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700 MHz Second Report and Order -- Order on Reconsideration

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Released: March 1, 2013

Federal Communications Commission


FCC 13-29

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)
Service Rules for the 698-746, 747-762, and 777-
)
WT Docket No. 06-150
792 MHz Bands
)
)
Revision of the Commission’s Rules to Ensure
)
CC Docket No. 94-102
Compatibility with Enhanced 911 Emergency
)
Calling Systems
)
)
Section 68.4(a) of the Commission’s Rules
)
WT Docket No. 01-309
Governing Hearing Aid-Compatible Telephones
)
)
Biennial Regulatory Review – Amendment of Parts
)
WT Docket No. 03-264
1, 22, 24, 27, and 90 to Streamline and Harmonize
)
Various Rules Affecting Wireless Radio Services
)
)
Former Nextel Communications, Inc. Upper 700
)
WT Docket No. 06-169
MHz Guard Band Licenses and Revisions to Part 37 )
of the Commission’s Rules
)
)
Implementing a Nationwide, Broadband,
)
PS Docket No. 06-229
Interoperable Public Safety Network in the 700
)
MHz Band
)
)
Development of Operational, Technical, and
)
WT Docket No. 96-86
Spectrum Requirements for Meeting Federal, State,
)
and Local Public Safety Communications
)
Requirements Through the Year 2010
)
)
Declaratory Ruling on Reporting Requirement under )
WT Docket No. 07-166
Commission’s Part 1 Anti-Collusion Rule
)

MEMORANDUM OPINION AND ORDER ON RECONSIDERATION

Adopted: February 28, 2013

Released: March 1, 2013

By the Commission:

TABLE OF CONTENTS

Heading
Paragraph #
I.
INTRODUCTION .................................................................................................................................. 1
II. BACKGROUND .................................................................................................................................... 2
III. DISCUSSION......................................................................................................................................... 3
A. Performance Requirements .............................................................................................................. 3

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1. Geographic-Based Coverage Requirements for CMA and EA Licenses .................................. 4
2. Benchmarks for REAG Licenses............................................................................................. 10
3. Keep-What-You-Use Provisions ............................................................................................. 12
4. Potential Enforcement Provisions for Failure to Build Out..................................................... 19
5. Interim Construction Reports .................................................................................................. 24
B. Auction-Related Issues .................................................................................................................. 26
1. Designated Entity Eligibility for a Small Business Providing Wholesale
Service ..................................................................................................................................... 27
2. Amount of Reserve Prices ....................................................................................................... 33
3. Re-Auction Procedures............................................................................................................ 37
4. Prohibition of Certain Communications.................................................................................. 40
5. Anonymous Bidding................................................................................................................ 42
C. Spectrum Eligibility ....................................................................................................................... 45
D. Lower 700 MHz A Block Wholesale Requirement ....................................................................... 48
E. First Amendment Analysis of Open Platform Rule ....................................................................... 50
F. Open Platform Requirements for the C Block if the Reserve Price is Not Met............................. 53
G. 700 MHz Public/Private Partnership.............................................................................................. 55
H. Narrowband Relocation ................................................................................................................. 58
IV. ORDERING CLAUSE ......................................................................................................................... 60
APPENDIX A – List of Petitioners and Commenters

I.

INTRODUCTION

1.
In this Memorandum Opinion and Order (“MO&O”), we address petitions that were filed
seeking reconsideration of certain decisions made by the Commission in the 700 MHz Second Report and
Order
relating to the 698-806 MHz Band (herein, the “700 MHz Band”).1 This MO&O denies or
dismisses petitioners’ requests to modify the earlier decisions on the performance requirements applicable
to licensees in this band, the auction and competitive bidding rules, the open platform rules, the
narrowband relocation procedures, and the decisions not to impose wholesale requirements, eligibility
restrictions, and spectrum aggregation limits. This MO&O also dismisses as moot petitions for
reconsideration regarding the establishment of the Public/Private Partnership between the Upper 700
MHz D Block (“D Block”) licensee and the Public Safety Broadband Licensee in the 763-768 MHz and
793-798 MHz bands.


1 Service Rules for the 698-746, 747-762 and 777-792 MHz Bands, WT Docket No. 06-150, Revision of the
Commission’s Rules to Ensure Compatibility with Enhanced 911 Emergency Calling Systems, CC Docket No. 94-
102, Section 68.4(a) of the Commission’s Rules Governing Hearing Aid-Compatible Telephones, WT Docket No.
01-309, Biennial Regulatory Review – Amendment of Parts 1, 22, 24, 27, and 90 to Streamline and Harmonize
Various Rules Affecting Wireless Radio Services, WT Docket 03-264, Former Nextel Communications, Inc. Upper
700 MHz Guard Band Licenses and Revisions to Part 27 of the Commission’s Rules, WT Docket No. 06-169,
Implementing a Nationwide, Broadband, Interoperable Public Safety Network in the 700 MHz Band, PS Docket No.
06-229, Development of Operational, Technical, and Spectrum Requirements for Meeting Federal, State, and Local
Public Safety Communications Requirements Through the Year 2010, WT Docket No. 96-86, Declaratory Ruling on
Reporting Requirement under Commission’s Part 1 Anti-Collusion Rule, WT Docket No. 07-166, Second Report
and Order
, 22 FCC Rcd 15289 (2007) (“700 MHz Second Report and Order”).
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II.

BACKGROUND

2.
In the 700 MHz Second Report and Order, the Commission revised the band plan for
both the commercial and public safety spectrum in the 700 MHz Band. With regard to the unassigned
commercial spectrum in the band, the Commission established assignment and licensing rules. In
addition, the Commission established a Public/Private Partnership between the D Block licensee and the
Public Safety Broadband Licensee in order to facilitate the development of a nationwide public safety
broadband network. Ten petitions for reconsideration were filed seeking review of a variety of specific
decisions made by the Commission in that order.2 We describe and address these issues in more detail
below.

III.

DISCUSSION

A.

Performance Requirements

3.
Below we discuss the issues raised by petitioners with respect to the performance
requirements that the Commission established in the 700 MHz Second Report and Order. After careful
consideration of the arguments raised in the petitions for reconsideration, we deny the requests to modify
the existing performance requirements.
1.

Geographic-Based Coverage Requirements for CMA and EA
Licenses

4.
Background. In the 700 MHz Second Report and Order, the Commission required
Cellular Market Area (“CMA”) licensees in the Lower 700 MHz B Block and Economic Area (“EA”)
licensees in the Lower 700 MHz A and E Blocks to provide service sufficient to cover 35 percent of the
geographic area of their licenses within four years, and 70 percent of this area within ten years (the


2 The parties petitioning for reconsideration of the 700 MHz Second Report and Order are: AT&T Inc. (“AT&T”),
Blooston Rural Carriers (“Blooston”), Commonwealth of Virginia (“Virginia”), Cyren Call Communications, Corp.
(“Cyren Call”), Frontline Wireless, LLC (“Frontline”), MetroPCS Communications, Inc. (“MetroPCS”), NTCH, Inc.
(“NTCH”), Pierce County Public Transportation Benefit Area Corporation (“Pierce Transit”), Ad Hoc Public
Interest Spectrum Coalition (“PISC”), and Rural Telecommunications Group, Inc. (“RTG”). See AT&T Inc.
Petition for Reconsideration and Clarification, WT Docket No. 06-150 et al. (filed Sept. 24, 2007) (“AT&T
Petition”); Blooston Rural Carriers Petition for Partial Reconsideration and/or Clarification, WT Docket No. 06-150
et al. (filed Sept. 24, 2007) (“Blooston Petition”); Commonwealth of Virginia Petition for Reconsideration, WT
Docket No. 06-150 et al. (filed Sept. 24, 2007) (“Virginia Petition”); Cyren Call Communications Corporation
Petition for Partial Reconsideration and for Clarification, WT Docket No. 06-150 et al. (filed Sept. 24, 2007)
(“Cyren Call Petition”); Frontline Wireless, LLC Petition for Reconsideration, WT Docket No. 06-150 et al. (filed
Sept. 24, 2007) (“Frontline Petition”); MetroPCS Communications, Inc. Petition for Clarification and
Reconsideration, WT Docket No. 06-150 et al. (filed Sept. 20, 2007) (“MetroPCS Petition”); NTCH, Inc. Petition
for Partial Reconsideration, WT Docket No. 06-150 et al. (filed Sept. 21, 2007) (“NTCH Petition”); Pierce Transit
Petition for Reconsideration, WT Docket No. 06-150 et al. (filed Sept. 24, 2007) (“Pierce Transit Petition”); Ad Hoc
Public Interest Spectrum Coalition Petition for Reconsideration, WT Docket No. 06-150 et al. (filed Sept. 24, 2007)
(“PISC Petition”); Rural Telecommunications Group, Inc. Petition for Reconsideration, WT Docket No. 06-150 et
al.
(filed Sept. 24, 2007) (“RTG Petition”).
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license term).3 It further provided that, when applying geographic benchmarks, licensees were not
required to include government lands as part of the relevant service area.4
5.
Blooston, MetroPCS, and RTG filed petitions for reconsideration challenging various
aspects of the geographic-based performance requirements. Blooston requests that in addition to being
able to meet the existing geographic-based benchmarks, CMA licensees should be given the option of
meeting population-based benchmarks.5 In addition, several of the petitioners argue for additional
exclusions beyond government lands when determining compliance with the benchmarks. MetroPCS
argues for excluding bodies of water, historic districts, areas completely surrounded by the licensee’s
system, and zip codes with population density less than 5 persons per square mile,6 while RTG only
supports excluding large bodies of water like the Great Lakes or the Great Salt Lake.7 Blooston requests
that a licensee not be held accountable for coverage to Tribal lands if the licensee has made a good faith
but unsuccessful effort to secure Tribal government agreement to allow such coverage.8
6.
Discussion. We deny the petitioners’ requests to alter the geographic-based coverage
requirements. First, we are unpersuaded by Blooston’s arguments that a geographic-based performance
requirement on CMA licensees (i.e. licensees in Lower 700 MHz B Block) is arbitrary and unworkable
and should be supplemented with the option of meeting a population-based benchmark.9 The
Commission provided reasonable justifications for its decision to adopt a geographic-based build-out
requirement for CMA and EA licenses, and we find nothing in the record to persuade us to change this
decision.10 Blooston argues that for some licenses, meeting the geographic-based benchmarks will be


