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Mobile Spectrum Holdings NPRM

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Released: September 28, 2012

Federal Communications Commission

FCC 12-119

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)
Policies Regarding Mobile Spectrum Holdings
)
WT Docket No. 12-269

NOTICE OF PROPOSED RULEMAKING

Adopted: September 28, 2012

Released: September 28, 2012

Comment Date: [45 days after date of publication in the Federal Register]
Reply Comment Date: [75 days after date of publication in the Federal Register]

By the Commission: Chairman Genachowski and Commissioners Clyburn, and Rosenworcel issuing
separate statements; Commissioner McDowell approving in part, concurring in part and issuing a statement;
Commissioner Pai concurring and issuing a statement.

TABLE OF CONTENTS

Heading
Paragraph #
I.
INTRODUCTION .................................................................................................................................. 1
II. BACKGROUND .................................................................................................................................... 3
A. Statutory Framework........................................................................................................................ 3
B. The Commission’s Policies Regarding Mobile Spectrum Holdings................................................ 4
C. Criticisms of Current Case-by-Case Analysis Approach................................................................. 9
D. The Current Wireless Landscape ................................................................................................... 11
III. DISCUSSION....................................................................................................................................... 15
A. General Approaches to Mobile Spectrum Holdings ...................................................................... 17
1. Case-by-Case Analysis............................................................................................................ 17
2. Bright-Line Limits................................................................................................................... 20
3. Alternative Approaches ........................................................................................................... 22
B. Implementation Issues.................................................................................................................... 23
1. Relevant Product Market......................................................................................................... 24
2. Suitable and Available Spectrum ............................................................................................ 26
3. Relevant Geographic Market Area .......................................................................................... 30
4. Applicable Spectrum Threshold .............................................................................................. 33
5. Making Distinctions Among Bands ........................................................................................ 35
6. Attribution Rules ..................................................................................................................... 40
7. Remedies ................................................................................................................................. 43
8. Transition Issues...................................................................................................................... 49
IV. PROCEDURAL MATTERS................................................................................................................ 50
A. Initial Regulatory Flexibility Analysis........................................................................................... 50
B. Paperwork Reduction Act Analysis ............................................................................................... 51
C. Ex Parte Rules................................................................................................................................ 52
D. Filing Requirements....................................................................................................................... 53
V. ORDERING CLAUSES....................................................................................................................... 57
APPENDIX A – Proposed Rules
APPENDIX B – Initial Regulatory Flexibility Analysis

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I.

INTRODUCTION

1.
With this Notice of Proposed Rulemaking, we initiate a review of our policies governing
mobile spectrum holdings in order to ensure that they fulfill our statutory objectives given changes in
technology, spectrum availability, and the marketplace since the Commission’s last comprehensive
review more than a decade ago. In the last few years, large, medium, and small providers as well as
public interest groups have raised concerns about the current approach, and sought review. In addition,
we adopt today, in a separate proceeding, a Notice of Proposed Rulemaking soliciting comment on the
framework for an incentive auction of the broadcast television spectrum, which will represent a major
addition of new spectrum available for mobile broadband. We initiate this proceeding to provide rules of
the road that are clear and predictable, and that promote the competition needed to ensure a vibrant,
world-leading, innovation-based mobile economy.
2.
Since the Commission’s last comprehensive review of these issues, the number of
spectrum bands used for mobile wireless services has expanded; new, innovative service offerings have
been rolled out; increasingly sophisticated devices have been introduced into the marketplace; and
consumers have adopted these devices to access a wide array of bandwidth-intensive applications. In
light of the surge in consumer demand for mobile broadband services that require greater bandwidth,
spectrum – a key input in the provision of mobile wireless services – is becoming increasingly critical for
all providers. In this proceeding, we seek comment on retaining or modifying the current case-by-case
analysis used to evaluate mobile spectrum holdings in the context of transactions and auctions, as well as
on bright-line limits advocated by some providers and public interest groups. In addition, we seek
comment on updating the spectrum bands that should be included in any evaluation of mobile spectrum
holdings and whether to make distinctions between different bands. We also take a fresh look at
geographic market analysis and other implementation issues such as attribution rules, remedies, and
possible transition issues. This proceeding affords us the opportunity to receive valuable input from a
broad range of active participants in the mobile broadband industry, as well as trade associations and
consumer groups, that have requested that our policies be revised to keep pace with market changes.

II.

BACKGROUND

A.

Statutory Framework

3.
Section 309(j)(3)(B) of the Communications Act provides that, in designing systems of
competitive bidding, the Commission shall “promot[e] economic opportunity and competition and
ensur[e] that new and innovative technologies are readily accessible to the American people by avoiding
excessive concentration of licenses.”1 Additionally, under the Communications Act, when reviewing a
proposed license assignment or transfer application, the Commission must determine whether the
applicant has demonstrated that the proposed assignment or transfer of control of licenses will serve the
public interest, convenience, and necessity.2 Moreover, Congress has established the promotion of
competition as a fundamental goal of the nation’s mobile wireless policy.3 More recently, Congress
enacted Section 6404 of the Spectrum Act, which modifies Section 309(j) to prohibit the Commission
from preventing an otherwise qualified entity from participating in an auction, but reaffirms the
Commission’s authority “to adopt and enforce rules of general applicability, including rules concerning
spectrum aggregation that promote competition.”4


1 47 U.S.C. § 309(j)(3)(B).
2 47 U.S.C. § 310(d).
3 See 47 U.S.C. § 332(a)(3), (c)(1)(C); Implementation of Section 6002(b) of the Omnibus Budget Reconciliation
Act of 1993. See also Annual Report and Analysis of Competitive Market Conditions with Respect to Mobile
Wireless, including Commercial Mobile Services, WT Docket No. 10-133, Fifteenth Report, 26 FCC Rcd 9664,
9687 ¶ 3 (2011) (Fifteenth Mobile Wireless Competition Report).
4 Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. No. 112-96, § 6404 (Spectrum Act).
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B.

The Commission’s Policies Regarding Mobile Spectrum Holdings

4.
Access to spectrum is a precondition to the provision of mobile wireless services.
Ensuring the availability of sufficient spectrum is critical for promoting the competition that drives
innovation and investment. Over time, the Commission has increased the amount of spectrum available
for the provision of mobile wireless services, making this additional spectrum available in different
frequency bands, bandwidths, and licensing areas.5 As discussed below, in order to address its statutory
mandate, the Commission has implemented a variety of mobile spectrum aggregation policies and rules,
including the cellular cross interest rule, the Personal Communications Service (PCS) cross-ownership
rule, the Commercial Mobile Radio Services (CMRS) spectrum cap, and the current case-by-case
spectrum aggregation analysis.6
5.
Cellular Services. In 1981, in establishing the rules for the licensing of cellular service,
the Commission decided to award two cellular services licenses per market – a separate allocation of 20
megahertz for incumbent wireline carriers and an allocation of 20 megahertz for other applicants.7 With
two licensees per market, the Commission reasoned it would be more difficult for a single entity to
dominate the cellular market nationwide.8 The Commission adopted the cellular cross-interest rule in
1991 “to guarantee the competitive nature of the cellular industry and to foster the development of
competing systems.”9 The rule was adopted when only two cellular licensees provided mobile voice
services in each geographic area of the U.S.10 At that time, a party with a controlling interest in one of the
cellular licensees was prohibited from having more than a five percent direct or indirect ownership
interest in the other licensee in the same cellular geographic service area (CGSA).11 In the Second
Biennial Review Order
in 2001, the Commission eliminated the cellular cross-interest rule in
Metropolitan Statistical Areas (MSAs) after finding numerous competitive choices for consumers in
urban markets.12 Later, in 2004, the Commission eliminated the cellular cross-interest rule in favor of a
case-by-case review for all markets, finding that the continued application of the cellular cross-interest
rule in Rural Service Areas (RSAs) could impede the development of new services in rural and
underserved areas.13
6.
Cellular/PCS Cross-Ownership Rule. In 1993, in establishing the initial PCS service
rules, the Commission imposed service-specific limitations on the aggregation of broadband PCS


5 See Fifteenth Mobile Wireless Competition Report, 26 FCC Rcd at 9821 ¶ 266.
6 See Fifteenth Mobile Wireless Competition Report, 26 FCC Rcd at 9826-28 ¶¶ 280-281.
7 Inquiry Into the Use of the Bands 825-845 MHz and 870-890 MHz for Cellular Communications Systems; and
Amendment of Parts 2 and 22 of the Commission’s Rules Relative to Cellular Communications Systems, CC
Docket No. 79-318, Report and Order, 86 FCC 2d 469, 488-92 ¶¶ 38-43 (1981) (Cellular Report and Order).
8 See Cellular Report and Order, 86 FCC 2d at 491 ¶ 43.
9 Amendment of Part 22 of the Commission’s Rules to Provide for Filing and Processing of Applications for
Unserved Areas in the Cellular Service and to Modify Other Cellular Rules, CC Docket No. 90-6, First Report and
Order and Memorandum Opinion and Order on Reconsideration
, 6 FCC Rcd 6185, 6628 ¶ 104 (1991) (Cellular
First Report and Order
).
10 See Cellular First Report and Order, 6 FCC Rcd at 6228 ¶ 103.
11 See Cellular First Report and Order, 6 FCC Rcd at 6228 ¶¶ 104-105.
12 2000 Biennial Regulatory Review – Spectrum Aggregation Limits for Commercial Mobile Radio Services, WT
Docket No. 01-14, Report and Order, 16 FCC Rcd 22668, 22671 ¶ 7, 22707 ¶ 84 (2001) (Second Biennial Review
Order
).
13 See Facilitating the Provision of Spectrum-Based Services to Rural Areas and Promoting Opportunities for Rural
Telephone Companies to Provide Spectrum-Based Services, WT Docket No. 02-381, Report and Order and Further
Notice of Proposed Rule Making
, 19 FCC Rcd 19078, 19113-115 ¶¶ 63-67 (2004) (Rural Report and Order).
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FCC 12-119

spectrum and on cellular/PCS cross-ownership.14 The Commission limited broadband PCS licensees to
40 megahertz of total spectrum allocated to broadband PCS,15 and limited cellular licensees to 10
megahertz of broadband PCS spectrum in their cellular service areas.16 In 1996, the Commission
eliminated the service-specific limitations on the aggregation of broadband PCS spectrum and on
cellular/PCS cross-ownership, and decided to rely solely on the 45 megahertz CMRS spectrum cap,
implemented in 1994, “to ensure that multiple service providers would be able to obtain broadband PCS
spectrum and thereby facilitate the development of competitive markets for wireless services.”17
7.
CMRS Spectrum Cap. In 1994, the Commission implemented a spectrum cap on
Cellular, broadband PCS, and Specialized Mobile Radio (SMR) spectrum to promote diversity and
competition in mobile services,18 “recognizing the possibility that mobile service licensees might exert
undue market power or inhibit market entry by other service providers if permitted to aggregate large
amounts of spectrum.”19 The Commission found that a spectrum cap provided a “minimally intrusive
means” to ensure that the mobile communications marketplace remained competitive and preserved
incentives for efficiency and innovation.20 Under former Section 20.6 of the Commission’s rules, no
licensee in the broadband PCS, Cellular, or SMR services regulated as CMRS could have an attributable
interest in more than 45 megahertz of licensed spectrum (broadband PCS, cellular, and SMR spectrum
regulated as CMRS) that has significant overlap in any geographic area.21 A few years later, the
Commission increased the cap to 55 megahertz in the RSAs.22 Subsequently, in the Second Biennial
Review Order
, the Commission eliminated the spectrum cap effective January 1, 2003,23 in favor of case-


14 See Amendment of the Commission's Rules to Establish New Personal Communications Services, Second Report
and Order
, 8 FCC Rcd 7700, 7728 ¶ 61, 7745 ¶ 106 (1993) (PCS Second Report and Order).
15 See PCS Second Report and Order, 8 FCC Rcd at 7728 ¶ 61.
16 See PCS Second Report and Order, 8 FCC Rcd at 7745 ¶ 106. See also Amendment of the Commission's Rules
to Establish New Personal Communications Services, Memorandum Opinion and Order, 9 FCC Rcd 4957, 4984 ¶¶
66-67 (1994).
17 See Second Biennial Review Order, 16 FCC Rcd at 22673 ¶ 13 (citing Amendment of Parts 20 and 24 of the
Commission’s Rules – Broadband PCS Competitive Bidding and the Commercial Mobile Radio Service Spectrum
Cap; Amendment of the Commission’s Cellular/PCS Cross-Ownership Rule, WT Docket No. 96-59, Report and
Order
, 11 FCC Rcd 7824, 7869 ¶ 94 (1996), aff’d, 12 FCC Rcd 14031 (1997), aff’d sub nom. BellSouth Corp. v.
FCC
, 162 F.3d 1215 (D.C. Cir. 1999)).
18 Implementation of Sections 3(n) and 332 of the Communications Act – Regulatory Treatment of Mobile Services,
GN Docket No. 93-252, Third Report and Order, 9 FCC Rcd 7988, 8100 ¶ 238, 8109 ¶ 263 (1994) (CMRS Third
Report and Order
).
19 CMRS Third Report and Order, 9 FCC Rcd at 8100 ¶ 239.
20 See CMRS Third Report and Order, 9 FCC Rcd at 7999 ¶ 16.
21 See 1998 Biennial Regulatory Review – Spectrum Aggregation Limits for Wireless Telecommunications Carriers,
WT Docket No. 98-205, Report and Order, 15 FCC Rcd 9219, 9224 ¶ 8 (1999) (First Biennial Review Order)
(quoting former 47 C.F.R. § 20.6(a)). A “significant overlap” of a PSC licensed service area, CGSA, and SMR
service area occurred when at least ten percent of the population of the PCS licensed service area was within the
cellular geographic service area and/or SMR service area. See id. (citing former Section 20.6(c)). The spectrum cap
sunset on January 1, 2003. 47 C.F.R. § 20.6(f).
22 See First Biennial Review Order, 15 FCC Rcd at 9254-57 ¶¶ 80-84.
23 See 47 C.F.R. § 20.6(f); Second Biennial Review Order, 16 FCC Rcd at 22669 ¶ 1, 22696 ¶ 55. The Commission
also raised the spectrum cap to 55 MHz in all markets during the sunset period. See 47 C.F.R. § 20.6(a); Second
Biennial Review Order
, 16 FCC Rcd at 22671 ¶ 6, 22693 ¶ 47.
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by-case review of mobile spectrum holdings.24
8.
Case-by-Case Analysis. Since 2003, the Commission has examined the competitive
effects of proposed wireless transactions involving the transfer, assignment, or lease of Commission
licenses by employing a case-by-case review. In 2008, the Commission determined that it would apply
the case-by-case analysis to spectrum acquired via auction.25 Beginning in 2004, the Commission has
used a two-part screen to help identify markets where the acquisition of spectrum provides particular
reason for further competitive analysis.26 The Commission does not, however, limit its consideration of
potential competitive harms in proposed transactions solely to markets identified by its initial screen.27
The first part of the screen considers changes in market concentration as a result of the transaction and is
based on the size of the post-transaction Herfindahl-Hirschman Index (HHI)28 and the change in the
HHI.29 The second part examines the amount of spectrum that is suitable and available on a market-by-
market basis for the provision of mobile telephony/broadband service.30 For those markets highlighted by
one or both steps in the analysis, the Commission routinely conducts detailed, market-by-market reviews
to determine whether the transaction would result in an increased likelihood or ability in those markets for
the combined entity to behave in an anticompetitive manner.31 The case-by-case analysis considers
variables that are important in predicting the incentives and ability of service providers to successfully
reduce competition on price or non-price terms, and transaction-specific public interest benefits that may


24 See Second Biennial Review Order, 16 FCC Rcd at 22670-71 ¶ 6.
25 See Union Telephone Company, Cellco Partnership d/b/a Verizon Wireless, Applications for 700 MHz Band
Licenses, Auction No. 73, Memorandum Opinion and Order, 23 FCC Rcd 16787, 16791 ¶ 9 (2008) (Verizon
Wireless-Union Tel. Order
).
26 See, e.g., Applications of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo LLC and Cox TMI, LLC for
Consent to Assign AWS-1 Licenses, et al,. WT Docket No. 12-4, Memorandum Opinion and Order and
Declaratory Ruling,
FCC 12-95 (rel. Aug. 23, 2012) at ¶ 48 (Verizon Wireless-SpectrumCo Order); Application of
AT&T Inc. and Qualcomm Incorporated For Consent to Assign Licenses and Authorizations, WT Docket No. 11-
18, Order, 26 FCC Rcd 17589, 17602 ¶ 31 (2011) (AT&T-Qualcomm Order); Applications of AT&T Wireless
Services, Inc. and Cingular Wireless Corporation For Consent to Transfer Control of Licenses and Authorizations,
WT Docket No. 04-70, Memorandum Opinion and Order, 19 FCC Rcd 21522, 21552 ¶ 58 (2004) (Cingular-AT&T
Wireless Order
).
27 See, e.g., Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 48; AT&T-Qualcomm Order, 26 FCC Rcd at
17609-10 ¶¶ 49-50; Applications of AT&T Inc. and Centennial Communications Corp. For Consent to Transfer
Control of Licenses, Authorizations, and Spectrum Leasing Arrangements, WT Docket No. 08-246, Memorandum
Opinion and Order
, 24 FCC Rcd 13915, 13946-48 ¶¶ 71-74, 13952 ¶ 85 (2009) (AT&T-Centennial Order);
Applications for the Assignment of License from Denali PCS, L.L.C. to Alaska Digitel, L.L.C. and the Transfer of
Control of Interests in Alaska Digitel, L.L.C. to General Communication, Inc., WT Docket 06-114, Memorandum
Opinion and Order
, 21 FCC Rcd 14863, 14898 ¶ 85 (2006).
28 The Herfindahl-Hirschman Index (HHI), which is calculated by summing the squares of all provider subscriber
market shares in any given market, is a commonly used measure of market concentration in competition analysis.
See Fifteenth Mobile Wireless Competition Report, 26 FCC Rcd at 9707-08 ¶¶ 48-49.
29 The HHI screen identifies for further case-by-case market analysis those markets in which, post-transaction, the
HHI would be greater than 2800 and the change in the HHI would be 100 or greater, or the change in the HHI would
be 250 or greater, regardless of the level of the HHI. The HHI screen has remained the same since the Commission
adopted the case-by-case review process. See Fifteenth Mobile Wireless Competition Report, 26 FCC Rcd at 9708
n. 121.
30 See, e.g., Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 59; see also infra discussion on determining
spectrum that is suitable and available for the relevant product market at ¶ 26.
31 This Notice of Proposed Rulemaking does not address the part of our review that considers changes in market
concentration based on HHI, but considers only our review of mobile spectrum holdings.
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mitigate or outweigh any harms arising from the transaction.32

C.

