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The Public Notice addresses the pre-bidding procedures for Auction 103, which will allocate upper microwave flexible use service (“UMFUS”) licenses in the bands referenced above. The spectrum in each of the three bands will offer 100 megahertz blocks of spectrum to be licensed in 416 Partial Economic Area (“PEA”) service area nationwide. The number of licenses that will be available for auction in the upper 37 and 39 GHz blocks in any given PEA will depend on commitments made by incumbent licensees in an initial phase to accept a reconfigured assignment or relinquish their license altogether in exchange for a portion of the auction proceeds.

The FCC seeks input on its proposal for Auction 103 to use an ascending clock auction format in both auction phases for licenses held by the FCC as well as those given up by incumbent licensees. The first phase will involve successive clock bidding rounds in which bidders request categories of generic license blocks in specific PEAs while in the subsequent round, bidders will bid on frequency-specific license assignments. During the clock phase, the FCC auction bidding system will announce prices for blocks in each category in each PEA, and qualified bidders will submit quantity bids for the number of blocks they seek. Simultaneously with the Public Notice, the FCC also published a technical guide with mathematical details about the proposed auction procedure and algorithms for the clock and assignment phases.

In addition, the auction procedures would include an aggregate net revenue requirement that must be met to ensure that the auction’s proceeds will be able to cover the cost of payments to incumbents that relinquish their spectrum. Bidders will be provided with an estimate of the shortfall to meeting the net revenue requirement after each round of bidding until the requirement has been met. If the revenue requirement has been met by the end of the clock phase bidding, the system will determine the winning bidders of generic blocks, and the auction will proceed to the assignment phase. If the net revenue requirement has not been satisfied at the time bidding stops in the clock phase, the auction will end, no new licenses will be assigned, and incumbents will retain their licenses while the FCC reassesses the matter.

After the winning bidders for the generic blocks have been determined, the FCC also proposes to conduct separate assignment rounds for each of the top 20 PEAs. The PEAs will be assigned sequentially, beginning with the largest PEAs. Assigning the PEAs sequentially will make it easier for bidders to incorporate frequency assignments from previously assigned areas into their bid preferences for other areas and acquire contiguous blocks of spectrum within PEAs and common spectrum among contiguous PEAs. Of note, the FCC proposes to implement a cap on bidding credits for winning bidders in the amounts of $25 million for small businesses and a $10 million for rural service providers.

You will find more details on the significant April meeting items after the break:

Spectrum Incentive Auction: The draft Public Notice would propose auction application and bidding procedures for licenses in the Upper 37 GHz (37.6-38.6 GHz), 39 GHz (38.6 GHz-40.0 GHz), and 47 GHz (47.2-48.2 GHz) bands. In the first auction phase, participants would bid for generic 100 megahertz blocks in the three mmW bands. The first auction phase also would determine the amount of incentive payments due to incumbent licensees that opted to relinquish their existing spectrum holdings. The second auction phase would establish the specific frequency assignments awarded to the auction winners. The actual number of licenses available for auction is not yet settled and will depend upon how many incumbent licensees previously agreed to give up their existing spectrum holdings for payment or accept modified licenses. The FCC would announce the particular licenses available at auction in advance of the auction application deadline. The FCC expects to complete the auction by the end of 2019.

37 GHz/50 GHz Band Access: The draft Order would facilitate the auction of the Upper 37 GHz band by establishing procedures for the Department of Defense (“DOD”) to operate in this spectrum on a shared basis with commercial wireless operators under limited circumstances. Specifically, the FCC would review DOD requests to use Upper 37 GHz band frequencies, contact potentially-affected commercial wireless licensees, and help coordinate shared usage, if possible. The draft item also would permit the licensing of Fixed-Satellite Service earth stations to transmit in the 50 GHz (50.4-51.4 GHz) band to potentially provide faster, more advanced services.

