*Pages 1--149 from Microsoft Word - 41843* Federal Communications Commission FCC 04- 167 1 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of Promoting Efficient Use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets ) ) ) ) ) ) WT Docket No. 00- 230 SECOND REPORT AND ORDER, ORDER ON RECONSIDERATION, AND SECOND FURTHER NOTICE OF PROPOSED RULEMAKING Adopted: July 8, 2004 Released: September 2, 2004 Comment Date: November 17, 2004 Reply Comment Date: December 17, 2004 By the Commission: Chairman Powell; Commissioners Abernathy and Martin issuing separate statements; Commissioner Adelstein approving in part, dissenting in part, and issuing a statement; Commissioner Copps dissenting and issuing a statement. TABLE OF CONTENTS Heading Paragraph # I. INTRODUCTION.................................................................................................................................. 1 II. EXECUTIVE SUMMARY.................................................................................................................... 4 III. BACKGROUND.................................................................................................................................... 7 IV. SECOND REPORT AND ORDER...................................................................................................... 10 A. Spectrum Leasing Arrangements ................................................................................................... 10 1. Additional Streamlining of Procedures for Certain Categories of Spectrum Leases .............. 10 a. Immediate approval of certain categories of de facto transfer leases that are subject to our forbearance authority ................................................................................. 11 (i) Background ................................................................................................................ 11 (ii) Discussion .................................................................................................................. 14 b. Immediate approval of certain categories of de facto transfer leases that are not subject to forbearance ....................................................................................................... 38 (i) Background ................................................................................................................ 38 (ii) Discussion .................................................................................................................. 39 c. Applying the immediate approval procedures to short- term de facto transfer leases................................................................................................................................. 42 (i) Background ................................................................................................................ 42 (ii) Discussion .................................................................................................................. 43 1 Federal Communications Commission FCC 04- 167 2 d. Immediate processing of certain categories of spectrum manager leases ......................... 46 (i) Background ................................................................................................................ 46 (ii) Discussion .................................................................................................................. 47 2. Extending Spectrum Leasing Policies to Additional Spectrum- Based Services ..................... 51 a. Background....................................................................................................................... 51 b. Discussion......................................................................................................................... 52 3. Spectrum Leasing Policies Applicable to Designated Entity/ Entrepreneur Licensees............ 67 a. Background....................................................................................................................... 67 b. Discussion......................................................................................................................... 69 4. Application of the De Facto Control Standard for Spectrum Leasing with regard to Other Issues and Types of Arrangements................................................................................ 83 a. Background....................................................................................................................... 83 b. Discussion......................................................................................................................... 84 B. Policies to Facilitate Advanced Technologies ............................................................................. 85 1. Background ............................................................................................................................. 85 2. Discussion ............................................................................................................................... 86 a. Facilitating advanced technologies within existing regulatory frameworks, including dynamic spectrum leasing arrangements .......................................................... 88 b. Private commons............................................................................................................... 91 C. License Assignments and Transfers of Control ........................................................................... 100 1. Immediate Approval Procedures for Certain Categories of License Assignments and Transfers of Control .............................................................................................................. 100 a. Background..................................................................................................................... 100 b. Discussion....................................................................................................................... 101 2. Extending the Streamlined Processing Policies Relating to License Assignments and Transfers of Control to Additional Wireless Radio Services ................................................ 109 a. Background..................................................................................................................... 109 b. Discussion....................................................................................................................... 110 D. The Commission’s Role in Providing Secondary Markets Information and Facilitating Exchanges .................................................................................................................................... 112 1. Background ........................................................................................................................... 112 2. Discussion ............................................................................................................................. 113 V. ORDER ON RECONSIDERATION ................................................................................................. 116 A. Licensee Responsibility To Ensure That Spectrum Lessees Comply With Commission Policies and Rules ........................................................................................................................ 116 1. The licensee’s responsibility to ensure the spectrum lessee’s compliance with Commission policies and rules.............................................................................................. 119 a. Spectrum manager leasing arrangements........................................................................ 121 b. De facto transfer leasing arrangements........................................................................... 123 2. The licensee’s responsibility to terminate a spectrum lease for violations by the spectrum lessee...................................................................................................................... 128 B. Protections for Licensees and Spectrum Lessees in the Event of Termination of the Spectrum Lease or the License .................................................................................................... 132 1. Procedural protections for licensees and spectrum lessees with regard to Commission termination of a spectrum leasing arrangement..................................................................... 132 a. Spectrum manager leasing arrangements........................................................................ 132 b. De facto transfer leasing arrangements........................................................................... 136 2. Protections for spectrum lessees in the event of license termination .................................... 140 C. Licensee Responsibility for Meeting Construction Obligations .................................................. 144 2 Federal Communications Commission FCC 04- 167 3 D. Responsibility for Compliance With Cost- Sharing Obligations for Relocation of Microwave Licensees in Broadband PCS.................................................................................... 147 E. Miscellaneous Additional Clarifications and Revisions .............................................................. 150 VI. SECOND FURTHER NOTICE OF PROPOSED RULEMAKING ................................................ 159 VII............................................................................................................................. CONCLUSION 166 VIII. PROCEDURAL MATTERS........................................................................................................... 167 A. Comment Filing Procedures ........................................................................................................ 167 B. Ex Parte Presentations ................................................................................................................. 175 C. Final Regulatory Flexibility Analysis.......................................................................................... 176 D. Paperwork Reduction Act of 1995 Analysis................................................................................ 177 E. Initial Regulatory Flexibility Analysis......................................................................................... 178 F. Contact Information ..................................................................................................................... 179 IX. ORDERING CLAUSES..................................................................................................................... 180 APPENDICES: Appendix A – Commenting Parties Appendix B – Petitions for Reconsideration Appendix C – Final Rules Appendix D – Final Regulatory Flexibility Analysis Appendix E – Initial Regulatory Flexibility Analysis I. INTRODUCTION 1. On May 15, 2003, we took significant first steps to facilitate the development of secondary markets in spectrum usage rights involving our Wireless Radio Services when we adopted our Report and Order and Further Notice of Proposed Rulemaking (Report and Order and Further Notice, respectively) in this proceeding. 