Criticisms of Current Case-by-Case Analysis Approach

9.
In its consideration of transactions, the Commission generally has reviewed and, when
necessary, adjusted its case-by-case analysis to reflect changing industry and consumer needs. In recent
years, large and small wireless providers, as well as trade associations and public interest groups, have
requested that the Commission undertake an examination of its current policies regarding mobile
spectrum holdings. For example, Verizon Wireless has contended that we should reconsider the
particular spectrum to be examined in a competitive analysis and has urged that we include additional
spectrum bands.33 AT&T has expressed concerns that the current case-by case evaluation is not clear and
predictable and the spectrum screen changes from one transaction to the next.34 AT&T has argued that
there is “more regulatory uncertainty on top of an industry that is a foundation for a lot of today's
innovation, making it difficult for all of us to allocate and commit capital,”35 and that “we don't know how
much spectrum we're allowed to hold.”36 Sprint Nextel has argued that the current method of evaluating
spectrum holdings values spectrum equally, “regardless of whether it lies within more valuable
‘beachfront’ bands or in higher-frequency bands of limited commercial use.”37 T-Mobile has argued that
to further the goal of a robust marketplace, the Commission should modify its case-by-case evaluation to
recognize the difference in value of spectrum above and below 1 GHz.38
10.
The Rural Cellular Association (RCA) has urged the Commission to “take a fresh
approach to its competitive analysis” instead of “recycl[ing] the outdated spectrum screen.”39 RTG has
urged the Commission to conduct a more in-depth competitive review of large-scale transactions, in part
by adopting a lower spectrum screen that will trigger a heightened level of review and allow consideration
of certain factors other than the amount of spectrum held by licensees, in order to determine whether
further spectrum concentration will threaten market competition.40 Both RTG and Leap Wireless have
contended that the case-by-case approach creates uncertainty and/or suggest that an alternative approach
would provide greater clarity.41 Free Press has urged the use of a spectrum screen based on spectrum


32 See Applications of Cellco Partnership d/b/a Verizon Wireless and Atlantis Holdings LLC For Consent to
Transfer Control of Licenses, Authorizations, and Spectrum Manager and De Facto Transfer Leasing Arrangements
and Petition for Declaratory Ruling that the Transaction is Consistent with Section 310(b)(4) of the Communications
Act, WT Docket No. 08-95, Memorandum Opinion and Order and Declaratory Ruling, 23 FCC Rcd 17444, 17460 ¶
26 (2008) (Verizon Wireless-ALLTEL Order).
33 See Verizon Wireless Comments, WT Docket No. 11-186, at 117, 120-25.
34 See AT&T Inc. Q4 2011 Earnings Call Transcript, Morningstar.com, January 26, 2012, Q&A, p. 2, available at
http://www.morningstar.com/earnings/34640330-at-t-inc-t-q4-2011.aspx?pindex=3&qindex=2 (last visited Sept. 6,
2012).
35 AT&T Inc. Q4 2011 Earnings Call Transcript, Morningstar.com, January 26, 2012, Presentation, p. 3, available at
http://www.morningstar.com/earnings/34640330-at-t-inc-t-q4-2011.aspx?pindex=3 (last visited Sept. 6, 2012).
36 See AT&T Inc. Q4 2011 Earnings Call Transcript, Morningstar.com, January 26, 2012, Q&A, p. 2, available at
http://www.morningstar.com/earnings/34640330-at-t-inc-t-q4-2011.aspx?pindex=3&qindex=2 (last visited Sept. 6,
2012).
37 Sprint Nextel Comments, WT Docket No. 12-4, at ii.
38 See T-Mobile Comments, WT Docket No. 11-186, at 6.
39 See RCA Petition to Condition or Otherwise Deny Transactions, WT Docket No. 12-4, at 44.
40 See RTG Petition to Deny, WT Docket No. 12-4, at 16-17.
41 See, e.g., RTG Reply Comments, RM No. 11498, at 1-3 (urging the Commission to consider instituting a
spectrum cap); Leap Comments, RM No. 11498, at 8-9. (advocating bright-line rules). Because this Notice of
Proposed Rulemaking addresses policies regarding mobile spectrum holdings from a broad perspective, we decline
(continued….)
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value,42 contending that the current spectrum screen, a “simple old analytical tool,” is insufficient to
reveal changes in market power.43 Similarly, Public Knowledge has argued that the assumptions
underlying the method used to calculate the spectrum screen have proven to be unreliable,44 and that we
should consider the long-term implications of spectrum holdings among carriers.45

D.

The Current Wireless Landscape

11.
During the past decade, the use of wireless services has surged as the number of spectrum
bands used to provide mobile wireless services has expanded, an array of increasingly sophisticated
devices has been introduced in the marketplace, and new service offerings have been rolled out. As
discussed below, some of these changes could have implications for our policies regarding mobile
spectrum holdings. The industry is undergoing a transformation, from an industry providing
predominantly voice services to one that is increasingly focused on providing data services, particularly
mobile broadband services. This transition has led to the need of competitors for more spectrum to meet
the increasing demand for mobile broadband, which consumes greater amounts of bandwidth.46 In order
to ensure that our policies continue to serve the public interest and keep pace with changing technologies
and consumer needs, we must consider these and other industry changes.
12.
Facilitating access by all providers to valuable spectrum resources they need to serve
their customers is essential given the current mobile wireless landscape. The rapid adoption of
smartphones, as well as tablet computers and the wide-spread use of mobile applications, combined with
deployment of high-speed 3G and 4G technologies, is driving more intensive use of mobile networks. A
single smartphone can generate as much traffic as 35 basic-feature phones; a tablet as much traffic as 121
basic-feature phones; and a single laptop can generate as much traffic as 498 basic-feature phones.47 The
adoption of smartphones alone increased at a 50 percent annual growth rate in 2011, from 27 percent of
U.S. mobile subscribers in December 2010 to nearly 42 percent in December 2011.48 Moreover, global
mobile data traffic is anticipated to grow eighteen-fold between 2011 and 2016.49 Indeed, a study by the
(Continued from previous page)


to initiate the more narrowly-tailored requests made in RTG’s petition for rulemaking. See RTG Petition for
Rulemaking, RM No. 11498, at 5 (proposing that the FCC impose, on a county level, a 110 MHz aggregation limit
below 2.3 GHz).
42 See Free Press Reply to Opposition, WT Docket No. 12-4, at 23; see also Free Press Petition to Deny, WT Docket
No. 12-4, at 11.
43 See Free Press Petition to Deny, WT Docket No. 12-4, at 19. See also Free Press Petition to Deny, WT Docket
No. 12-4, at 11.
44 See Public Knowledge et al., Petition to Deny, WT Docket No. 12-4, at 34-35.
45 Letter from Harold Feld, Public Knowledge, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 12-4, at 3
(Apr. 30, 2012).
46 Connecting America: The National Broadband Plan at 77 (Mar. 16, 2010).
47 See Cisco White Paper, Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2011-2016,
at 7, February 14, 2012, available at
http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.pdf
(last visited Sept. 6, 2012).
48 comScore 2012 Mobile Future in Focus (2012), available at
http://www.comscore.com/Press_Events/Presentations_Whitepapers/2012/2012_Mobile_Future_in_Focus (last
visited Sept. 6, 2012). For consumers ages 25-34, eight of ten recent new phone purchases were smartphones. See
Survey: New U.S. Smartphone Growth by Age and Income, NIELSENWIRE, Feb. 20, 2012, available at
http://blog.nielsen.com/nielsenwire/online_mobile/survey-new-u-s-smartphone-growth-by-age-and-income/ (last
visited Sept. 6, 2012).
49See Cisco White Paper, Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2011-2016,
Executive Summary, February 14, 2012, available at
(continued….)
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Council of Economic Advisors (CEA) found that “the spectrum currently allocated to wireless is not
sufficient to handle the projected growth in demand, even with technological improvements allowing for
more efficient use of existing spectrum and significant investment in new facilities.”50
13.
Given the limited spectrum resources, we must consider how our policies regarding
mobile spectrum holdings can accommodate the increasing demand for spectrum by all providers. While
there are numerous ways in which wireless service providers can increase network capacity to satisfy
increasing demand, acquiring more spectrum has been the least costly way for all providers to address
capacity constraints. In light of these circumstances, ensuring that our policies regarding mobile spectrum
holdings promote access to spectrum is critical.51
14.
Since the sunset of the spectrum cap, there also have been other changes in the wireless
industry that warrant reexamination of our policies. In 2003, when the Commission eliminated the
spectrum cap, there were six mobile telephone operators that analysts then described as nationwide:
AT&T Wireless, Sprint PCS, Verizon Wireless, T-Mobile, Cingular Wireless (“Cingular”), and Nextel.52
Today, as a result of mergers and other transactions, there are four nationwide providers: Verizon
Wireless, AT&T, T-Mobile, and Sprint Nextel.53 As of December 2003, the top six facilities-based
nationwide providers served approximately 78 percent of total mobile wireless subscribers in the
country.54 By December of 2009, the top four facilities-based nationwide providers had increased their
(Continued from previous page)


http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.html
(last visited Sept. 6, 2012).
50 Council of Economic Advisors, The Economic Benefits of New Spectrum for Wireless Broadband at 5 (Feb.
2012), available at http://www.whitehouse.gov/sites/default/files/cea_spectrum_report_2-21-2012.pdf (last visited
Sept. 6, 2012).
51 We note that Congress, as well as the Commission and NTIA, has taken innovative steps to bring additional
spectrum suitable for mobile broadband to the commercial marketplace. For instance, Congress recently passed the
Spectrum Act, which authorizes the auction and repurposing of television broadband spectrum for the provision of
wireless services. See Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. No. 112-96, Subtitle D -
Spectrum Auction Authority, § 6401 et seq. As another example, the Commission has opened a proceeding to
increase the supply of spectrum for mobile broadband by providing for flexible use of 40 megahertz of spectrum
assigned to the Mobile Satellite Service (MSS) in the 2 GHz Band. See, e.g., Service Rules for Advanced Wireless
Services in the 2000-2020 MHz and 2180-2200 MHz Bands, WT Docket No. 12-70, Notice of Proposed
Rulemaking and Notice of Inquiry
, 27 FCC Rcd 3561 (2012) (AWS-4 NPRM). NTIA undertook a “fast-track”
review of several bands that could be reallocated to mobile use. See U.S. Department of Commerce, An Assessment
of the Near-Term Viability of Accommodating Wireless Broadband Systems in the 1675-1710 MHz, 1755-1780
MHz, 3500-3650 MHz, and 4200-4220 MHz, 4380-4400 MHz Bands
(Oct. 2010), available at
http://www.ntia.doc.gov/reports/2010/FastTrackEvaluation_11152010.pdf (NTIA Fast Track Report) (last visited
Sept. 6, 2012). Additionally, on August 13, 2012, the Commission granted T-Mobile’s application for experimental
special temporary authority to begin testing possible use of the 1755 MHz to 1780 MHz band on a shared basis for
providing commercial mobile broadband services. See FCC Experimental Special Temporary Authorization, Call
Sign No. WF9XQW, File No. 0373-EX-ST-2012, available at https://apps.fcc.gov/els/GetAtt.html?id=128554 (last
visited Sept. 6, 2012).
52 See Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and
Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services, WT Docket No. 04-111,
Ninth Report, 19 FCC Rcd 20597, 20613 ¶ 36 (2004) (Ninth Annual CMRS Competition Report).
53 See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17604 ¶ 35; AT&T-Centennial Order, 24 FCC Rcd 13915;
Verizon Wireless-ALLTEL Order, 23 FCC Rcd 17444; Applications of Nextel Communications, Inc. and Sprint
Corporation For Consent to Transfer Control of Licenses and Authorizations, WT Docket No. 05-63, Memorandum
Opinion and Order
, 20 FCC Rcd. 13967 (2005) (Sprint-Nextel Order).
54 See Ninth Annual CMRS Competition Report, 19 FCC Rcd at ¶ 174, A-8, Table 4.
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combined market share to 88 percent.55 Moreover, since 2003, a number of regional and rural facilities-
based providers have exited the marketplace through mergers and acquisitions, including Dobson
Communications, SunCom Wireless, Rural Cellular Corporation, ALLTEL, and Centennial
Communications.56 In addition, there have been significant spectrum-only transactions, such as the
transaction at the end of 2011 in which AT&T acquired Qualcomm’s nationwide Lower 700 MHz
downlink spectrum57 and the more recent transaction in which Verizon Wireless acquired AWS-1 licenses
from SpectrumCo, LLC, and Cox TMI.58

III.

DISCUSSION

15.
In the sections below, we seek comment on whether and how to revise our policies and
rules regarding mobile spectrum holdings. In particular, we ask that comments address how to ensure that
our policies and rules afford all interested parties greater certainty, transparency and predictability to
make investment and transactional decisions, while also promoting the competition needed to ensure a
vibrant, increasingly mobile economy driven by innovation. First, we discuss general approaches to
address competitive harm resulting from foreclosing access to spectrum, including a case-by-case
analysis, bright-line limits, and other methodologies, and how they might apply not only to secondary
market transactions but also to initial spectrum licensing after auctions. We then take a fresh look at
implementation issues under various approaches, such as which spectrum should be considered, relevant
product and geographic markets, and issues relating to attribution rules, appropriate remedies and
transition concerns.
16.
We also seek comment on the costs and benefits of any proposals or proposed changes to
policies and rules. We ask that commenters take into account only those costs and benefits that directly
result from the implementation of the particular approach or rule that could be adopted. Further, to the
extent possible, commenters should provide specific data and information, such as actual or estimated
dollar figures for each specific cost or benefit addressed, including a description of how the data or
information was calculated or obtained, and any supporting documentation or other evidentiary support.59

A.

General Approaches to Mobile Spectrum Holdings

1.