3 See 700 MHz Second Report and Order, 22 FCC Rcd at 15349 ¶ 157.
4 See id. at 15350 ¶ 160.
5 See Blooston Petition at iii; Blooston Reply at 3-5. See also CTIA Comments and Opposition at 2-6 (arguing for
extension of population coverage option for both CMA and EA licensees); MetroPCS Reply at 2 (same); AT&T
Opposition and Comments at 6-7 (same); U.S. Cellular Comments at 6-7; U.S. Cellular Reply at 2-6. But see RTG
Opposition and Comments at 2-4; RTG Limited Reply and Comments at 2-3.
6 See MetroPCS Petition at 3, 11-13; Letter from Michael Lazarus, Counsel for MetroPCS Communications, Inc., to
Marlene H. Dortch, Secretary, FCC, WT Docket No. 06-150 et al. (filed Nov. 8, 2007). See also Blooston
Comments at 2-3; CTIA Comments and Opposition at 6-9; U.S. Cellular Comments at 4. But see RCA Limited
Opposition and Comment at 3-4.
7 See RTG Opposition and Comments at 5-6.
8 See Blooston Petition at 19-20. See also CTIA Comments and Opposition at 8.
9 See Blooston Petition at 3-11.
10 See 700 MHz Second Report and Order, 22 FCC Rcd at 15348-51 ¶¶ 154-61, 15354-55 ¶ 176, 15402 ¶ 309. The
Commission particularly noted that “[b]ecause we adopt smaller geographic license areas such as CMAs to facilitate
the provision of service . . . in rural areas, we also adopt performance requirements that are designed to ensure that
such service is offered to consumers in these areas.” Id., 22 FCC Rcd at 15349 ¶ 158. The Commission further
found that “the uniqueness of the 700 MHz spectrum justifies the use of geographic benchmarks . . . .” Id. Blooston
argues that the Commission arbitrarily discriminated against CMA licenses by providing population-based
requirements on both EA and REAG licensees. Blooston Petition at 9. In fact, the Commission imposed identical
geographic-based requirements on EA and CMA licenses, and it reasonably justified its decision to adopt a different
(continued….)
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impractical, and offers analysis of nine CMAs out of the 734 in Lower 700 MHz B Block.11 For specific
cases of hardship, however, providers can seek waiver relief. Blooston offers no evidence demonstrating
that a geographic-based benchmark is inherently impractical in the usual case.
7.
Indeed, the results of the auction of Lower 700 MHz B Block licenses provide further
support for the reasonableness of the Commission’s geographic-based performance requirement. In the
700 MHz Second Report and Order, the Commission decided that, if those geographic-based
requirements caused a “reduction in the monetary value of the licenses” to such an extent that bidding in
the auction resulted in the Lower 700 MHz B Block failing to meet its applicable aggregate reserve price,
the licenses for that block would be re-auctioned subject to population-based performance requirements.12
Thus, the Commission relied in part on the auction results as a final check on whether its geographic-
based performance requirements were in the public interest.13 When the licenses were auctioned in
Auction 73, the Commission received provisionally winning bids on 728 out of 734 Lower 700 MHz B
Block licenses and the aggregate amount of the provisionally winning bids far exceeded the applicable
aggregate reserve price.14 Accordingly, we reaffirm the geographic-based coverage requirement for
Lower 700 MHz B Block licensees and we deny Blooston’s request to add an optional population-based
benchmark to Lower 700 MHz B Block.15
8.
We also reject arguments that we should broaden the exclusions from our geographic
coverage requirements.16 Our geographic coverage requirements already exclude government lands,17
and any further categorical exclusions could undermine the Commission’s goals in adopting these
requirements, which include taking advantage of the excellent propagation characteristics of 700 MHz
(Continued from previous page)


approach for the much larger REAG licenses. See 700 MHz Second Report and Order, 22 FCC Rcd at 15351 ¶¶
163, 164.
11 See Blooston Petition at 3-4 & Attach. B.
12 See 700 MHz Second Report and Order, 22 FCC Rcd at 15402 ¶¶ 309-10.
13 See id.
14 See Auction of 700 MHz Band Licenses Closes, Public Notice, 23 FCC Rcd 4572, 4573 (WTB 2008).
15 For similar reasons, we reject the requests of various commenters for a population-based buildout option for EA
licensees. See CTIA Comments and Opposition at 2-6; MetroPCS Reply at 2; AT&T Opposition and Comments at
6-7. We note that there are currently pending a number of requests from Lower 700 MHz A and B Block licensees
for an extension of time to meet and waiver of the interim performance requirement on other grounds, including a
lack of 700 MHz interoperability and certain interference issues. See Wireless Telecommunications Bureau Seeks
Comment on Requests for Waiver and Extension of Time to Construct 700 MHz A and B Block Licenses, WT
Docket 12-332, Public Notice, DA 12-1827 (WTB rel. Nov. 13, 2012). Nothing in our discussion here should be
construed to prejudge these pending requests.
16 See MetroPCS Petition at 3, 11-13; Letter from Michael Lazarus, Counsel for MetroPCS Communications, Inc.,
to Marlene H. Dortch, Secretary, FCC, WT Docket No. 06-150 et al. (filed Nov. 8, 2007). See also RTG Opposition
and Comments at 5-6; See also Blooston Comments at 2-3; CTIA Comments and Opposition at 6-9; U.S. Cellular
Comments at 4.
17 See 700 MHz Second Report and Order, 22 FCC Rcd at 15350 ¶ 160.
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spectrum to promote wireless coverage in remote and rural areas.18 Even with regard to bodies of water,
there is a public interest benefit to wireless coverage to vessels near shore, and some level of coverage
may be possible from infrastructure on land or, where relevant, through platforms or other facilities
constructed out from the shore.19 Further, the Commission already specifically considered and rejected
exclusions for Tribal lands, finding that it did not want to discourage deployment to these areas.20 While
Blooston would limit exclusion of Tribal lands to cases where a licensee had made a good faith but
unsuccessful attempt to obtain Tribal government consent, we see no evidence that such consent will
often be unreasonably withheld, and we are concerned that an exclusion for Tribal lands may result in
reduced efforts to obtain such consent and deploy in these areas.
9.
In sum, we conclude that the requested categorical exclusions are not appropriate, but, as
mentioned in the 700 MHz Second Report and Order itself, licensees may seek waivers of our rules if
they believe the circumstances in a particular area warrant relief under our waiver standard.21 If licensees
seek to obtain such waivers, we urge that they make these requests as soon as possible. These requests
must be well founded and not based solely on grounds of low population density. The Commission staff
will consider these types of requests on a case-by-case basis.
2.

Benchmarks for REAG Licenses

10.
Background. In the 700 MHz Second Report and Order, the Commission imposed a
population-based performance requirement on Regional Economic Area Groupings (“REAG”) licensees,
who occupy the Upper 700 MHz C Block. Specifically, the Commission required them to provide service
sufficient to cover 40 percent of the population in each EA of their license areas within four years and 75
percent of the population in each EA of their license areas within ten years.22 In its petition for
reconsideration, RTG argues that a geographic-based coverage requirement will better ensure that REAG
licensees deploy in rural areas.23
11.
Discussion. We conclude that we will retain the requirement that REAG licensees must
meet the population-based benchmarks. RTG argues that the REAG approach is inconsistent with the
approach the Commission took with regard to EA and CMA licenses, but there is no requirement that the
performance requirements be the same for all commercial wireless services, nor even for those of a


18 See id. at 15348-49 ¶¶ 154-55, 15354-55 ¶ 176.
19 In some cases, there may also be demand from economic activity that may benefit from access to advanced
communications services over the relevant body of water. For example, for both EAs and CMAs, the Commission
separately licenses the Gulf of Mexico as a service area, reflecting the Commission’s recognition of the public
interest in promoting the deployment of service there to help meet the growing communications needs of petroleum
and natural gas providers in the area. See 47 C.F.R. § 27.6(c).
20 See 700 MHz Second Report and Order, 22 FCC Rcd at 15350 n.386.
21 See 47 C.F.R. § 1.925; see also 700 MHz Second Report and Order, 22 FCC Rcd at 15348 ¶ 153.
22 See 700 MHz Second Report and Order, 22 FCC Rcd at 15351 ¶¶ 162, 163.
23 See RTG Petition at 4-10; RTG Opposition and Comments at 4; RTG Limited Reply and Comments at 2-3. See
also
Blooston Comments at 3; RCA Limited Opposition and Comment at 4. But see U.S. Cellular Comments at 6-7;
CTIA Comments and Opposition at 2-6; AT&T Opposition and Comments at 9-10; MetroPCS Reply at 3.
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certain type.24 The Commission explained its determination that population-based benchmarks were
better suited for the much larger REAG licenses in some detail, and there is nothing new in the record to
persuade us to change this decision.25 This decision involved tradeoffs particular to the expectation that
these licenses would lead to regional or even nationwide network deployment. Contrary to RTG’s
assertion, the Commission was mindful not only of the need to develop regional and nationwide
networks, but also of the need to promote wireless services in less populated portions of our nation,
including rural areas.26 To address this concern, it provided that REAG licensees must meet the
population-based build-out requirements on an EA basis.27 RTG questions the Commission’s expectation
that the REAG licenses were more likely to be used to provide regional or nationwide service than the
much smaller EA and CMA licenses but offers nothing to undermine the Commission’s well-supported
predictive judgment.28 Therefore, we deny RTG’s request that we require REAG licensees to meet a
geographic-based coverage requirement.
3.

