regular pre-
auction process. The Commission concluded that the aggregate reserve 
prices should reflect current assessments of the potential market value 
of licenses for the 700 MHz Band and directed that this assessment be 
based on various factors, including the characteristics of the band and 
the value of other recently auctioned licenses, such as licenses for 
Advanced Wireless Services. The Commission further indicated that if 
the reserve price for a particular block was not met in the initial 
auction, a subsequent auction of alternative licenses in that block 
would be subject to the same applicable reserve price as the initial 
auction of licenses. The Commission concluded

that in the event that auction results for conditioned Upper 700 MHz 
C Block licenses do not satisfy the aggregate reserve price for the 
C Block, the Commission will offer as soon as possible licenses for 
the C Block without the open platform conditions.

With respect to the D Block, given the unique service rules for the 
Public/Private Partnership in that block, the Commission concluded that 
if the aggregate reserve was not met, that the Commission would leave 
open the possibility of re-offering the license on the same terms in a 
subsequent auction, as well as the possibility of re-evaluating all or 
some of the applicable license conditions. Based on the Commission's 
direction in the 700 MHz Second Report and Order, and after additional 
public notice and comment, the Wireless Bureau set the following 
aggregate reserve prices for Auction 73: Block A, $1.807380 billion; 
Block B, $1.374426 billion; Block C, $4.637854 billion; Block D, 
$1.330000 billion; Block E, $0.903690 billion.
    31. In its petition for reconsideration, Frontline argues that the 
reserve prices for the C and D Block licenses proposed, and ultimately 
adopted, by the Wireless Bureau based on the Commission's guidance in 
the 700 MHz Second Report and Order are arbitrarily high and, coupled 
with re-auction mechanisms, undermine the open access provisions for 
the C Block and the public safety provisions for the D Block. MetroPCS 
filed in opposition to Frontline's petition for reconsideration on this 
issue.
    32. Subsequent to the Commission's order waiving the impermissible 
material relationship rule with respect to leasing or resale of the 
spectrum capacity of the D Block license, Frontline filed an amendment 
to its petition for reconsideration withdrawing its argument that the 
reserve prices were set arbitrarily high and stating that it no longer 
advocates altering the reserve prices for the 700 MHz auction.
    33. In light of Frontline's withdrawal of its arguments with 
respect to the Auction 73 reserve prices, the Commission dismisses this 
portion of Frontline's petition for reconsideration.
3. Re-Auction Procedures
    34. MetroPCS asks the Commission to reconsider two issues related 
to the re-auction of 700 MHz licenses contemplated by the 700 MHz 
Second Report and Order. First, MetroPCS requests reconsideration of 
the Commission's determination that, for any 700 MHz re-auction, the 
auction of alternative licenses would be subject to the same applicable 
reserve prices as the initial auction of licenses. Second, MetroPCS 
requests reconsideration of the Commission's determination that both 
the initial and any required follow-on auction would be treated as a 
single auction for purposes of the application of Sec.  1.2105(c), the 
rule prohibiting certain communications. The prohibition generally 
applies to auction applicants during the time period between the 
deadline for filing short-form applications and the deadline for 
winning bidders to make their down payments. Treating the initial 
auction and subsequent auction of alternative licenses as a single 
auction would have kept the prohibition in place for all applicants to 
participate in the first auction until the down payment deadline for 
the second auction, regardless of whether they were applicants to 
participate in the second auction. CTIA--The Wireless Association 
(CTIA), U.S. Cellular, Blooston, and RTG support MetroPCS's proposal 
that the Commission allow applicants that do not wish to participate in 
the second auction, to opt out of the second auction to avoid continued 
application of the rules prohibiting certain communications.
    35. The winning bids in Auction 73 for the Lower 700 MHz A, B, and 
E Block licenses and the Upper 700 MHz C Block licenses exceeded the 
aggregate reserve prices for those blocks; however, the provisionally 
winning bid for the Upper 700 MHz D Block did not meet the applicable 
reserve price. On March 20, 2008, two days after the close of Auction 
73, the Commission issued an order electing not to re-offer the D Block 
license immediately in Auction 76 in order to allow additional time to 
consider options for this spectrum. More recently, Congress directed 
the Commission to reallocate the D Block spectrum for use by public 
safety entities. As a result, the D Block spectrum will not be assigned 
by auction for commercial use.
    36. Because the Commission decided not to re-auction the D Block 
license immediately, and Congress has since directed the Commission to 
reallocate the D Block for public safety use, the re-auction of the D 
Block has not occurred and will not occur. As a result, the reserve 
price for any re-auction of the D Block is now irrelevant. In addition, 
the issue is also moot as to the other blocks because the bids in those 
blocks exceeded the applicable reserve prices,