Case-by-Case Analysis

17.
We seek comment on our current policies regarding mobile spectrum holdings. In
general, we currently examine the impact of spectrum aggregation on competition, innovation, and the
efficient use of spectrum on a case-by-case basis, after establishing the relevant product and geographic
markets in each case.60 The Commission has applied this approach to wireless transactions, using an
initial spectrum screen, since 2004,61 and to mobile spectrum acquired through competitive bidding since


55 See Fifteenth Mobile Wireless Competition Report, 26 FCC Rcd at 9760, Table 14, and John C. Hodulik et al.,
US Wireless 411 Report for 4Q2010, UBS Investment Research, UBS, at 13, Table 8.
56 See Fifteenth Mobile Wireless Competition Report, 26 FCC Rcd at 9722, Table 10.
57 See generally AT&T-Qualcomm Order, 26 FCC Rcd 17589.
58 See generally Verizon Wireless-SpectrumCo Order, FCC 12-95.
59 During the pendency of this proceeding, the Commission will continue to apply its current case-by-case approach
to evaluate mobile spectrum holdings during our consideration of secondary market transactions and initial spectrum
licensing after auctions.
60 See AT&T-Qualcomm Order, 26 FCC Rcd at 17602 ¶¶ 31-32.
61 See Cingular-AT&T Wireless Order, 19 FCC Rcd at 21568-69 ¶¶ 107-12. See also AT&T-Qualcomm Order, 26
FCC Rcd at 17602 ¶ 31; AT&T Inc. and Cellco Partnership d/b/a Verizon Wireless Seek FCC Consent To Assign or
Transfer Control of Licenses and Authorizations and Modify a Spectrum Leasing Arrangement, WT Docket No. 09-
104, Memorandum Opinion and Order, 25 FCC Rcd 8704, 8720-21 ¶ 32 (2010) (AT&T-Verizon Wireless Order).
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2008.62 In reviewing a proposed wireless transaction, the Commission evaluates the current spectrum
holdings of the acquiring firm that are “suitable” and “available” in the near term for the provision of
mobile telephony/broadband services.63 The current screen identifies local markets where an entity would
acquire more than approximately one-third of the total spectrum suitable and available for the provision
of mobile telephony/broadband services.64 The Commission does not, however, limit its consideration of
potential competitive harms in proposed transactions solely to markets identified by its initial screen.65
The Commission balances a number of factors in its analysis, considering the totality of the circumstances
in each market.66 The Commission also has considered whether harms in numerous local markets may
result in nationwide harms.67
18.
We recognize that a case-by-case approach affords flexibility to consider different
circumstances, permits a variety of factors to be considered, and allows us to better tailor any remedies to
the specific harm and circumstances, particularly in our review of wireless transactions. In addition to
recognizing factors unique to each licensee, a case-by-case approach allows us to consider the changing
needs of the mobile wireless marketplace more generally. On the other hand, a case-by-case approach is
time- and resource-intensive, and has been criticized for creating uncertainty as to whether a particular
transaction will be approved.68 One commenter, however, has suggested generally that a case-by-case
approach can provide sufficiently clear guidance to enable providers to make their transactional and
investment decisions.69 We seek comment on the costs and benefits of a case-by-case analysis to
consumers, wireless service providers, and others, as well as the overall effectiveness of such an approach
in achieving our public policy objectives. Should we change our current case-by-case analysis process?
For instance, should we continue to use a screen that includes a measure of spectrum holdings? Could we
take measures to make the process more transparent, predictable, or better tailored to promote our goals?
For example, should we consider a regular review of our policies and guidelines to keep pace with
changing marketplace conditions? Should we adopt guidelines setting forth the factors that will be
considered during any review of a licensee’s mobile spectrum holdings or delegate authority to the
Wireless Telecommunications Bureau to do so?
19.
Finally, we seek comment on the specific costs and benefits of applying a case-by-case
approach to initial licenses acquired through competitive bidding. Does a case-by-case analysis afford
auction participants sufficient certainty to determine whether they would be allowed to hold a given
license post-auction? Does the lack of a bright-line spectrum limit deter auction participation? Further,
does the lack of a bright-line rule provide an opportunity for licensees to bid on spectrum, regardless of
whether they believe they ultimately would be allowed to hold the licenses, in order to raise bidding costs
or foreclose other competitors from acquiring certain licenses? A case-by-case approach could result in
an inefficient auction process if we ultimately deny the winning bidder’s application to hold a license. In


62 See Verizon Wireless-Union Tel. Order, 23 FCC Rcd at 16791-92 ¶ 9.
63 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 59; AT&T-Qualcomm Order, 26 FCC Rcd at 17605-06
¶ 38; AT&T-Verizon Wireless Order, 25 FCC Rcd at 8723-24 ¶ 39; AT&T-Centennial Order, 24 FCC Rcd at 13934
¶ 43. See infra discussion of determining spectrum suitable and available for the relevant product market at ¶ 26.
64 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 59; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17473 ¶ 54.
65 See, e.g., Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 48; AT&T-Qualcomm Order, 26 FCC Rcd at
17609-10 ¶¶ 49-50; AT&T-Centennial Order, 24 FCC Rcd 13915, 13946-48 ¶¶ 71-74, 13952 ¶ 85.
66 See, e.g., Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17487-88 ¶ 91.
67 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 76.
68 See, e.g., “Stephenson: Verizon/Cable Deals Could Offer Guidance from FCC,” TR Daily (June 12, 2012).
69 See Union Tel. Co. Comments, RM No. 11498, at i.
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addition to imposing costs on competitors, the expenditure of public or private resources and resulting
delay in awarding the spectrum to another bidder impose costs on the public. We seek comment on
whether there are additional measures we would need to adopt to promote an effective and efficient
auction process while discouraging the potential for anticompetitive behavior. If we continue our case-
by-case analysis for secondary market transactions, should we adopt another approach for initial licensing
rather than a case-by-case analysis, such as band-specific limits adopted prior to an auction?
2.

Bright-Line Limits

20.
As discussed above, the Commission employed a CMRS spectrum cap to prevent
excessive spectrum concentration, but eliminated that cap in 2003 and then started using the current case-
by-case approach. Before employing a CMRS spectrum cap, the Commission used other bright-line
limits on spectrum holdings.70 There have been many changes in the mobile wireless industry since we
first started using a case-by-case approach to assess spectrum concentration, as noted above, and we
believe that these changes warrant reevaluating that approach.71 We seek comment on whether adoption
of bright-line limits would serve the public interest now, and also on the specific costs and benefits of
adopting such an approach. Bright-line limits could offer providers greater certainty, clarity, and
predictability regarding which licenses they could acquire. Bright-line limits might encourage auction
participation or more secondary market transactions by affording parties greater certainty and
predictability to develop their business plans and obtain necessary financing. On the other hand, a bright-
line approach would limit the Commission’s flexibility to consider individualized circumstances and to
respond swiftly to the changing needs of the mobile wireless industry and consumers. If we were to adopt
bright-line limits, how could we do so in a manner that preserves our flexibility?
21.
We seek comment on related implementation issues with respect to applying bright-line
limits to initial licenses acquired through competitive bidding as well as to licenses acquired through the
secondary market. We further seek comment on whether we should consider applying a band-specific
spectrum limit in the context of any band-specific service rules that we adopt prior to an auction. Such an
approach would be consistent with the Commission’s practice of seeking comment on spectrum
aggregation issues with respect to particular spectrum bands prior to an auction, would afford auction
participants greater certainty, and would allow us to re-evaluate our spectrum aggregation policies in the
context of newly available spectrum bands and changing industry and consumer needs.72 Further,
adopting band-specific spectrum limits generally applicable to all licensees would be consistent with
Section 6404 of the Spectrum Act, which recognizes the Commission’s authority “to adopt and enforce
rules of general applicability, including rules concerning spectrum aggregation that promote
competition.”73 For instance, should we consider adopting limits on the amount of spectrum that entities
could acquire in the context of spectrum auctions mandated by the Spectrum Act? We seek comment on
these approaches.
3.

Alternative Approaches

22.
We seek comment on any alternative approaches to evaluate the competitive effect of
spectrum aggregation. Are there other mechanisms for evaluating spectrum aggregation that would better
serve the public interest and meet our statutory objectives? In this regard, we seek comment on whether
there are different ways in which we could conduct a case-by-case analysis, such as adopting a case-by-
case analysis that does not include an initial spectrum screen. Another approach would be to combine


70 See PCS Second Report and Order, 8 FCC Rcd 7700, 7728 ¶ 61, 7745 ¶ 106.
71 See Second Biennial Review Order, 16 FCC Rcd at 22694 ¶ 50. See supra section II.D.: The Current Wireless
Landscape.
72 See, e.g., Service Rules for Advanced Wireless Services in the 2155-2175 MHz Band, WT Docket No. 07-195,
Notice of Proposed Rulemaking, 22 FCC Rcd 17035, 17079-80 ¶¶ 101-03 (2007).
73 Spectrum Act at § 6404.
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some elements of a bright-line limit with a case-by-case analysis. One hybrid approach would be to adopt
a bright-line threshold that, if exceeded, would trigger a heightened burden on the applicants to
demonstrate that approval of the proposed transaction would be in the public interest. We seek comment
on these approaches and how they could be implemented, and on any other alternatives.

B.

Implementation Issues

23.
Certain threshold issues would need to be considered if the Commission were to adopt
any new or modified approach to reviewing mobile spectrum holdings, including establishing initial
definitions such as the relevant product and geographic markets, assessing the spectrum bands that should
be included, and deciding how to treat different spectrum bands. Finally, we discuss attribution and
remedies, and explore whether there are other factors for us to consider in this area.
1.

Relevant Product Market

24.
In order to assess competition in a given market, the Commission has initiated its analysis
of a proposed transaction by establishing definitions for the relevant product market. In recent wireless
transactions, the Commission has determined that the relevant product market is a combined “mobile
telephony/broadband services” product market,74 comprised of mobile voice and data services, including
mobile voice and data services provided over advanced broadband wireless networks (mobile broadband
services).75 In AT&T-Qualcomm and Verizon Wireless-SpectrumCo, while the Commission evaluated the
transaction using a combined mobile telephony/broadband market, it recognized the growing importance
of mobile broadband services and focused its analysis to an increasing degree on mobile broadband
services.76
25.
We seek comment on whether the Commission’s current approach to the product market
definition continues to be appropriate. Given the transition to data-centric services and the development
of more spectrum-efficient technologies that will transmit voice as data,77 we seek comment on whether
the relevant product market has changed and, if so, whether these changes warrant any modifications to
our product market definition. For example, should we modify the relevant product market definition to
reflect differentiated service offerings, devices, and contract features?78 We also seek comment on
whether we should separately define smaller product markets that may be nested within a larger defined
product market and, if so, how we would analyze such smaller defined product markets vis-à-vis the
larger defined product market. What are the costs and benefits if we were to modify our product market


74 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 53; AT&T-Qualcomm Order, 26 FCC Rcd at 17603 ¶
33; AT&T-Verizon Wireless Order, 25 FCC Rcd at 8721 ¶ 35; AT&T-Centennial Order, 24 FCC Rcd at 13932 ¶ 37.
The Commission has previously determined that there are separate relevant product markets for interconnected
mobile voice and data services, and also for residential and enterprise services, but found it reasonable to analyze all
of these services under a combined mobile telephony/broadband services product market. See AT&T-Qualcomm
Order
, 26 FCC Rcd at 17603 ¶ 33; AT&T-Verizon Wireless Order, 25 FCC Rcd at 8721 at ¶ 35; AT&T-Centennial
Order
, 24 FCC Rcd at 13932 ¶ 37.
75 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 53; AT&T-Qualcomm Order, 26 FCC Rcd at 17602-03
¶¶ 32-33; AT&T-Verizon Wireless Order, 25 FCC Rcd at 8721 ¶ 35; AT&T-Centennial Order, 24 FCC Rcd at 13932
¶ 37.
76 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶¶ 53, 70; AT&T-Qualcomm Order, 26 FCC Rcd at
17602-03 ¶ 32, 17605 ¶ 38.
77 One example of changing technology is the development of “Voice over LTE” (or “VoLTE”). See “MetroPCS
Unveils First U.S. Voice Over LTE Service, Phone,” by Chloe Albanesius, PCMag.com, Aug. 8, 2012, available at
http://www.pcmag.com/article2/0,2817,2408216,00.asp (last visited Sept. 6, 2012).
78 See American Antitrust Institute Comments, WT Docket No. 11-65, at 6; Sprint Petition to Deny, WT Docket No.
11-65, at 11-15; Free Press Petition to Deny, WT Docket No. 11-65, at 9-12; Greenlining Institute Petition to Deny,
WT Docket No. 11-65, at 4, 12-13.
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definition versus keeping the current combined “mobile telephony/broadband services” product market or
focusing the analysis on mobile broadband services? Commenters also should discuss how their
particular approach for the relevant product market definition is supported by economic or antitrust
theory.
2.

Suitable and Available Spectrum

26.
In order to assess whether any particular spectrum acquisition exceeds a certain threshold
of available spectrum, we first must determine what spectrum we will include in our overall evaluation.
Currently, we include spectrum in our case-by-case analysis if we determine that it is suitable and
available for the relevant product market.79 “Suitability” is determined by whether the spectrum is
capable of supporting mobile service given its physical properties and the state of equipment technology,
whether the spectrum is licensed with a mobile allocation and corresponding service rules, and whether
the spectrum is committed to another use that effectively precludes its use for the relevant mobile
service.80 Particular spectrum is considered to be “available” if it is fairly certain that it will meet the
criteria for suitable spectrum in the near term.81 In recent applications of the spectrum screen, the
Commission has included cellular, PCS, SMR, and 700 MHz spectrum, as well as AWS-1 and certain
BRS spectrum, where available.82
27.
Should we continue to consider spectrum based on its suitability and availability for a
given product market? Are there other factors that we should consider in determining whether particular
spectrum bands are suitable and available for the relevant product market? We seek comment on any
measures that might increase the transparency with which we determine what spectrum we would include
in a case-by-case spectrum analysis or in implementing bright-line limits. For example, should we adopt
a regular process to add or remove existing or newly allocated spectrum bands for purposes of assessing
spectrum concentration? We also seek comment on the costs and benefits of implementing a new process
for identifying the spectrum to include in a case-by-case spectrum analysis. We seek comment on the
legal, economic, and engineering justifications to support the existing or any modified criteria for
determining the suitability and availability of spectrum.
28.
While mobile wireless operators primarily have used licenses associated with three
different frequency bands to provide mobile voice and, in most cases, mobile data services – cellular (in
the 850 MHz band), SMR (in the 800/900 MHz band), and broadband PCS (in the 1.9 GHz band) –
providers are now incorporating additional spectrum bands into their networks, such as BRS and EBS in
the 2.5 GHz band, AWS in the 1.7/2.1 GHz band, and the 700 MHz band. These bands enable the
provision of additional competitive mobile voice and data services.83 In several recent transactions, some
parties have suggested modifying our spectrum analysis to include additional spectrum bands, such as the
BRS spectrum that is not currently included in the screen, EBS, or MSS.84 Others also have argued in
favor of including WCS spectrum, citing certain changes the Commission made to the WCS technical


79 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 59; AT&T-Qualcomm Order, 26 FCC Rcd at 17605-06
¶ 38; AT&T-Centennial Order, 24 FCC Rcd at 13935 ¶ 43.
80 See AT&T-Qualcomm Order, 26 FCC Rcd at 17605-06 ¶ 38; AT&T-Centennial Order, 24 FCC Rcd at 13935 ¶
43; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17473 ¶ 53.
81 See AT&T-Qualcomm Order, 26 FCC Rcd at 17606 ¶ 38.
82 See, e.g., Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 59; AT&T-Qualcomm Order, 26 FCC Rcd at
17605-06 ¶ 39; AT&T-Centennial Order, 24 FCC Rcd at 13935 ¶ 43.
83 See Fifteenth Mobile Wireless Competition Report, 26 FCC Rcd at 9822-23 ¶ 269.
84 See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17606-07 ¶ 40; AT&T-Qualcomm Application, Public Interest
Statement, WT Docket No. 11-18, at 22-27.
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service rules that enable licensees to provide mobile broadband service in a portion of the WCS band.85
Aside from general factors we should consider in determining whether spectrum is suitable and available,
we also seek comment on the application of these factors to particular spectrum bands. Which spectrum
bands should be included in our spectrum analysis? In particular, at what point should television
broadcast spectrum that is repurposed in the incentive auction be included in our analysis?86 Commenters
also should discuss at what point other spectrum bands, such as WCS and the frequencies the
Commission is required to auction under the Spectrum Act,87 should be included in our analysis. Are
there any band-specific factors we may want to consider in determining suitability and availability of a
particular band? Further, we seek comment on whether there are any economic or technical justifications
that would warrant modifying the criteria we use to determine the suitability and availability of spectrum.
For example, should we consider factors such as channel size, potential interference issues, or conditions
that may develop after the allocation and licensing of spectrum (such as technological developments that
affect the timely deployment of services)? If we were to modify the criteria we use to determine the
suitability and availability of spectrum, how could we do so in a manner that promotes clarity and
predictability?88
29.
Further, we seek comment on whether we should remove any spectrum bands from our
consideration. For instance, the Commission recently indicated that, as the provision of mobile
broadband services becomes increasingly central to wireless transactions, it may be appropriate to reduce
the amount of suitable SMR spectrum from 26.5 megahertz to 14 megahertz to reflect the portion of SMR
spectrum through which mobile broadband service can be provided.89 We seek comment on how much
SMR spectrum is suitable and available in the near term for mobile broadband services.90 We note that
the Upper 700 MHz D Block is to be reallocated for public safety service rather than commercial service.
We seek comment, however, on whether and how, pursuant to Section 6101 of the Spectrum Act,91 this
spectrum and the existing public safety broadband spectrum may be relevant to our spectrum analysis in
the event such spectrum is leased to a commercial licensee pursuant to this section of the Spectrum Act.92
We seek comment on these considerations, and whether there are any additional spectrum bands that
should be reduced or removed from our analysis.
3.