Keep-What-You-Use Provisions

12.
Background. In the 700 MHz Second Report and Order, the Commission established
both interim and end-of-term enforcement measures that would apply automatically in the event that
licensees failed to meet the applicable benchmarks. For licensees that fail to meet the applicable interim
benchmark, the Commission decided that the normal ten year license term would be reduced by two
years, and the end-of-term benchmark must then be met within eight years.29 The Commission
determined that, at the end of the license term, licensees that fail to meet the end-of-term benchmark
would be subject to a keep-what-you-use rule, which would make unused spectrum available to other
potential users.30 For those CMAs or EAs in which the end-of-term performance requirements have not
been met, the unused portion of the license will terminate automatically without Commission action and
will become available for reassignment by the Commission.31 Similarly, if a REAG licensee fails to
provide signal coverage and offer service to at least 75 percent of the population in any EA comprising
the REAG license area by the end of the license term, the unused portion of each such EA in that
licensee’s authorization area will terminate automatically without Commission action and will become
available for reassignment by the Commission.32
13.
The Commission further established a process governing the reassignment of licenses
made available pursuant to the keep-what-you-use rules. As part of this process, the Commission


24 See 700 MHz Second Report and Order, 22 FCC Rcd at 15354-55 ¶ 176.
25 See id. at 15351-52 ¶ 164.
26 See id.
27 See id.
28 See id. at 15324 ¶¶ 81, 82.
29 See id. at 15348 ¶ 153.
30 See id.
31 See id. at 15349 ¶ 157.
32 See id. at 15351 ¶ 163.
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provided that the licenses will be subject to an initial 30-day application period during which the original
licensee may not file an application.33 Following this period, the original licensee is permitted to file an
application for any remaining unserved area where licenses have not been issued and there are no pending
applications.34
14.
Several petitioners seek reconsideration of the keep-what-you-use rules. Blooston
requests that the Commission provide a “more precise definition of how the take-back process will work,
and what propagation model will be used.”35 MetroPCS requests that the Commission modify the current
rule to adopt a “triggered” approach, under which the original licensee would only lose unserved areas if a
third party files a “credible” application, demonstrating “a bona fide desire, and the wherewithal, to build-
out the spectrum in the unserved market,” and submits a “meaningful upfront payment” that is
“sufficiently large to deter speculators.”36 MetroPCS also requests that the incumbent should be allowed
to participate in any auction of the unserved spectrum.37 Finally, Blooston and MetroPCS request that an
original licensee of 700 MHz commercial spectrum subject to loss of unused license area under the keep-
what-you-use rule be allowed to retain an expansion area in addition to the area it serves at the end of its
license term.38

15.
Discussion. We deny the requests to alter the keep-what-you-use rules that the
Commission adopted in the 700 MHz Second Report and Order. First, we disagree with Blooston’s
assertion that we need to provide a more detailed explanation of how the process will work and what
propagation model will be used.39 We find that the 700 MHz Second Report and Order already sets forth
the process implementing the keep-what-you use provisions in significant detail, starting with the filing of
construction notifications up through the reassignment process, and that further detail regarding the “take-
back” process is unnecessary at this time.40 Further, a specific propagation model would be contrary to
the flexibility that the Commission adopted. In establishing the construction notification through which
licensees will demonstrate compliance with performance requirements, the Commission recognized that
“demonstrations of coverage may vary across licensees,” who “will likely use a variety of technologies to
provide a range of services with this spectrum.”41 It specifically rejected a request for a “bright-line” test
for what constitutes sufficient signal strength, provided instead that licensees must provide the
assumptions they use to create coverage maps, “including the propagation model and signal strength


33 See id. at 15353 ¶ 171.
34 See id. at 15353 ¶ 172.
35 Blooston Petition at 19.
36 MetroPCS Petition at 14-16.
37 Id. at 15.
38 See Blooston Petition at 19; MetroPCS Petition at 13-14; see also CTIA Comments and Opposition at 11, 13; U.S.
Cellular Comments at 4-5; AT&T Opposition and Comments at 8-9; Blooston Comments at 4.
39 Blooston Petition at 19.
40 700 MHz Second Report and Order, 22 FCC Rcd at 15352-54 ¶¶ 166-175.
41 Id. at 15352 ¶ 166.
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necessary to provide service,” and also delegated to the Wireless Telecommunications Bureau (“Wireless
Bureau”) the authority to establish further specifications for filings and to determine coverage areas.42
We see no reason to reverse this decision, and therefore reject Blooston’s request.
16.
We also deny proposals that we revise the keep-what-you-use rules to provide for a
“triggered” approach, under which a licensee would not lose unused spectrum until a party seeking the
spectrum first files an application for the area meeting certain requirements for sufficiency.43 The
Commission already has application procedures to ensure that license approvals are in the public
interest.44 Requiring applicants seeking authorization over unused spectrum to demonstrate their bona
fides
in new ways above and beyond such established and familiar license application processes may in
fact discourage bona fide interest in such spectrum, undermining our goal of putting this spectrum to use.
Further, because these proposed revisions to the rules decrease the original licensee’s risk of
consequences for failing to build-out, they may lessen the incentive for the licensee to expand service into
parts of its license areas by the end of its license term. We also do not find persuasive MetroPCS’s
argument that a triggered approach “reduces the prospect that forfeited unserved license areas will lie
fallow in the Commission’s hands.”45 The rules already address this possibility: if no application is filed
by third parties in 30 days, the original licensee is free to apply for it.46
17.
We also reject MetroPCS’s arguments that in the event the original licensee loses its
license or parts thereof through application of the keep-what-you-use rules, it should be allowed to
participate in any reauction of the recaptured license areas.47 Under our build-out rules, the original
licensee has ample opportunity to meet its build-out requirements. Further, barring the original licensee
from participating during the initial reauction of its unserved license areas is a reasonable penalty for the
licensee’s failure to meet its build-out requirements. This measure helps ensure that the original licensee


42 Id. at 15352 ¶ 166 (“We recognize that coverage determinations may need to be made on a case-by-case basis so
as to account for the potentially wide variety of services and technologies that may be offered in the band.”) &
n.394, 15353 ¶ 168.
43 See MetroPCS Petition at 14-19 (to trigger incumbent’s loss of spectrum, applicant must demonstrate a “bona fide
desire” to build out and make a “meaningful” payment); see also CTIA Comments and Opposition at 11-13; U.S.
Cellular Comments at 5-6 (arguing Commission should replace keep-what-you-use rule with triggered approach
similar to cellular unserved area rule); MetroPCS Reply at 7-8. We note that the Commission sought comment on a
“triggered keep-what-you-use” approach similar to MetroPCS’s proposal prior to adopting the existing rule. See
Service Rules for the 698-749, 747-762 and 777-792 MHz Bands, WT Docket No. 06-150, Revision of the
Commission’s Rules to Ensure Compatibility with Enhanced 911 Emergency Calling Systems and Section 68.4(a)
of the Commission’s Rules Governing Hearing Aid-Compatible Telephones, CC Docket No. 94-102, WT Docket
No. 01-309, Notice of Proposed Rule Making, Fourth Further Notice of Proposed Rule Making, and Second Further
Notice of Proposed Rule Making
, 21 FCC Rcd 9345, 9376 ¶ 67 (2006) (“700 MHz NPRM”).
44 Under our existing rules, before any application will be granted, the applicant must already demonstrate, inter
alia
, that it is “legally, technically, financially, and otherwise qualified” and that a “grant of the application would
serve the public interest, convenience, and necessity.” 47 C.F.R. § 1.945(c).
45 See MetroPCS Petition at 16. See also CTIA Comments and Opposition at 11.
46 See 700 MHz Second Report and Order, 22 FCC Rcd at 15353 ¶ 172.
47 See MetroPCS Petition at 17. See also U.S. Cellular Comments at 5.
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will make all reasonable efforts to meet its performance benchmarks and that we license spectrum to
those parties that are most likely to use it.48
18.
Finally, we are not persuaded that licensees that fail to meet the end-of-term benchmark
should nevertheless retain a portion of the unserved area of their licenses as an “expansion area.”49
Parties argue that an expansion area is justified for a number of reasons including the potential need to
address changes in customer demand, subsequent development of areas, population growth, and
replacement of base stations, or as a buffer to avoid interference.50 We find, however, that permitting
licensees to keep a part of their unused license areas as petitioners propose would undermine our keep-
what-you-use policy goals of motivating licensees to meet their benchmarks and promoting access to
spectrum that is not adequately built out and deployment of service to communities that might otherwise
not receive it.51 Further, the rules adopted in the 700 MHz Second Report and Order provide ample
opportunity for licensees to construct facilities and provide service in their licensed areas. We therefore
reject the requests for an expansion area under the keep-what-you-use rules.
4.

