Introduction
The Federal Communications Commission (the "Commission") has issued a Notice of Proposed Rulemaking ("NPRM") to institute a proceeding (this "Proceeding") that will have a tremendous impact on numerous entities that either possess, or may wish to acquire, licenses to use spectrum allocated by the Commission. The Commission will determine how the Balanced Budget Act of 1997 has changed the authority the Commission initially received under the Omnibus Budget Reconciliation Act of 1993 ("1993 Budget Act") to auction spectrum for wireless telecommunications services.
Some of the issues that the Commission will address in this Proceeding include the following:
(i) whether auctions must be held for certain spectrum that will be used for internal communications purposes, and, if so, what services should be exempt from such auctions;
(ii) the manner in which the Commission should separate auction-exempt spectrum from spectrum subject to auction, and whether it should establish a third radio services pool in addition to the Public Safety and Industrial/Business Radio Pools;
(iii) the extent to which the Commission should seek to avoid finding that applications are mutually exclusive and the manner in which the Commission should apply relevant public interest standards in determining licensing schemes;
(iv) the standards that the Commission will employ to determine whether an entity is eligible to participate in the auctions, the type of licensing that will be used for the auctioned spectrum (e.g. geographic licensing), and the procedures, methodology and timing of such auctions;
(v) whether the Commission should create a new class of licensees called Band Managers;
(vi) whether the Commission should eliminate or modify the rules permitting multiple licensed systems;
(vii) the manner in which the Commission should construe the statutory criteria under 47 U.S.C. ' 337, which under certain circumstances permits providers of public safety services to obtain unassigned spectrum not otherwise allocated for public safety purposes; and
(viii) the manner in which the Commission should treat license applications during the pendency of this Proceeding to prevent speculative activity.
This Proceeding will affect many different types of entities. It will have a tremendous impact upon many persons, entities and government agencies that use or intend to use frequency allocated by the Commission to conduct their internal operations, including, for example, airlines, alarm companies, architects, bus companies, clinics, delivery companies, disaster relief organizations, educational institutions, electric companies, emergency medical providers, farmers, film and video companies, fire departments, hospitals, highway maintenance companies, landscapers, local governments, manufacturers, mining companies, natural gas companies, news organizations, oil exploration companies, pipeline operators, police departments, railroad companies, road and bridge construction companies, taxi cab companies, trucking companies and water companies.
This Proceeding also will have a significant impact upon many commercial providers of wireless telecommunications services, including those that provide public safety radio services on a contract basis to public safety entities and those commercial providers that may wish to participate in auctions of private radio services spectrum. In addition, this Proceeding is important to public service entities that might utilize 47 U.S.C. ' 337 to obtain spectrum. This Proceeding also will affect entities that either use or plan to use multiple licensed systems or that may seek licenses for spectrum during the pendency of this Proceeding, which spectrum may subsequently become subject to auction.
Set forth below is a discussion of many of the areas upon which the Commission seeks comment in this Proceeding. Initial comments must be filed within sixty (60) days after the NPRM is published in the Federal Register, which publication has not occurred as of April 20, 1999. Reply comments are due ninety (90) days after publication of the NPRM in the Federal Register.
Discussion
Under the Budget Act of 1993, Congress authorized the Commission to hold auctions under certain circumstances to choose among applications for licenses for spectrum if those applications were mutually exclusive (i.e. if the grant of one of the applications effectively precluded the grant of the other application). The Commission was prohibited from finding that applications were mutually exclusive where it was in the public interest to use engineering solutions, negotiation, threshold qualifications, service regulations and other means to prevent mutual exclusivity. Although in 1993 Congress gave the Commission the right to hold auctions under certain circumstances, it did not authorize the Commission to auction spectrum to choose between mutually exclusive applications where the principle use for the spectrum would be for the licensee's internal business communications.
The Balanced Budget Act of 1997 (the "Balanced Budget Act" or the "Act") modified the Commission's auction authority. The Commission believes that under the Balanced Budget Act it must use auctions to choose between mutually exclusive applications for initial licenses or permits except where an exemption applies. Two of the three exemptions listed in the Balanced Budget Act concern (i) digital television service licenses and permits given to incumbent broadcast licenses to replace their analog licenses, and (ii) licenses for noncommercial educational broadcast stations and public broadcast stations. The other exemption, the Public Safety Radio Services Exemption, is discussed below.
1. The Scope of the Public Safety Radio Services Exemption
Pursuant to the Public Safety Radio Services Exemption, the Commission shall not use auctions to choose between mutually exclusive applications
(A) for public safety radio services, including private internal radio services used by State and local governments and non-governmental entities and including emergency road services provided by not-for-profit organizations, that:
(i) are used to protect the safety of life, health or property; and
(ii) are not made commercially available to the public.
47 U.S.C. ' 309 (j)(2)(A).
The Commission's determination as to which categories of applications come within the Public Safety Radio Services Exemption is critical to many entities that do not wish to risk participating in the auction process because it may greatly reduce their likelihood of receiving the necessary licenses and greatly increase their costs of obtaining the licenses if they are able to acquire them.