OTARD Reform: The draft Notice of Proposed Rulemaking would reform the FCC’s OTARD rule, which currently protects only end-user antennas (e.g., satellite TV dishes) from state, local, or private restrictions. Under the FCC’s proposal, the OTARD protections would be extended to hub or relay antennas used by fixed wireless providers that represent the backbone of emerging 5G networks. The FCC would seek input on how reforming the OTARD rule would impact small antenna infrastructure deployment, particularly in rural areas. The FCC anticipates retaining OTARD rule exceptions for state, local, and private restrictions on antennas based on public safety issues or historic preservation objectives, so long as the restrictions are not overly burdensome and apply in a nondiscriminatory manner.

Legacy Regulation Forbearance: The draft Order would partially grant a petition filed by USTelecom asking the FCC to forbear from enforcing certain legacy long-distance service regulations applicable to former Bell Operating Companies (“BOCs”) and other incumbent carriers. First, the FCC would no longer require incumbent rate-of-return carriers to offer long-distance service through a separate affiliate. Second, the FCC would grant incumbent carriers relief from the “provisioning interval” requirement obligating them to fulfill telephone exchange service and exchange access requests within the same period that they provide such services to affiliated entities. Third, the FCC would refrain from requiring incumbent carriers to submit reports about their legacy “special access” services. Finally, the FCC would eliminate a BOC-specific requirement to provide nondiscriminatory access to poles, conduits, and rights-of way, finding the obligation duplicative of a similar access rule already imposed on all local exchange carriers. The FCC plans to hold off on USTelecom’s request that it forbear from enforcing its incumbent carrier network element unbundling and resale mandates, but the agency likely will take up this issue before the end of the year.

Rate Floor Elimination: The draft Order would abolish the USF “rate floor” that limited the amount of Connect America Fund support received by some rural carriers to build and maintain networks in underserved areas. Today, if a carrier elects to charge its customers less than the rate floor set by the FCC for voice service, the difference between the amount charged and the rate floor is deducted from the amount of USF support received by the carrier. The FCC plans to conclude that this process results in artificially-inflated rates for rural customers and should be eliminated, along with all of the rate floor’s associated reporting and customer notification requirements. The FCC previously froze the rate floor for two years while it considered reforms and the rule’s elimination would prevent a nearly 50% increase in the rate floor scheduled to take effect in July 2019.

Of particular interest, the recently released draft item would lay the groundwork for the FCC’s second incentive auction (after the “inaugural” broadcast incentive auction completed in March 2017). A 39 GHz incentive auction would be structured quite differently than the 600 MHz broadcast incentive auction and attempt to reduce encumbrances in the 39 GHz Band by offering existing licensees the option to relinquish their licenses in exchange for payment. The FCC leadership appears bullish that the three auctions will draw significant interest from major service providers looking to support next-generation applications, including 5G wireless connectivity and the Internet of Things. Naturally, the first-in-time 24 and 28 GHz auctions may give some sense in advance of that interest. Through November 26, 2018, after 18 rounds, the 28 GHz Band auction had generated under $200 million in bids, albeit that spectrum is encumbered in many of the largest markets and in slightly more than 50% of all counties nationwide, including the most populous. The 24 GHz Band auction may prove a much better test of the appetite for participants to pay high prices for so-called “high band” spectrum.

The FCC’s draft item would modify the band plans for the Upper 37 GHz Band, 39 GHz Band, and 47 GHz Band to move from 200 megahertz channels to 100 megahertz channels to facilitate repacking of incumbents, ensure consistency with international allocations, encourage equipment standardization across spectrum bands, and promote secondary market transactions. The new licenses would be auctioned on a Partial Economic Area (“PEA”) basis. Auction participants would be allowed to bid on licenses that overlap the contiguous Upper 37 GHz Band and 39 GHz Band.