Potential Enforcement Provisions for Failure to Build Out

19.
Background. In addition to establishing measures that apply automatically in the event of
a licensee’s failure to meet its interim or end-of-term buildout benchmarks, discussed above, the
Commission also stated that certain other enforcement provisions might potentially apply in such an
event. Specifically, the Commission provided that licensees that fail to meet their interim benchmarks
might lose a portion of the remaining unserved areas of the license and such licensees may also be subject
to enforcement action, including forfeitures.52 It further provided that licensees that fail to meet end-of-
term coverage requirements could be subject to license termination (or for a REAG licensee, termination
within each EA in which the licensee has failed to meet its benchmark) or enforcement action, including
forfeitures.53


48 MetroPCS argues that the Commission’s rule enhances the risk that the original licensee will be subject to “green
mail from speculators.” MetroPCS Petition at 15. We think the risk of speculators acquiring unused spectrum for
green mail purposes is small, however, given that the Commission also required new licensees of spectrum made
available under the keep-what-you-use rule to offer service to the entire license area within one year, and provided
that if they fail to meet this requirement, they lose the license automatically and are ineligible to file an application
to provide service in the same area over the same frequencies at any future date. See 700 MHz Second Report and
Order
, 22 FCC Rcd at 15354 ¶ 173.
49 See Blooston Petition at 19; MetroPCS Petition at 13-14 (proposing an expansion area of “+15%”); CTIA
Comments and Opposition at 11, 13; U.S. Cellular Comments at 4-5; AT&T Opposition and Comments at 8-9;
Blooston Comments at 4.
50 See Blooston Petition at 19; AT&T Opposition and Comments at 8-9; CTIA Comments and Opposition at 11, 13;
U.S. Cellular Comments at 5.
51 See 700 MHz Second Report and Order, 22 FCC Rcd at 15348-49 ¶¶ 154-56; see also RCA Limited Opposition
and Comment at 3 (“An expansion area after performance deadlines pass is wholly inconsistent with the goal of
allowing other interested parties to serve an area left unserved by the prior licensee.”).
52 See 47 C.F.R. §§ 27.14(g)(1), (h)(1); 700 MHz Second Report and Order, 22 FCC Rcd at 15348 ¶ 153.
53 See 47 C.F.R. §§ 27.14(g)(2), (h)(2); 700 MHz Second Report and Order, 22 FCC Rcd at 15348 ¶ 153.
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20.
Blooston, MetroPCS, and RTG seek reconsideration of these potential mid-term and end-
of-term construction benchmarks enforcement provisions.54 MetroPCS and RTG contend that the
Commission did not provide guidance regarding under what circumstances these potential enforcement
actions might be taken and they propose various standards.55 Blooston argues that we should repeal these
enforcement provisions altogether, and that the Commission did not provide the notice required by the
Administrative Procedure Act (“APA”) before adopting forfeitures as a potential enforcement measure.56
21.
Discussion. We are not persuaded that we should adopt the modifications to the potential
enforcement provisions proposed by petitioners. Although petitioners argue that their proposals would
resolve ambiguity in the Commission’s rules, we find that their proposals would substantially limit the
Commission’s enforcement options. For example, MetroPCS argues that that the option of license
termination at end-of-term should apply only in cases of failure to provide substantial service.57 It is
already the case under the license renewal requirement, however, that a licensee’s failure to demonstrate
that it is providing substantial service results, by operation of the rules, in loss of the license.58 Thus,
MetroPCS’s interpretation would effectively eliminate license termination as a separate mechanism for
enforcing the performance requirements prior to the end of a license term.59 RTG’s proposal – that a
licensee should be subject to additional enforcement only if it utterly fails to construct a system – goes
even further; it not only eliminates license termination as an enforcement mechanism prior to the end of a
license term, but it also reduces this mechanism to a mere subset of its existing form as a license renewal
requirement. Therefore, we are not persuaded that any of the petitioners’ proposed clarifications are
consistent with the Commission’s adoption of these enforcement measures.


54 See Blooston Petition at 11-18; MetroPCS Petition at 2-3, 8-10; RTG Petition at 10.
55 See MetroPCS Petition at 9-10 (proposing additional interim enforcement measures apply only if no “meaningful
steps” are taken and end-of-term measures only in cases of failure to provide “substantial service”); RTG Petition at
10 (licensee should not be subject to additional enforcement action unless “it utterly fails to construct a system”).
56 Blooston Petition at 11, 16-18. See also MetroPCS Petition at 8-9; CTIA Comments and Opposition at 10.
57 See MetroPCS Petition at 9.
58 See 47 C.F.R. § 27.14(a).
59 In rejecting this proposal to partially conflate the “substantial service” and performance requirements, we
also note that the Commission has previously emphasized that the “substantial service” requirement at
renewal “is distinct from the performance requirements.” Service Rules for the 698-746, 747-762 and 777-
792 MHz Bands, WT Docket No. 06-150, Revision of the Commission’s Rules to Ensure Compatibility
with Enhanced 911 Emergency Calling Systems, CC Docket No. 94-102, Section 68.4(a) of the
Commission’s Rules Governing Hearing Aid-Compatible Telephones, WT Docket No. 01-309, Biennial
Regulatory Review – Amendment of Parts 1, 22, 24, 27, and 90 to Streamline and Harmonize Various
Rules Affecting Wireless Radio Services, WT Docket 03-264, Former Nextel Communications, Inc. Upper
700 MHz Guard Band Licenses and Revisions to Part 27 of the Commission’s Rules, WT Docket No. 06-
169, Implementing a Nationwide, Broadband, Interoperable Public Safety Network in the 700 MHz Band,
PS Docket No. 06-229, Development of Operational, Technical and Spectrum Requirements for Meeting
Federal, State and Local Public Safety Communications Requirements Through the Year 2010, WT Docket
No. 96-86, Report and Order and Further Notice of Proposed Rulemaking, 22 FCC Rcd 8064, 8093 ¶ 75
(2007) (“700 MHz Report and Order” or “700 MHz FNPRM”).
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22.
We also disagree with arguments that the Commission provided no justification in
support of the additional enforcement mechanisms and should eliminate them entirely.60 In adopting its
requirements, the Commission underscored that it “expect[ed] that licensees will take these construction
requirements seriously and proceed toward providing service with utmost diligence,”61 and concluded
that “these set of stringent benchmarks . . . with effective consequences for noncompliance . . . are the
most effective way to promote rapid service to the public, especially in rural areas.”62 The additional
enforcement mechanisms thus reflect the importance of effective enforcement to achieving the
Commission’s goals for the 700 MHz Band and its determination that the additional mechanisms would
help to ensure that enforcement would be effective.63 Blooston objects that the application of fines in
particular is a departure from prior Commission practice with regard to enforcement of buildout
requirements.64 However, the enforcement regime was also novel in other respects, including its adoption
of the keep-what-you-use rules. Therefore, the suggestion that the Commission should eliminate one
element in order to conform to prior practice is unpersuasive. We also reject the assertion that the
Commission acted without notice. The Commission twice sought comment broadly on how to revise the
performance requirements, and we find that adoption of measures to enforce such requirements are well
within the scope of the issues raised.65
23.
Finally, we note that the Wireless Bureau has already clarified the conditions under
which licensees may be subject to reduction in license area at the interim stage.66 We do not rule out the
Wireless Bureau providing further clarification, if necessary, regarding how the potential end-of-term


60 See Blooston Petition at 13; CTIA Comments and Opposition at 10-11. We also reject Blooston’s argument that
forfeitures are inappropriate because, in failing to meet performance benchmarks, a licensee does not actually violate
a rule but merely exercises an option under the rules to lose a given area. See Blooston Petition at 18. The 700 MHz
Second Report and Order
is clear that the benchmarks are requirements, and section 27.14 imposes these buildout
requirements without qualification. See, e.g., 47 C.F.R. § 27.14(g) (providing that EA and CMA licenses “shall
provide signal coverage and offer service
over at least 35 percent of the geographic area of each of their license
authorizations no later than June 13, 2013”) (emphasis added).
61 Id. at 15348 ¶ 153.
62 Id. at 15348 ¶ 155 (emphasis added).
63 See id. at 15348 ¶ 154 (finding that by providing “the potential for enforcement action for failure to meet
the construction requirements, we require licensees to provide service to consumers in a timely manner”);
see also id. at 15354-55 ¶ 176 (concluding that a rigorous performance requirement regime is appropriate
for the 700 MHz Band “given the excellent propagation characteristics of this spectrum, the benefits of
service being offered before the end of the license term, and the public interest that would be served by
ensuring additional service in the more rural and remote areas of this country”).
64 See Blooston Petition at 14.
65 See 700 MHz NPRM, 21 FCC Rcd at 9373 ¶ 61; 700 MHz FNPRM, 22 FCC Rcd at 8142 ¶ 212. See also id. at
8142 ¶ 214 (“We also seek comment on the potential consequences for licensees that fail to meet the interim
requirements”). We also note that the Commission is not obligated to provide APA notice to impose a forfeiture
pursuant to section 503 of the Act. See 47 U.S.C. § 503(b)(1) (any person who violates the Act, the Commission’s
rules, or the terms of a license “shall be liable to the United States for a forfeiture penalty”).
66 See 700 MHz Construction and Reporting Requirements, Public Notice, 26 FCC Rcd 16442 (WTB 2011).
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enforcement measures will be applied after assessing progress toward and compliance with the interim
benchmarks and any necessary enforcement in connection with those benchmarks.
5.