An important issue with respect to the Public Safety Radio Services Exemption is which types of services will the Commission hold are covered by the exemption. The Commission has tentatively concluded that, at a minimum, it will hold that all of the services that are currently assigned to the Public Safety Radio Pool will be covered by the exemption, which include Local Government, Police, Fire, Highway Maintenance, Forestry-Conservation, Emergency Medical Radio Services as well the radio communications of the following types of persons or entities: hospitals, clinics, ambulances and rescue services, veterinarians, persons with disabilities, disaster relief organizations, school buses, beach patrols, persons or organizations in isolated areas, and emergency standby and repair facilities for telephone and telegraph systems. The Commission also has tentatively concluded that the Public Safety Radio Services Exemption applies to (i) the newly allocated public safety spectrum in the 700 MHZ band; (ii) the ten 220 MHZ non-nationwide channel pairs allocated for the exclusive use of public safety eligibles; and (iii) two contiguous channel pairs in each of the thirty-three inland VHF Public Coast areas for public safety users.
Many parties who provide services referred to in the preceding paragraph will wish to file comments in this Proceeding on the scope of the Public Safety Radio Services Exemption to seek to ensure that the Commission's tentative conclusions discussed above becomes its ultimate determinations. Various other parties will wish to propose that their license applications should also be covered by the Public Safety Radio Services Exemption. The Commission will consider exempting other types of applications, and, in fact, the Commission noted that frequencies used by medical telemetry equipment may fall within the Public Safety Radio Services Exemption.
Providing the type of services that may under most circumstances fall within the Public Safety Radio Services Exemption does not, however, necessarily guarantee any person or entity that its particular applications will be covered by that exemption. That ultimate determination may very well depend upon the Commission's decision on a host of other issues relating to the Public Safety Radio Services Exemption, including the following:
(i) the nature of any eligibility criteria that the Commission implements to ensure that public safety radio services spectrum licensed to non-governmental applicants (and perhaps some governmental applicants as well) will not be made commercially available to the public and will be used to protect the safety of life, health or property;
(ii) whether the Commission permits licensees to use auction-exempt spectrum for ineligible purposes (e.g., for business purposes unrelated to the safety of health, life or property) if they are also using the spectrum for eligible purposes, and, if so, what test the Commission adopts to prevent circumvention of the statutory mandate that auction-exempt spectrum be used for eligible purposes; and
(iii) how the Commission defines the phrase in the Public Safety Radio Services Exemption "not made commercially available to the public," and whether, for example, the Commission construes the language to mean that the radio services are not made available for compensation or are not made available to a "substantial" portion of the public.
The Commission also has not ruled out the possibility that under certain circumstances commercial providers could receive auction-exempt spectrum. The Commission has sought comment on whether commercial providers or other non-governmental providers that provide public safety radio services on a contract basis to public safety entities should be eligible for auction-exempt spectrum if such providers do not make the spectrum commercially available to the public and use it to protect the safety of life, health or property.
In addition to the foregoing, the Commission must also decide how it will determine which spectrum is subject to the Public Safety Radio Services Exemption. The Commission has sought comment on whether it should apply the Public Safety Radio Services Exemption only to spectrum the Commission specifically allocates to public safety radio services or whether it should designate certain radio services or classes of frequencies within services as public safety radio services.
2. The Separation of Spectrum Subject to Auction from Auction-Exempt Spectrum
Many licensees and prospective licensees may also wish to comment on how the Commission should determine how to separate spectrum subject to auction from auction-exempt spectrum. Given that the Public Safety Radio Services Exemption is broader than the criteria the Commission uses in determining eligibility for frequencies in the Public Safety Pool, the Commission is considering in this Proceeding whether to adopt the proposal of the Association of American Railroads and others to create a third radio pool in addition to the Public Safety and Industrial/Business Radio Pools. The third pool would be open to entities that do not qualify for Public Service Radio Pool spectrum but are eligible for auction-exempt spectrum. If the Commission does not adopt that proposal, it may either create separate pools for various categories of auction-exempt services or develop some other means of separating auctionable from non-auctionable spectrum.
3. Mutual Exclusivity and Public Interest Factors
Some entities who do not want to participate in auctions may be unable to establish that all of their applications fall within the Public Safety Radio Services Exemption. For such entities it will be important to comment on the issues in the Proceeding regarding mutual exclusivity and the pertinent public interest factors. The Commission has sought comment on how, if at all, the Balanced Budget Act has changed the scope or content of the Commission's obligation to use various means to attempt to eliminate mutual exclusivity, and whether the Commission should continue to evaluate its duty to avoid mutual exclusivity by weighing the relevant public interest objectives or whether the Commission now has some separate, independent, obligation to pursue strategies that avoid mutual exclusivity. In addition, the Commission has specifically asked how it should apply the relevant public interest factors under 47 U.S.C. ' 309(j)(3) when determining the licensing schemes for both new and existing services.