Relevant Geographic Market Area

30.
Defining the relevant geographic market is important in accurately assessing the
competitive effects that may result from a potential transaction. This can be a difficult process in some
instances, as the licensed areas of different spectrum bands, and even within the same band, may not be


85 See, e.g., RCA Petition to Deny, WT Docket No. 11-18, at 10-11. See also Amendment of Part 27 of the
Commission’s Rules to Govern the Operation of Wireless Communications Services in the 2.3 GHz Band, Report
and Order
, 25 FCC Rcd 11710, 11711 ¶ 1 (2010) (WCS Report and Order), recon. pending.
86 See Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions, GN Docket
No. 12-268, Notice of Proposed Rulemaking, FCC 12-118 (adopted Sept. 28, 2012).
87 See Spectrum Act at § 6401 (identifying the following bands 1915-1920 MHz, 1995-2000 MHz, and 2155-2180
MHz).
88 We also seek comment below on whether such factors should be reflected in any valuation approach. See infra at
¶ 38.
89 See AT&T-Qualcomm Order, 26 FCC Rcd at 17607 ¶ 42.
90 See Improving Spectrum Efficiency Through Flexible Channel Spacing and Bandwidth Utilization for Economic
Area-Based 800 MHz Specialized Mobile Radio Licensees, WT Docket No. 12-64, Report and Order, 27 FCC Rcd
6489 (2012).
91 See Spectrum Act at § 6101.
92 See Spectrum Act at § 6101.
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the same.93 Under the case-by-case analysis, the Commission has found that relevant geographic markets
are local, larger than counties, may encompass multiple counties, and, depending on the consumer’s
location, may even include parts of more than one state.94 The Commission has primarily used Cellular
Market Areas (CMAs)95 as the local geographic markets in which to analyze the potential competitive
harms arising from spectrum concentration as a result of the transaction.96
31.
In the recent Verizon Wireless-SpectrumCo Order, the Commission found that it was
appropriate to analyze the local markets in which consumers purchase mobile wireless services where
they live, work, and shop.97 The Commission also considered the potential nationwide competitive
impacts of the transaction because the proposed acquisition would be in the majority of markets across the
country and harms that may occur at the local level collectively could have nationwide competitive
effects.98 The Commission noted that although there are local geographic markets for retail wireless
services, prices and service plan offerings do not vary for most providers across most geographic
markets.99 Moreover, the four nationwide providers, as well as other providers of retail mobile
telephony/broadband services, set the same rates for a given plan everywhere and advertise nationally.100
Also, mobile broadband equipment and devices are developed and deployed primarily on a national
scale.101
32.
In light of the above, we seek comment on the appropriate geographic market definition
to use when evaluating a licensee’s mobile spectrum holdings. If we were to adopt bright-line limits or
continue to use a case-by case analysis, what should be the applicable geographic market? Should we
adopt a two-tiered approach under which there is a spectrum threshold at the local level and a separate
threshold that applies on a nationwide basis?102 Is there another approach that would allow us to consider
both local and national competitive effects in establishing a spectrum threshold for bright-line limits or


93 Cf., Fifteenth Mobile Wireless Competition Report, 26 FCC Rcd at 9693 ¶ 24.
94 See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17604 ¶ 34; Cingular-AT&T Wireless Order, 19 FCC Rcd at
21562-63 ¶¶ 89-90; 21561 ¶ 82 (citing the Supreme Court’s definition of a relevant geographic market in Tampa
Electric Co. v. Nashville Coal Co.
, 365 U.S. 320, 327 (1961) as “the area of effective competition to which
purchasers can practicably turn for services”). The Commission based its findings on the “hypothetical monopolist
test.” Under the DOJ/FTC Horizontal Merger Guidelines, the hypothetical monopolist test ensures that markets are
not defined too narrowly, but it does not lead to a single relevant market. The Guidelines also provide that “the
Agencies may evaluate a merger in any relevant market satisfying the test, guided by the overarching principle that
the purpose of defining the market and measuring market shares is to illuminate the evaluation of competitive
effects.” See DOJ/FTC Horizontal Merger Guidelines § 4.1.1.
95 CMAs are standard geographic areas used for the licensing of cellular systems and are comprised of Metropolitan
Statistical Areas (MSAs) and Rural Service Areas (RSAs). See 47 C.F.R. § 22.909; AT&T-Qualcomm Order, 26
FCC Rcd at 17603 ¶ 32 n.96.
96 See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17604 ¶ 34.
97 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 58.
98 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 58; AT&T-Qualcomm Order, 26 FCC Rcd at 17603-05
¶¶ 32, 34.
99 See AT&T-Qualcomm Order, 26 FCC Rcd at 17604 ¶ 35.
100 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 57; AT&T-Qualcomm Order, 26 FCC Rcd at 17604 ¶
35.
101See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 57; AT&T-Qualcomm Order, 26 FCC Rcd at 17605 ¶
35.
102 See AT&T-Qualcomm Order, 26 FCC Rcd at 17603 ¶ 32 (finding that it was appropriate to analyze competitive
effects on both a national and local level).
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case-by-case analysis? Commenters should discuss any other issues with respect to geographic market
definition that might be relevant to adopting a bright-line limit, case-by-case analysis, or any other
approach that would promote competition and prevent excessive concentration of spectrum in any given
area.
4.

Applicable Spectrum Threshold

33.
As part of the current case-by-case review process, the Commission examines the amount
of spectrum suitable and available on a market-by-market basis for the provision of mobile
telephony/broadband service. The Commission uses a spectrum screen, which is approximately one-third
of the total spectrum suitable and available for mobile telephony/broadband services, to help identify
markets where the acquisition of spectrum provides particular reason for further competitive analysis.
The Commission conducts the further competitive analysis to determine whether the transaction would
result in an increased likelihood or ability in those markets for the combined entity to behave in an
anticompetitive manner.103
34.
The spectrum threshold can affect the number of competitors in a geographic market.
The one-third threshold currently used in our case-by-case review envisions at least three competitors
having access to approximately the same amount of suitable spectrum for providing mobile wireless
broadband service. Whether we use the threshold in a case-by-case review or as a bright-line limit, is
one-third the appropriate threshold level, or should the threshold be higher in rural areas? Given that the
licensed geographic areas of different spectrum bands, and even within the same band, may not be the
same, commenters should address any issue that may arise in calculating mobile spectrum holdings at the
local level. Finally, for transactions that involve a large geographic area with national characteristics, we
seek comment on how to calculate mobile spectrum holdings at the national level.104 For example, should
we use an approach similar to the one used in AT&T-Qualcomm, in which the Commission calculated
providers’ spectrum holdings on a “MHz*POPs” basis?105 Would it be better to use population-weighted
average megahertz, which the Commission reported in the Verizon Wireless-SpectrumCo Order,106 and/or
a nationwide-weighted average market share? Are there are other methods to compute spectrum holdings
at the national level?
5.

Making Distinctions Among Bands

35.
We also seek comment on whether we should adopt an approach to evaluating a
licensee’s mobile spectrum holdings that accounts for differing characteristics of spectrum bands. The
Commission has recognized that spectrum resources in different frequency bands can have disparate
technical characteristics that affect how the bands can be used to deliver mobile services.107 In particular,
the Commission has noted that the more favorable propagation characteristics of lower frequency
spectrum, i.e., spectrum below 1 GHz, allow for better coverage across larger geographic areas and inside


103 See Section III.A.1, supra.
104 See also the discussion regarding evaluating competitive effects at the national level in Section III.B.3, supra.
105 See AT&T-Qualcomm Order, 26 FCC Rcd at 17608 ¶ 45. The Commission noted that it calculated MHz*POPs
by multiplying the megahertz of spectrum held in an area by the population in that area. See id. n.128.
106 Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 77. Population-weighted average megahertz is calculated
by adding the provider’s MHz*POPs and dividing by the U.S. population. See Fifteenth Mobile Wireless
Competition Report
, 26 FCC Rcd at 9830 ¶ 288, 9831, Table 28.
107 See AT&T-Qualcomm Order, 26 FCC Rcd at 17609-11 ¶ 49. See also Fifteenth Mobile Wireless Competition
Report
, 26 FCC Rcd at 9832-37 ¶¶ 289-97. In its consideration of mobile wireless competition issues, the DOJ has
noted the differences between the use of lower and higher frequency bands. See, e.g., United States of America et
al. v. Verizon Communications Inc. and ALLTEL Corporation, Competitive Impact Statement, Case No. 08-cv-
1878, at 5-6 (filed Oct. 30, 2008), available at http://www.justice.gov/atr/cases/f238900/238947.pdf (last visited
Sept. 6, 2012).
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buildings,108 while higher frequency spectrum may be well-suited for providing capacity, such as in high-
traffic urban areas.109 Because the properties of lower and higher frequency spectrum are complementary,
the Commission has recognized that both types of spectrum may be helpful for the development of an
effective nationwide competitor that can address both coverage and capacity needs.110 The Commission
also has noted that there currently is significantly more spectrum above 1 GHz potentially available for
mobile broadband services than spectrum below 1 GHz.111 We seek comment on whether our policies
regarding mobile spectrum holdings should include separate consideration of spectrum in different
frequency bands, e.g., below or above 1 GHz. Would a separate spectrum threshold limit for spectrum
holdings below 1 GHz, as some countries have adopted, advance the goals of promoting wireless
competition, innovation, investments and broadband deployment in rural areas?112
36.
If the Commission were to adopt differential treatment for different spectrum bands, what
mechanism should we use to evaluate the aggregation of below 1 GHz spectrum? Should we add a
threshold limit for below 1 GHz spectrum as part of our current case-by-case review? For example, we
could establish a trigger under which an entity that would hold, post-transaction, more than one third of
the relevant spectrum below 1 GHz in a geographic market would be subject to a more detailed
competitive review in that market. Or, alternatively, we could establish bright-line limits for spectrum
holdings below 1 GHz. If so, what should those limits be? Should we consider adopting limits on the
amount of below 1 GHz spectrum that entities could acquire in the context of spectrum auctions? We
also could adopt a hybrid approach, for instance, in which we establish a bright-line limit for below 1
GHz spectrum and conduct a case-by-case analysis of total mobile spectrum holdings. Under such an
approach, no licensees could aggregate more than the specified percentage of spectrum below 1 GHz in
the market, but we would conduct a case-by-case review on total mobile spectrum holdings, with a
particular focus on markets where an applicant’s post-transaction spectrum holdings would exceed a
spectrum screen threshold. What are the costs and benefits of these various approaches? Is 1 GHz an
appropriate demarcation line for a separate competitive analysis and associated threshold? Consistent


108 See AT&T-Qualcomm Order, 26 FCC Rcd at 17609-11 ¶ 49. See also, e.g., Service Rules for the 698-746, 747-
762 and 777-792 MHz Band, WT Docket No. 06-150, Second Report and Order, 22 FCC Rcd 15289, 15349 ¶ 158,
15354-55 ¶ 176, 15400-401 ¶ 304 (2007); Unlicensed Operation in the TV Broadcast Bands, ET Docket No. 04-186,
Second Report and Order and Memorandum Opinion and Order, 23 FCC Rcd 16807, 16820-21 ¶ 32 (2008);
Unlicensed Operation in the TV Broadcast Bands, ET Docket No. 04-186, Second Memorandum Opinion and
Order
, 25 FCC Rcd 18661, 18662 ¶ 1 (2010).
109 See Fifteenth Mobile Wireless Competition Report, 26 FCC Rcd at 9832 ¶ 289, 9836 ¶ 296; see also AT&T-
Qualcomm Order
, 26 FCC Rcd at 17609-11 ¶ 49.
110 See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17609-11 ¶ 49, n.140; Fifteenth Mobile Wireless Competition
Report
, 26 FCC Rcd at 9837 ¶ 297.
111 See AT&T-Qualcomm Order, 26 FCC Rcd at 17611 ¶ 49; Fifteenth Mobile Wireless Competition Report, 26 FCC
Rcd at 9836 ¶ 296.
112 Some countries conducting or planning auctions of spectrum reclaimed as part of the transition from analog to
digital television have adopted various measures that recognize the differences between lower-frequency and higher-
frequency spectrum in the context of spectrum aggregation limits. See, e.g., Federal Network Agency, Decisions of
the President's Chamber of the Federal Network Agency for Electricity, Gas, Telecommunications, Post and
Railway of 12 October 2009 on Combining the Award of Spectrum in the Bands 790 to 862 MHz, 1710 to 1725
MHz and 1805 to 1820 MHz with Proceedings to Award Spectrum in the Bands 1.8 GHz, 2 GHz and 2.6 GHz for
Wireless Access for the Provision of Telecommunications Services, at 6 (2009), available at
http://www.bundesnetzagentur.de/cae/servlet/contentblob/138364/publicationFile/3682/DecisionPresidentChamberT
enor_ID17495pdf.pdf (adopting limits on sub-1GHz spectrum in Germany’s 4G auction) (last visited Sept. 6, 2012);
Office of Communications (Ofcom), Statement on Assessment of Future Mobile Competition and Award of 800
MHz and 2.6 GHz,
at Executive Summary, page 3, (2012), available at
http://stakeholders.ofcom.org.uk/binaries/consultations/award-800mhz/statement/Statement-summary.pdf (adopting
limits on sub-1 GHz spectrum in United Kingdom’s upcoming 4G auction) (last visited Sept. 6, 2012).
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with our intention regarding the applicability of any revised policies for overall spectrum holdings,113 we
would not anticipate revisiting licensees’ current spectrum holdings under any revised policy for below 1
GHz spectrum, but instead would grandfather those holdings.
37.
Are there other ways we should distinguish among spectrum bands, such as taking into
account the value of spectrum held by each licensee rather than the amount of spectrum held, as some
parties have proposed?114 For example, Sprint Nextel has proposed that an analysis of the book values of
spectrum holdings as reflected in providers’ SEC filings would be helpful in our analysis.115 To address
what it contends is a growing “spectrum gap” between the largest spectrum providers and other
competing providers, Public Knowledge suggested, among other things, that spectrum be weighted by its
suitability for mobile data use and, further, that spectrum held by providers with substantial existing
spectrum holdings or spectrum that has not yet been built out be weighted more heavily.116 Free Press
similarly argued that the Commission should use “inputs that determine value” and suggested that these
inputs should primarily be “wavelength, contiguous block size, block pairing, market density and
demographics, and interference issues.”117 T-Mobile has asked the Commission to recognize the
difference in value of spectrum above and below 1 GHz by assigning different value weights to each of
the spectrum bands.118 The value weights would be derived from analysts’ reports, which in turn are
based on prices paid at auction and publicly available information about spectrum transactions.119 T-
Mobile proposed the following specific value weights: cellular, 1.7; 700 MHz, 1.5; SMR, 1.5;
AWS/PCS, .75; and BRS, .2.120 AT&T argued that we should not adopt such an approach for several
reasons, including because the Commission already considers propagation and other physical
characteristics in determining whether to count spectrum in the case-by case analysis, the marketplace
already accounts for cost differences between different spectrum bands, and there are many factors other
than propagation characteristics that determine the relative value of spectrum.121 We seek comment on
these suggested approaches.
38.
If we were to assign value to spectrum for purposes of our policy on mobile spectrum
holdings, what variables should we consider? We recognize, for example, that license values tend to vary
with geographic location.122 Moreover, in recent auctions, licenses in densely populated markets
generally were sold at higher winning bids than those in less populated areas.123 The value of a license