1 In the Report and Order, we established policies and rules to enable spectrum users to gain access to licensed spectrum by entering into different types of spectrum leasing arrangements with licensees in most Wireless Radio Services. 2 In addition, we streamlined the Commission’s approval procedures for license assignments and transfers of control in most Wireless Radio Services. 3 These steps advanced the general goal set forth in the Commission’s Secondary Markets Policy Statement, namely that of significantly expanding and enhancing secondary markets to permit spectrum to flow more freely among users and uses in response to economic demand, to the extent consistent with our public interest objectives. 4 The policies we implemented also were consistent with several spectrum policy recommendations of the Spectrum Policy Task Force Report, including allowing more flexible use of 1 See generally Promoting Efficient Use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets, Report and Order and Further Notice of Proposed Rulemaking, 18 FCC Rcd 20604 (2003) (Report and Order and Further Notice, respectively), Erratum, 18 FCC Rcd 24817 (2003). By “spectrum usage rights,” we refer to the terms, conditions, and period of use conferred under a license. See Report and Order at ¶ 1. 2 See generally id. at ¶¶ 1- 194. 3 See generally id. at ¶¶ 195- 203. 4 See generally Principles for Promoting Efficient Use of Spectrum By Encouraging the Development of Secondary Markets, Policy Statement, 15 FCC Rcd 24178 (2000) (Secondary Markets Policy Statement). 3 Federal Communications Commission FCC 04- 167 6 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 11 of the license and de facto control over the leased spectrum pursuant to the updated de facto control standard for leasing. 12 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. 13 We also adopted streamlined Commission approval procedures for license assignments and transfers of control involving many of our Wireless Radio Services. 14 8. In the Further Notice, 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. 15 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. 16 We requested comment on whether our spectrum leasing policies should be extended to additional services, 17 and whether other actions should be taken to facilitate the development of secondary markets in spectrum usage rights. 18 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. 19 11 De jure control means legal control, or control as a matter of law. Typically, ownership of more than 50 percent of the voting stock of a corporate licensee evidences de jure control. See generally In re Application of Fox Television Stations, Inc., Memorandum Opinion and Order, 10 FCC Rcd 8452, 8513- 14 ¶¶ 151- 153 (1995). 12 See generally Report and Order at ¶¶ 82- 125, 182- 189. As explained more fully in the Report and Order, we adopted a new, more flexible de facto control standard that applies to spectrum leasing arrangements. See id. at ¶¶ 51- 70. 13 See generally id. at ¶¶ 82- 92, 126- 189. 14 See generally id. at ¶¶ 195- 203. 15 See generally Further Notice at ¶¶ 213- 323. 16 See id. at ¶¶ 237- 287. 17 See id. at ¶¶ 288- 313. 18 See generally id. at ¶¶ 221- 229 (achieving a more efficient spectrum marketplace), 315- 319 (applying the new de facto control standard for spectrum leasing to other types of arrangements), 320- 323 (considering the effect of secondary markets policies on designated entity and entrepreneur policies). 19 See id. at ¶¶ 230- 236. 6 Federal Communications Commission FCC 04- 167 7 9. In response to the Further Notice, we received twenty- one (21) comments and ten (10) reply comments. 20 Five parties filed petitions for reconsideration of the Report and Order, and several parties filed oppositions or comments in response. 21 IV. SECOND REPORT AND ORDER A. Spectrum Leasing Arrangements 1. Additional Streamlining of Procedures for Certain Categories of Spectrum Leases 10. In the Report and Order, we took significant steps to develop spectrum leasing policies for many of our Wireless Radio Services and to streamline the regulatory processes applicable to parties that seek to enter into these types of arrangements. In the Further Notice, we proposed additional steps to further reduce unnecessary delay in the implementation of certain categories of spectrum leasing arrangements to the extent doing so would be consistent with meeting our statutory obligations that such transactions would be in the public interest. 22 In this Second Report and Order, we adopt several measures to remove unnecessary delay in the implementation of spectrum leasing arrangements, as explained herein. a. Immediate approval of certain categories of de facto transfer leases that are subject to our forbearance authority (i) Background 11. Under current spectrum leasing policies and procedures, licensees and spectrum lessees may enter into both long- and short- term de facto transfer leases pursuant to streamlined application and 20 See AMTA Comments; APCO Comments; AT& T Wireless Comments and Reply Comments; BellSouth Comments; Boeing Reply Comments; Blooston Rural Carriers Comments; Cantor Fitzgerald Telecom Comments and Reply Comments; Cingular Wireless Comments; CTIA Comments; ITA Reply Comments; Mobex Comments; NAM/ MRFAC Reply Comments; National ITFS Association Comments and Reply Comments; Nextel Communications Comments; Nextel Partners Reply Comments; PCIA Comments; Paging Systems Reply Comments; RTG Comments; Salmon PCS Comments; SBC Comments; Spectrum Market Comments; Sprint Comments; St. Clair County Reply Comments; T- Mobile Reply Comments; Verizon Wireless Comments; WCA Comments; WiNSeC Comments; Winstar Comments and Reply Comments. We also received ex parte comments from three parties. See Council Tree Ex Parte Comments; MDS America Ex Parte Comments; Salmon PCS Ex Parte Comments. 21 See Blooston Rural Carriers Petition for Partial Reconsideration and/ or Clarification; Cingular Wireless Petition for Reconsideration and Clarification; First Avenue Networks Petition for Reconsideration; NTCA Petition for Partial Reconsideration; Verizon Wireless Petition for Reconsideration and Clarification. In response, we received reply comments from Salmon PCS and RTG, an opposition was filed by the Fixed Wireless Communications Coalition, and an ex parte letter filed by PCIA’s Microwave Cost Sharing Clearinghouse. See generally Salmon PCS Petition Reply Comments; RTG Petition Reply Comments (dated Feb. 13, 2004); Fixed Wireless Communications Coalition Opposition to Petition for Reconsideration; Letter to Katherine Harris, Deputy Chief, Mobility Division, from Eric W. DeSilva, Counsel to PCIA’s Microwave Cost Sharing Clearinghouse (dated Mar. 25, 2004). 22 See generally Further Notice at ¶¶ 237- 240. 7 Federal Communications Commission FCC 04- 167 8 approval procedures. 23 Specifically, parties that seek to enter into long- term de facto transfer leasing arrangements submit their applications, which are then placed on public notice 24 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. 25 Parties that seek to enter into short- term de facto transfer leases do so pursuant to the same processes applicable to 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. 26 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. 27 12. In the Further Notice, 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, 28 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. 29 23 See generally Report and Order at ¶¶ 150- 154. 24 The Wireless Telecommunications Bureau places these spectrum leasing applications on weekly public notices. We note that all de facto transfer spectrum leasing arrangements that fall within the scope of our forbearance authority – i. e., those that involve licensees that are telecommunications carriers, as defined under the Act, or otherwise provide commercial radio services (CMRS) or common carrier- based services – generally are subject to the requirement, pursuant to Section 309( b), that the application be placed on public notice prior to grant. See 47 U. S. C. § 309( b). Those applications not statutorily subject to this requirement are placed on an “informational” public notice. 25 As the Commission indicated in the Report and Order, these concerns might include foreign ownership or competition concerns, or other concerns requiring further review, such as those raised by petitions to deny (where such petitions are permitted under Section 309( d) of the Act). See Report and Order at ¶¶ 151- 152; 47 U. S. C. §§ 309( b)-( d). 26 Report and Order at ¶ 181. 27 See id. at ¶ 152; see generally 47 C. F. R. § 1.101 et seq. (rules pertaining to petitions for reconsideration of actions taken on delegated authority). 28 47 U. S. C. § 160( a). As we noted in the Further Notice, our forbearance authority under Section 10 of the Communications Act applies to de facto transfer spectrum leases involving licensees that are telecommunications carriers, or that otherwise provide commercial mobile radio service and common carrier-based services. See Further Notice at ¶ 242. 29 See id. at ¶¶ 244, 246- 265, 268. In particular, we proposed to forbear from the requirements of Sections 308, 309, and 310( d) of the Communications Act to the extent necessary to permit the Commission to process notification filings regarding certain categories of de facto transfer leases without 30 days prior public notice and without prior Commission review and consent. Id. at ¶¶ 244, 246. 8 Federal Communications Commission FCC 04- 167 9 13. Specifically, we proposed that if the spectrum lessee satisfied certain eligibility requirements and applicable use restrictions, 30 and the spectrum lease did not raise specified potential public interest concerns relating to foreign ownership, 31 designated entity/ entrepreneur, 32 or competition policies, 33 we would require only that the spectrum leasing parties notify the Commission of the spectrum leasing arrangement within 14 days of executing the lease. 34 Once the parties notified the Commission of a spectrum leasing arrangement that met these qualifications, we proposed that the lease would be deemed approved as of the time that the Bureau placed it on public notice. 