BloostonLaw Telecom Update
Vol. 10, No. 40
October 24, 2007 Blooston 700 MHz Recon Petition Gets Support From AT&T, CTIA, U.S. Cellular BloostonLaw, on behalf of its rural telco clients (“the Blooston Rural Carriers”), last week received significant support for its recent petition for partial reconsideration of the FCC’s 700 MHz auction service rules from AT&T, CTIA—The Wireless Association, and U.S. Cellular. According to the Blooston Rural Carriers’ petition, the FCC’s geographic coverage requirement would force the licensee of a CMA (which may be a Rural Service Area, or RSA) to serve 70% of the land within the license boundaries, even if no one lives or travels there. In many RSAs, it may be possible to cover 70% to 90% of the population by putting a signal over well below 50% of the land area. The rule should be revised to provide a population coverage option, comparable to the benchmarks allowed for larger 700 MHz licenses. AT&T said in its comments that “The Blooston Rural Carriers point out that, in many of the country’s CMAs—and especially in Rural Service Areas—the vast majority of the population often is concentrated in a small amount of the CMA geography. The same is true for EAs [Economic Areas]. The Commission’s current construction requirement will, in some circumstances, force licensees to expend capital and construct facilities to serve unpopulated and even barren areas. These uneconomic costs naturally will be factored into bidders’ assessments of the value of these licenses, so the current rule, if not modified, could serve to depress auction bidding.” Like BloostonLaw, AT&T also supported the MetroPCS Communications proposal that the Commission exclude the following areas from any geographic area requirement: (1) bodies of water, (2) historic districts, (3) areas completely surrounded by licensee coverage, and (4) ZIP codes with a population density of less than 5 persons per square mile. “No purpose is served in including these areas in geographic coverage calculations,” AT&T said. And like BloostonLaw, AT&T also supported the MetroPCS suggestion that the Commission factor in an “expansion zone” to CMA/EA coverage, when reclaiming area under the “keep what you use” rule. Finally, AT&T opposed the Rural Telecommunications Group’s (RTG’s) request that the FCC reconsider its decision to apply population-based construction benchmarks in the Upper 700 MHz band C-block, and it opposed the Frontline Wireless request that the FCC reinstitute a spectrum cap. CTIA said it “strongly supports the Blooston Rural Carriers’ petition calling for the FCC to provide a population coverage buildout option for CMA and EA licenses and opposes the Rural Telecommunications Group effort to extend the geographic buildout requirement to REAG licenses.” CTIA said, “as an initial matter, the Blooston Rural Carriers correctly observe that geographic benchmarks are bad for a competitive marketplace and bad for consumers.” CTIA wrote that the geographic buildout requirement directs licensees to invest in “the equipment, site acquisition, site rental, and maintenance costs to serve areas … where no one lives or travels.” Geographic benchmarks will literally necessitate “the construction of transmitters and related infrastructure in areas that are not inhabited” or that “have little or no traffic,” CTIA said (footnotes omitted). Thus, CTIA agreed with Blooston and AT&T that this predicament would discourage bidding in the auction and be a detriment to rural consumers. CTIA also supported the MetroPCS proposal to exclude certain geographical areas, as noted above in the AT&T and Blooston petitions. CTIA asked the FCC to reject Frontline’s proposal to impose a spectrum cap, and to deny the Ad Hoc Public Interest Spectrum Coalition (PISC) petition that the Commission should prohibit the winner of the D-block license from holding any C-block spectrum. In its comments, U.S. Cellular said that it agrees with MetroPCS and Blooston that the Commission cannot and should not threaten licensees in addition to loss of unserved territory for failure to meet geographic or population coverage requirements. “Such additional sanctions were not proposed in the Further Notice and would be imposed without any announced standard to govern their applicability, a state of affairs arbitrary and capricious almost by definition,” U.S. Cellular said. “Moreover, as Blooston notes, the method of calculating 700 MHz coverage is not defined in the [FCC’s rules] and thus the imposition of such sanctions could be the result of a disputed coverage measurement. Moreover, as USCC stated in our comments, such uncertainty about the validity of licenses can only undermine the reasonable certainty of license renewal which underlies necessary network investments.” U.S. Cellular asked the FCC to repeal this “additional sanctions” provision, stating that “no other punishment is warranted or necessary.” U.S. Cellular did, however, support the Ad Hoc PISC proposal to prohibit a D-block licensee from holding C-block spectrum. RTG and the Rural Cellular Association opposed Blooston’s petition in favor of RTG’s proposal for geographic benchmarks. Replies to the oppositions to the recon petitions in this WT Docket No. 06-150 proceeding are due Monday, October 29. FCC Releases 2008 Funding Year Eligible Services List For Schools and Libraries The FCC has released the Funding Year 2008 Eligible Services List (ESL) for the schools and libraries universal service support mechanism. On July 27, 2007, the Commission released a Public Notice seeking comment on the ESL proposed by the Universal Service Fund’s (USF’s) administrator, the Universal Service Administrative Company (USAC), for Funding Year 2008. Some of the changes that have been made to the Funding Year 2008 ESL are: Centrex: In the 2008 ESL, Centrex service is treated as basic telephone service for purposes of the schools and libraries program with the intention of eliminating the requirement that applicants file a technology plan for Centrex service. Internet Access for Distance Learning: The FCC clarified that basic conduit access to the Internet for the purpose of accessing distance learning and video conferencing is eligible for funding in the Internet access category but distance learning and video conferencing tools are not eligible for funding. Broadband over Power Lines (BPL): The FCC added BPL under the entry for Digital Transmission Services to allow applicants to seek funding for the transmission component of BPL as a telecommunications service. BPL-enabled Internet access service: The FCC added BPL-enabled Internet access service under the entry for Internet access to allow applicants to seek funding for BPL-enabled Internet access service under the Internet access category if the service is bundled with Internet access. Ancillary Calendaring Functions: The FCC clarified that program participants are not required to provide cost allocation for calendaring functions ancillary to E-mail service. Web Hosting: The FCC clarified the eligible components of a web hosting service. Failover Products or Services: “Failover” products or services have been added to the list of miscellaneous ineligible components.