[[Page 19429]]

thereby obviating the need for any follow-on auctions. Accordingly, the 
Sec.  1.2105(c) prohibition on certain communications, as applied to 
the Auction 73 applicants for licenses in those blocks, ended at the 
down payment deadline for that auction. The Commission therefore 
dismisses as moot MetroPCS's petition for reconsideration of these 
issues related to the re-auction.
4. Prohibition of Certain Communications
    37. In its petition for reconsideration, PISC requests that the 
Commission declare that two or more bidders working together to block 
another bidder from winning any licenses would violate Sec.  1.2105(c) 
of the Commission's rules, which prohibits certain communications. PISC 
argues that in the 700 MHz Second Report and Order, the Commission 
failed to address PISC's request to clarify

whether a conspiracy to block a bidder from winning any licenses, 
rather than a conspiracy to distribute licenses or set the price for 
licenses, [ violates section 1.2105(c). PISC argues that] a 
conspiracy among bidders to block potential rivals--even if they 
plan to bid aggressively against one another--thwarts the goals of 
Congress in distributing licenses via auction.

    38. The Commission denies PISC's request for a declaratory ruling 
on the application of Sec.  1.2105(c) to certain types of activity by 
bidders who work together. The Commission has discretion whether to 
issue a declaratory ruling, and rather than address PISC's request in 
this proceeding, the Commission thinks it's best to address such issues 
as they arise. The declaratory ruling PISC seeks would likely be of 
very limited benefit given the hypothetical general circumstances it 
describes. The Commission also notes that regardless of compliance with 
Sec.  1.2105(c), auction applicants remain subject to the antitrust 
laws, which are designed to prevent anticompetitive behavior in the 
marketplace, and conduct that is permissible under the Commission's 
rules may be prohibited by the antitrust laws.
5. Anonymous Bidding
    39. In the 700 MHz Second Report and Order, the Commission 
concluded that the public interest would be served by the use of 
anonymous bidding procedures in Auction 73. The Commission found that 
the record indicated that implementing anonymous bidding procedures 
would reduce the potential for anti-competitive bidding behavior, 
including bidding activity that aims to prevent the entry of new 
competitors. The Commission noted that its decision did not rely upon 
studies conducted by Gregory Rose and submitted by PISC, even though 
those studies were offered as evidence that anonymous bidding would be 
beneficial. As described in detail in footnotes 644 and 645 of the 700 
MHz Second Report and Order, the Commission did not find the Rose 
studies persuasive for a variety of reasons.
    40. PISC does not challenge the Commission's decision to employ 
anonymous bidding in Auction 73, but argues that the Commission's 
conclusions regarding the merits of the Rose studies were inaccurate 
and arbitrary, and that footnotes 644, 645, and 655 (which relies upon 
footnotes 644 and 645) should be vacated. PISC adds that given the 
Commission's decision to adopt anonymous bidding, it was unnecessary 
and unusual for it to address the merits of the Rose studies in 
footnotes.
    41. The Commission denies PISC's request to vacate the footnotes 
describing potential flaws in the Rose studies. PISC's petition for 
reconsideration presents additional information regarding the Rose 
studies that provides useful context but does not change the validity 
of the footnotes with respect to the studies as filed. Footnotes 644, 
645, and 655 in the 700 MHz Second Report and Order explain that the 
Commission's adoption of anonymous bidding, although advocated by the 
Rose studies, did not depend upon those studies.