Interim Construction Reports

24.
Background. In the 700 MHz Second Report and Order, the Commission required the
filing of two interim construction reports at specified dates following the end of the DTV Transition.67 In
its petition for reconsideration, Blooston requests that the Commission eliminate the interim construction
reports for all small and rural licensees.68
25.
Discussion. We are not persuaded that this modification is warranted. First, we do not
agree that these reports impose unnecessary burdens on small licensees. The interim construction
reporting requirements strengthen our ability to monitor build-out progress during the license term.
Under the circumstances, where the Commission has stressed the importance of a timely build-out of the
700 MHz spectrum and has adopted performance requirements to meet this end, we consider the
information that is to be supplied in these reports to be reasonable and in the public interest. Further, the
required information is readily available to licensees and can easily be reported to the Commission. We
merely require licensees to provide us with a description of the steps they have taken toward meeting their
construction obligations in a timely manner, including the technology or technologies and service(s) they
are providing and the areas in which those services are available.69 Accordingly, we deny Blooston’s
request.

B.

Auction-Related Issues

26.
Frontline, MetroPCS, and PISC ask the Commission to reconsider certain determinations
adopted in the 700 MHz Second Report and Order regarding auction rules and procedures. For the
reasons discussed below, we dismiss as moot Frontline’s petition to reconsider the Commission’s
application to the Upper 700 MHz Band C and D Blocks of a now-vacated rule under which applicants
having certain impermissible material relationships were ineligible to receive bidding credits; we dismiss
Frontline’s petition to reconsider the amount of the reserve prices because Frontline subsequently
withdrew this request; we dismiss as moot MetroPCS’s petition to reconsider issues related to the re-
auction; we deny PISC’s request that the Commission clarify whether two or more bidders working
together to block another bidder from winning any licenses would violate the rules prohibiting certain
communications; and we deny PISC’s request that we vacate portions of the 700 MHz Second Report and
Order
discussing the Commission’s rationale for adopting anonymous bidding procedures.
1.

Designated Entity Eligibility for a Small Business Providing
Wholesale Service

27.
Background. In the 700 MHz Second Report and Order, the Commission explained that
provision of only wholesale service would create a conflict with the eligibility requirements for entities
seeking a designated entity bidding credit. Specifically, at that time, section 1.2110(b)(3)(iv) of the
Commission’s rules restricted an applicant’s eligibility for designated entity benefits if it had an


67 See 47 U.S.C. § 27.14(l).
68 See Blooston Petition at 20-21. See also RCA Limited Opposition and Comment at 5.
69 See 700 MHz Second Report and Order, 22 FCC Rcd at 15352 ¶ 165.
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“impermissible material relationship,” which was defined as an arrangement with one or more entities for
the lease or resale (including under a wholesale agreement) of, on a cumulative basis, more than 50
percent of the spectrum capacity of any one of the applicant’s or licensee’s license.70
28.
In its petition for reconsideration, Frontline argues that application of the impermissible
material relationship rule to the C and D Blocks would be prejudicial to small businesses, especially those
adopting a wholesale business model.71 Frontline asks the Commission to reinterpret the designated
entity rules to allow small businesses with a wholesale model to maintain their eligibility for a bidding
credit in the C and D Blocks.72 U.S. Cellular argues that the Commission properly applied the
impermissible material relationship rule in the 700 MHz Second Report and Order and opposes
Frontline’s proposal.73 PISC supports making a small business bidding credit available to a licensee that
agrees to wholesale 100 percent of its spectrum if the Commission imposes specific conditions to prevent
warehousing while ensuring non-discrimination, transparency, and spectrum efficiency.74
29.
On November 15, 2007, on its own motion, the Commission waived application of the
impermissible material relationship rule for purposes of determining designated entity eligibility solely
with respect to arrangements for lease or resale (including wholesale) of the spectrum capacity of the D
Block license. The Commission found that the unique regulations governing the D Block license, which
required the establishment of the 700 MHz Band Public/Private Partnership subject to a Commission-
approved Network Sharing Agreement—together with the application of the Commission’s other
designated entity eligibility requirements—eliminated for the D Block license the risks that led the
Commission to adopt the impermissible material relationship rule.75 This waiver applied to the D Block
in Auction 73, which began on January 24 and closed on March 18, 2008.
30.
Frontline did not qualify to participate in Auction 73.76 Frontline selected only the D
Block license on its short-form application, but was unable to raise the $128.21 million necessary to make
the required upfront payment for the D Block.77 The Wireless Bureau denied Frontline’s request for a
waiver to allow it to add the A and B Blocks, which included licenses that required lower upfront
payments, to its short-form application after the deadline.78


70 Id. at 15472 ¶ 532 (citing 47 C.F.R. § 1.2110(b)(3)(iv)(A)).
71 Frontline Petition at 3.
72 Id. at 3-7.
73 U.S. Cellular Comments at 10.
74 Letter from PISC to Marlene H. Dortch, Secretary, FCC, WT Docket Nos. 06-150, 05-211, at 1-5 (filed Oct. 18,
2007).
75 Waiver of Section 1.2110(b)(3)(iv)(A) of the Commission’s Rules For the Upper 700 MHz Band D Block
License, Order, 22 FCC Rcd 20354, 20354 ¶ 1 (2007).
76 See Letter from Fred B. Campbell, Jr., Chief, WTB, FCC to Jonathan Blake et al., Regarding Request for Waiver;
Redacted Version Released Jan. 23, 2008, as DA 08-100, 23 FCC Rcd 4756, 4758 (WTB 2008).
77 Id.
78 Id. at 4756.
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31.
In Council Tree Communications, Inc. v. FCC, the U.S. Court of Appeals for the Third
Circuit held that the Commission’s impermissible material relationship rule in section 1.2110(b)(3)(iv)(A)
had been adopted without the notice and opportunity for comment required by the Administrative
Procedure Act.79 The court vacated the rule, but also concluded that it would be “imprudent and unfair to
order rescission of the auction results” for Auction 73.80 We subsequently conformed our rules to the
court’s mandate by deleting subsection 1.2110(b)(3)(iv)(A).81
32.
Discussion. The Commission’s November 15, 2007 waiver of the impermissible material
relationship rule rendered moot Frontline’s petition for reconsideration with respect to the D Block
license, and we therefore dismiss that portion of the petition as moot.82 We also dismiss as moot
Frontline’s petition to the extent it addresses designated entity status for wholesale services in the C
Block, because the Third Circuit vacated the impermissible material relationship rule that is the subject of
Frontline’s petition. In accordance with the court’s mandate we have deleted the relevant provision from
our Part 1 competitive bidding rules.
2.

Amount of Reserve Prices

33.
Background. In order to promote the statutory objectives in 47 U.S.C. § 309(j)(3),
including the efficient and intensive use of the electromagnetic spectrum as well as the recovery for the
public of a portion of the value of the public spectrum resource, in the 700 MHz Second Report and Order
the Commission directed the Wireless Bureau to adopt and publicly disclose block-specific aggregate
reserve prices pursuant to its existing delegated authority and its regular pre-auction process.83 The
Commission concluded that the aggregate reserve prices should reflect current assessments of the
potential market value of licenses for the 700 MHz Band and directed that this assessment be based on
various factors, including the characteristics of the band and the value of other recently auctioned
licenses, such as licenses for Advanced Wireless Services.84 The Commission further indicated that if the
reserve price for a particular block was not met in the initial auction, a subsequent auction of alternative
licenses in that block would be subject to the same applicable reserve price as the initial auction of
licenses.85 The Commission concluded “that in the event that auction results for conditioned Upper 700