As stated in the July 27th Public Notice, this proceeding is limited to determining what services are eligible under the Commission’s current rules and is not intended to be a vehicle for changing any eligibility rules. Therefore, those comments not addressed in the Funding Year 2008 ESL may be more appropriately filed for the Commission’s consideration in the general proceeding for the Schools and Libraries Universal Service Support Mechanism in CC Docket No. 02-6. Those comments not addressed may include comments that requested eligibility for new services or products, comments that requested that services or products currently deemed ineligible be made eligible, comments that requested that the Commission take action outside of the scope of this proceeding, or comments that requested that the Commission take action that was not permitted by the short time frame allotted for this proceeding by section 54.522 of the Commission’s rules. In addition, the Commission authorized USAC to open the annual application filing window on November 7, 2007. Because the filing window would open less than 60 days after the release of this Public Notice, the FCC therefore waived on its own motion section 54.522 of the rules requiring publication of the ESL at least 60 days prior to the commencement of the filing window. The FCC concluded that this action will facilitate the application process for E-rate beneficiaries applying for monies for Funding Year 2008. BloostonLaw Private Users Update
Vol. 7, No. 10
October 2007 Reminder That Ownership Changes May Require FCC Approval We want to remind our clients that many types of reorganizations and other transactions require prior FCC approval; and given the frequent need to implement such transactions by the end of the year, companies engaging in such transactions should immediately evaluate whether they must file an application for FCC approval, and obtain a grant, before closing on a year-end deal. Transactions requiring prior FCC approval include (but are not limited to): - Any sale of a company that holds FCC licenses;
- Any transfer of stock that results in a shareholder attaining a 50% or greater ownership level, or a shareholder relinquishing a 50% or greater ownership level;
- Any transfer of stock, partnership or LLC interests that would have a cumulative affect on 50% or more of the ownership.
- The creation of a holding company or trust to hold the stock of an FCC license holder;
- The distribution of stock to family members, if there are changes the control levels discussed above;
- The creation of new classes of stockholders that affect the control structure of an FCC license holder.
- Certain minority ownership changes can require FCC approval (e.g., transfer of a minority stock interest, giving the recipient extraordinary voting rights or powers through officer or board position).