C. Spectrum Eligibility

    42. Frontline, PISC, and RTG filed petitions requesting that the 
Commission reconsider its decision not to impose spectrum aggregation 
limits. Frontline requests that the Commission implement a spectrum 
screen that would trigger increased review of certain long-form auction 
applications for anticompetitive effects, similar to the screen applied 
to merger and acquisition transactions. PISC proposes that the 
Commission adopt a rule prohibiting the winner of the Upper 700 MHz D 
Block license from holding Upper 700 MHz C Block licenses and vice 
versa. RTG proposes an interim, geographically based spectrum cap 
applicable specifically to the 700 MHz auction.
    43. In the 700 MHz Second Report and Order, the Commission 
considered and declined to adopt license eligibility restrictions, 
including rules that would have excluded ILECs, incumbent cable 
operators, and large wireless carriers from holding licenses in the 700 
MHz Band. The Commission provided numerous reasonable justifications 
for its decision, and the Commission finds that Frontline, PISC, and 
RTG offer no new evidence warranting the Commission's reconsideration 
of the Commission's decision on spectrum aggregation limits at the 
initial licensing stages of the 700 MHz Band. Further, the Commission 
notes that the appropriate policies regarding spectrum holdings going 
forward are the subject of a separate and pending rulemaking 
proceeding, and any further consideration of such issues is therefore 
more appropriately considered in that context. Therefore, the 
Commission denies Frontline's request for heightened review of certain 
long-form applications, and the Commission denies PISC's and RTG's 
requests that the Commission impose a spectrum cap. Finally, the 
Commission concludes that Congress's direction that the Commission 
reallocate the D Block spectrum to public safety use has rendered moot 
requests by Frontline and PISC that the Commission not permit the C 
Block auction winners to hold a D Block license or D Block auction 
winners to hold C Block licenses.

D. Lower 700 MHz A Block Wholesale Requirement

    44. In its petition for reconsideration, NTCH, Inc. (NTCH) argues 
that the Commission should reform the current Universal Service Funding 
(USF) system by requiring Lower 700 MHz A Block licensees to provide 
service on a discounted wholesale basis to designated Eligible 
Telecommunications Companies. CTIA and U.S. Cellular oppose NTCH's 
proposal arguing, among other assertions, that the proposal is outside 
the scope of what can be granted on reconsideration of the 700 MHz 
Second Report and Order.
    45. NTCH presents a new proposal to impose a discounted wholesale 
obligation on Lower 700 MHz A Block licensees and argues that the 
Commission should adopt it as a means of reforming the current USF 
system, but does not challenge the Commission's refusal, in the 700 MHz 
Second Report and Order, to adopt wholesale requirements for the Upper 
700 MHz C or D Block licensees. The Commission agrees with CTIA and 
U.S. Cellular that the USF issues raised in NTCH's proposal are outside 
the scope of this proceeding and therefore denies NTCH's petition. The 
Commission notes that, as with other 700 MHz licensees, A Block 
licensees have the flexibility to provide wholesale services if they 
choose to based on their determination of market need.

[[Page 19430]]

E. First Amendment Analysis of Open Platform Rule

    46. In the 700 MHz Second Report and Order, the Commission required 
licensees in the C Block

to allow customers, device manufacturers, third-party application 
developers, and others to use or develop the devices and 
applications of their choice, subject to certain conditions[.]