113 See infra at ¶ 49.
114 See Free Press Reply To Opposition, WT Docket No. 12-4, at 23; Free Press Petition to Deny, WT Docket No.
12-4, at 12; Public Knowledge et al. Petition to Deny, WT Docket No. 12-4, at 47; RCA Petition to Condition or
Deny, WT Docket No. 12-4, at 52; T-Mobile Comments, WT Docket No. 11-186, at 6-7.
115 See Sprint Nextel Comments, WT Docket No. 12-4, at 18 n. 45.
116 See Letter from Harold Feld, Legal Director, Public Knowledge, to Marlene Dortch, Secretary, FCC, WT Docket
No. 12-4 (Apr. 30, 2012) at 3.
117 See Free Press Petition to Deny, WT Docket No. 12-4, at 16.
118 See T-Mobile Comments, WT Docket No. 11-186, at 6-8.
119 See T-Mobile Comments, WT Docket No. 11-186, at 7.
120 See T-Mobile Comments, WT Docket No. 11-186, at 7.
121 See AT&T Supplemental Reply Comments, WT Docket No. 11-186, at 6-13.
122 See Kimberly M. Randolph, Spectrum Licenses: Valuation Intricacies, available at
http://www.srr.com/article/spectrum-licenses-valuation-intricacies (last visited Sept. 6, 2012).
123 For example, in the 700 MHz band auction (Auction No. 73), the winning bid for the lower 700 MHz B-Block
license in New York City ($4.57 per MHz*POP, or $884 million) was much higher, both in dollars per MHz per
person and in total dollars, than the winning bid for the lower 700 MHz B Block license in Binghamton, NY ($.04
(continued….)
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can also depend on its location within the spectrum band.124 For instance, spectrum blocks at the edge of
a band can be less valuable due to the increased risk of interference to and from operations on
neighboring bands.125 Should we take these factors into account in assigning value to licenses? Should
we consider changes in the value of spectrum as technology evolves?126 As a practical matter, how
should we quantify differences in value? How would we use spectrum valuation in applying bright-line
limits, as opposed to a case-by-case analysis? What are the costs and benefits of attaching a value to
spectrum?
39.
We seek comment on other methods or considerations that might be relevant in reviewing
our policies regarding mobile spectrum holdings. In our current case-by-case approach, we consider
factors such as the number of rival service providers, firms’ network coverage, rival firms’ and the
licensee’s market shares, the applicant’s post-transaction spectrum holdings, and the spectrum holdings of
each of the rival service providers.127 Should we modify the factors we consider or include other
marketplace conditions that may affect competition? For example, in order to be considered a meaningful
competitor for purposes of a market-by-market analysis, should a licensee have a particular weighted
average market share or hold a particular amount of spectrum in the geographic market at issue? We also
seek comment on how we should take into account special circumstances, such as how efficiently the
licensee is using its existing spectrum resources and whether it has alternatives to meet its competitive
needs aside from acquiring more spectrum. Would imposing some level of spectral efficiency and/or a
spectrum utilization requirement, perhaps coupled with a higher level bright-line limit or a higher case-
by-case spectrum threshold, help prevent spectrum warehousing and encourage more efficient spectrum
use? Some parties have suggested that as part of a case-by-case analysis, the Commission should
calculate the spectrum HHI, or the increase in concentration of spectrum shares post-transaction.128 What
would be the benefits and costs of such measures?
(Continued from previous page)


per MHz*POP, or $186,000). See more information about the 700 MHz band auction, available at
http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=73 (last visited on Sept. 6, 2012).
124 See Kimberly M. Randolph, Spectrum Licenses: Valuation Intricacies, available at
http://www.srr.com/article/spectrum-licenses-valuation-intricacies (last visited Sept. 6, 2012).
125 For example, the average auction price for A-Block licenses was much lower than the average price for B-Block
licenses in the lower 700 MHz band. See Auction 73 results, available at
http://wireless.fcc.gov/auctions/default.htm?job=releases_auction&id=73&page=P (last visited Sept. 6, 2012). See
also
ITU Broadband Series, Exploring the Value and Economic Valuation of Spectrum, April 2012, page 1,
available at http://www.itu.int/ITU-D/treg/broadband/ITU-BB-Reports_SpectrumValue.pdf (last visited Sept. 6,
2012).
126 Spectrum values can be affected by technologies adopted by licensees. For example, spectrum aggregation
technologies might affect spectrum value. See Mohammed Alotaibi, and Marvin A. Sirbu, Spectrum Aggregation
Technology: Benefit-Cost Analysis and its Impact on Spectrum Value, at 12-13, 39th Research Conference on
Communication, Information, and Internet Policy, 2011, available at
http://papers.ssrn.com/so13/papers.cfm?abstract_id=1985738 (last visited Sept. 6, 2012). Similarly, for those
service providers that hold spectrum in high frequency bands, Wi-Fi off-load may mitigate the disadvantage of
inferior indoor coverage. See J.P. Morgan, The Economics of Wireless Data—Part 3, at 50, March 26, 2012,
available at https://mm.jpmorgan.com/stp/t/c.do?i=83100-F7&u=a_p*d_814984.pdf*h_-177n7l2 (last visited Sept.
6, 2012).
127 See, e.g., AT&T-Verizon Wireless Order, 25 FCC Rcd at 8732 ¶ 63; Verizon Wireless-ALLTEL Order, 23 FCC
Rcd at 17487-88 ¶ 91.
128 For example, U.S. Cellular has argued that the Commission should apply HHI measurements to “greenfield”
spectrum acquired at auction. See U.S. Cellular (USCC) Comments, RM No. 11498, at 8; USCC Reply Comments
(RM No. 11498) at 2; see also Letter from John Bergmayer, Senior Staff Attorney, Public Knowledge, to Marlene
Dortch, Secretary, FCC, WT Docket No. 12-4 (March 27, 2012) at 4; Sprint Nextel Comments, WT Docket No. 12-
4, at 19-20; Free Press Reply to Opposition, WT Docket No. 12-4, at 24.
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6.

Attribution Rules

40.
No matter which approach we decide to take, we need attribution rules to determine
which of a licensee’s spectrum interests counts toward that licensee’s total mobile spectrum holdings.
Under the spectrum cap, the Commission’s attribution rules were designed to protect competition in the
wireless services marketplace by making certain equity and non-equity interests attributable. Some non-
equity interests in spectrum, as well as equity interests in spectrum that are less than controlling, can
potentially confer the ability to significantly influence wireless service offerings and prices to one or a
few parties, and we seek to make these interests cognizable under our attribution rules.129
41.
Over time, while our policies regarding mobile spectrum holdings have changed, our
attribution rules consistently have focused on a licensee’s controlling interests, as well as non-controlling
and other interests above a certain percentage threshold or that result in de facto influence or control.
Today, when reviewing transactions on a case-by-case basis, the Commission generally considers all
equity ownership interests of ten percent or more to be attributable to those interest holders, but it has the
flexibility to examine equity and non-equity ownership and other interests that do not meet the ten percent
equity interest threshold, as the Commission deems those interests relevant.130 In the past, the
Commission had attribution rules for counting controlling and some non-controlling interests toward the
CMRS spectrum cap that were generally consistent with current practice.131 Under those rules, the
Commission attributed to a licensee’s total spectrum holdings both controlling interests and a number of
non-controlling interests, including in most cases equity interests of twenty percent or more.132 For
purposes of its cellular cross-interest rule described above, the Commission generally included as
attributable interests, in addition to any controlling interest, partnership and other ownership interests of
twenty percent or more.133
42.
In light of these past and present approaches, we seek comment on whether and how the
attribution rules that are used to implement our policies regarding mobile spectrum holdings should be
amended if we decide to continue our existing case-by-case review of transactions or in the event that we
alter our transaction review mechanism. Regardless of which approach we decide to take, what interests
should be attributable for purposes of reviewing mobile spectrum holdings? The attached draft rules
generally follow the attribution standards we currently apply,134 but we seek comment on whether we
should make any changes in those standards. For instance, we seek comment on what level of non-


129 See, e.g., Implementation of Sections 3(n) and 332, Regulatory Treatment of Mobile Services, GN Docket No.
93-252, Fourth Report and Order, 9 FCC Rcd 7123, 7124 ¶¶ 5-6 (1994).
130 See, e.g., Sprint Nextel Corporation and Clearwire Corporation Applications for Consent to Transfer Control of
Licenses, Leases, and Authorizations, WT Docket No. 08-94, Memorandum Opinion and Order, 23 FCC Rcd
17570, 17601-02 ¶ 78 (2008) (Sprint Nextel-Clearwire Order) (declining to attribute interests below ten percent).
See also AT&T-Centennial Order, 24 FCC Rcd at 13917 ¶ 7, 13946-47 ¶¶ 71-74.
131 See 47 C.F.R. § 20.6(d)(1)-(10). The relevant rules governing divestiture of interests are in subsection (e) of the
same rule. See 47 C.F.R. § 20.6(e). Section 20.6 ceased to be effective on January 1, 2003. See 47 C.F.R. § 20.6(f).
See also 47 C.F.R. § 1.2110 (attribution rules for competitive bidding purposes).
132 These non-controlling interests included partnership and other ownership interests; interests of investment
companies, insurance companies, and banks holding stock through their trust departments; non-voting stock
interests; debt interests and instruments such as warrants, convertible debentures, and options; limited partnership
interests; officers and directors; ownership interests held indirectly through an intervening corporation; managing
interests; and parties with joint marketing arrangements. See 47 C.F.R. § 20.6(d)(1)-(10). Section 20.6 ceased to be
effective on January 1, 2003. See 47 C.F.R. § 20.6(f). See also 47 C.F.R. § 1.2110 (attribution rules for competitive
bidding purposes).
133 See 47 C.F.R. § 22.942 (repealed 2004), available at http://www.gpo.gov/fdsys/pkg/CFR-2002-title47-
vol2/pdf/CFR-2002-title47-vol2-sec22-942.pdf (last visited Sept. 6, 2012).
134 See Appendix A: Proposed Rules.
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controlling interest should be attributable, and whether that level should be different whether we adopt a
case-by-case approach or a bright-line limit. We seek comment on the types of interests that should be of
primary importance when we review proposed transactions, and whether and how the importance of any
attributable interests may have changed over time. Should we define as attributable any interests that
have not been attributed in the past or exclude any non-controlling interests that have been attributed in
the past? If we make any changes to our spectrum holdings review process, how, if at all, should we
attribute leased mobile spectrum holdings? Finally, we note that the draft attribution rules include a
waiver provision. We seek comment on this provision.
7.

Remedies

43.
In considering applications for initial licenses and applications for the assignment or
transfer of control of licenses, including spectrum leasing, the Commission must determine whether the
applicants have demonstrated that the application will serve the public interest, convenience, and
necessity.135 The Commission reviews the competitive effects of a transaction under the broad public
interest standard,136 and may impose remedies, such as requiring divestitures of certain licenses, to
address potential harms likely to result from a transaction or to help ensure the realization of potential
benefits promised for the transaction.137
44.
We seek comment on what remedies, including divestitures, would be appropriate for the
Commission to require in order to prevent competitive harm. We seek comment on the value of
divestures as a remedy to redress particular competitive harms, and whether different approaches or types
of divestures would best serve the Commission’s goals, including providing clarity and certainty to
parties while promoting competition. If granting a license application or an assignment or transfer of
control of licenses to a licensee would result in competitive harm, should that licensee be required to
divest spectrum only in markets where it would exceed the spectrum aggregation threshold, or should it
be required to divest more broadly across its licensed markets, and under what, if any, conditions? We
note that there are a number of approaches to divestitures, including a clustered approach that would
require divestitures of population centers to allow a prospective purchaser to offer a viable service and to
minimize or prevent piecemeal divestiture.138 Other approaches could include full business unit
divestures, spectrum-only divestures, divestitures with a “right of first refusal” to a particular set of
licensees, particular limits on parties that have licenses divested to them (such as requiring divestiture to
rural or midsize carriers that may be in a position to offer roaming),139 or divestiture of spectrum by sale
on the secondary market. We seek comment on these or other approaches, including remedies that could
provide greater predictability to allow the industry to better make needed investment decisions. We also
seek comment on measures we can adopt to facilitate spectrum being divested expeditiously to licensees
that will put it to use quickly and efficiently.140 If we decide to permit divestiture of spectrum by sale on
the secondary market, what conditions, limits, or other rules should apply?
45.
Many licensees hold spectrum in multiple frequency bands with different propagation or


135 47 U.S.C. § 310(d).
136 See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17599-600 ¶ 25.
137 See, e.g., AT&T-Verizon Wireless Order, 25 FCC Rcd at 8718 ¶ 25; AT&T-Centennial Order, 24 FCC Rcd at
13929 ¶ 30; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17463 ¶ 29; Sprint Nextel-Clearwire Order, 23 FCC
Rcd at 17582 ¶ 22; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21546 ¶ 43.
138 See Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17517 ¶ 160.
139 See id.
140 Verizon Wireless-SpectrumCo Order, FCC 12-95, Statement of Commissioner Ajit Pai, approving in part and
concurring in part, at 1, available at http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0823/FCC-12-
95A6.pdf (last visited Sept. 6, 2012).
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other characteristics, and some spectrum holdings may be more valuable than others. Some parties have
proposed that the Commission should adopt different criteria for divestiture based on whether the
spectrum to be divested is from lower or upper frequency bands141 or is immediately “useable” by another
licensee, perhaps for a particular technology.142 We seek comment on these proposals and any other
factors we should consider when determining which and how much spectrum should be divested to
prevent competitive harms. We also seek comment on any other approach to spectrum divestiture that
would meet our goals of promoting competition yet make our policies regarding mobile spectrum
holdings more clear, transparent, and predictable.
46.
As an alternative or supplement to divestiture, we have also placed conditions on
transactions to remedy certain aspects that may be contrary to the public interest, convenience, and
necessity, including any potential anti-competitive effects of the transaction. For example, in the Verizon
Wireless-ALLTEL Order
, in addition to requiring divestiture, the Commission conditioned its approval on
Verizon Wireless’s commitments regarding roaming availability and rates, a phase down of competitive
ETC high cost support, and using counties for measuring compliance with the Commission’s E911
location accuracy rules governing handset-based technologies.143 In the AT&T-Qualcomm Order, as
another example, the Commission required AT&T to make roaming commitments and imposed additional
conditions designed to protect against interference with competitors using neighboring 700 MHz
spectrum.144 In the Verizon Wireless-SpectrumCo Order, the Commission required Verizon Wireless to
make roaming commitments and imposed accelerated buildout requirements on the AWS-1 spectrum
Verizon Wireless acquired.145 We seek comment on the extent to which we should remedy the potential
harms posed by a transaction by placing other conditions, such as, for example, requirements to offer
leasing, roaming or collocation, in conjunction with, or in lieu of, requiring divestitures. Would
application of such remedies be appropriate if we adopt bright-line limits? How can we provide clarity
and guidance on such remedies and the circumstances under which such remedies may be appropriate?
47.
We also seek comment on whether there are other remedial approaches we could require
and how we might apply them. Commenters should discuss and, to the extent possible, quantify any
associated costs or benefits of implementing any remedial approaches or any other proposals.
Commenters should address the particular benefits associated with these remedies, and the cost savings, if
any, that may be available from requiring certain conditioned spectrum access.
48.
With regard to spectrum acquired through competitive bidding, the Commission
prospectively applies a competitive analysis of spectrum to be acquired through auctions in order to
determine whether granting a winning bidder’s license application is in the public interest and whether
requiring divestiture prior to granting such application is necessary to protect the public interest.146 We
seek comment on what changes and clarifications might be needed in using divestiture as a remedy to
cure competitive harm resulting from spectrum acquired in an auction in the context of a case-by case
analysis. Are there any differences or additional considerations among remedies that are applicable to
spectrum acquired through auctions and those applicable to licenses acquired through secondary market
transactions? What else should we take into account when determining and applying remedies in the


141 See Letter from Carl W. Northrop, Counsel for MetroPCS, to Marlene Dortch, Secretary, FCC, WT Docket No.
12-4, (Apr. 26, 2012) at 3; see also RCA Reply to Opposition to Petition to Condition or Otherwise Deny
Transactions, WT Docket No. 12-4, at 35.
142 See, e.g., RCA Reply Comments, WT Docket No. 12-4, at 35; RCA Petition to Condition or Deny, WT Docket
No. 12-4, at 55.
143 See Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17546-47 ¶ 233.
144 See AT&T-Qualcomm Order, 26 FCC Rcd at 17613-14 ¶¶ 56-57, 17616-18 ¶¶ 61-68.
145 Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 121.
146 Verizon Wireless-Union Tel. Order, 23 FCC Rcd at 16791 ¶ 9.
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event we adopt bright-line limits that apply in an auction?
8.

Transition Issues

49.
If we were to change our current case-by-case approach or adopt new rules or policies,
we seek comment on transition issues to consider as new rules or policies are implemented. For example,
we would not anticipate revisiting licensees’ current spectrum holdings under any revised policy, but
instead we would anticipate grandfathering those holdings. We seek comment on that issue, as well as on
any other transition issues that may arise in implementing the new rules or policies.

IV.

PROCEDURAL MATTERS

A.

Initial Regulatory Flexibility Analysis

50.
As required by the Regulatory Flexibility Act of 1980 (RFA),147 the Commission has
prepared an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on
small entities of the policies and rules proposed in the NPRM. The analysis is found in Appendix B. We
request written public comment on the analysis. Comments must be filed by the same dates as listed on
the first page of this document and must have a separate and distinct heading designating them as
responses to the IRFA. The Commissions Consumer and Governmental Affairs Bureau, Reference
Information Center, will send a copy of this Notice, including the IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration.