However, in order for the modified band plan to work as hoped, the FCC wants to clear out as much encumbered spectrum in the 39 GHz Band as possible. The 28 GHz Band, for example, as we mentioned earlier, is heavily encumbered. In the 39 GHz Band, like the 28 GHz Band, incumbents prior to the designation of the spectrum for flexible mobile and fixed use in 2016 were grandfathered by the Commission and generally hold licenses in non-contiguous spectrum blocks that often overlap multiple PEAs. As a result, to serve its purposes, the draft order would offer incumbents three options:

• First, incumbents could choose to have their licenses modified by the FCC to conform to the new license areas while preserving the licenses’ value. The draft item states that the FCC will provide each incumbent with a proposed modification plan well before the auction starts to help them with their decision;
• Second, incumbents could propose alternative license modifications that preserve their licenses’ value, which would be subject to FCC approval. The draft item states that the FCC will announce in advance of the auction procedures for incumbents to submit such proposed modifications and the review criteria by which it would evaluate such proposals; or
• Third, incumbents could elect to relinquish all of their existing licenses in exchange for either (1) “vouchers” of “equivalent value” to use in bidding for new licenses at the auction or (2) cash incentive payments based on the value of their licenses as determined through the auction.

As with the details of the incumbent license modification process, the final auction bidding and assignment procedures would be announced by the FCC later ̶ likely by early next year. In the meantime, incumbent licensees in the 39 GHz Band and service providers seeking to participate in the auction should take a close look at the FCC’s draft item to ensure that the auction plan would adequately safeguard existing spectrum rights while creating opportunities for increased commercial flexible use of the spectrum. Ex parte discussion with the Commissioners and staff will be possible through December 5, the expected sunshine notice date for the December 12 Open Meeting.

In the Notice, the FCC sets out its plan to operate two separate and consecutive auctions, with different application and bidding processes, for licenses of available spectrum in the 28 GHz (27.5 – 28.35 GHz) band – which was designated for UMFUS in July 2016 – and 24 GHz (24.25-24.45 and 24.75-25.25 GHz) band – which was a subject of the Second Report and Order in Spectrum Frontiers in November 2017. The window during which individuals can apply to bid in each auction, as outlined in the draft Notice, will run concurrently. Since both auctions involve UMFUS licenses, applicants will be subject to the same application requirements, certifications, prohibited communications rule, and procedures regarding information available during the auction process. The 28 GHz band auction is set to start on November 14, 2018 and the 24 GHz band one will commence after bidding in the 28 GHz closes.

It remains to be seen what the level of interest in the auctions will be because portions of both spectrum bands are already encumbered. Thanks to relatively recent secondary market acquisitions of Nextlink and StraightPath, Verizon already has significant portions of the 28 GHz band in some key markets. Under the Spectrum Frontiers 2016 decision, the existing licenses will be converted to UMFUS licenses without competitive bidding. For the 24 GHz band, AT&T was initially set to acquire a large set of licenses in that band through its purchase transaction with FiberTower which would have resulted in significant encumbrances there as well. However, as part of a settlement agreement with the FCC to get the transaction approved, AT&T was required to return the 24 GHz licenses to the Commission. The 24 GHz band still has some active licenses but the encumbrance is less and the current licensee has filed applications seeking to reconfigure its licenses in a way the FCC has indicated would increase the number of unencumbered blocks available for auction.

At the August Commission Meeting, the FCC is also set to take vote on a Fourth Further Notice of Proposed Rulemaking (“FNPRM”) in the Spectrum Frontiers proceeding that would consider rules to set the stage for a separate, single auction of three other mmW bands, 37 GHz (37.6-38.6 GHz), 39 GHz (38.6 GHz-40 GHz), and 47 GHz (47.2-48.2 GHz). The Commission hopes that the auction will occur in the second half of 2019, after rules are adopted to tweak the current band structure. To facilitate the auctioning of these bands, the FCC proposes changes to the current service rules for the 39 GHz band. Specifically, the FCC seeks comment on the following changes which would be designed to make the bands more attractive to potential high-stakes bidders, the large carriers and providers, and maximize auction revenues:

• Create fourteen 100 MHz channels instead of seven 200 MHz ones in the 39 GHz block to facilitate repacking of incumbent licensees;
• Modify upper 37 GHz band channels to also have 100 MHz instead of 200 MHz to align the licensing scheme with the adjacent 39 GHz; and
• Modify the plan for the portion of the 47 GHz band licensed under UMFUS rules to also have 100 MHz channels.