35 Thereafter, our approval of the spectrum leasing arrangement would be subject to the Commission’s reconsideration procedures. Any interested party would be entitled, consistent with our rules and policies concerning standing, to petition for reconsideration of our approval of the spectrum leasing arrangement within 30 days of the public notice date. 36 Similarly, the Bureau would be able to reconsider the grant on its own motion within 30 days of the public notice date, and the Commission could reconsider the grant on its own motion within 40 days of the public notice date. 37 We also inquired whether there were additional classes of leases that 30 In the Further Notice, we proposed to forbear from requiring prior approval of de facto transfer spectrum leases provided, among other things, that the spectrum lessee certifies in the spectrum lease filing that it meets the basic qualification requirements for holding the license authorization associated with the lease, and that it would comply with all applicable use restrictions. See id. at ¶¶ 247- 250. Thus, for example, a lessee would be required to have the requisite character qualifications and to be able to certify its compliance under the Anti- Drug Abuse Act of 1988. See 21 U. S. C. § 862; 47 C. F. R. § 1.2001 et seq. 31 We proposed to forbear from requiring prior Commission review of de facto transfer spectrum leases so long as such leases would not, among other things, raise certain specified potential foreign ownership concerns. See Further Notice at ¶¶ 251- 253. 32 See id. at ¶¶ 266, 268. Noting that designated entity and entrepreneur licensees had received special benefits (e. g., bidding credits, installment payment plans, or closed bidding licenses) from the Commission and that, as a result, would continue to remain subject to any applicable eligibility and use restrictions when leasing to spectrum lessees, we sought general comment on how our forbearance proposal would address spectrum leasing by designated entity and entrepreneur licensees. See id. at ¶¶ 266, 268. 33 We sought comment in the Further Notice on possible benchmarks or safe harbors that would allow certain classes of de facto transfer leases that would not pose any significant risk to our competition policies to proceed without prior public notice and Commission review. Id. at ¶¶ 257- 262. Specifically, we proposed to establish benchmarks that considered the competitive effects on both the input and output markets. Id. at ¶ 258 & n. 454. 34 Id. at ¶ 266. Under the proposal set forth in the Further Notice, both spectrum leasing parties would be involved in filing the application. Id. This is consistent with current requirements pertaining to de facto transfer spectrum leasing applications. See Report and Order at ¶ 151. 35 Further Notice at ¶ 266. 36 Id. at ¶ 268; see 47 U. S. C. § 405; 47 C. F. R. § 1.106( b). 37 Further Notice at ¶ 268; see 47 C. F. R. §§ 1.108, 1.117. We also noted that, should information be brought to our attention at some later date suggesting that the parties to a spectrum lease implemented pursuant to this proposed forbearance option had not complied with the requirements and conditions we adopt for such action, the Commission could initiate a formal or informal investigation. Further Notice at ¶ 268 n. 461; see 47 C. F. R. §§ 1.80, 1.89, 1.91, 1.92. 9 Federal Communications Commission FCC 04- 167 10 might raise other public interest concerns for which prior individualized Commission review and approval would continue to be appropriate. 38 (ii) Discussion 14. Consistent with the broad support by commenters for the general forbearance proposal set forth in the Further Notice, 39 we adopt this proposal, with certain modifications, as discussed herein. Under the approach we adopt, spectrum leasing parties 40 that seek to enter into de facto transfer spectrum leases that qualify under this forbearance approach may file their spectrum lease application 41 with the Commission, which in turn will be immediately approved under the procedures set forth below. 42 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. This action serves the Commission’s policy goals of facilitating secondary markets in spectrum usage rights by enabling parties to implement spectrum leasing arrangements without undue delay. At the same time, it continues to protect the public interest by subjecting these arrangements, following approval, to public notice and possible additional review under the Commission’s reconsideration procedures should that be warranted. (a) Elements of de facto transfer leasing transactions that would not require prior public notice and individualized Commission review 15. 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 in Section IV. A. 1. a( ii)( b), below. As discussed in this section, 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 38 Further Notice at ¶¶ 263- 265. 39 All parties commenting on the forbearance proposal supported the Commission’s general approach. See, e. g., Blooston Rural Carriers Comments at 11- 12; Cantor Fitzgerald Telecom Comments at 2; CTIA Comments at 2- 4; Nextel Communications Comments at 6- 9; Nextel Partners Reply Comments at 8; PCIA Comments at 5; RTG Comments at 2- 5; SBC Comments at 7- 10; Spectrum Market Comments at 4; T- Mobile Reply Comments at 6- 8; WCA Comments at 11- 15; Winstar Comments at 2. Some commenters recommended certain revisions to the particular elements proposed, as discussed more fully below. 40 Spectrum leasing parties include licensees and spectrum lessees. The term “spectrum lessee,” as used throughout this report, includes spectrum lessees and spectrum sublessees that have entered into spectrum subleasing arrangements as permitted under our spectrum leasing policies and rules. 41 Because we determine to require that the de facto transfer spectrum leasing arrangements be approved, we use the term “application” instead of the term “notification” used in the Further Notice. 42 As we explain more fully below, under the immediate approval process, spectrum leasing parties must submit qualifying applications and include the requisite filing fees. The Bureau will then process the application overnight and, provided that the payment of the requisite filing fees have been confirmed, indicate in our Universal Licensing System (ULS) that the application has been approved. See Section IV. A. 1. a( ii)( b), infra. 10 Federal Communications Commission FCC 04- 167 11 lease may become effective. 43 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. 44 16. Eligibility and use restrictions. As proposed in the Further Notice, 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 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. 45 17. As discussed in the Further Notice, 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. 46 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. 47 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. 18. Consistent with the policies we adopted in the Report and Order, the applicable eligibility restrictions are the same for both long- term and short- term de facto transfer leases. 48 The applicable use restrictions may, however, differ depending on whether a long or short- term de facto transfer lease is involved. 49 As provided in the 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 43 If spectrum leasing parties do not qualify for this type of processing, they must proceed pursuant to the streamlined 21- day process set forth in the Report and Order. See Report and Order at ¶¶ 151- 154. 44 Thus, if the spectrum leasing parties indicate on the application that, under the terms of the lease, the spectrum lessee will commence the spectrum lease as of the date that the Commission approves the arrangement, then that will be the date on which the Commission’s policies and rules regarding de facto transfer leases will be applied with regard to the leased spectrum. If, however, the spectrum leasing parties have indicated in the lease application that commencement is due to occur at some later date, then the date indicated will apply. 45 We note that only a few commented on this proposal, with most providing general support for it. See, e. g., Blooston Rural Carriers Comments at 12; RTG Comments at 2- 3. Only one commenter opposed such restrictions. See AT& T Wireless Comments at 6. 46 Further Notice at ¶ 248. 47 Id. 48 See Report and Order at ¶ 143 (eligibility requirements applicable to long- term de facto transfer leases), ¶ 174 (eligibility requirements applicable to short- term de facto transfer leases); 47 C. F. R. §§ 1.9030( d)( 2), 1.9035( d)( 1). 49 See Report and Order at ¶ 144 (use restrictions applicable to long- term de facto transfer leases), ¶ 175 (use restrictions applicable to short- term de facto transfer leases); 47 C. F. R. §§ 1.9030( d)( 3), 1.9035( d)( 1). 11 Federal Communications Commission FCC 04- 167 12 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. 50 19. Foreign ownership. As we generally proposed in the Further Notice, 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. 20. 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. 51 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). 52 21. Finally, consistent with our policies under Section 310( b)( 4), 53 as explained in the Further Notice, 54 the spectrum lessee must certify either (1) that it does not have more than 25 percent indirect 50 Report and Order at ¶ 175; 47 C. F. R. § 1.9035( d)( 1). 51 47 U. S. C. § 310( a). 52 Id. § 310( b)( 1)-( 3). 53 Id. § 310( b)( 4). 54 As noted in the Further Notice, we have traditionally conducted our Section 310( b)( 4) public interest analysis of indirect foreign ownership in excess of 25 percent in the context of specific applications (whether for a new authorization or in connection with a transfer of control or license assignment) involving an entity with such ownership or in response to a request for declaratory ruling. See, e. g., Lockheed Martin Global Telecommunications, Comsat Corporation, and Comsat General Corporation, Applications for Assignment of Section 214 Authorizations, Private Land Mobile Radio Licenses, Experimental Licenses, and Earth Station Licenses and Petition for Declaratory Ruling Pursuant to Section 310( b)( 4) of the Communications Act, Order and Authorization, 16 FCC Rcd 22897 (2001), Erratum, 17 FCC Rcd 2147 (2002), recon. denied, 17 FCC Rcd 14030 (2002). Moreover, under the Foreign Participation Order, we treat different classes of foreign ownership differently, depending upon whether the applicant is from a WTO- member country or a non- WTO- member country. See Foreign Participation Order, 12 FCC Rcd at 23902- 23903 ¶¶ 26- 27. Under the current standard, an applicant that demonstrates more than 25 percent indirect foreign ownership attributable to entities from WTO member countries is entitled to a presumption that no competitive concerns are raised by the proposed investment, subject to Commission consideration of any relevant factors and evidence that might tend to rebut the presumption. See, e. g., General Electric Capital Corporation and SES Global, S. A., Order and Authorization, 16 FCC Rcd 17575, 17579 ¶ 30 (IB & WTB 2001); see also Foreign Participation Order, 12 FCC Rcd at 23913- 23915 ¶¶ 50- 53, 23940 ¶¶ 111- 112. We do not presume, however, that indirect foreign investment from WTO-member countries poses no national security, law enforcement, foreign policy, or trade concerns, and accord deference to the expertise of Executive Branch agencies in identifying and interpreting these issues of concern in the context of particular applications and petitions for declaratory ruling under Section 310( b)( 4). See Foreign Participation Order, 12 FCC Rcd at 23919- 23920 ¶¶ 63- 64. In contrast, an applicant that demonstrates more than (continued….) 