B.

Paperwork Reduction Act Analysis

51.
This document does not contain proposed information collection(s) subject to the
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain
any new or modified information collection burden for small business concerns with fewer than 25
employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44
U.S.C. 3506(c)(4).

C.

Ex Parte Rules

52.
Permit-But-Disclose. The proceeding initiated by this Notice of Proposed Rulemaking
shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission’s ex parte
rules.148 Persons making ex parte presentations must file a copy of any written presentation or a
memorandum summarizing any oral presentation within two business days after the presentation (unless a
different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations
are reminded that memoranda summarizing the presentation must: (1) list all persons attending or
otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all
data presented and arguments made during the presentation. If the presentation consisted in whole or in
part of the presentation of data or arguments already reflected in the presenter’s written comments,
memoranda, or other filings in the proceeding, the presenter may provide citations to such data or
arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or
paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to
be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings
governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing,
written ex parte presentations and memoranda summarizing oral ex parte presentations, and all
attachments thereto, must be filed through the electronic comment filing system available for that
proceeding and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in
this proceeding should familiarize themselves with the Commission’s ex parte rules.


147 5 U.S.C. § 603.
148 47 C.F.R. § 1.1200 et seq.
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D.

Filing Requirements

53.
Pursuant to sections 1.415 and 1.419 of the Commission’s rules, 47 CFR §§ 1.415, 1.419,
interested parties may file comments and reply comments on or before the dates indicated on the first
page of this document. Comments may be filed using the Commission’s Electronic Comment Filing
System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
§
Electronic Filers: Comments may be filed electronically using the Internet by accessing the
ECFS: http://fjallfoss.fcc.gov/ecfs2/.
§
Paper Filers: Parties who choose to file by paper must file an original and one copy of each
filing. If more than one docket or rulemaking number appears in the caption of this proceeding,
filers must submit two additional copies for each additional docket or rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-
class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission’s
Secretary, Office of the Secretary, Federal Communications Commission.
§
All hand-delivered or messenger-delivered paper filings for the Commission’s Secretary
must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-A325,
Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries
must be held together with rubber bands or fasteners. Any envelopes and boxes must be
disposed of before entering the building.
§
Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority
Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
§
U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th
Street, SW, Washington DC 20554.
.
54.
Availability of Documents. Comments, reply comments, and ex parte submissions will
be available for public inspection during regular business hours in the FCC Reference Center, Federal
Communications Commission, 445 12th Street, S.W., CY-A257, Washington, D.C., 20554. These
documents will also be available via ECFS. Documents will be available electronically in ASCII,
Microsoft Word, and/or Adobe Acrobat.
55.
Accessibility Information. To request information in accessible formats (computer
diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the FCC’s
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This
document can also be downloaded in Word and Portable Document Format (PDF) at: http://www.fcc.gov.
56.
Additional Information. For additional information on this proceeding, contact Christina
Clearwater, Christina.Clearwater@fcc.gov, of the Wireless Telecommunications Bureau, Spectrum and
Competition Policy Division, (202) 418-1893 or Nicole McGinnis, Nicole.McGinnis@fcc.gov, of the
Wireless Telecommunications Bureau, Spectrum and Competition Policy Division, (202) 418-2877.

V.

ORDERING CLAUSES

57.
Accordingly, IT IS ORDERED, pursuant to Sections 1, 2, 4(i), 4(j), 301, 303(g), 303(r),
309(j) and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152, 154(i), 154(j),
301, 303(g), 303(r), 309(j) and 310(d), that this Notice of Proposed Rulemaking in WT Docket No. 12-
269 IS ADOPTED.
58.
IT IS FURTHER ORDERED that the Commission’s Consumer & Governmental Affairs
Bureau, Reference Information Center, SHALL SEND a copy of this Notice of Proposed Rulemaking,
including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
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Business Administration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
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APPENDIX A

Proposed Rules

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend
47 CFR part 20 as follows:

PART 20 – COMMERCIAL MOBILE SERVICES

1. The authority citation for Part 20 continues to read as follows:
Authority: 47 U.S.C. 154, 160, 201, 251-254, 301, 303, 316, and 332 unless otherwise noted.
Section 20.12 is also issued under 47 U.S.C. 1302.
2. Part 20 – COMMERCIAL MOBILE SERVICES is amended by adding section 20.21 to read as
follows:
§ 20.21 Rules Governing Mobile Spectrum Holdings
(a) This section applies to mobile spectrum holdings that are suitable and available for commercial use.
Applicants for mobile spectrum licenses for commercial use, for assignment or transfer of control of such
licenses, or for long-term de facto transfer leasing arrangements as defined in § 1.9003 of Subpart X of
Part 1 of these rules and long-term spectrum manager leasing arrangements as identified in §
1.9020(e)(1)(ii) must demonstrate that the public interest, convenience, and necessity will be served
thereby. The Commission will evaluate any such license application consistent with the standards set
forth in WT Docket No. 12-269.
(b) Divestiture of interests as required by the Commission, in conjunction with the grant of a license
application or a transfer of control or assignment of authorization, must occur expeditiously, and within
the time period specified by the Commission.
(c) Attribution of Interests. Ownership and other interests in mobile spectrum holdings for commercial
use will be attributable to their holders pursuant to the following criteria:
(1) Controlling interests shall be attributable. Controlling interest means majority voting equity
ownership, any general partnership interest, or any means of actual working control (including negative
control) over the operation of the licensee, in whatever manner exercised.
(2) Non-controlling interests of 10 percent or more in mobile spectrum holdings shall be attributable.
Non-controlling interests of less than 10 percent in mobile spectrum holdings shall be attributable if the
Commission determines that such interest confers de facto control, including but not limited to
partnership and other ownership interests and any stock interest in a licensee.
(3) The following interests in mobile spectrum shall also be attributable to holders:
(i) Officers and directors of a licensee shall be considered to have an attributable interest in the entity
with which they are so associated. The officers and directors of an entity that controls a licensee or
applicant shall be considered to have an attributable interest in the licensee.
(ii) Ownership interests that are held indirectly by any party through one or more intervening
corporations will be determined by successive multiplication of the ownership percentages for each link
in the vertical ownership chain and application of the relevant attribution benchmark to the resulting
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product, except that if the ownership percentage for an interest in any link in the chain exceeds 50 percent
or represents actual control, it shall be treated as if it were a 100 percent interest. (For example, if A owns
20% of B, and B owns 40% of licensee C, then A's interest in licensee C would be 8%. If A owns 20% of
B, and B owns 51% of licensee C, then A's interest in licensee C would be 20% because B's ownership of
C exceeds 50%.)
(iii) Any person who manages the operations of a licensee pursuant to a management agreement shall be
considered to have an attributable interest in such licensee if such person, or its affiliate, has authority to
make decisions or otherwise engage in practices or activities that determine, or significantly influence, the
nature or types of services offered by such licensee, the terms upon which such services are offered, or he
prices charged for such services.
(iv) Any licensee or its affiliate who enters into a joint marketing arrangement with another licensee or its
affiliate shall be considered to have an attributable interest in the other licensee’s holdings if it has
authority to make decisions or otherwise engage in practices or activities that determine or significantly
influence the nature or types of services offered by the other licensee, the terms upon which such services
are offered, or the prices charged for such services.
(v) Limited partnership interests shall be attributed to limited partners and shall be calculated according
to both the percentage of equity paid in and the percentage of distribution of profits and losses.
(vi) Debt and instruments such as warrants, convertible debentures, options, or other interests (except
non-voting stock) with rights of conversion to voting interests shall not be attributed unless and until
converted or unless the Commission determines that these interests confer de facto control.
(vii) Long-term de facto transfer leasing arrangements as defined in § 1.9003 of Subpart X of Part 1 of
these rules and long-term spectrum manager leasing arrangements as identified in § 1.9020(e)(1)(ii) that
enable commercial use shall be attributable to lessees, lessors, sublessees, and sublessors for purposes of
this section.
(4) Requests for waivers of paragraph (c) of this section, pursuant to § 1.925 of the Commission rules,
must contain the information necessary to make an affirmative showing to the Commission that:
(a) the interest holder is not likely to affect the relevant geographic market(s) in an anticompetitive
manner;
(b) the interest holder is not involved in the day-to-day operations of the licensee and does not have the
ability to influence the licensee on a regular basis; and
(c) grant of a waiver is in the public interest because the benefits to the public of common ownership
outweigh any potential harm to the market.
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APPENDIX B

Initial Regulatory Flexibility Analysis

1.
As required by the Regulatory Flexibility Act of 1980, as amended (RFA),149 the
Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact of the policies and rules proposed in the Notice of Proposed Rulemaking (NPRM) on a
substantial number of small entities. Written public comments are requested on the IRFA. Comments
must be identified as responses to the IRFA and must be filed by the deadline for comments on the
NPRM provided in the item. The Commission will send a copy of the NPRM, including this IRFA, to the
Chief Counsel for Advocacy of the Small Business Administration (SBA).150 In addition, the NPRM and
IRFA (or summaries thereof) will be published in the Federal Register.151
2.
Although Section 213 of the Consolidated Appropriations Act of 2000 provides that the
RFA shall not apply to the rules and competitive bidding procedures for frequencies in the 746-806 MHz
Band,152 we believe that it would serve the public interest to analyze the possible significant economic
impact of the proposed policy and rule changes in this band on a substantial number of small entities.
Accordingly, this IRFA contains an analysis of this impact in connection with all spectrum that falls
within the scope of the NPRM, including spectrum in the 746-806 MHz Band.

A.

Need for, and Objectives of, the Proposed Rules

3.
With this NPRM, the Commission initiates a review of its policies governing mobile
spectrum holdings in order to ensure that they fulfill our statutory objectives given changes in technology,
spectrum availability, and the marketplace since the Commission’s last comprehensive review.
Specifically, we seek comment on retaining or modifying the current case-by-case analysis used to
evaluate mobile spectrum holdings in the context of transactions and auctions, as well as on bright-line
limits advocated by some providers and public interest groups. In addition, we seek comment on
updating the spectrum bands that should be included in any evaluation of mobile spectrum holdings, and
whether we should make distinctions between different bands. We also take a fresh look at the relevant
product market, geographic market, and other implementation issues such as attribution rules, remedies,
and transition issues. We initiate this proceeding to provide rules of the road that are clear and
predictable, and that promote the competition needed to ensure a vibrant, world-leading, innovation-based
mobile economy.
4.
In our examination of the current case-by-case analysis used to evaluate mobile spectrum
holdings, we seek comment on the costs and benefits of a case-by-case analysis to consumers, wireless
service providers and others, as well as the overall effectiveness of such an approach in achieving our
public policy objectives. We also seek comment on the specific costs and benefits of applying a case-by-
case approach to initial licenses acquired through competitive bidding. In this regard, we seek comment
on whether a case-by-case analysis affords auction participants sufficient certainty to determine whether
they would be allowed to hold a given license post-auction and on whether the lack of a bright-line
spectrum limit deters participation or provides an opportunity for bidding, regardless of whether bidders


149 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. §§ 601 – 612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (“SBREFA”), Pub. L. No. 104-121, 110 Stat. 847 (1996).
150 See 5 U.S.C. § 603(a).
151 Id.
152 In particular, this exemption extends to the requirements imposed by Chapter 6 of Title 5, United States Code;
Section 3 of the Small Business Act (15 U.S.C. 632); and Sections 3507 and 3512 of Title 44, United States Code.
See Consolidated Appropriations Act 2000, Pub. L. No. 106-113, 113 Stat. 2502, app. E, § 213(a)(4)(A)-(B); see
also
145 Cong. Rec. H12493-94 (daily ed. Nov. 17, 1999); 47 U.S.C.A. 337 note at § 213(a)(4)(A)-(B).
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believe they ultimately would be allowed to hold the licenses, in order to raise bidding costs or foreclose
other competitors from acquiring certain licenses. Further, we request comment on whether there are
additional measures we would need to adopt to promote an effective and efficient auction process while
discouraging the potential for anticompetitive behavior, such as including band-specific limits adopted
prior to an auction.
5.
In addition, we seek comment on whether the adoption of bright-line limits would serve
the public interest now, and on the specific costs and benefits of adopting bright-line limits. We also seek
comment on related implementation issues with respect to applying bright-line limits to both initial
licenses acquired through competitive bidding as well as to licenses acquired through the secondary
market. We further request comment on whether we should consider applying a band-specific spectrum
limit in the context of any band-specific service rules that we adopt prior to an auction. Are there any
alternative approaches to evaluate the competitive effect of spectrum aggregation, such as adopting a
case-by-case analysis that does not include an initial spectrum screen? We seek comment on these
approaches and how they could be implemented, and on any other alternatives.
6.
If the Commission were to adopt any new or modified approach to reviewing mobile
spectrum holdings, certain threshold issues would need to be considered, including initial definitions of
the relevant product and geographic markets, deciding the relevant spectrum bands and their treatment, as
well as attribution rules and potential remedies. Toward that end, we seek comment on whether the
relevant product market has changed and, if so, whether these changes warrant any modifications to our
product market definition. We also seek comment on how we should determine what spectrum to include
in our overall evaluation. We request comment on any measures that might increase the transparency
with which we determine what spectrum we would include in a case-by-case spectrum analysis or in
implementing bright-line limits. We further seek comment on the costs and benefits of implementing a
new process for identifying the spectrum to include in a case-by-case spectrum analysis. Finally, what are
the legal, economic, and engineering justifications to support the existing or any modified criteria for
determining suitability and availability of spectrum?
7.
Aside from general factors we should consider in determining whether spectrum is
suitable and available, we also seek comment on the application of these factors to particular spectrum
bands. Specifically, we seek comment on which spectrum bands should be included, reduced, or removed
from consideration in our spectrum analysis and whether there are any band-specific factors the
Commission should consider in determining suitability and availability of a particular band.
8.
The Commission also seeks comment on the appropriate geographic market definition to
use when evaluating a licensee’s mobile spectrum holdings, including any other issues with respect to
geographic market definition that might be relevant to adopting a bright-line limit, case-by-case analysis,
or any other approach that would promote competition and prevent excessive concentration of spectrum
in any given area. Should we adopt a two-tiered approach under which there is a spectrum threshold at
the local level and a separate threshold that applies on a nationwide basis? In addition, we seek comment
on the appropriate spectrum threshold to be used in evaluating mobile spectrum holdings, including
whether the threshold should be higher in rural areas. For transactions that involve a large geographic
area with national characteristics, we also seek comment on how to calculate mobile spectrum holdings at
the national level.
9.
The Commission has recognized that spectrum resources in different frequency bands can
have disparate technical characteristics that affect how the bands can be used to deliver mobile services.
Therefore, we seek comment on whether the Commission should adopt an approach to evaluating a
licensee’s mobile spectrum holdings that accounts for differing characteristics of spectrum bands,
including whether the spectrum is below or above 1 GHz. If the Commission were to adopt differential
treatment for different spectrum bands, we seek comment on what mechanism we should use to evaluate
the aggregation of below 1 GHz spectrum and whether to apply different threshold limits – for example
one to spectrum below 1 GHz and another to spectrum above 1 GHz. We also seek comment on whether
to take into account the value of spectrum held by each licensee rather than the amount of spectrum held.
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If we were to assign value to spectrum, we seek comment on what variables we should consider when
doing so. Possible variables include geographic location and location within the spectrum band itself.
10.
Further, we seek comment on other methods or considerations that might be relevant in
reviewing our policies regarding mobile spectrum holdings. For instance, should we take into account
special circumstances, such as how efficiently the licensee is using its existing spectrum resources and
whether it has alternatives to meet its competitive needs aside from acquiring more spectrum? As part of
a case-by-case analysis, should we calculate the spectrum HHI, or the increase in concentration of
spectrum shares post-transaction?
11.
No matter which approach we decide to take, we need attribution rules to determine
which of a licensee’s spectrum interests counts toward that licensee’s total mobile spectrum holdings.
Whether or not we decide to alter our review mechanism for transactions and license applications, we
seek comment on whether and how the attribution rules that are used to implement our policies regarding
mobile spectrum holdings should be amended and on what interests should be attributable for purposes of
reviewing mobile spectrum holdings. We also seek comment on the types of interests that should be of
primary importance when we review proposed transactions, and whether and how the importance of any
attributable interests may have changed over time. Additionally, we seek comment on whether we should
define as attributable any interests that have not been attributed in the past or exclude any non-controlling
interests that have been attributed in the past. Further, if we make any changes to our spectrum holdings
review process, how, if at all, should we attribute leased mobile spectrum holdings.
12.
In considering applications for initial licenses and applications for the assignment or
transfer of control of licenses, including spectrum leasing, the Commission must determine whether the
applicants have demonstrated that the application will serve the public interest, convenience, and
necessity. The Commission reviews the competitive effects of a transaction under the broad public
interest standard, and may impose remedies, such as requiring divestitures of certain licenses, to address
potential harms likely to result from a transaction or to help ensure the realization of potential benefits
promised for the transaction. With this in mind, we seek comment on what remedies, including
divestitures, would be appropriate for the Commission to require in order to prevent competitive harm.
We also seek comment on the value of divestures as a remedy to redress particular competitive harms,
and whether different approaches or types of divestures including a clustered approach, full business unit
divestures, spectrum-only divestures, divestitures with a “right of first refusal” to a particular set of
licensees, particular limits on parties that have licenses divested to them (such as requiring divestiture to
rural or midsize carriers that may be in a position to offer roaming), or divestiture of spectrum by sale on
the secondary market, would best serve the Commission’s goals.
13.
We also seek comment on measures we can adopt to facilitate spectrum being divested
expeditiously to licensees that will put it to use quickly and efficiently, and what conditions, limits or
other rules should apply if we should decide to permit divestiture of spectrum by sale on the secondary
market. Toward that end, the Commission proposes rules governing mobile spectrum holdings. These
include proposed Section 20.21(b), which would require applicants subject to divestiture of interests as
required by the Commission, in conjunction with the grant of a license application or a transfer of control
or assignment of authorization, to divest expeditiously, and within the time period specified by the
Commission.153 The Commission also proposes rules governing the attribution of interests, including
controlling interests, non-controlling interests, and waivers.154 These proposed rules generally follow the
attribution standards we currently apply, but we seek comment on whether we should make any changes
in those standards, including the level of non-controlling interest that should be attributable, and whether
that level should be different whether we adopt a case-by-case approach or a bright-line limit.