Spectrum Frontiers Auctions: The FCC issued a draft Public Notice in its ongoing Spectrum Frontiers proceeding establishing application and bidding procedures to auction 850 MHz of spectrum in the 28 GHz band and 700 MHz of spectrum in the 24 GHz band. The spectrum would be made available for flexible wireless use to support 5G technologies. The FCC plans to start the 28 GHz band auction by mid-November 2018, with the 24 GHz band auction following soon afterward. The agency would apply its standard auction rules to each proceeding to facilitate participation in both auctions. In addition, the FCC released a draft proposed rulemaking seeking comment on service rule changes for the 39 GHz band, which along with the upper 37 GHz band, represents the largest amount of contiguous spectrum available for flexible use in the millimeter wave bands. The FCC anticipates freeing up this spectrum through an incentive auction tentatively planned for 2019. Comments will be due September 17, 2018 and replies on October 8, 2018.

One-Touch Make-Ready: A draft Order and Declaratory Ruling would allow the “vast majority” of pole attachments to follow a one-touch make-ready process, in which new attachers may elect to perform all of the work to prepare a pole to hold new facilities without relying on the pole owner. The FCC also plans to codify its existing precedent regarding the “overlashing” of new facilities to current attachments, while eliminating disparities between the pole attachment rates paid by incumbent telecommunications carriers versus cable and other telecommunications attachers. In addition, the draft would clarify that state and local moratoria on telecommunications services and facilities deployments are preempted under federal law.

$100 Million Connected Care Pilot Program: The FCC plans to adopt a Notice of Inquiry (“NOI”) seeking input on a proposed $100 million “Connected Care Pilot Program” to support telehealth services delivered to low-income Americans. The proposed program would draw money from the Universal Service Fund, potentially lowering the funds available to other programs (it notes the reduced spending on the Lifeline Program), and the FCC is looking for comments on the appropriate application procedures, supported services and equipment, support amounts, eligibility criteria, and duration for the pilot program. The NOI asks a lot of open questions, but also seeks comment on restricting the pilot program to projects that would involve new or upgraded deployments or upgrades to existing facilities and whether to only partner with facilities-based eligible telecommunications carriers (“ETCs”), which would be consistent with the agency’s proposal in late 2017 to limit the Lifeline Program to facilities-based ETCs. Comments will be due 30 days after the NOI is released and reply comments are due 60 days after release.

The Commission granted the petitions of wireless microphone manufacturers to relax the limit on spurious emissions. The FCC concluded that its prior specification in the Wireless Microphones Order of a -90 dBc limit at all frequencies more than one megahertz above and below the carrier frequency is not necessary to protect radio services in shared or adjacent bands. In its place, the Commission adopted the European Telecommunications Standards Institute (“ETSI”) spurious emission limits for licensed and unlicensed wireless microphones, such that emissions more than one megahertz above and below a wireless microphone carrier frequency must comply with the limits in Section 8.4 of ETSI EN 300 422-1.

With respect to output power measurement applicable to both licensed and unlicensed wireless microphone operations in the VHF TV bands, the Commission clarified that manufacturers may show compliance with the 50 mW equivalent isotropically radiated power (“EIRP”) limit for licensed wireless microphones operating in the VHF band by making either radiated or conducted measurements.

The Commission denied the requests of manufacturers to increase the EIRP limit of wireless microphones (20 mW) that operate in the 600 MHz guard band and duplex gap. The agency found the proponents of change had not adequately substantiated their request, observing that “[n]o party provided an analysis demonstrating that the maximum power could be increased without causing harmful interference to licensed wireless services.”

However, in a long sought victory for manufacturers, the FCC also decided on reconsideration to exempt unlicensed wireless microphone operations in the TV bands from antenna connector restrictions. Specifically, the Commission waived a requirement in Section 15.203 of its rules that unlicensed wireless microphones utilize either a permanently attached antenna or an antenna that is uniquely coupled to the device. The Commission’s rationale for doing so reflected both the fact that some microphones require detachable antennas in order to function effectively, and its assessment that the other unique connector requirement would not be necessary to prevent harmful interference to authorized services. This result is limited to unlicensed wireless microphones and does not extend to other Part 15 devices which are not already exempt from the still generally applicable integrated or unique antenna requirement.