12 Federal Communications Commission FCC 04- 167 13 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. 22. We recognize that this approach could require a spectrum lessee with indirect foreign ownership above 25 percent to file multiple Section 310( b)( 4) requests in order to take advantage of the new immediate approval procedures for spectrum leases. The need to make multiple filings for Section 310( b)( 4) approval could undercut many of the efficiencies provided by the new procedures. In order to minimize the need to request multiple Section 310( b)( 4) rulings, we will entertain petitions for Section 310( b)( 4) rulings that seek to cover future spectrum leasing arrangements involving spectrum for services and geographic coverage areas specified in the petitions. We also will entertain petitions that seek to cover such spectrum leases entered into by the petitioning carrier, as well as by wholly- owned subsidiaries of that carrier. However, in order to discourage the filing of speculative petitions, which would impose undue administrative burdens on Commission resources, we note that we will entertain petitions for such “blanket” rulings only in conjunction with a spectrum lease application that would be covered by the requested ruling. Consistent with our current practice, we will forward the petition for declaratory ruling to the appropriate Executive Branch agencies and process the application under our current streamlined procedures, assuming the application is otherwise eligible for such processing. We believe this approach eliminates unnecessary regulatory hurdles for carriers seeking maximum flexibility to expand the scope of their service offerings, while continuing to ensure that the Commission and the Executive Branch have a meaningful opportunity to review applications and petitions for potential harms to national security, law enforcement, public safety, security of critical infrastructure, foreign policy, and trade policy. 55 (Continued from previous page) 25 percent indirect foreign ownership attributable to entities from non- WTO member countries does not receive the favorable presumption and must meet the more demanding effective competitive opportunities test. See id. at 23946 ¶ 131. 55 One commenter, T- Mobile, recommended that the Commission include in the forbearance approach those leases in which either (i) the proposed lessee has obtained a declaratory ruling for foreign ownership above 25 percent or (ii) the 100 percent direct or indirect parent of the lessee has obtained such a declaratory ruling. T-Mobile Comments at 2- 4. T- Mobile made the same recommendation with respect to our forbearance proposal for applications to assign or transfer control of wireless licenses. Id. We find that the approach we adopt here strikes the optimum balance between the concerns raised by T- Mobile, reducing transaction costs, including unnecessary regulatory delay, and the concerns raised by the Executive Branch in numerous licensing proceedings before the Commission. See, e. g., Applications of Vodafone AirTouch, plc., and Bell Atlantic Corporation, For Consent to Transfer of Control or Assignment of Licenses and Authorizations, Memorandum Opinion and Order, 15 FCC Rcd 16507 (WTB/ IB 2000); Application of VoiceStream Wireless Corporation, Powertel, Inc., Transferors, and (continued….) 13 Federal Communications Commission FCC 04- 167 14 23. We note that because the same foreign ownership policies apply to both long- term and short-term de facto transfer leasing arrangements, 56 spectrum lessees under both of these types of de facto transfer lease applications will be required to make these certifications. 24. 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, 57 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. 58 As we stated in the Further Notice, we do not intend for the forbearance approach to be used as a means to evade Commission rules, 59 and we believe this to be especially important where the rules have been implemented to fulfill our statutory obligations. 60 Given, however, that we have eliminated all of these restrictions with regard to short- term de facto transfer leases, 61 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. (Continued from previous page) Deutsche Telekom AG, Transferee, Memorandum Opinion and Order, 16 FCC Rcd 9779 (2001); Lockheed Martin Global Telecommunications, Comsat Corporation, and Comsat General Corporation, Assignor, and Telenor Satellite Mobile Services, Inc., and Telenor Satellite, Inc., Assignee, Order and Authorization, 16 FCC Rcd 22897 (2001); Space Station System Licensee, Inc. (Assignor) and Iridium Constellation LLC (Assignee) et al., Memorandum Opinion, Order and Authorization, 17 FCC Rcd 2271 (IB 2002); Global Crossing, Ltd. (Debtor-in- Possession), Transferor, and GC Acquisition Limited, Transferee, Order and Authorization, 18 FCC Rcd 20301 (IB/ WCB/ WTB 2003) (recon. pending). 56 See Report and Order at ¶¶ 110, 143; 47 C. F. R. §§ 1.9020( d)( 2)( ii), 1.9030( d)( 2)( ii). 57 See Report and Order at ¶ 145; see also the discussion in Section IV. A. 4, below. 58 Our decision not to forbear with regard to this class of spectrum leases is consistent with the Commission’s determination not to forbear from prior notice and individualized approval requirements with regard to pro forma transactions involving designated entity and entrepreneur licensees. See Federal Communications Bar Association’s Petition for Forbearance from Section 310( d) of the Communications Act Regarding Non- Substantial Assignments of Wireless Licenses and Transfers of Control Involving Telecommunications Carriers, Memorandum Opinion and Order, 13 FCC Rcd 6293, 6307- 6308 ¶¶ 25- 26 (1998) (Pro Forma Forbearance Order). 59 Further Notice at ¶ 248. While several commenters sought either modification or elimination of restrictions on spectrum leasing by designated entity and entrepreneur licensees, none recommended how the Commission should address eligibility- related restrictions in the context of the forbearance proposal in the event certain restrictions remained in place. See AT& T Wireless Comments at 6- 9; Blooston Rural Carriers Comments at 3- 5; Cingular Wireless Comments at 2- 8; RTG Comments at 5- 7. We discuss these comments more fully in Section IV. A. 4, below, where we provide additional clarification on how the designated entity and entrepreneur policies will be applied in the context of spectrum leasing. 60 See generally Report and Order at ¶¶ 237- 238, 240, 245, 248, 251, 257, 263. 61 Id. at ¶ 176; 47 C. F. R. § 1.9035( d)( 2). 14 Federal Communications Commission FCC 04- 167 15 25. 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), 62 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 Report and Order. 63 26. As we noted in the Report and Order, assessment of potential competitive effects of spectrum leasing transactions remains an important element of our policies to promote 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). 64 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. 65 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 set forth in the 2000 Biennial Review Order on CMRS 62 For the purpose of implementing this requirement, we define these direct or indirect interests in the same manner as defined pursuant to existing rules for wireless licensees under Part 1. In particular, a lessee must disclose whether it has a 10 percent direct or indirect interest in an entity, as defined in Section 1.2112 of our rules. See 47 C. F. R. § 1.2112; see also 47 C. F. R. §§ 1.919 (ownership information relating to Wireless Radio Service licensees and applicants); 1.948 (ownership reporting requirements for transfers and assignments); cf. Report and Order at ¶¶ 119 (requiring spectrum lessees under spectrum manager leases to disclose, in the lease notification, whether they already hold direct or indirect interests, of 10 percent or more, in 10 MHz or more of certain CMRS spectrum in a particular geographic area, either as a licensee or spectrum lessee), 147 (requiring spectrum lessees under long- term de facto transfer leases to disclose, in the lease application, whether they already hold direct or indirect interests, of 10 percent or more, in 10 MHz or more of certain CMRS spectrum in a particular geographic area, either as a licensee or spectrum lessee). 63 See Report and Order at ¶ 147 (citing ¶¶ 116- 119 of the Report and Order). This is spectrum that the Commission has licensed with a mobile allocation and corresponding service rules; it is suitable for the provision of mobile telephony services on the basis of its physical properties, the state of equipment technology, and the relevant interference rights and obligations. 64 See Report and Order at ¶¶ 116- 119 (applying the Commission’s competition policies to spectrum manager leases), 147 (applying the Commission’s competition policies to long- term de facto transfer leases). 65 See, e. g., 2000 Biennial Regulatory Review – Spectrum Aggregation Limits for Commercial Mobile Radio Services, Report and Order, 16 FCC Rcd 22668 (2001) (2000 Biennial Review Order on CMRS Aggregation Limits). 15 Federal Communications Commission FCC 04- 167 16 Aggregation Limits. 66 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 67 – including the Wireless Communications Service (WCS), 68 Broadband Radio Service, 69 Advanced Wireless Service (AWS), 70 the upper and lower 700 MHz bands, 71 and the 1390- 1392 MHz, 1392- 1395/ 1432- 1435 MHz, and 2385- 2390 MHz bands 72 – as well as narrowband PCS, 73 various paging 66 See generally id. In that order, the Commission noted that it would continue to have an obligation to guard against potential anticompetitive effects that might result from entities aggregating control over spectrum. See generally id., 16 FCC Rcd at 22681- 22693 ¶¶ 30- 46, 22695- 22696 ¶¶ 54- 55, 22699- 22700 ¶¶ 62- 65. We note, however, that the cellular cross- interest rules were eliminated in the Rural Report and Order adopted concurrently with this Second Report and Order. See Facilitating the Provision of Spectrum- Based Services to Rural Areas and Promoting Opportunities for Rural Telephone Companies To Provide Spectrum- Based Services, WT Docket No. 02- 381; 2000 Biennial Regulatory Review Spectrum Aggregation Limits For Commercial Mobile Radio Services, WT Docket No. 01- 14; Increasing Flexibility to Promote Access to and the Efficient and Intensive Use of Spectrum and the Widespread Deployment of Wireless Services, and to Facilitate Capital Formation, WT Docket No. 03- 202, Report and Order and Further Notice of Proposed Rulemaking, FCC 04- 166 (rel. Aug. __, 2004) (Rural Report and Order). Accordingly, we will revise our spectrum leasing rules to reflect elimination of these rules in the context of spectrum leasing arrangements, as discussed below. See para. 157, infra. 