79 Council Tree Communications, Inc. v. FCC, 619 F.3d 235, 254-55 (3d Cir. 2010), cert. denied 131 S. Ct. 1784
(2011).
80 Id., 619 F.3d at 258.
81 Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission’s
Competitive Bidding Rules and Procedures, WT Docket No. 05-211, Waiver of Section 1.2110(b)(3)(iv)(A) of the
Commission’s Rules For the Upper 700 MHz Band D Block License, Order, 27 FCC Rcd 908 (2012). The order
also made other revisions to our Part 1 competitive bidding rules to conform them to the court’s mandate.
82 Frontline’s arguments with respect to the D Block are also moot because the D Block will not be re-auctioned
since Congress recently directed the Commission to reallocate the D Block spectrum for use by public safety
entities. 47 U.S.C. § 1411(a); Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. No. 112-96, 126 Stat.
156 § 6101 (2012) (“Spectrum Act”).
83 700 MHz Second Report and Order, 22 FCC Rcd at 15399-15401 ¶¶ 300-304.
84 Id. at 15400-01 ¶¶ 304-305 & n.700.
85 Id. at 15402 ¶ 308.
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MHz C Block licenses do not satisfy the aggregate reserve price for the C Block, we will offer as soon as
possible licenses for the C Block without the open platform conditions.”86 With respect to the D Block,
given the unique service rules for the Public/Private Partnership in that block, the Commission concluded
that if the aggregate reserve was not met, that the Commission would leave open the possibility of re-
offering the license on the same terms in a subsequent auction, as well as the possibility of re-evaluating
all or some of the applicable license conditions.87 Based on the Commission’s direction in the 700 MHz
Second Report and Order
, and after additional public notice and comment, the Wireless Bureau set the
following aggregate reserve prices for Auction 73: Block A, $1.807380 billion; Block B, $1.374426
billion; Block C, $4.637854 billion; Block D, $1.330000 billion; Block E, $0.903690 billion.88
34.
In its petition for reconsideration, Frontline argues that the reserve prices for the C and D
Block licenses proposed, and ultimately adopted, by the Wireless Bureau based on the Commission’s
guidance in the 700 MHz Second Report and Order are arbitrarily high and, coupled with re-auction
mechanisms, undermine the open access provisions for the C Block and the public safety provisions for
the D Block.89 MetroPCS filed in opposition to Frontline’s petition for reconsideration on this issue.90
35.
Subsequent to the Commission’s order waiving the impermissible material relationship
rule with respect to leasing or resale of the spectrum capacity of the D Block license, Frontline filed an
amendment to its petition for reconsideration withdrawing its argument that the reserve prices were set
arbitrarily high and stating that it “no longer advocates altering the reserve prices for the 700 MHz
auction.”91
36.
Discussion. In light of Frontline’s withdrawal of its arguments with respect to the
Auction 73 reserve prices, we dismiss this portion of Frontline’s petition for reconsideration.
3.

Re-Auction Procedures

37.
Background. MetroPCS asks the Commission to reconsider two issues related to the re-
auction of 700 MHz licenses contemplated by the 700 MHz Second Report and Order. First, MetroPCS
requests reconsideration of the Commission’s determination that, for any 700 MHz re-auction, the auction
of alternative licenses would be subject to the same applicable reserve prices as the initial auction of
licenses.92 Second, MetroPCS requests reconsideration of the Commission’s determination that both the


86 Id. at 15402 ¶ 311. As described in more detail below, the open platform condition requires licensees of spectrum
in the C Block to allow customers, device manufacturers, third-party application developers, and others to use or
develop the devices and applications of their choice, subject to certain conditions. See id. at 15361 ¶ 195.
87 Id. at 15404 ¶ 314.
88 Auction of 700 MHz Band Licenses Scheduled for January 24, 2008: Notice and Filing Requirements, Minimum
Opening Bids, Reserve Prices, Upfront Payments, and Other Procedures for Auctions 73 and 76, AU Docket No. 07-
157, Public Notice, 22 FCC Rcd 18141, 18158 ¶ 193 (2007).
89 Frontline Petition at 11-20. Frontline also argues that the requirement to re-auction the C Block licenses without
the open platform conditions if the reserve price is not met violates the Administrative Procedure Act. Id. at 19-20.
90 MetroPCS Opposition at 2-3, 7, 9, 10-12.
91 Frontline Amendment to Petition for Reconsideration at 1.
92 MetroPCS Petition at 19-20.
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initial and any required follow-on auction would be treated as a single auction for purposes of the
application of section 1.2105(c), the rule prohibiting certain communications.93 The prohibition generally
applies to auction applicants during the time period between the deadline for filing short-form
applications and the deadline for winning bidders to make their down payments.94 Treating the initial
auction and subsequent auction of alternative licenses as a single auction would have kept the prohibition
in place for all applicants to participate in the first auction until the down payment deadline for the second
auction, regardless of whether they were applicants to participate in the second auction.95 CTIA, U.S.
Cellular, Blooston, and RTG support MetroPCS’s proposal that the Commission allow applicants that do
not wish to participate in the second auction, to “opt out” of the second auction to avoid continued
application of the rules prohibiting certain communications.96
38.
The winning bids in Auction 73 for the Lower 700 MHz A, B, and E Block licenses and
the Upper 700 MHz C Block licenses exceeded the aggregate reserve prices for those blocks; however,
the provisionally winning bid for the Upper 700 MHz D Block did not meet the applicable reserve price.97
On March 20, 2008, two days after the close of Auction 73, the Commission issued an order electing not
to re-offer the D Block license immediately in Auction 76 in order to allow additional time to consider
options for this spectrum.98 More recently, Congress directed the Commission to reallocate the D Block
spectrum for use by public safety entities.99 As a result, the D Block spectrum will not be assigned by
auction for commercial use.
39.
Discussion. Because the Commission decided not to re-auction the D Block license
immediately, and Congress has since directed the Commission to reallocate the D Block for public safety
use, the re-auction of the D Block has not occurred and will not occur. As a result, the reserve price for
any re-auction of the D Block is now irrelevant. In addition, the issue is also moot as to the other blocks
because the bids in those blocks exceeded the applicable reserve prices, thereby obviating the need for
any follow-on auctions. Accordingly, the section 1.2105(c) prohibition on certain communications, as
applied to the Auction 73 applicants for licenses in those blocks, ended at the down payment deadline for
that auction. We therefore dismiss as moot MetroPCS’s petition for reconsideration of these issues
related to the re-auction.


93 Id. at 20-23; see 47 C.F.R. § 1.2105(c).
94 47 C.F.R. § 1.2105(c)(1).
95 700 MHz Second Report and Order, 22 FCC Rcd at 15405 ¶ 316.
96 CTIA Comments and Opposition at 23; U.S. Cellular Comments at 10-11; Blooston Reply at 7-8; RTG Limited
Reply and Comments at 3-5.
97 See Auction of 700 MHz Band Licenses Closes: Winning Bidders Announced for Auction 73, Public Notice, 23
FCC Rcd 4572 ¶ 2 (2008).
98 Auction of the D Block License in the 758-763 and 788-793 MHz Bands, AU Docket No. 07-157, Order, 23 FCC
Rcd 5421, 5421 ¶ 1 (2008).
99 47 U.S.C. § 1411(a); Spectrum Act, § 6101.
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4.

Prohibition of Certain Communications

40.
Background. In its petition for reconsideration, PISC requests that the Commission
declare that two or more bidders working together to block another bidder from winning any licenses
would violate section 1.2105(c) of the Commission’s rules,100 which prohibits certain communications.101
PISC argues that in the 700 MHz Second Report and Order, the Commission failed to address PISC’s
request to clarify “whether a conspiracy to block a bidder from winning any licenses, rather than a
conspiracy to distribute licenses or set the price for licenses,” violates section 1.2105(c).102 PISC argues
that “a conspiracy among bidders to block potential rivals—even if they plan to bid aggressively against
one another—thwarts the goals of Congress in distributing licenses via auction.”103
41.
Discussion. We deny PISC’s request for a declaratory ruling on the application of
section 1.2105(c) to certain types of activity by bidders who work together. The Commission has
discretion whether to issue a declaratory ruling, and rather than address PISC’s request in this proceeding,
we think it best to address such issues as they arise.104 The declaratory ruling PISC seeks would likely be
of very limited benefit given the hypothetical general circumstances it describes. We also note that
regardless of compliance with section 1.2105(c), auction applicants remain subject to the antitrust laws,
which are designed to prevent anticompetitive behavior in the marketplace, and conduct that is
permissible under the Commission’s Rules may be prohibited by the antitrust laws.105
5.

Anonymous Bidding

42.
Background. In the 700 MHz Second Report and Order, the Commission concluded that
the public interest would be served by the use of anonymous bidding procedures in Auction 73.106 The
Commission found that the record indicated that implementing anonymous bidding procedures would
reduce the potential for anti-competitive bidding behavior, including bidding activity that aims to prevent
the entry of new competitors.107 The Commission noted that its decision did not rely upon studies


100 PISC Petition at 15-16.
101 See 47 C.F.R. § 1.2105(c); Procedural Amendments to Commission Part 1 Competitive Bidding Rules, WT
Docket No. 10-18, Order, 25 FCC Rcd 521, 522 ¶ 5 (2010).
102 PISC Petition at 15.
103 Id. at 16.
104 See 5 U.S.C. § 554(e) (“The agency . . . in its sound discretion, may issue a declaratory order to terminate a
controversy or remove uncertainty.”); 47 C.F.R. § 1.2(a); Yale Broadcasting Co. et al. v. FCC, 478 F.2d 594, 602
(D.C. Cir. 1973) (holding that the Commission did not abuse its discretion by declining to grant a declaratory
ruling).
105 See Amendment of Part 1 of the Commission’s Rules – Competitive Bidding Procedures, WT Docket No. 97-82,
Third Further Notice of Proposed Rulemaking, 14 FCC Rcd 21558, 21560-61 ¶ 4 & n.17 (1999) (citing
Implementation of Section 309(j) of the Communications Act – Competitive Bidding, Memorandum Opinion and
Order
, 9 FCC Rcd 7684, 7689 ¶ 12 (1994)).
106 700 MHz Second Report and Order, 22 FCC Rcd at 15393 ¶ 280.
107 Id.
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conducted by Gregory Rose and submitted by PISC, even though those studies were offered as evidence
that anonymous bidding would be beneficial.108 As described in detail in footnotes 644 and 645 of the
700 MHz Second Report and Order, the Commission did not find the Rose studies persuasive for a
variety of reasons.109
43.
PISC does not challenge the Commission’s decision to employ anonymous bidding in
Auction 73, but argues that the Commission’s conclusions regarding the merits of the Rose studies were
inaccurate and arbitrary, and that footnotes 644, 645, and 655 (which relies upon footnotes 644 and 645)
should be vacated.110 PISC adds that given the Commission’s decision to adopt anonymous bidding, it
was unnecessary and unusual for it to address the merits of the Rose studies in footnotes.111
44.
Discussion. We deny PISC’s request to vacate the footnotes describing potential flaws in
the Rose studies. PISC’s petition for reconsideration presents additional information regarding the Rose
studies that provides useful context but does not change the validity of the footnotes with respect to the
studies as filed. Footnotes 644, 645, and 655 in the 700 MHz Second Report and Order explain that the
Commission’s adoption of anonymous bidding, although advocated by the Rose studies, did not depend
upon those studies.