153 See proposed 47 C.F.R. § 20.21(b), Appendix A, supra.
154 See proposed 47 C.F.R. § 20.21(c), Appendix A, supra.
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14.
In addition, many licensees hold spectrum in multiple frequency bands with different
propagation or other characteristics, and some spectrum holdings may be more valuable than others. We
seek comment on whether the Commission should adopt different criteria for divestiture based on whether
the spectrum to be divested is from lower or upper frequency bands or is immediately “useable” by
another licensee, perhaps for a particular technology, and any other factors we should consider when
determining which and how much spectrum should be divested to prevent competitive harm. We also
seek comment on any other approach to spectrum divestiture that would meet our goals of promoting
competition yet make our policies regarding mobile spectrum holdings more clear, transparent and
predictable.
15.
Further, as an alternative or supplement to divestiture, we have previously placed
conditions on transactions to remedy certain aspects that may be contrary to the public interest,
convenience, and necessity, including any potential anti-competitive effects of the transaction. We seek
comment on the extent to which we should remedy the potential harms posed by a transaction by placing
other conditions on it, including leasing, roaming, or collocation, in conjunction with or in lieu of
requiring divestitures. We also seek comment on whether there are other remedial approaches we could
require and how we might apply them. We further seek comment on what changes and clarifications
might be needed in using divestiture as a remedy to cure competitive harm resulting from spectrum
acquired in an auction in the context of a case-by case analysis.
16.
Finally, we seek comment on whether there are any transition issues to consider if new
rules or policies are implemented. We anticipate that grandfathering existing holdings in excess of any
spectrum limit we may adopt would serve the public interest. We seek comment on the grandfathering
issue, as well as on any other transition issues that may arise in implementing the new rules or policies.

B.

Legal Basis

17.
The sources of authority for the actions proposed in this NPRM are contained in Sections
1, 2, 4(i), 4(j), 301, 303(g), 303(r), 309(j) and 310(d) of the Communications Act of 1934, as amended, 47
U.S.C. §§ 151, 152, 154(i), 154(j), 301, 303(g), 303(r), 309(j) and 310(d).

C.

Description and Estimate of the Number of Small Entities to Which the Proposed
Rules Will Apply

18.
The RFA directs agencies to provide a description of, and where feasible, an estimate of
the number of small entities that may be affected by the proposed rules and policies, if adopted.155 The
RFA generally defines the term “small entity” as having the same meaning as the terms “small business,”
“small organization,” and “small governmental jurisdiction.”156 In addition, the term “small business” has
the same meaning as the term “small business concern” under the Small Business Act.157 A “small
business concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field
of operation; and (3) satisfies any additional criteria established by the SBA.158
19.
In the following paragraphs, the Commission further describes and estimates the number
and type of small entities that may be affected by our proposals regarding mobile spectrum holdings.
Implementing new policies regarding mobile spectrum holdings would affect entities that hold or lease


155 5 U.S.C. § 603(b)(3).
156 5 U.S.C. § 601(6).
157 5 U.S.C. § 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business
Act, 15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity
for public comment, establishes one or more definitions of such term which are appropriate to the activities of the
agency and publishes such definition(s) in the Federal Register.”
158 15 U.S.C. § 632.
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spectrum within spectrum bands that are available for mobile wireless service.
20.
This IRFA analyzes the number of small entities affected on a service-by-service basis.
When identifying small entities that could be affected by the Commission’s new rules, this IRFA provides
information that describes auction results, including the number of small entities that were winning
bidders. However, the number of winning bidders that qualify as small businesses at the close of an
auction does not necessarily reflect the total number of small entities currently in a particular service. The
Commission does not generally require that licensees later provide business size information, except in
the context of an assignment or a transfer of control application that involves unjust enrichment issues.
21.

Small Businesses, Small Organizations, and Small Governmental Jurisdictions.

Our
action may, over time, affect small entities that are not easily categorized at present. We therefore
describe here, at the outset, three comprehensive, statutory small entity size standards that encompass
entities that could be directly affected by the proposals under consideration.159 As of 2009, small
businesses represented 99.9% of the 27.5 million businesses in the United States, according to the SBA.160
Additionally, a “small organization” is generally “any not-for-profit enterprise which is independently
owned and operated and is not dominant in its field.”161 Nationwide, as of 2007, there were
approximately 1,621,315 small organizations.162 Finally, the term “small governmental jurisdiction” is
defined generally as “governments of cities, counties, towns, townships, villages, school districts, or
special districts, with a population of less than fifty thousand.”163 Census Bureau data for 2007 indicate
that there were 89,527 governmental jurisdictions in the United States.164 We estimate that, of this total,
as many as 88,761 entities may qualify as “small governmental jurisdictions.”165 Thus, we estimate that
most governmental jurisdictions are small.
22.

Cellular Licensees.

The SBA has developed a small business size standard for small
businesses in the category “Wireless Telecommunications Carriers (except satellite).”166 Under that SBA
category, a business is small if it has 1,500 or fewer employees.167 The census category of “Cellular and
Other Wireless Telecommunications” is no longer used and has been superseded by the larger category


159 See 5 U.S.C. § 601(3)–(6).
160 See SBA, Office of Advocacy, “Frequently Asked Questions,” available at
http://web.sba.gov/faqs/faqindex.cfm?areaID=24 (last visited Sept. 6, 2012).
161 5 U.S.C. § 601(4).
162 INDEPENDENT SECTOR, THE NEW NONPROFIT ALMANAC & DESK REFERENCE (2010).
163 5 U.S.C. § 601(5).
164 U.S. CENSUS BUREAU, STATISTICAL ABSTRACT OF THE UNITED STATES: 2011, Table 427 (2007)
available at www.census.gov/prod/2011pubs/11statab/stlocgov.pdf (last visited Sept. 18, 2012).
165 The 2007 U.S Census data for small governmental organizations are not presented based on the size of the
population in each such organization. There were 89,476 local governmental organizations in 2007. If we assume
that county, municipal, township, and school district organizations are more likely than larger governmental
organizations to have populations of 50,000 or less, the total of these organizations is 52,125. If we make the same
assumption about special districts and also assume that special districts are different from county, municipal,
township, and school districts, in 2007 there were 37,381 special districts. In 2011, there were a total of 715 cities
and towns (incorporated places and minor civil divisions) with populations over 50,000. CITY AND TOWNS
TOTALS: VINTAGE 2011 – U.S. Census Bureau, available at
http://www.census.gov/popest/data/cities/totals/2011/index.html. Of these 89,476 local government organizations,
if we subtract the 715 cities and towns that meet or exceed the 50,000 population threshold, we conclude that
approximately 88,761 are small. Id. at Tables 426, 427 (Data cited therein are from 2007).
166 13 C.F.R. § 121.201, NAICS code 517210.
167 Id.
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“Wireless Telecommunications Carriers (except satellite).” The Census Bureau defines this larger
category to include “establishments engaged in operating and maintaining switching and transmission
facilities to provide communications via the airwaves. Establishments in this industry have spectrum
licenses and provide services using that spectrum, such as cellular phone services, paging services,
wireless Internet access, and wireless video services.”168
23.
In this category, the SBA has deemed a wireless telecommunications carrier to be small if
it has fewer than 1,500 employees.169 For this category of carriers, Census data for 2007, which
supersede similar data from the 2002 Census, shows 1,383 firms in this category.170 Of these 1,383 firms,
only 15 (approximately 1%) had 1,000 or more employees.171 While there is no precise Census data on
the number of firms in the group with fewer than 1,500 employees, it is clear that at least the 1,368 firms
with fewer than 1,000 employees would be found in that group. Thus, at least 1,368 of these 1,383 firms
(approximately 99%) had fewer than 1,500 employees. Accordingly, the Commission estimates that at
least 1,368 (approximately 99%) had fewer than 1,500 employees and, thus, would be considered small
under the applicable SBA size standard.
24.

Wireless Telecommunications Carriers (except satellite).

This industry comprises
establishments engaged in operating and maintaining switching and transmission facilities to provide
communications via the airwaves. Establishments in this industry have spectrum licenses and provide
services using that spectrum, such as cellular phone services, paging services, wireless Internet access,
and wireless video services.172 The appropriate size standard under SBA rules is for the category
Wireless Telecommunications Carriers (except satellite). The size standard for that category is that a
business is small if it has 1,500 or fewer employees.173 For this category, census data for 2007 show that
there were 1,383 firms that operated for the entire year.174 Of this total, 1,368 firms had 999 or fewer
employees and 15 had 1000 employees or more.175 Thus, under this category and the associated small
business size standard, the Commission estimates that the majority of wireless telecommunications
carriers (except satellite) are small entities that may be affected by our proposed action.176
25.
2.3 GHz Wireless Communications Services. This service can be used for fixed,
mobile, radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small
business” for the wireless communications services (“WCS”) auction as an entity with average gross


168 U.S. Census Bureau, Industry Statistics Sampler, “Wireless Telecommunications Carriers (Except Satellite),”
2007 NAICS Definitions available at http://www.census.gov/econ/industry/def/d517210.htm (last visited Sept. 6,
2012).
169 13 C.F.R. § 121.201, NAICS Code 517210.
170 U.S. Census Bureau, American Fact Finder, 2007 Economic Census, Industry Series, Industry Statistics by
Employment Size, NAICS code 517210 (rel. Nov. 19, 2010), available at
http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml (last visited Sept. 6, 2012).
171 Id.
172 United States Census Bureau, North American Industry Classification System, available at
http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_51SSSZ2&prod
Type=table (last visited Sept. 6, 2012).
173 13 C.F.R. § 121.201, NAICS code 517210.
174 U.S. Census Bureau, Subject Series: Information, Table 5, “Establishment and Firm Size: Employment Size of
Firms for the United States: 2007 NAICS Code 517210” (issued Nov. 2010).
175 Id. Available census data do not provide a more precise estimate of the number of firms that have employment
of 1,500 or fewer employees; the largest category provided is for firms with “1000 employees or more.”
176 See United States Census Bureau, American Fact Finder, available at
http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml (last visited Sept. 6, 2012).
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revenues of $40 million for each of the three preceding years, and a “very small business” as an entity
with average gross revenues of $15 million for each of the three preceding years.177 The SBA approved
these definitions.178 The Commission conducted an auction of geographic area licenses in the WCS
service in 1997. In the auction, seven bidders that qualified as very small business entities won 31
licenses, and one bidder that qualified as a small business entity won a license.
26.
1670-1675 MHz Services. This service can be used for fixed and mobile uses, except
aeronautical mobile.179 An auction for one license in the 1670-1675 MHz band was conducted in 2003.
The Commission defined a “small business” as an entity with attributable average annual gross revenues
of not more than $40 million for the preceding three years, which would thus be eligible for a 15 percent
discount on its winning bid for the 1670-1675 MHz band license. 180 Further, the Commission defined a
“very small business” as an entity with attributable average annual gross revenues of not more than $15
million for the preceding three years, which would thus be eligible to receive a 25 percent discount on its
winning bid for the 1670-1675 MHz band license.181 The winning bidder was not a small entity.
27.
3650-3700 MHz Band Licensees. In March 2005, the Commission released an order
providing for the nationwide, non-exclusive licensing of terrestrial operations, utilizing contention-based
technologies, in the 3650 MHz band (i.e., 3650–3700 MHz).182 As of April 2010, more than 1270
licenses have been granted and more than 7433 sites have been registered. The Commission has not
developed a definition of small entities applicable to 3650–3700 MHz band nationwide, non-exclusive
licensees. However, we estimate that the majority of these licensees are Internet Access Service
Providers (ISPs) and that most of those licensees are small businesses.
28.

Wireless Telephony

. Wireless telephony includes cellular, personal communications
services, and specialized mobile radio telephony carriers. As noted, the SBA has developed a small
business size standard for Wireless Telecommunications Carriers (except Satellite).183 Under the SBA
small business size standard, a business is small if it has 1,500 or fewer employees.184 Census data for
2007 shows that there were 1,383 firms in the Wireless Telecommunications Carriers (except Satellite)
category that operated that year.185 Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms
had more than 100 employees.186 Thus under this category and the associated small business size
standard, the majority of firms can be considered small. According to Trends in Telephone Service data,
434 carriers reported that they were engaged in wireless telephony.187 Of these, an estimated 222 have


177 Amendment of the Commission’s Rules to Establish Part 27, the Wireless Communications Service (WCS), GN
Docket No. 96-228, Report and Order, 12 FCC Rcd 10785, 10879 ¶ 194 (1997).
178 See Letter from Aida Alvarez, Administrator, SBA, to Thomas Sugrue, Chief, Wireless Telecommunications
Bureau, FCC (Aug. 10, 1999) (Alvarez Letter 1999).
179 47 C.F.R. § 2.106; see generally 47 C.F.R. §§ 27.1–.70.
180 Service Rules for Advanced Wireless Services in the 1.7 GHz and 2.1GHz Bands, WT Docket No. 02-353,
Report and Order, 18 FCC Rcd 25162, 25220 ¶149 (2003).
181 Id.
182 The service is defined in section 90.1301 et seq. of the Commission’s Rules, 47 C.F.R. § 90.1301 et seq.
183 13 C.F.R. § 121.201, NAICS code 517210.
184 Id.
185 U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 NAICS code 517210 (rel. Oct. 20, 2009), available
at http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml (last visited Sept. 6, 2012).
186 Id.
187 See FCC, Trends in Telephone Service, Table 5.3 (2008).
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1,500 or fewer employees and 212 have more than 1,500 employees.188 Therefore, approximately half of
these entities can be considered small. Similarly, according to Commission data, 413 carriers reported
that they were engaged in the provision of wireless telephony, including cellular service, Personal
Communications Service (PCS), and Specialized Mobile Radio (SMR) Telephony services.189 Of these,
an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees.190
Consequently, the Commission estimates that approximately half or more of these firms can be
considered small. Thus, using available data, we estimate that the majority of wireless firms can be
considered small.
29.