67 See generally 47 C. F. R. Part 27. Each of the Part 27 services listed here may provide mobile telephony services. See 47 C. F. R. §§ 27.2, 2.106 (allocation in these services includes a mobile allocation). 68 See generally 47 C. F. R. Part 27 subpart E. The licensed spectrum in the WCS band includes the 2305- 2320 MHz and 2345- 2360 MHz bands, and may be used to provide mobile telephony services. See 47 C. F. R. §§ 27.2, 2.106 (allocation in these services includes a mobile allocation). 69 47 C. F. R. Part 27 subpart M. Pursuant to the Commission’s competition policies, the Wireless Telecommunications Bureau and Media Bureau have recently examined transactions involving the assignment of MDS and ITFS licenses to determine whether potential competitive concerns were raised. See Applications to Assign Wireless Licenses from WorldCom, Inc. (Debtor in Possession) to Nextel Spectrum Acquisition Corp., Memorandum Opinion and Order, 19 FCC Rcd 6232, 6244 ¶ 29 (2004) (WTB and MB) (determining that the potential benefits of the transaction outweighed any potential competitive harm, and the that the transaction was in the public interest). 70 See generally 47 C. F. R. Part 27 (including rules applicable to AWS). The licensed spectrum in these bands may be used to provide mobile telephony services. See 47 C. F. R. §§ 27.2, 2.106 (allocation in these services includes a mobile allocation). The Commission adopted the AWS service rules in 2003. See Service Rules for Advanced Wireless Services in the 1.7GHz and 21. GHz Bands, Report and Order, 18 FCC Rcd 25162 (2003). We note, too, that we determined to extend the spectrum leasing policies and rules adopted in the Report and Order to the AWS band. See id. at 25173- 25174 ¶ 26. As part of this Second Report and Order and Order on Reconsideration, we will revise our Part 1 subpart X rules applicable to spectrum leasing arrangements to reflect that AWS is one of the included services. 71 47 C. F. R. Part 27 subparts F, H. The licensed spectrum in these bands may be used to provide mobile telephony services. See 47 C. F. R. §§ 27.2, 2.106 (allocation in these services includes a mobile allocation). 72 47 C. F. R. Part 27 subparts I, J, K. These bands may be used to provide mobile telephony services. See 47 C. F. R. §§ 27.802, 27.902, 27.1002. 73 47 C. F. R. § Part 24 subpart D. Operators may provide mobile telephony services on spectrum in the narrowband PCS band. See 47 C. F. R. § 24.3. 16 Federal Communications Commission FCC 04- 167 17 services, 74 and mobile satellite service where the use of ancillary terrestrial components (ATC) is permissible. 75 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. 76 Such transactions potentially raise public interest concerns relating to competition, and thus will not be subject to our forbearance approach at this time. 27. Thus, if the spectrum leasing transaction does not involve a geographic overlap with spectrum held by the spectrum lessee in any of the particular services listed, as described above, we will permit the leasing arrangement to proceed without prior public notice or case- by- case review. We note, however, that because of the emergence of new technologies and the convergence of different services (e. g., wireline and wireless services), 77 our identification of those classes of spectrum leasing arrangements currently raising possible competitive concerns may not always capture that class of transactions that may raise competitive concerns in the future. For instance, new product markets may emerge through the bundling of different services, thus requiring us to determine whether such a new product market may raise competitive concerns. Alternatively, competition issues might arise if there was significant intermodal consolidation of services. Accordingly, as the Commission gains more experience with regard to these transactions and the kinds of competitive concerns that may arise, further refinements may be made to the forbearance approach we are adopting herein. In addition, to the extent that we determine that a spectrum leasing transaction raises an unanticipated potential competitive concern (e. g., new and evolving product markets, intermodal consolidation), we reserve the right to reconsider the grant of a spectrum leasing transaction during our reconsideration process. 28. 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. (b) Application and immediate approval procedures 74 These would involve certain frequencies in the Paging and Radio Telephone Service. See 47 C. F. R. §§ 20.561 (providing for one- way or two- way mobile operation on certain VHF and UHF channels); 22.651 (providing for trunked mobile operation on 470- 512 MHz channels in New York- Northern New Jersey and Houston). 75 47 C. F. R. § 25.143( i)-( k). 76 We have already determined that short- term de facto transfer spectrum leasing arrangements, which are by definition only temporary arrangements, do not raise potential competitive harm and thus are not subject to the Commission’s competition policies. See Report and Order at ¶ 178. 77 For instance, in the future we anticipate significant advances in voice over Internet Protocol (VoIP) and the provision of broadband services over power line systems. See generally In the Matter of IP- Enabled Services, Notice of Proposed Rulemaking, 19 FCC Rcd 4863 (2004); Carrier Current Systems, including Broadband over Power Line Systems, Notice of Proposed Rulemaking, 19 FCC Rcd 3335 (2004). 17 Federal Communications Commission FCC 04- 167 18 29. Application/ immediate approval procedures. Consistent with the general proposal set forth in the Further Notice, 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, 78 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. 79 The Bureau also will place the approved application on public notice. 80 We note that, in order to allow parties to enter into spectrum leasing arrangements more quickly, the immediate approval procedures that we are adopting vary slightly from what was proposed in the Further Notice in that approval occurs prior to the date that the application is placed on public notice. 81 30. The changes adopted to facilitate even more efficient and timely processing of spectrum leasing transactions meeting the requirements set forth in this Second Report and Order necessitate changes to the ULS software and will required certain database updates. We accordingly direct the Bureau to undertake as soon as practicable the necessary programming changes to implement the provisions of this Second Report and Order and to modify as necessary any licensing databases. Once ULS is updated to permit the immediate approval process, we further direct the Bureau to release a public notice notifying the public that the new procedures are available. 31. Post- approval reconsideration procedures. We adopt the reconsideration procedures set forth in the Further Notice. 82 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. 83 Similarly, the Bureau will be able to reconsider the grant on its own 78 See Report and Order at nn. 318, 356 (noting that, as part of a complete application, spectrum leasing parties must submit the requisite filing fees). 79 Thus, operations under a de facto transfer spectrum lease could commence immediately upon approval provided, of course, that the parties have established that time as the date that the spectrum lease commences. 80 The Bureau will also send a letter to the spectrum leasing parties, by U. S. mail, indicating that the application was sufficiently complete and has been granted on the basis of, and in reliance on, the information and certifications supplied. 81 In the Further Notice, we had proposed that the spectrum leasing filing would be “deemed approved” at the time it was placed on public notice. Further Notice at ¶ 266. 82 See id. at ¶ 268. 83 See 47 C. F. R. § 1.106( f). We note that the Commission employs similar reconsideration procedures for applications involving pro forma license assignments and transfers of control; as with the procedures adopted here, interested parties may file a petition for reconsideration within 30 days of the time the notice of the pro forma transaction is placed on public notice. See Pro Forma Forbearance Order, 13 FCC Rcd at 6312 ¶ 36. 18 Federal Communications Commission FCC 04- 167 19 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. 84 32. These reconsideration procedures are consistent with our general reconsideration procedures for Bureau action taken on delegated authority, including action approving assignments and transfers of control under Sections 308, 309, and 310( d). 85 We believe that these reconsideration procedures provide a sufficient opportunity for review by interested parties, the Bureau, or the Commission of any de facto transfer lease that meets the conditions for approval without prior public notice or Commission review. To the extent that issues are raised on reconsideration regarding whether a particular spectrum lease complies with Commission policies and rules, the Bureau or Commission may deny the spectrum leasing application on reconsideration or take other necessary action, including requiring revisions to the leasing arrangement if appropriate. 33. 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. 86 In addition, we note that the Commission reserves the right, post- approval, to correct administrative errors. 87 (c) Compliance with forbearance requirements 34. 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 in Section IV. A. 1. a( ii), 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, 88 to the extent necessary, so that these spectrum leases may be approved pursuant to the procedures set forth in Section IV. A. 1. a( ii)( b), 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 84 See 47 C. F. R. §§ 1.108, 1.113. 85 See generally 47 C. F. R. §§ 1.101- 1.120 (Part 1 rules relating to petitions for reconsideration and review of actions taken on delegated authority and by the Commission). 86 We note that this is consistent with general Commission policies. 87 See, e. g., American Trucking Ass’n v. Frisco Transportation Co., 358 U. S. 133, 145- 146 (1958) (acknowledging an agency’s ability to correct administrative errors; the Court stated that “[ t] o hold otherwise would be to say that once an error has been done the agency is powerless to take remedial steps”); Chlorine Institute v. OSHA, 613 F. 2d 120, 123 (5 th Cir.) cert. den., 449 U. S. 826 (1980). 