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

Mid-Band Spectrum Auction: The draft Order would set the stage for a 2.5 GHz Band auction by eliminating rules that prevented non-educational institutions from obtaining licenses, allowing commercial providers to enter the Band. New licensees would no longer be required to use the spectrum for educational purposes and would possess more flexibility in leasing spectrum to others. The auction would not affect existing contracts or leases for 2.5 GHz Band spectrum, which would remain in place. The FCC plans to provide rural Tribal organizations with a priority filing window for new 2.5 GHz Band licenses, but would not implement a similar window for educational institutions. After the close of the priority filing window, the FCC would auction the remaining 2.5 GHz Band spectrum in 100 megahertz or 16.5 megahertz blocks at the county level.

High-Band Spectrum Auction: The draft Public Notice would establish rules for the auction of Upper 37 GHz Band, 39 GHz Band, and 47 GHz Band spectrum for commercial mobile use. Auction participants would first bid on generic spectrum blocks covering partial economic areas. The bid amounts in this round would determine the size of the incentive payments received by incumbent 39 GHz Band licensees. Following the generic bidding round, auction participants would bid on frequency-specific spectrum blocks, with the aim of creating contiguous block assignments. The FCC plans to provide bidding credits to small businesses and rural service providers to encourage auction participation. The FCC would accept applications to participate in the auction beginning August 2, 2019, with the auction scheduled to start on December 10, 2019.

Connected Care Pilot Program: The draft Notice of Proposed Rulemaking (“NPRM”) would seek input on the eligibility requirements, application processes, goals, and evaluation metrics for the proposed Connected Care Pilot Program. The FCC anticipates operating the Connected Care Pilot Program as a new program within the Universal Service Fund (“USF”), supported by an additional assessment on telecommunications providers to be added to the contribution factor that will slightly increase USF contributions. The FCC therefore says it does not plan on diverting resources from existing USF programs to support the Connected Care Pilot Program. Moreover, in a reversal from its initial inquiry last year on the Connected Care Pilot Program, the FCC is no longer considering restricting program participation only to facilities-based eligible telecommunications carriers (“ETCs”); rather, service providers do not even have to be ETCs. Comments on the NPRM will be due 30 days after Federal Register publication of the NPRM, with reply comments due 30 days later.

Transport Services Reform: The draft Orders would relieve price cap carriers from pricing regulation of their lower-speed, legacy transport services known as Time Division Multiplexing (“TDM”) transport. The FCC would find that sufficient competition exists in the provision of TDM transport services to justify eliminating the pricing controls. Although the FCC already voted to eliminate TDM transport service pricing controls in 2017, a federal court subsequently returned the issue to the agency to allow for full notice and comment on the issue. The FCC also would forbear from enforcing its unbundling requirements for legacy transport services known as DS1 and DS3 transport, subject to certain conditions and a multi-year transition period. The forbearance would free price cap carriers from providing such legacy transport services based on regulated rates.

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.