The Commission rejected Verizon Wireless' arguments that the open 
platform rule applicable to the Upper 700 MHz C Block violates the 
First Amendment, finding that even if the open platform rule did 
implicate the First Amendment, it withstands the applicable 
intermediate scrutiny test.
    47. In late 2007, Verizon Wireless and CTIA each filed and then 
withdrew lawsuits in the DC Circuit Court challenging the open platform 
requirements on the grounds that they violated the First Amendment. 
Prior to Verizon Wireless's withdrawal of its petition for review from 
the DC Circuit Court, PISC filed its petition for reconsideration with 
the Commission requesting, in pertinent part, that the Commission 
clarify that

the proper framework for Verizon's First Amendment claim remains the 
`rational basis' flowing from the `scarcity rationale' adopted by 
the Supreme Court in NBC v. U.S.

    48. In light of the withdrawal of the Verizon Wireless and CTIA 
First Amendment challenges to the open platform rule, PISC's request 
for clarification of the proper legal framework for addressing Verizon 
Wireless's withdrawn challenge is moot, and the Commission accordingly 
dismisses PISC's petition for reconsideration as such, to the extent 
the petition requested such clarification.

F. Open Platform Requirements for the C Block if the Reserve Price Is 
Not Met

    49. In its petition for reconsideration, Frontline argues that 
stripping the C Block of the open platform conditions in the event of a 
re-auction would be contrary to the public interest and would create 
perverse incentives for bidders. The C Block auction was successful and 
has been completed, rendering any discussion of an unsuccessful auction 
and the terms of a re-auction of the C Block moot. Therefore, the 
Commission dismisses Frontline's petition for reconsideration to the 
extent that it seeks the Commission to reconsider the conditions of a 
re-auction of the C Block.

G. 700 MHz Public/Private Partnership

    50. Several of the pending petitions in this proceeding seek 
reconsideration or clarification of various aspects of the regulatory 
requirements adopted by the Commission to effectuate and govern the 
Public/Private Partnership between the Upper 700 MHz D Block licensee 
and the future licensee of the 700 MHz public safety broadband spectrum 
(the Public Safety Broadband Licensee or PSBL). The Commission finds 
that the directives in the Spectrum Act regarding the D Block render 
moot the requests for reconsideration or clarification of the 
Commission D Block commercial service rules, and the Commission 
therefore dismisses these requests.

H. Narrowband Relocation

    51. Commonwealth of Virginia (Virginia) and Pierce County Public 
Transportation Benefit Area Corporation (Pierce Transit) filed 
petitions seeking reconsideration of certain aspects of the decisions 
on public safety narrowband relocation.
    52. The 700 MHz Second Report and Order assumed that the D Block 
would be licensed to a commercial provider that would be responsible, 
up to a cap, for the costs of the narrowband relocation. Now that the D 
Block has been reallocated for public safety services pursuant to the 
Spectrum Act, the approach that the Commission established for 
effectuating the consolidation of the narrowband channels cannot be 
implemented, and the Commission must revisit the entire narrowband 
relocation process (including elements such as those relating to 
reimbursement and the timing of relocation), which the Commission will 
accomplish by initiating a new rulemaking proceeding where the 
Commission can address more comprehensively what rules need to be 
adopted, deleted, or modified to implement the Spectrum Act. 
Accordingly, the Commission dismisses the petitions for reconsideration 
by Virginia and Pierce Transit as moot.

III. Ordering Clause

    53. Accordingly, it is ordered, pursuant to sections 4(i), 302, 
303(e), 303(f), 303(g), 303(r) and 405 of the Communications Act of 
1934, as amended, 47 U.S.C. 154(i), 302, 303(e), 303(f), 303(g) and 
405, that the petitions for reconsideration of Blooston Rural Carriers, 
NTCH, Inc., and Rural Telecommunications Group, Inc. Are denied; the 
petitions for reconsideration of AT&T, Inc., Commonwealth of Virginia, 
Cyren Call Communications Corporation, and Pierce County Public 
Transportation Benefit Area Corporation are dismissed; and petitions 
for reconsideration of Frontline Wireless, LLC, MetroPCS 
Communications, Inc., and Ad Hoc Public Interest Spectrum Coalition are 
denied in part and dismissed in part as described herein.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2013-07397 Filed 3-29-13; 8:45 am]
BILLING CODE 6712-01-P