88 Section 309( b) requires a 30- day notice and comment period for authorizations involving common carrier services, while Section 310( d) requires review and approval for transfers of de facto control relating to license authorizations. See generally 47 U. S. C. §§ 309( b), 310( d). We note that in the Report and Order, we have already exercised limited forbearance with regard to the 30- day notice and comment period for de facto transfer leases by reducing the comment period to 14 days. Report and Order at ¶ 151. We also reduced the review period to 21 days, unless the Commission determined to removed the application from this streamlined processing for additional review. Report and Order at ¶ 151. 19 Federal Communications Commission FCC 04- 167 20 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. 89 35. Examining the first prong of the forbearance test, we conclude that for de facto transfer spectrum leases meeting the elements set forth in Section IV. A. 1. a( ii)( a), above, the prior public notice and individualized review requirements of Sections 309( b) 90 and 310( d) are not necessary to ensure that a carrier’s charges, practices, classifications, and services are just and reasonable, and not unjustly or unreasonably discriminatory. 91 Indeed, even when parties file applications proposing a transfer of control or assignment of a license, such applications do not generally contain information on the charges, practices, classifications, or services of the parties involved, and we have declined to use such applications as a context for regulating these issues. 92 Because we do not address these issues in our review of these applications, retaining prior public notice and review requirements is not necessary to ensure that licensees’ and lessees’ charges, practices, classifications, and regulations are just and reasonable and not unjustly or unreasonably discriminatory. In addition, the eligibility, foreign ownership, and competition benchmarks we establish limit the types of de facto transfer spectrum leases that qualify for forbearance to those that are unlikely to raise concerns about the charges, practices, classifications, and services of the parties to the spectrum lease. Moreover, as indicated in the Further Notice, we have other existing tools at our disposal, including enforcement actions, to ensure that charges, practices, classifications, and regulations are just and reasonable and not unjustly or unreasonably discriminatory. 93 89 47 U. S. C. § 160( a). In determining whether forbearance is consistent with the public interest, the Commission must consider whether forbearance will promote competitive market conditions, including whether it will enhance competition among telecommunications service providers. See 47 U. S. C. § 160( b). If the Commission determines that forbearance will promote competition among providers of telecommunications services, that determination may be the basis for finding that forbearance is in the public interest. See 47 U. S. C. § 160( b). 90 Long- term de facto transfer leases that are subject to our forbearance authority include leases involving common carrier services. Section 309( b) generally provides that applications involving transfers of substantial control are to be placed on public notice for at least 30 days in advance of being granted. See 47 U. S. C. § 309( b). Short- term de facto transfer leases are not, under existing policies, subject to this 30- day prior public notice requirement because the applications are processed under STA procedures set forth in Section 309( e); we note that, in this Second Report and Order, we replace the STA procedures used for short- term de facto transfer leases, as explained in Section IV. A. 1. c, below. 91 We have already determined, in the Report and Order, that a full 30- day public notice period is not required for any de facto transfer lease applications. Report and Order at ¶¶ 155- 159 (reducing the public notice requirement to 21 days). 92 See Craig O. McCaw, Memorandum Opinion and Order, 9 FCC Rcd 5836, 5880- 5881 ¶ 76 (1994), aff’d sub nom. SBC Communications, Inc. v. FCC, 56 F. 3d 1484 (D. C. Cir. 1995), recon. in part, 10 FCC Rcd 11786 (1995). 93 See Further Notice at ¶ 271. 20 Federal Communications Commission FCC 04- 167 21 36. Similarly, in analyzing the second prong of the Section 10 forbearance standard, we conclude that requiring prior notice and comment and Commission review of qualifying de facto transfer leases is not necessary for the protection of consumers. Indeed, we have determined that effectively functioning secondary markets will offer significant benefits to consumers, 94 and we regard consumers as fully protected by the limitations and safeguards placed on the forbearance process. Our screening criteria ensure that forbearance procedures will only apply to spectrum leases that do not raise potential competitive issues, which is a core aspect of protecting consumers in the wireless marketplace. In addition, spectrum leases approved under our forbearance authority will be placed on public notice, enabling members of the public and other interested parties to raise any concerns regarding the protection of consumers in petitions for reconsideration. 37. With respect to the third Section 10 criterion, we believe that forbearing from prior public notice and Commission review of qualifying de facto transfer spectrum leases will further the public interest. This process will enable parties entering into spectrum leasing arrangements that do not raise potential public interest concerns to put their business plans into effect with reduced regulatory delay and transaction costs. This will allow secondary markets to work more effectively, which in turn will increase the efficient use of spectrum, improve access to spectrum by all interested parties, promote competitive market conditions, and increase the innovative and advanced wireless services available to consumers. At the same time, the limitations on spectrum leases that qualify for forbearance are designed to ensure that the public interest and our fulfillment of our statutory obligations are not in any way undermined. b. Immediate approval of certain categories of de facto transfer leases that are not subject to forbearance (i) Background 38. As we noted in the Further Notice, Section 10 of the Act authorizes us to forbear from statutory and regulatory requirements only with respect to spectrum leases that involve telecommunications carriers and telecommunications services. 95 Even so, we stated our wish to provide similar streamlined processing for spectrum leases involving non- telecommunications carriers as we are providing for spectrum leasing transactions that fall within the scope of Section 10. Accordingly, we sought comment on whether and how the Commission could structure its review of spectrum leasing transactions involving non- telecommunications carriers or services in order to minimize possible delays in processing these transactions. 96 94 See Report and Order at ¶¶ 32, 39- 45; see generally Secondary Markets Policy Statement, 15 FCC Rcd 24178. 95 Further Notice at ¶ 275. 96 Id. at ¶¶ 275- 277. We also noted that, as a practical matter, many licenses that are beyond the scope of Section 10 are not subject to the statutory requirement of 30 days public notice prior to Commission approval, which applies only to common carrier and broadcast licenses. See 47 U. S. C. § 309( b). Section 310( d) does, however, require prior Commission review and approval of all transaction applications involving non- common carrier and non- broadcast licenses (just as it does for applications involving common carrier and broadcast licenses that are subject to our forbearance authority). Further Notice at ¶ 276; see generally 47 U. S. C. §§ 308, 309, 310( d). 21 Federal Communications Commission FCC 04- 167 22 (ii) Discussion 39. 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. 97 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. 98 40. 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, 99 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. 100 41. 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, 97 See paras. 15- 28, supra. 98 All of the comments we received on this issue supported our efforts to streamline spectrum lease transactions involving non- telecommunications carriers in the manner similar to what we are adopting under the forbearance approach. See, e. g., Blooston Rural Carriers Comments at 12- 13 (providing general support for the Commission’s goals); Nextel Communications Comments at 7- 9; WCA Comments at 13- 15. One commenter recommended that the Commission take an approach similar to that it has taken for Section 214 applications. See WCA Comments at 13- 15. 99 See paras. 15- 28, supra. Because licenses in non- telecommunications services generally are not auctioned, and thus would not implicate our designated entity or entrepreneur policies, we need not be concerned about restrictions and potential public interest concerns associated with these policies regarding spectrum leasing by designated entity or entrepreneur licensees. See para. 24. Similarly, because spectrum leasing in non-telecommunications services would not involve the kind of CMRS spectrum implicated by our competition policies (see the discussion in paras. 25- 26, above), we are not concerned about potential public interest concerns relating to competition that would necessitate prior review of these spectrum leases. 100 See para. 31, supra; see also 47 C. F. R. §§ 1.101 et seq. (rules relating to petitions for reconsideration of actions taken on delegated authority). 22 Federal Communications Commission FCC 04- 167 23 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 (i) Background 42. Under procedures adopted in the Report and Order, short- term de facto transfer leasing arrangements are processed in the same manner as STAs authorized pursuant to Section 309( f) of the Communications Act. 101 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. The Bureau then reviews the application and will act on the request within ten days if the specified conditions are met. A short- term lease can be for any term of up to 180 days; the parties may also renew the lease for any period of time up to another 180 days, but to do so they must submit another filing, subject to the same procedures. 102 (ii) Discussion 43. 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. 103 Accordingly, we determine to process these arrangements under the new procedures we are adopting, and we will no longer process them under the STA procedures. 44. Under the policies and rules adopted in the 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 104 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. 105 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. 106 Accordingly, these issues do 101 Report and Order at ¶¶ 163- 164, 181. 102 Id. at ¶ 181. 103 See generally Section IV. A. 1. a, supra. 104 Report and Order at ¶ 174. 