C.

Spectrum Eligibility

45.
Background. In the 700 MHz Second Report and Order, the Commission declined to
impose eligibility restrictions for licenses in the 700 MHz Band finding that the record did not
demonstrate that open eligibility was likely to result in substantial competitive harm in the provision of
broadband services.112 Additionally, the Commission found that the revised band plan for the 700 MHz
Band and the associated build-out rules would help discourage foreclosure of competitive opportunities
and participation in the market, and that there were potential competitive benefits to not imposing
eligibility requirements.113 Finally, the Commission noted that restricting eligibility for licenses without
adequate justification could harm the public interest.114
46.
Frontline, PISC, and RTG filed petitions requesting that the Commission reconsider its
decision not to impose spectrum aggregation limits. Frontline requests that the Commission implement a
spectrum screen that would trigger increased review of certain long-form auction applications for
anticompetitive effects, similar to the screen applied to merger and acquisition transactions.115 PISC
proposes that the Commission adopt a rule prohibiting the winner of the Upper 700 MHz D Block license


108 Id. at 15393 ¶ 280 & n.655.
109 Id. at 15391-92 ¶ 277 & nn.644-45.
110 PISC Petition at 14. See also PISC Comments at 13.
111 PISC Petition at 8.
112 700 MHz Second Report and Order, 22 FCC Rcd at 15361 ¶ 256.
113 Id. at 15361 ¶¶ 257-258.
114 Id. at 15361 ¶ 259.
115 Frontline Opposition at ii, 3; Frontline Reply at 3-4.
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from holding Upper 700 MHz C Block licenses and vice versa.116 RTG proposes an interim,
geographically based spectrum cap applicable specifically to the 700 MHz auction.117
47.
Discussion. In the 700 MHz Second Report and Order, the Commission considered and
declined to adopt license eligibility restrictions, including rules that would have excluded ILECs,
incumbent cable operators, and large wireless carriers from holding licenses in the 700 MHz Band.118
The Commission provided numerous reasonable justifications for its decision,119 and we find that
Frontline, PISC, and RTG offer no new evidence warranting our reconsideration of the Commission’s
decision on spectrum aggregation limits at the initial licensing stages of the 700 MHz Band. Further, we
note that the appropriate policies regarding spectrum holdings going forward are the subject of a separate
and pending rulemaking proceeding, and any further consideration of such issues is therefore more
appropriately considered in that context.120 Therefore, we deny Frontline’s request for heightened review
of certain long-form applications, and we deny PISC’s and RTG’s requests that the Commission impose a
spectrum cap. Finally, we conclude that Congress’s direction that the Commission reallocate the D Block
spectrum to public safety use has rendered moot requests by Frontline and PISC that the Commission not
permit the C Block auction winners to hold a D Block license or D Block auction winners to hold C
Block licenses.121

D.

Lower 700 MHz A Block Wholesale Requirement

48.
Background. In its petition for reconsideration, NTCH argues that the Commission
should reform the current Universal Service Funding (“USF”) system by requiring Lower 700 MHz A
Block licensees to provide service on a discounted wholesale basis to “designated Eligible
Telecommunications Companies.”122 CTIA and U.S. Cellular oppose NTCH’s proposal arguing, among
other assertions, that the proposal is outside the scope of what can be granted on reconsideration of the
700 MHz Second Report and Order.123
49.
Discussion. NTCH presents a new proposal to impose a discounted wholesale obligation
on Lower 700 MHz A Block licensees and argues that the Commission should adopt it as a means of
reforming the current USF system, but does not challenge the Commission’s refusal, in the 700 MHz
Second Report and Order
, to adopt wholesale requirements for the Upper 700 MHz C or D Block


116 PISC Petition at 3-5.
117 RTG Opposition and Comments at 8.
118 700 MHz Second Report and Order, 22 FCC Rcd at 15383-85 ¶¶ 256-259.
119 Id.
120 See Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269, Notice of Proposed Rulemaking,
FCC 12-119 (rel. Sept. 28, 2012).
121 47 U.S.C. § 1411(a); Spectrum Act, § 6101. See also Implementing Public Safety Broadband Provisions of the
Middle Class Tax Relief and Job Creation Act of 2012, PS Docket No. 12-94, Report and Order, 27 FCC Rcd
10953 (PSHSB 2012).
122 NTCH Petition at 3.
123 CTIA Comments and Opposition at 22; U.S. Cellular Comments at 8.
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licensees.124 We agree with CTIA and U.S. Cellular that the USF issues raised in NTCH’s proposal are
outside the scope of this proceeding and therefore deny NTCH’s petition. We note that, as with other 700
MHz licensees, A Block licensees have the flexibility to provide wholesale services if they choose to
based on their determination of market need.

E.

First Amendment Analysis of Open Platform Rule

50.
Background. In the 700 MHz Second Report and Order, the Commission required
licensees in the C Block “to allow customers, device manufacturers, third-party application developers,
and others to use or develop the devices and applications of their choice, subject to certain
conditions[.]”125 The Commission rejected Verizon Wireless’ arguments that the open platform rule
applicable to the Upper 700 MHz C Block violates the First Amendment,126 finding that even if the open
platform rule did implicate the First Amendment, it withstands the applicable “intermediate scrutiny”
test.127
51.
In late 2007, Verizon Wireless and CTIA each filed and then withdrew lawsuits in the
D.C. Circuit Court challenging the open platform requirements on the grounds that they violated the First
Amendment.128 Prior to Verizon Wireless’s withdrawal of its petition for review from the D.C. Circuit
Court, PISC filed its petition for reconsideration with the Commission requesting, in pertinent part, that
the Commission clarify that “the proper framework for Verizon’s First Amendment claim remains the
‘rational basis’ flowing from the ‘scarcity rationale’ adopted by the Supreme Court in NBC v. U.S.”129
PISC faults the Commission for “inexplicably fail[ing] to cite the more than 70 years of consistent
Supreme Court precedent finding that no First Amendment right exists in the grant of a license [and
instead] elects to analyze Verizon’s First Amendment claim (assuming one exists) under intermediate
scrutiny.”130


124 See 700 MHz Second Report and Order, 22 FCC Rcd at 15364-65 ¶¶ 205-06, 15476-77 ¶¶ 545-46.
125 Id. at 15361 ¶ 195.
126 Verizon Wireless filed an ex parte letter alleging that the Commission cannot impose these access requirements
without violating various sections of the Communications Act and affecting the First Amendment rights of existing
providers. Letter from John T. Scott, III, Verizon Wireless to Marlene H. Dortch, Secretary, FCC, WT Docket No.
06-150, at 2, 12-15 (filed July 24, 2007).
127 700 MHz Second Report and Order, 22 FCC Rcd at 15369-70 ¶¶ 217-220 & n.495, citing Turning Broadcasting
System, Inc. v. FCC
, 520 U.S. 180, 189 (1997).
128 See Petition for Review, Cellco Prtnshp d/b/a Verizon Wireless v. FCC, Cellco Prtnshp d/b/a Verizon Wireless v.
FCC
, Docket # 07-1359 (D.C. Cir. Sept. 10, 2007); Motion of Cellco Prtnshp d/b/a Verizon Wireless for Voluntary
Dismissal of its Petition for Review and Protective Notice of Appeal, Cellco Prtnshp d/b/a Verizon Wireless v. FCC,
Docket # 07-1359, 07-1382 (D.C. Cir. Oct. 22, 2007); Petition for Review, CTIA Wireless Assn v. FCC, et al,
Docket # 07-1386 (D.C. Cir. Sept. 28, 2007); Motion by Petitioner CTIA Wireless Assn to Dismiss Case
Voluntarily and to Withdraw a Motion to Stay Case, CTIA Wireless Assn v. FCC, et al, Docket # 07-1386 (D.C. Cir.
Oct. 4, 2007).
129 PISC Petition at 5-6, citing NBC v. U.S., 319 U.S. at 226-27.
130 PISC Petition at 5.
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52.
Discussion. In light of the withdrawal of the Verizon Wireless and CTIA First
Amendment challenges to the open platform rule, PISC’s request for clarification of the proper legal
framework for addressing Verizon Wireless’s withdrawn challenge is moot, and we accordingly dismiss
PISC’s petition for reconsideration as such, to the extent the petition requested such clarification.