4. Auctions: Eligibility, Geographic Licensing, and Methodologies, Procedures and Timing
Entities that may seek licenses for frequencies subject to auctions, or that may be impacted by the auctions even if the licenses they seek will not be subject to auction, may also wish to comment on the issues in this Proceeding relating to eligibility for the auctions, geographic licensing, and the auctions' methodology, procedures and timing. The Commission has raised many eligibility issues in this Proceeding, including the following:
(i) the manner in which the Commission should determine the class of eligible bidders for spectrum, and whether it should it be based on the purpose for which the spectrum would be used, the size of the bidder, or some other standard;
(ii) if the Commission uses size standards on a service specific basis, whether the Commission should measure an applicant's size by gross revenues, total assets or some other standard and what dollar amounts the Commission should set as the eligibility thresholds;
(iii) whether the Commission should give providers of commercial wireless telecommunications services the right to participate in auctions of private radio service spectrum, and, if so, whether such providers should be permitted to participate only if they agree to use the spectrum to meet the private communication needs of entities eligible to hold licenses in the private radio services; and
(iv) whether the Commission should implement regulations that set aside specific licenses or confer financial benefits (e.g., bidding credits) on certain applicants, and, if so, which applicants.
As for geographic licensing, some of the issues on which the Commission seeks comment include the following:
(i) whether geographic licensing should be used for all services in which the Commission decides to adopt competitive bidding or whether some services should be licensed on a site-by-site basis;
(ii) if geographic licensing is used for certain private radio services that have never been subject to such licensing and competitive bidding previously, whether the Commission should use smaller geographical licensing areas than it has previously used with regard to other services; and
(iii) if geographic licensing is used whether there will be any role for frequency coordinators with respect to such licensing.
As for the the methodology and procedures relating to the auctions, the Commission has asked whether it should use the simultaneous multiple-round competitive bidding system, the combinatorial bidding system or some other system for the auctions or whether such decision should depend upon the particular private service involved. With respect to the timing of the auctions, the Commission has sought comment on the frequency with which the Commission should hold auctions of private radio spectrum and whether such actions should be conducted at regularly scheduled intervals.
5. Band Manager Licenses
Many entities also will wish to comment on what may be the Commission's most novel proposal to establish a new class of licensees called Band Managers, which would obtain private radio licenses, limit their operations to offering internal communications services or capacity to private radio eligibles, and have the right to sublicense portions of their licenses to eligible users. The Commission seeks comment on more than twenty issues relating to the possible creation of Band Manager licenses, which issues focus on, among other things, whether such licenses would be beneficial, discourage wasteful and low value uses of the spectrum, enable end-users to receive fair and non-discriminatory access to the spectrum sublicened from Band Managers, or whether such licenses are unnecessary because commercial providers can provide all of the functions a aaaa
Band Manger licensee would provide. The Commission also seeks comment on a variety of issues relating to how such licenses would be awarded, the restrictions that should be placed on such licenses, and the rights of the Band Manager.
6. Miscellaneous Issues
The Commission also will decide several miscellaneous issues in this Proceeding that are of critical importance to a variety of entities. Entities that possess or wish to acquire licenses under a multiple licensed system should comment on the issue raised by the Commission as to whether it should eliminate the current multiple licensing rules or at the very least modify those rules. The Commission is concerned that some multiple licensed operations are for-profit operations while claiming to be non-profit, thereby receiving favorable regulatory treatment and gaining an unfair competitive advantage over CMRS licensees. Entities that have or wish to acquire licenses under a multiple licensed system also will need to comment on whether their receipt of compensation simply because they are part of a multiple licensed system precludes their application from falling within the Public Safety Radio Services Exemption.
Entities that will seek licenses that will be exempt from competitive bidding may wish to comment on how the Commission should resolve any mutual exclusivity issues that may arise for such licenses. Should the Commission, for example, employ comparative hearings, licensing on a first-come-first-served basis, or some other method?
Providers of public safety services under 47 U.S.C. ' 337 ("Section 337") will be impacted by the Commission's resolution of the Section 337 issues raised in this Proceeding. The Commission will decide how it should interpret the statutory criteria set forth under Section 337, which permits, when such criteria are met, providers of public safety services to obtain unassigned spectrum not otherwise allocated for public safety purposes. In particular, the Commission will determine what must be shown to establish that the frequency sought is "unassigned' and that the application will be in the public interest. Providers of public safety services under Section 337 also should comment as to whether they should be permitted to apply for unlicensed frequencies that have been designated by the Commission for auction.
7. The Licensing Process During the Pendency of this Proceeding
Entities that will apply for licenses of spectrum prior to the conclusion of this Proceeding will be impacted not only by the Commission's holdings in this Proceeding but also by the Commission's decision as to how to treat such applications during the pendency of this Proceeding. The Commission is seeking comment on the actions it should take to prevent applicants from using the current licensing process to engage in speculative activity prior to the Commission's adoption of the new auction rules. The Commission will decide, for example, whether it should temporarily suspend acceptance of applications in frequency bands for which the Commission proposes using competitive bidding to license. The Commission also is considering adopting interim rules imposing shorter time periods for build-out or construction.