105 We note that for short- term de facto transfer leasing arrangements, certain eligibility and use restrictions applicable to long- term de facto transfer leasing arrangements do not apply. See Report and Order at ¶ 175. 106 See id. at ¶¶ 176 (the designated entity and entrepreneur policies are not applied with respect to short-term de facto transfer leases), 178 (competition policies are not applied with respect to short- term de facto transfer leases). 23 Federal Communications Commission FCC 04- 167 24 not prevent a short- term de facto transfer lease application from qualifying for the immediate approval procedures we are adopting herein. 45. 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. 107 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. 108 d. Immediate processing of certain categories of spectrum manager leases (i) Background 46. The 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). 109 We stated that this advance notification was included so as to allow the Commission and the public some opportunity to review the leasing arrangement prior to it going into effect. 110 (ii) Discussion 47. 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 in Section IV. A. 1. a, 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. 111 These immediate processing procedures for spectrum 107 See 47 C. F. R. §§ 1.931( a)( 1) (STA procedures for Wireless Telecommunications Services), 1.931( b)( 3) (STA procedures for Private Wireless Services). 108 These short- term de facto transfer leases may be renewed so long as the combined term of the application and any renewal( s) does not exceed one year. We note that the remainder of the policies applicable to short- term de facto transfer leases, as set forth in the Report and Order, will remain in place for the reasons established therein. See generally Report and Order at ¶¶ 166- 180. 109 Id. at ¶ 124; see also 47 C. F. R. § 1.9020( e). 110 Report and Order at ¶ 124. 111 The spectrum leasing parties will be able to determine whether the notification has been successfully processed, through ULS, in the same manner they would determine whether a de facto transfer lease application has been approved, as set forth in para. 29, supra. Specifically, if the parties file a spectrum manager lease notification in ULS that establishes, through the information provided and related certifications, that they qualify for this processing method, ULS will reflect, on the next business day, that the notification was sufficiently (continued….) 24 Federal Communications Commission FCC 04- 167 25 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. 112 48. 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. 113 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 policies, just as long- term de facto transfer leases are subject to certain restrictions. 114 49. 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 in Section IV. A. 1. a above 115 – 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 (Continued from previous page) complete and accepted for this processing on the basis of, and in reliance on, the information and certifications supplied. The spectrum lease notification will then be placed on public notice. 112 See First Avenue Networks Petition for Reconsideration at 1- 4. First Avenue Networks asserted that it was capable of providing wireless broadband connections within three days of signing a lease and contended that the current rules unnecessarily delayed its prompt delivery of service to its customers. Accordingly, it recommended that we eliminate the requirement that the Commission be notified of spectrum manager leases days in advance of permitting parties to commence operations under the spectrum leasing arrangement. See id. 113 See Report and Order at ¶¶ 109- 11 (eligibility and foreign ownership requirements for spectrum manager leases), 112 (use restrictions for spectrum manager leases), 116- 119 (competition policies relating to spectrum manager leases), 143 (eligibility and foreign ownership requirements for long- term de facto transfer leases), 144 (use restrictions for long- term de facto transfer leases), 147 (competition policies relating to long- term de facto transfer leases). We note that short- term de facto transfer leasing arrangements are not always subject to the same policies as spectrum manager leasing arrangements. With regard to these particular issues, short- term de facto leases are not subject to the same use restrictions or competition policies as spectrum manager leases. Compare id. at ¶¶ 112 (use restrictions applicable to spectrum manager leases) and 116- 119 (competition policies applicable to spectrum manager leases) with ¶¶ 175 (exemption of short- term de facto transfer leases from certain use restrictions) and 178 (exemption of short- term de facto transfer leases from competition policies), respectively. 114 See id. at ¶¶ 113 (spectrum manager leases), 145 (long- term de facto transfer leases). While these restrictions differ depending on whether a spectrum manager or long- term de facto transfer lease is involved, both types of spectrum leases trigger potential public interest considerations that warrant providing the Commission an opportunity to review the leases prior to commencement of operations. 115 See Section IV. A. 1. a, above. 25 Federal Communications Commission FCC 04- 167 26 parties are entitled to commence operations once they have received the requisite confirmation through ULS. 116 As with de facto transfer leases, 117 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. 118 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. 50. 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). Eliminating this requirement is consistent with the policies we are adopting, above, for de facto transfer leases; parties filing those applications are not required to file their spectrum leases with the Commission within 14 days of execution. 2. Extending Spectrum Leasing Policies to Additional Spectrum- Based Services a. Background 51. In the Further Notice, 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 Report and Order. In particular, we requested comment on whether such policies should be extended to the following services: Public Safety Radio Services (Part 90); Instructional Television Fixed Services (ITFS) (Part 74) and Multipoint Distribution Service (MDS) (Part 21); various other private wireless and Personal Radio Services, including certain Maritime services (Part 80), 119 Aviation services (Part 87), Personal Radio services (Part 95), 120 and Amateur services (Part 97); various services/ authorizations in which frequencies are “shared”; and, miscellaneous other services, including non- multilateration Location and Monitoring Service (LMS) (Part 90), Cable Television Relay Service (Part 78), Multichannel Video Distribution and Data Service (MVDDS) (Part 101), 700 MHz Guard Band (Part 27), and satellite services (Part 25). 121 116 To the extent, however, that the spectrum manager leasing arrangements do not qualify for immediate processing because they potentially raise public interest concerns in any of these enunciated areas, then we believe it continues to be appropriate for the Commission and the public to have the opportunity to review the leases prior to parties commencing operations, consistent with the Report and Order. See Report and Order at ¶¶ 124- 125. We also provide additional clarification regarding the Commission’s opportunity to review these spectrum manager leases in the Order on Reconsideration, below. See Section V. B. 1. a, infra. 117 See paras. 30, 39, 43, supra. 118 This is the date in which the Bureau announces acceptance of the spectrum manager lease notification. 119 We note that licensees in the VHF Public Coast services, Part 80 subpart J, already may enter into spectrum leasing arrangements under the Report and Order. Report and Order at ¶ 84; 47 C. F. R. § 1.9005( o). 120 We have already permitted licensees in the 218- 219 MHz Service, Part 95 subpart F, to enter into spectrum leasing arrangements under the Report and Order. Report and Order at ¶ 84; 47 C. F. R. § 1.9005( u). 121 See generally Further Notice at ¶¶ 288- 314. 26 Federal Communications Commission FCC 04- 167 27 b. Discussion 52. 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. 53. Public Safety Services. With regard to the Public Safety Services in Part 90, we will permit public safety licensees with exclusive use rights 122 to lease their spectrum usage rights to other public safety entities and entities providing communications in support of public safety operations. 123 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. 54. 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 the 4.9 GHz Report and Order. In that order, 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. 124 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, 125 which the Commission adopted in 1998 to implement Section 337( f)( 1) of the Communications Act. 126 Under this definition, “public safety services” are services: (A) the sole or principle 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. 127 122 To the extent that licensees are sharing spectrum, they are not permitted to enter into spectrum leasing arrangements with other entities. 123 In this section, we are only discussing public safety licensees authorized under Part 90 rules. See 47 C. F. R. Part 90 subpart B; § 90.311( a)( 1)( i). We already permit Part 101 licensees (including public safety licensees) to lease spectrum under the rules adopted in the Report and Order. See Report and Order at ¶ 84 & n. 181. 124 See The 4.9 GHz Band Transferred from Federal Government Use, Memorandum Opinion and Order, 18 FCC Rcd 9152, 9158 ¶ 16 (2003) (4.9 GHz Report and Order). 125 Id. at 9158- 59 ¶ 16 (citing 47 C. F. R. § 90.523); see also 47 C. F. R. § 90.1203( a). 126 47 U. S. C. § 337( f)( 1). 127 47 C. F. R. § 90.523. 27 Federal Communications Commission FCC 04- 167 28 Under this standard, nongovernmental organizations are eligible if they obtain written approval from a state or local government entity whose mission is the oversight or provision of public safety services. 128 Though we noted that utilities and pipelines were examples of potential licensees, we did not attempt to delineate every type of nongovernmental organization that would be eligible to be licensed in the 4.9 GHz band; rather, we determined that traditional public safety entities are better poised to be most knowledgeable about what other users and/ or uses would be supportive of public safety operations. 129 We did, however, expressly require that use of the 4.9 GHz band by entities other than traditional public safety entities be in support of public safety, and prohibited communications with no nexus to the safety of life, health or property. 130 55. 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. 