F.

Open Platform Requirements for the C Block if the Reserve Price is Not Met

53.
Background. In the 700 MHz Second Report and Order, the Commission concluded that
“in the event that auction results for conditioned Upper 700 MHz C Block licenses do not satisfy the
aggregate reserve price for the C Block, we will offer as soon as possible licenses for the C Block without
the open platform conditions.”131 In its petition for reconsideration, Frontline argues that stripping the C
Block of the open platform conditions in the event of a re-auction would be contrary to the public interest
and would create perverse incentives for bidders.132
54.
Discussion. The C Block auction was successful and has been completed, rendering any
discussion of an unsuccessful auction and the terms of a re-auction of the C Block moot. Therefore, we
dismiss Frontline’s petition for reconsideration to the extent that it seeks us to reconsider the conditions of
a re-auction of the C Block.

G.

700 MHz Public/Private Partnership
55.
Background. In the 700 MHz Second Report and Order, the Commission concluded that
a Public/Private Partnership between the licensee of the Upper 700 MHz D Block, which at that time was
allocated for commercial services, and the future licensee of the 700 MHz public safety broadband
spectrum (the “Public Safety Broadband Licensee” or “PSBL”) would serve the public interest by
enabling the construction of a nationwide, interoperable broadband network available to state and local
public safety users.133 Accordingly, the Commission conditioned the D Block license on its commercial
licensee entering into an agreement with the PSBL to construct and operate a nationwide shared wireless
broadband network across both the D Block spectrum and the public safety broadband spectrum that
would be used to provide mobile broadband services to both commercial subscribers and public safety
entities.134
56.
Several of the pending petitions in this proceeding seek reconsideration or clarification of
various aspects of the regulatory requirements adopted by the Commission to effectuate and govern the
Public/Private Partnership between the D Block licensee and the PSBL.135 While these petitions were still
pending, the Commission held the auction of 700 MHz Band licenses, including the D Block license.136
Bids for the D Block license did not meet its applicable reserve price and there was therefore no winning


131 700 MHz Second Report and Order, 22 FCC Rcd at 15402 ¶ 311.
132 Frontline Petition at 17-19.
133 See 700 MHz Second Report and Order, 22 FCC Rcd at 15431 ¶ 395.
134 See id. at 15428 ¶¶ 386-87, 15431 ¶ 395.
135 See AT&T Petition at 4-5; Cyren Call Petition at 10-11; Frontline Petition at 2-3, 20-21.
136 See http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=73.
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bid for that license.137 As a result, the Commission issued several further notices of proposed rulemaking,
seeking comment on possible changes to the commercial service rules applicable to the D Block
license.138 Subsequent to these further notices, the Spectrum Act was passed, setting forth a new
statutorily required plan for development of a nationwide interoperable public safety broadband network
in the 700 MHz band.139 In particular, the Spectrum Act directs the Commission to reallocate the D
Block for public safety services, and to license the public safety broadband spectrum and the spectrally
adjacent D Block spectrum to the First Responder Network Authority (FirstNet), an independent authority
within NTIA tasked with overseeing the development of a nationwide, interoperable public safety
broadband network.140 On September 7, 2012, the Public Safety and Homeland Security Bureau released
a Report and Order reallocating the D Block,141 and on November 15, 2012, it issued FirstNet its
license.142
57.
Discussion. We find that the directives in the Spectrum Act regarding the D Block render
moot the requests for reconsideration or clarification of our D Block commercial service rules, and we
therefore dismiss these requests.

H.

Narrowband Relocation

58.
Background. In the 700 MHz Second Report and Order, the Commission consolidated
existing narrowband allocations in the 700 MHz Public Safety band to the upper half of that band (769-
775/799-805 MHz).143 To effectuate this consolidation of the narrowband channels, the Commission
required relocation of existing 700 MHz public safety narrowband operations from the 764-767 MHz and
794-797 MHz bands, as well as from the 775-776 MHz and 805-806 MHz bands that were affected by a 1
megahertz downward shift of the 700 MHz public safety spectrum.144 The Commission further required


137 See id.; see also Auction of 700 MHz Band Licenses Closes: Winning Bidders Announced for Auction 73,
Public Notice, 23 FCC Rcd 4572 (WTB 2008).
138 See Service Rules for the 698-746, 747-762 and 777-792 Bands; Implementing a Nationwide, Broadband,
Interoperable Public Safety Network in the 700 MHz Band, WT Docket No. 06-150, PS Docket No. 06-229, Second
Further Notice of Proposed Rulemaking
, 23 FCC Rcd 8047 (2008); Service Rules for the 698-746, 747-762 and
777-792 Bands; Implementing a Nationwide, Broadband, Interoperable Public Safety Network in the 700 MHz
Band, WT Docket No. 06-150, PS Docket No. 06-229, Third Further Notice of Proposed Rulemaking, 23 FCC Rcd
1094 (2008).
139 Spectrum Act, Title VI.
140 See 47 U.S.C. §§ 1411(a), 1421(a), 1422(a), 1424(a); Spectrum Act §§ 6101(a), 6201(a), 6202(a), 6204(a).
141 See Implementing Public Safety Broadband Provisions of the Middle Class Tax Relief and Job Creation
Act of 2012; Implementing a Nationwide, Broadband, Interoperable Public Safety Network in the 700 MHz
Band; Service Rules for the 698-746, 747-762 and 777-792 MHz Bands, PS Docket 12-94; PS Docket 06-
229; WT Docket 06-150, Report and Order, 27 FCC Rcd 11075 (PSHSB 2012).
142 See Universal Licensing System, License Call Sign WQQE234 (Nov. 15, 2012).
143 See 700 MHz Second Report and Order, 22 FCC Rcd at 15406 ¶ 322.
144 Id. at 15412 ¶ 341.
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the D Block licensee to pay the costs of such relocation, subject to a cap of $10 million.145 The
Commission found that relocation of narrowband equipment and clearing of the old narrowband channels
needed to be completed no later than the DTV transition date, i.e., by February 17, 2009.146 Virginia and
Pierce Transit filed petitions seeking reconsideration of certain aspects of the decisions on narrowband
relocation, including the adequacy of the $10 million cap.147
59.
Discussion. As discussed above, the 700 MHz Second Report and Order assumed that
the D Block would be licensed to a commercial provider that would be responsible, up to a cap, for the
costs of the narrowband relocation. Now that the D Block has been reallocated for public safety services
pursuant to the Spectrum Act, the approach that the Commission established for effectuating the
consolidation of the narrowband channels cannot be implemented, and the Commission must revisit the
entire narrowband relocation process (including elements such as those relating to reimbursement and the
timing of relocation), which the Commission will accomplish by initiating a new rulemaking proceeding
where we can address more comprehensively what rules need to be adopted, deleted, or modified to
implement the Spectrum Act. Accordingly, we dismiss the petitions for reconsideration by Virginia and
Pierce Transit as moot.

IV.

ORDERING CLAUSE

60.
Accordingly, IT IS ORDERED, pursuant to sections 4(i), 302, 303(e), 303(f), 303(g),
303(r) and 405 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 302, 303(e),
303(f), 303(g) and 405, that the petitions for reconsideration of Blooston Rural Carriers, NTCH, Inc., and
Rural Telecommunications Group, Inc. ARE DENIED; the petitions for reconsideration of AT&T, Inc.,
Commonwealth of Virginia, Cyren Call Communications Corporation, and Pierce County Public
Transportation Benefit Area Corporation ARE DISMISSED; and petitions for reconsideration of
Frontline Wireless, LLC, MetroPCS Communications, Inc., and Ad Hoc Public Interest Spectrum
Coalition ARE DENIED IN PART and DISMISSED IN PART as described herein.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary


145 Id.
146 Id. at 15406 ¶ 322.
147 See Virginia Petition; Pierce Transit Petition.
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APPENDIX A

List of Petitioners and Commenters

Petitions for Reconsideration
AT&T Inc. (“AT&T”)
Blooston Rural Carriers (“Blooston”)
Commonwealth of Virginia (“Virginia”)
Cyren Call Communications Corporation (“Cyren Call”)
Frontline Wireless, LLC (“Frontline”)
MetroPCS Communications, Inc. (“MetroPCS”)
NTCH, Inc. (“NTCH”)
Pierce County Public Transportation Benefit Area Corporation (“Pierce Transit”)
Ad Hoc Public Interest Spectrum Coalition (“PISC”)
Rural Telecommunications Group, Inc. (“RTG”)
Comments
AT&T Inc. (“AT&T”)
Blooston Rural Carriers (“Blooston”)
Commonwealth of Virginia (“Virginia”)
CTIA-The Wireless Association (“CTIA”)
Frontline Wireless, LLC (“Frontline”)
MetroPCS Communications, Inc. (“MetroPCS”)
Motorola, Inc. (“Motorola”)
National Association of Telecommunications Officers and Advisors (“NATOA”)
National Telecommunications Cooperative Association (“NTCA”)
Pierce County Public Transportation Benefit Area Corporation (“Pierce Transit”)
Rural Cellular Association (“RCA”)
Rural Telecommunications Group, Inc. (“RTG”)
United States Cellular Corporation (“U.S. Cellular”)

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