Fortunately, transactions involving many types of licenses can often be approved on an expedited basis. But this is not always the case, especially if microwave licenses are involved. Also, in some instances Section 214 authority is required, especially in the case of wireless and other telephony services. Clients planning year-end transactions should contact us as soon as possible to determine if FCC approval is needed. FCC Terminates License For Failure To Meet 800 MHz Rebanding Obligations The FCC has deleted mobile and base station frequencies from the license for call sign WPEH654, a single-site 800 MHz conventional Specialized Mobile Radio system in Nashville, Tennessee, licensed to Ron and Barbara Gossett. The action terminates the Gossetts’ right to operate on these frequencies. The FCC took this license modification action pursuant to an earlier order regarding the disposition of the Gossetts’ license in the 800 MHz rebanding process. In its May 4, 2007, Memorandum Opinion and Order (MO&O) in this matter, the Commission addressed the failure by the Gossetts to participate in the rebanding process under the terms of their Frequency Reconfiguration Agreement (FRA) with Sprint Nextel. The FCC found that the Gossetts failed to meet their obligation of good-faith participation in the rebanding process and forfeited their right to retuning of their facility at Sprint’s expense. The FCC therefore held that Sprint was not responsible for the cost of retuning this facility, and ordered the Gossetts to either retune station WPEH654 at their own expense or cease operation and surrender their license. The FCC required the Gossetts to comply with these terms within 30 days of the release of the MO&O (i.e. June 4, 2007). In the MO&O, the FCC also stipulated that if the Gossetts failed to either retune their station or surrender their license, they must show cause why the Commission should not modify their license by terminating their right to operate on their pre-rebanding frequencies. Because the proposed modification to WPEH654 involves the safety of life and property, the FCC required the Gossetts to file any protest within 40 days of the release date of the MO&O. Otherwise, the FCC stated, the Gossetts would be deemed to have consented to modification of their license as proposed in the MO&O, and a final Order would be issued if the modification were found to be in the public interest. A copy of the MO&O was sent to the Gossetts by certified mail. To date, the Gossetts have not surrendered their license nor have they retuned their facility as directed by the MO&O, the FCC said. The Gossetts also did not protest the proposed modification of their license within the requisite time frame. Therefore, as provided in the MO&O, the FCC found that the Gossetts have consented to the proposed deletion of pre-rebanding frequencies from their license. The FCC concluded that it is in the public interest to modify the license for Station WPEH654 by deleting mobile only frequencies 806-821 MHz and base station frequency 852.1875, thereby terminating the Gossetts’ right to operate on these frequencies. FCC Grants Minnesota’s Request To Expand Its Public Safety System The FCC has granted the State of Minnesota’s request to expand its public safety land mobile operations on frequency 858.6625 MHz in the southeastern region of the state. Minnesota seeks a waiver of Section 90.617(g)(1) of the Commission’s rules in order to use this frequency at six new sites prior to the end of the 800 MHz rebanding process in the region, the date by which the frequency would normally become available for public safety use. Minnesota operates a statewide mobile data system in the 800 MHz band used by police patrol cars to share real-time data in emergency situations. The mobile data system consists of vehicular-mounted computers installed in every patrol car and ninety base stations situated across the state of Minnesota. In August 2005, as part of 800 MHz band reconfiguration, the operating frequency of three Minneapolis/St. Paul mobile data base stations in the system was retuned from General Category frequency 852.2875 MHz to frequency 858.6625 MHz in the interleaved portion of the band, which was vacated by Sprint Nextel in the Minneapolis/St. Paul area to accommodate the assignment of the channel to Minnesota. Minnesota would now like to expand the operation of its mobile data system beyond the Minneapolis/St. Paul area by adding new sites in southeastern Minnesota that would also operate on the retuned channel, i.e., 858.6625 MHz. Except in the Minneapolis/St. Paul area served by Minnesota’s three existing mobile data base stations, frequency 858.6625 MHz remains licensed to Sprint on a wide-area basis throughout Minnesota. As part of rebanding, Sprint will vacate this frequency in its entirety at the end of the 36-month rebanding period, at which point Section 90.617(g)(1) of the Commission’s rules provides that the frequency will become available for licensing to eligible public safety entities. Thus, under the applicable rule, Minnesota cannot apply to add new sites to its system on 858.6625 MHz until the conclusion of rebanding. Minnesota, however, wishes to expand its operations on this frequency before rebanding is concluded, and thus seeks a waiver of Section 90.617(g)(1). In support of its waiver request, Minnesota stated that it urgently needs to extend its law enforcement mobile data network to the southeastern part of the state. Minnesota states that its first responders are very concerned about the lack of mobile data service in this area, and that this lack of service has adversely impacted their ability to respond to incidents efficiently, appropriately, and safely. In addition, Minnesota provided a letter from the American Association of State Highway and Transportation Officials (AASHTO), an 800 MHz frequency coordinator, indicating that no other Public Safety Pool frequencies are available in this area that would satisfy the technical requirements for Minnesota’s proposed expansion. Finally, Minnesota has obtained Sprint’s consent for Minnesota to add the requested sites on 858.6625 MHz before the end of the rebanding transition period. In response, the FCC found that Minnesota has demonstrated a compelling need to expand its operations on frequency 858.6625 MHz before the end of the rebanding transition period. Minnesota has successfully retuned its three existing mobile data base stations to this frequency as part of band reconfiguration, but under the rules, it cannot expand its mobile data system by adding new sites on the same frequency until all rebanding in the region is complete. The FCC believes that requiring Minnesota to delay its expansion would be unduly burdensome and contrary to the public interest. The Commission said that Minnesota has demonstrated that it has no reasonable alternative to using this frequency because no Public Safety Pool frequency is available that will satisfy the minimum co-channel spacing requirements at the proposed sites. It will also have minimal impact on other public safety entities in Minnesota that might have an interest in obtaining new channels after rebanding is completed, the FCC said. The waiver only applies to a single channel in a limited geographic area, and this channel would be of limited utility to other public safety entities in any event because they would have to protect Minnesota’s existing three base stations that already use the channel. | 
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