131 Further, spectrum would not be used by commercial entities to the potential detriment of public safety operations. We believe that allowing public safety licensees to lease spectrum for use in support of public safety operations will help maximize the efficient use of spectrum among public safety entities by providing them incentives to lease any excess spectrum capacity, thus diminishing the likelihood that public safety entities will warehouse spectrum. 132 56. Our decision at this time not to permit public safety licensees in our Public Safety Services to lease spectrum to entities other than public safety entities, or entities providing communications in support of public safety operations, is based on the record before us and reflects several concerns. Most commenters strongly objected to allowing public safety licensees to enter into spectrum leasing arrangements with commercial entities, contending that such leasing faced possible statutory barriers or could allow potential abuses without implementation of certain safeguards. 133 Two commenters also 128 4.9 GHz Report and Order, 18 FCC Rcd at 9159 ¶ 17 (citing 47 C. F. R. § 90.523( a)). 129 Id. at 9159- 60 ¶¶ 17- 19. 130 Id. at 9162- 63 ¶¶ 22- 23. 131 As noted above, two commenters supported providing public safety licensees additional flexibility to lease spectrum to other entities. See ITA Reply Comments at 9- 10 (support for permitting public safety entities to lease spectrum to other entities eligible under private land mobile entities that are eligible under Part 90 services); St. Clair County Reply Comments at 2- 3 (general support for permitting public safety entities to lease spectrum to commercial entities). 132 Additionally, we note that applicable buildout requirements also act as constraints against spectrum warehousing. See, e. g., 47 C. F. R. §§ 90.155( a), (b). 133 See APCO Comments at 1- 6; CTIA Comments at 4- 5; SBC Comments at 13; Winstar Comments at 3; ITA Reply Comments at 9- 10. For instance, one commenter representing public safety officials expressed “grave concerns” about potential harm that might result if public safety entities were to lease spectrum on a commercial basis. It pointed out possible significant statutory barriers to such leasing involving spectrum 700 MHz band on the grounds that Section 337 of the Act might effectively preclude making such spectrum commercially available. This commenter also was concerned that while most public safety entities would act responsibly when leasing spectrum, some agencies might by pressured by cash- strapped state and local governments to lease more and more (continued….) 28 Federal Communications Commission FCC 04- 167 29 proposed consideration of future technological developments and the possibility of requiring that any leased spectrum be subject to “interruptible use” capacities that would enable public safety licensees to immediately reclaim the use of any leased spectrum for public safety emergencies. 134 Since issuance of the Further Notice in this proceeding, we have released the Cognitive Radio NPRM seeking comment upon, among other things, technical issues relating to “smart” or cognitive radios that could enable implementation of “interruptible” spectrum leasing arrangements that could be used with regard to leasing of spectrum licensed to public safety entities. 135 As our next step in this area, we intend to consider the technical issues raised in that proceeding, which appear to be important groundwork in addressing broader public safety spectrum leasing. 57. ITFS/ MMDS services. All of the comments received in this docket 136 were previously transferred to and considered in the BRS/ EBS Report and Order in WT Docket No. 03- 66, in which we comprehensively reviewed our policies and rules relating to the ITFS and MDS services. 137 In that order, we converted the MDS service into the Broadband Radio Service and the ITFS service into the Educational Radio Service, 138 and extended the secondary markets spectrum leasing policies to those services, but included certain modifications in order to maintain the educational purpose of ITFS. 139 We (Continued from previous page) spectrum capacity, potentially to the detriment of public safety operational requirements, or they could be become “fronts” for commercial entities. See APCO Comments at 1- 6. Another commenter opposed leasing by public safety entities on the grounds that they might warehouse spectrum. See CTIA Comments at 4- 5. Two commenters supported providing public safety licensees greater flexibility to lease spectrum to others. See ITA Reply Comments at 9- 10 (support for permitting public safety entities to lease spectrum to other entities eligible under private land mobile entities that are eligible under Part 90 services); St. Clair County Reply Comments at 2- 3 (general support for permitting public safety entities to lease spectrum to commercial entities). 134 One commenter recommended that any spectrum leasing of public safety channels should be subject to strict rules that ensure that the substantial majority of the public safety system is in fact used for public safety purposes, and that by public safety licensees can effectively reclaim the use of the spectrum, such as through newly developed cognitive radio capacity, when necessary. See APCO Comments at 1- 6. Another commenter focused on possible future technological developments that would assist in developing appropriate leasing policies for public safety licensees, including “interruptible use” capacities that would enable public safety licensees to immediately reclaim the use of any leased spectrum for public safety emergencies. See generally WiNSec Comments. 135 See Cognitive Radio NPRM, 18 FCC Rcd at 26878- 26883 ¶¶ 51- 67. 136 We received comments from several parties on spectrum leasing involving the ITFS and MDS services. See BellSouth Comments at 6- 10; National ITFS Association/ Catholic Television Network Comments at 1- 9 and Reply Comments at 1- 3; SBC Comments at 12- 13; Spectrum Market LLC Comments at 4- 5; Sprint Comments at 4- 6; WCA Comments at 1- 8. 137 See Amendment of Parts 1, 21, 73, 74 and 101 of the Commission’s Rules to Facilitate the Provision of Fixed and Mobile Broadband Access, Educational and Other Advanced Services in the 2150- 2162 and 2500- 2690 MHz Bands, Report and Order and Further Notice of Proposed Rulemaking, FCC 04- 145 (rel. July 29, 2004) (BRS/ EBS Report and Order). As we noted in the Further Notice, there are unique policies associated with ITFS licensees’ educational purposes, and the services have already developed their own approach to excess capacity leasing. See Further Notice at ¶¶ 307- 08. 138 See generally BRS/ EBS Report and Order. 139 See id. at ¶¶ 177- 181. 29 Federal Communications Commission FCC 04- 167 30 also grandfathered pre- existing “excess capacity” leasing arrangements that were entered into under the previous ITFS- specific leasing rules. 140 58. Maritime services. Consistent with the spectrum leasing policies adopted in the 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, 141 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 Report and Order. 142 59. We do not, however, extend our spectrum leasing policies to any of our high seas public coast stations. 143 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. 144 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). 145 In addition, unlike VHF Public Coast and AMTS stations, high seas public coast stations are not permitted to serve units on land. 146 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 140 See id. at ¶ 181. 141 We received comments from three parties that supported extending our spectrum leasing policies to the AMTS services. They asserted that to do so would be consistent with our earlier decision, in the Report and Order, to permit VHF Public Coast Station licensees to enter into spectrum leasing arrangements. See AMTA Comments at 3- 4; Mobex Comments at 2- 5; Paging Systems Reply Comments at 2- 4. 142 Report and Order at ¶ 84 & n. 183. Also, we note that the Commission has previously stated that the licensing of incumbent site- based AMTS stations are akin to geographic licensing in many respects because the licensing of each system was tied to fixed geographic features (coastlines and waterways). See Regionet Wireless License, LLC, Order, 15 FCC Rcd 16119, 16122 ¶ 7 (2000). 143 See 47 C. F. R. §§ 80.357( b), 80.361, 80.363( a)( 2), 80.371( a)-( b). 144 See generally Amendment of the Commission’s Rules Concerning Maritime Communications, Second Memorandum Opinion and Order and Fifth Report and Order, 17 FCC Rcd 6685, 6687 ¶ 4 (2002) (Public Coast Fifth Report and Order). We note, too, that while VHF Public Coast and AMTS stations use frequencies in the very high frequency band, high seas public coast stations use much lower frequencies, which enables them to serve vessels hundreds or even thousands of miles from land. See generally id. 145 See Public Coast Fifth Report and Order, 17 FCC Rcd at 6710 ¶ 56, 6716- 17 ¶ 75. 146 See Amendment of the Commission’s Rules Concerning Maritime Communications, Second Report and Order and Second Further Notice of Proposed Rule Making, PR Docket No. 92- 257, 12 FCC Rcd 16949, 17020 (1997); 47 C. F. R. § 80.123; see also Technology for Communications International, Order, 14 FCC Rcd 16173, 16176- 77 ¶ 8 (WTB PSPWD 1999) (denying a request for a waiver to permit a high seas public coast station to serve units on land, and explaining that, because of the propagation characteristics of HF signals, interference to international communications is a possibility associated with service to units on land using HF frequencies not presented by VHF land mobile service). 30 Federal Communications Commission FCC 04- 167 31 changing international allocations and allotments, and the fact that some of the spectrum is shared with the Federal Government. 147 60. MVDDS services. We will extend our spectrum leasing policies to the MVDDS services consistent with the comments we have received. 148 We conclude that licensees will have similar “exclusive use” rights as other licensees to whom these policies currently apply, 149 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, 150 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, 151 but will permit only one entity, either the licensee or spectrum lessee, to operate in a given geographic area. 152 61. Services/ authorizations involving shared frequencies. We will not extend spectrum leasing to shared services at this time. As we noted in the Further Notice, 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. 153 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. 154 147 Public Coast Fifth Report and Order, 17 FCC Rcd at 6711- 12 ¶ 59, 6713- 14 ¶¶ 64- 66. 148 See MDS America Ex Parte Comments at 2- 4. 149 See Report and Order at ¶ 84. 150 Consistent with our general spectrum leasing policies, any spectrum leasing arrangement involving these services must comply with the underlying service rules. 151 See