For operations of legacy wireless microphone equipment, the Commission clarified that unlicensed users can continue to operate equipment that had been certified under Part 74 in portions of the 600 MHz service band until the end of the 39-month post auction transition period. After that time, however, unlicensed wireless microphone users are only authorized to operate wireless microphone equipment that has been certified under the Part 15 rules. The Commission will also allow operation of legacy wireless microphone equipment that was originally certified under Part 74, but can be modified and certified to operate in portions of the 600 MHz service band under the new Part 15 rules, to do so.

The Commission declined to adopt Shure’s proposal to allow unlicensed wireless microphone users to register for protection from other unlicensed operations in the TV bands on the grounds that doing so would be inconsistent with their fundamental status as unlicensed services. Instead, the Commission sought to accommodate mid-sized professional theater, music, performing arts, or similar organizations by issuing a further notice on creating a regime for such parties to attain licenses for their wireless microphone operations, as discussed below.

In the 169-172 MHz band, the Commission revised the center frequencies for two of the 200-kilohertz wireless microphone channels, shifting the authorization to operate on channels centered at 169.475 and 170.275 MHz to 169.575 MHz and 170.025 MHz. They also permitted 54-kilohertz operations on four new channels that would correspond with these 200-kilohertz channels, specifically authorizing such wireless microphone operations on frequencies centered at 169.545 MHz, 169.605 MHz, 169.995 MHz, and 170.055 MHz.

In the 1435-1525 MHz AMT band, the Commission, denying several petitions for reconsideration on the issue by manufacturers, affirmed a decision establishing a 30 MHz limit on the amount of spectrum available for wireless microphone operations at a particular location and clarified how that limit would work with multiple wireless microphone users in the same geographic area. Specifically, the FCC clarified that that the 30-megahertz limit applies to each licensed wireless microphone user seeking access to spectrum in the 1435-1525 MHz band for its own wireless microphone operations at a particular location or venue. Licensed wireless microphone users seeking access first need to coordinate with the Aerospace and Flight Test Radio Coordinating Council (“AFTRCC”), which must determine whether to permit access to the 1435-1525 MHz band in that area during the specified period and to indicate whether any specific frequencies in the 90 megahertz of spectrum of the band is unavailable for use. The Commission also clarified that, in extraordinary circumstances in which a wireless microphone user demonstrates that access to more than 30 megahertz for “a specified event” is merited, an STA process will be available which requires prior coordination with AFTRCC. For example, the Commission suggested that isolated, “super-scale” professional entertainment productions, such as a seasonal holiday production at Radio City Music Hall, may qualify for an STA.

The Commission also sought to facilitate coordination between wireless microphone operations and incumbent primary Federal fixed services in the 941.5-944 MHz band. Ultimately, the FCC decided that, after coordination of proposed wireless microphone operations with incumbent non-Federal users through the local SBE coordinator, a license applicant is to file its application for an LPAS license with the Commission. In addition to basic technical information, the applicant must provide a description of the proposed location and area (or areas) of operation.

In the companion Further Notice of Proposed Rulemaking (“FNPRM”), the Commission proposed to permit certain professional theater, music, performing arts, or similar organizations that operate unlicensed wireless microphones to obtain Part 74 licenses to operate in the TV bands, thereby gaining the ability to register in the white spaces database and gain protection from unlicensed white space devices at the same venues. The Commission proposes a 50 microphone license eligibility threshold for such entities, but seeks comment on whether the threshold should be even smaller. The FNPRM seeks comment on whether such users should also be able to obtain a Part 74 licenses to operate in other bands available for use by Part 74 wireless microphone licensees, provided that they meet all applicable requirements in the respective bands. Specifically, the Commission seeks comment on allowing professional theater, music, and performing arts organizations under the proposed definitions access to portions of the 900 MHz band, the 1435-1525 MHz band, and the 6975-7125 MHz band. Comments will be due 30 days after publication in the Federal Register, which hasn’t yet occurred.