Broadband Personal Communications Service

. The broadband personal
communications services (PCS) spectrum is divided into six frequency blocks designated A through F,
and the Commission has held auctions for each block. The Commission initially defined a “small
business” for C- and F-Block licenses as an entity that has average gross revenues of $40 million or less
in the three previous years.191 For F-Block licenses, an additional small business size standard for “very
small business” was added and is defined as an entity that, together with its affiliates, has average gross
revenues of not more than $15 million for the preceding three years.192 These small business size
standards, in the context of broadband PCS auctions, have been approved by the SBA.193 No small
businesses within the SBA-approved small business size standards bid successfully for licenses in Blocks
A and B. There were 90 winning bidders that claimed small business status in the first two C-Block
auctions. A total of 93 bidders that claimed small and very small business status won approximately 40
percent of the 1,479 licenses in the first auction for the D, E, and F Blocks.194 On April 15, 1999, the
Commission completed the re-auction of 347 C-, D-, E-, and F-Block licenses in Auction No. 22.195 Of
the 57 winning bidders in that auction, 48 claimed small business status and won 277 licenses.
30.
On January 26, 2001, the Commission completed the auction of 422 C and F Block
Broadband PCS licenses in Auction No. 35. Of the 35 winning bidders in that auction, 29 claimed small
business status.196 Subsequent events concerning Auction 35, including judicial and agency
determinations, resulted in a total of 163 C and F Block licenses being available for grant. On February
15, 2005, the Commission completed an auction of 242 C-, D-, E-, and F-Block licenses in Auction No.
58. Of the 24 winning bidders in that auction, 16 claimed small business status and won 156 licenses.197


188 See id.
189 See FCC, Trends in Telephone Service, Table 5.3 (2008).
190 See id.
191 See Amendment of Parts 20 and 24 of the Commission’s Rules – Broadband PCS Competitive Bidding and the
Commercial Mobile Radio Service Spectrum Cap, WT Docket No. 96-59, GN Docket No. 90-314, Report and
Order
, 11 FCC Rcd 7824, 7850–52 ¶¶ 57–60 (1996) (PCS Report and Order); see also 47 C.F.R. § 24.720(b).
192 See PCS Report and Order, 11 FCC Rcd at 7852 ¶ 60.
193 See Alvarez Letter 1999.
194 See D, E and F Block Auction Closes, Public Notice, DA 97-81 (rel. Jan. 15, 1997).
195 See C, D, E, and F Block Broadband PCS Auction Closes, Winning Bidders of 302 Licenses Announced, Public
Notice
, 14 FCC Rcd 6688 (WTB 1999). Before Auction No. 22, the Commission established a very small standard
for the C Block to match the standard used for F Block. Amendment of the Commission’s Rules Regarding
Installment Payment Financing for Personal Communications Services (PCS) Licensees, WT Docket No. 97-82,
Fourth Report and Order, 13 FCC Rcd 15743, 15768 ¶ 46 (1998).
196 See C and F Block Broadband PCS Auction Closes, Winning Bidders Announced, Public Notice, 16 FCC Rcd
2339 (2001).
197 See Broadband PCS Spectrum Auction Closes, Winning Bidders Announced for Auction No. 58, Public Notice,
20 FCC Rcd 3703 (2005).
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On May 21, 2007, the Commission completed an auction of 33 licenses in the A, C, and F Blocks in
Auction No. 71.198 Of the 14 winning bidders in that auction, six claimed small business status and won
18 licenses.199 On August 20, 2008, the Commission completed the auction of 20 C-, D-, E-, and F-Block
Broadband PCS licenses in Auction No. 78.200 Of the eight winning bidders for Broadband PCS licenses
in that auction, six claimed small business status and won 14 licenses.201
31.

AWS Services (1710–1755 MHz and 2110–2155 MHz bands (AWS-1); 1915–1920

MHz, 1995–2000 MHz, 2020–2025 MHz and 2175–2180 MHz bands (AWS-2); 2155–2175 MHz
band (AWS-3)).

For the AWS-1 bands, the Commission has defined a “small business” as an entity with
average annual gross revenues for the preceding three years not exceeding $40 million, and a “very small
business” as an entity with average annual gross revenues for the preceding three years not exceeding $15
million.202 In 2006, the Commission conducted its first auction of AWS-1 licenses.203 In that initial
AWS-1 auction, 31 winning bidders identified themselves as very small businesses.204 Twenty-six of the
winning bidders identified themselves as small businesses.205 In a subsequent 2008 auction, the
Commission offered 35 AWS-1 licenses.206 Four winning bidders identified themselves as very small
businesses, and three of the winning bidders identified themselves as a small business.207 For AWS-2 and
AWS-3, although we do not know for certain which entities are likely to apply for these frequencies, we
note that the AWS-1 bands are comparable to those used for cellular service and personal
communications service. The Commission has not yet adopted size standards for the AWS-2 or AWS-3
bands but has proposed to treat both AWS-2 and AWS-3 similarly to broadband PCS service and AWS-1
service due to the comparable capital requirements and other factors, such as issues involved in relocating
incumbents and developing markets, technologies, and services.208


198 See Auction of Broadband PCS Spectrum Licenses Closes, Winning Bidders Announced for Auction No. 71,
Public Notice
, 22 FCC Rcd 9247 (2007).
199 Id.
200 See Auction of AWS-1 and Broadband PCS Licenses Closes, Winning Bidders Announced for Auction 78,
Public Notice, 23 FCC Rcd 12749 (WTB 2008).
201 Id.
202 See Service Rules for Advanced Wireless Services in the 1.7 GHz and 2.1 GHz Bands, WT Docket No. 02-353,
Report and Order, 18 FCC Rcd 25162, App. B (2003), modified by Service Rules for Advanced Wireless Services
In the 1.7 GHz and 2.1 GHz Bands, WT Docket No. 02-353, Order on Reconsideration, 20 FCC Rcd 14058, App. C
(2005).
203 See Auction of Advanced Wireless Services Licenses Scheduled for June 29, 2006, Notice and Filing
Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures for Auction No. 66, AU Docket
No. 06-30, Public Notice, 21 FCC Rcd 4562 (2006) (Auction 66 Procedures Public Notice).
204 See Auction of Advanced Wireless Services Licenses Closes, Winning Bidders Announced for Auction No. 66,
Public Notice, 21 FCC Rcd 10521 (2006) (Auction 66 Closing Public Notice).
205 See id.
206 See Auction of AWS-1 and Broadband PCS Licenses Rescheduled for August 13, 2008, Public Notice, 23 FCC
Rcd 7496, 7498 (2008). Auction 78 also included an auction of broadband PCS licenses.
207 See Auction of AWS-1 and Broadband PCS Licenses Closes, Winning Bidders Announced for Auction 78,
Down, Public Notice, 23 FCC Rcd 12749 (2008).
208 Service Rules for Advanced Wireless Services in the 1915–1920 MHz, 1995–2000 MHz, 2020–2025 MHz and
2175–2180 MHz Bands et al., Notice of Proposed Rulemaking, 19 FCC Rcd 19263, App. B (2005); Service Rules
for Advanced Wireless Services in the 2155–2175 MHz Band, Notice of Proposed Rulemaking, 22 FCC Rcd 17035,
App. (2007); Service Rules for Advanced Wireless Services in the 2155-2175 MHz Band, Further Notice of
Proposed Rulemaking
, 23 FCC Rcd 9859, App. B (2008).
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32.

Lower 700 MHz Band Licenses

. The Commission previously adopted criteria for
defining three groups of small businesses for purposes of determining their eligibility for special
provisions such as bidding credits.209 The Commission defined a “small business” as an entity that,
together with its affiliates and controlling principals, has average gross revenues not exceeding $40
million for the preceding three years.210 A “very small business” is defined as an entity that, together with
its affiliates and controlling principals, has average gross revenues that are not more than $15 million for
the preceding three years.211 Additionally, the Lower 700 MHz Service had a third category of small
business status for Metropolitan/Rural Service Area (“MSA/RSA”) licenses —“entrepreneur”— which is
defined as an entity that, together with its affiliates and controlling principals, has average gross revenues
that are not more than $3 million for the preceding three years.212 The SBA approved these small size
standards.213 An auction of 740 licenses was conducted in 2002 (one license in each of the 734
MSAs/RSAs and one license in each of the six Economic Area Groupings (EAGs)). Of the 740 licenses
available for auction, 484 licenses were won by 102 winning bidders. Seventy-two of the winning
bidders claimed small business, very small business, or entrepreneur status and won a total of 329
licenses.214 A second auction commenced on May 28, 2003, closed on June 13, 2003, and included 256
licenses.215 Seventeen winning bidders claimed small or very small business status and won 60 licenses,
and nine winning bidders claimed entrepreneur status and won 154 licenses.216 In 2005, the Commission
completed an auction of 5 licenses in the lower 700 MHz band (Auction 60). All three winning bidders
claimed small business status.
33.
In 2007, the Commission reexamined its rules governing the 700 MHz band in the 700
MHz Second Report and Order.217 An auction of A, B and E block licenses in the Lower 700 MHz band
was held in 2008.218 Twenty winning bidders claimed small business status (those with attributable
average annual gross revenues that exceed $15 million and do not exceed $40 million for the preceding
three years).219 Thirty three winning bidders claimed very small business status (those with attributable
average annual gross revenues that do not exceed $15 million for the preceding three years).220 In 2011,
the Commission conducted Auction 92, which offered 16 lower 700 MHz band licenses that had been
made available in Auction 73 but either remained unsold or were licenses on which a winning bidder


209 See Reallocation and Service Rules for the 698-746 MHz Spectrum Band (Television Channels 52-59), GN
Docket No. 01-74, Report and Order, 17 FCC Rcd 1022, 1087-88 ¶ 172-73 (2002) (Channels 52-59 Report and
Order
).
210 See id., 17 FCC Rcd at 1087-88 ¶ 172.
211 See id.
212 See id., 17 FCC Rcd at 1088 ¶ 173.
213 See Alvarez Letter 1999.
214 See Lower 700 MHz Band Auction Closes, Winning Bidders Announced, Public Notice, 17 FCC Rcd 17272
(WTB 2002).
215 See Lower 700 MHz Band Auction Closes, Winning Bidders Announced, Public Notice, 18 FCC Rcd 11873
(WTB 2003).
216 See id.
217 Service Rules for the 698-746, 747-762 and 777-792 MHz Band, WT Docket No. 06-150, Second Report and
Order
, 22 FCC Rcd 15289 (2007) (700 MHz Second Report and Order).
218 See Auction of 700 MHz Band Licenses Closes, Public Notice, 23 FCC Rcd 4572 (WTB 2008).
219 See Auctions Summary, Auction 73, 700 MHz Band, available at
http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=73 (last visited Sept. 6, 2012).
220 Id.
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defaulted.221 Two of the seven winning bidders in Auction 92 claimed very small business status,
winning a total of four licenses.222
34.

Upper 700 MHz Band Licenses

. In the 700 MHz Second Report and Order, the
Commission revised its rules regarding Upper 700 MHz licenses.223 On January 24, 2008, the
Commission commenced Auction 73 in which several licenses in the Upper 700 MHz band were
available for licensing: 12 Regional Economic Area Grouping licenses in the C Block, and one
nationwide license in the D Block.224 The auction concluded on March 18, 2008, with 3 winning bidders
claiming very small business status (those with attributable average annual gross revenues that do not
exceed $15 million for the preceding three years) and winning five licenses.
35.
700 MHz Guard Band Licenses. In 2000, the Commission adopted the 700 MHz Guard
Band Report and Order, in which it established rules for the A and B block licenses in the Upper 700
MHz band, including size standards for “small businesses” and “very small businesses” for purposes of
determining their eligibility for special provisions such as bidding credits.225 A small business in this
service is an entity that, together with its affiliates and controlling principals, has average gross revenues
not exceeding $40 million for the preceding three years.226 Additionally, a very small business is an
entity that, together with its affiliates and controlling principals, has average gross revenues that are not
more than $15 million for the preceding three years.227 SBA approval of these definitions is not
required.228 An auction of these licenses was conducted in 2000.229 Of the 104 licenses auctioned, 96
licenses were won by nine bidders. Five of these bidders were small businesses that won a total of 26
licenses. A second auction of 700 MHz Guard Band licenses was held in 2001. All eight of the licenses
auctioned were sold to three bidders. One of these bidders was a small business that won a total of two
licenses.230
36.

Specialized Mobile Radio

. The Commission adopted small business size standards for
the purpose of determining eligibility for bidding credits in auctions of Specialized Mobile Radio (SMR)
geographic area licenses in the 800 MHz and 900 MHz bands. The Commission defined a “small
business” as an entity that, together with its affiliates and controlling principals, has average gross
revenues not exceeding $15 million for the preceding three years.231 The Commission defined a “very
small business” as an entity that, together with its affiliates and controlling principals, has average gross


221 See Auctions Summary, Auction 92, 700 MHz Band, available at
http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=92 (last visited Sept. 6, 2012).
222 Id.
223 See 700 MHz Second Report and Order, 22 FCC Rcd 15289.
224 See Auction of 700 MHz Band Licenses Closes, Public Notice, 23 FCC Rcd 4572, 4573 (WTB 2008).
225 See Service Rules for the 746-764 MHz Bands, and Revisions to Part 27 of the Commission’s Rules, Second
Report and Order
, 15 FCC Rcd 5299 (2000) (700 MHz Guard Band Report and Order).
226 See id., 15 FCC Rcd at 5343 ¶¶ 106-08.
227 See id.
228 See id., 15 FCC Rcd at 5344 ¶ 108 n.246 (“For the 746-764 MHz and 776-794 MHz bands, the Commission is
exempt from 15 U.S.C. § 632, which requires Federal agencies to obtain SBA approval before adopting small
business size standards”).
229 See 700 MHz Guard Bands Auction Closes, Winning Bidders Announced, Public Notice, 15 FCC Rcd 18026
(2000).
230 See 700 MHz Guard Bands Auction Closes, Winning Bidders Announced, Public Notice, 16 FCC Rcd 4590
(WTB 2001).
231 47 C.F.R. §§ 90.810, 90.814(b), 90.912.
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revenues not exceeding $3 million for the preceding three years.232 The SBA has approved these small
business size standards for both the 800 MHz and 900 MHz SMR Service.233 The first 900 MHz SMR
auction was completed in 1996. Sixty bidders claiming that they qualified as small businesses under the
$15 million size standard won 263 licenses in the 900 MHz SMR band. In 2004, the Commission held a
second auction of 900 MHz SMR licenses and three winning bidders identifying themselves as very small
businesses won 7 licenses.234 The auction of 800 MHz SMR licenses for the upper 200 channels was
conducted in 1997. Ten bidders claiming that they qualified as small or very small businesses under the
$15 million size standard won 38 licenses for the upper 200 channels.235 A second auction of 800 MHz
SMR licenses was conducted in 2002 and included 23 BEA licenses. One bidder claiming small business
status won five licenses.236
37.
The auction of the 1,053 800 MHz SMR licenses for the General Category channels was
conducted in 2000. Eleven bidders who won 108 licenses for the General Category channels in the 800
MHz SMR band qualified as small or very small businesses.237 In an auction completed in 2000, a total
of 2,800 Economic Area licenses in the lower 80 channels of the 800 MHz SMR service were awarded.238
Of the 22 winning bidders, 19 claimed small or very small business status and won 129 licenses. Thus,
combining all four auctions, 41 winning bidders for geographic licenses in the 800 MHz SMR band
claimed to be small businesses.
38.
In addition, there are numerous incumbent site-by-site SMR licensees and licensees with
extended implementation authorizations in the 800 and 900 MHz bands. We do not know how many
firms provide 800 MHz or 900 MHz geographic area SMR pursuant to extended implementation
authorizations, nor how many of these providers have annual revenues not exceeding $15 million. One
firm has over $15 million in revenues. In addition, we do not know how many of these firms have 1500
or fewer employees.239 We assume, for purposes of this analysis, that all of the remaining existing
extended implementation authorizations are held by small entities, as that small business size standard is
approved by the SBA.
39.
1.4 GHz Band Licensees. The Commission conducted an auction of 64 1.4 GHz band
licenses in the paired 1392-1395 MHz and 1432-1435 MHz bands, and in the unpaired 1390-1392 MHz
band in 2007.240 For these licenses, the Commission defined “small business” as an entity that, together
with its affiliates and controlling interests, had average gross revenues not exceeding $40 million for the
preceding three years, and a “very small business” as an entity that, together with its affiliates and


232 Id.
233 See Alvarez Letter 1999.
234 See 900 MHz Specialized Mobile Radio Service Spectrum Auction Closes, Winning Bidders Announced, Public
Notice
, 19 FCC Rcd. 3921 (WTB 2004).
235 See Correction to Public Notice DA 96-586 FCC Announces Winning Bidders in the Auction of 1020 Licenses to
Provide 900 MHz SMR in Major Trading Areas, Public Notice, 18 FCC Rcd 18367 (WTB 1996).
236 See Multi-Radio Service Auction Closes, Winning Bidders Announced, Public Notice, 17 FCC Rcd 1446 (WTB
2002).
237 See 800 MHz Specialized Mobile Radio (SMR) Service General Category (851-854 MHz) and Upper Band (861-
865 MHz) Auction Closes; Winning Bidders Announced, Public Notice, 15 FCC Rcd 17162 (2000).
238 See 800 MHz SMR Service Lower 80 Channels Auction Closes, Winning Bidders Announced, Public Notice, 16
FCC Rcd 1736 (2000).
239 See generally 13 C.F.R. § 121.201, NAICS code 517210.
240 See Auction of 1.4 GHz Band Licenses Scheduled for February 7, 2007, Public Notice, 21 FCC Rcd 12393
(WTB 2006); Auction of 1.4 GHz Band Licenses Closes, Winning Bidders Announced for Auction No. 69, Public
Notice
, 22 FCC Rcd 4714 (2007) (Auction No. 69 Closing PN).
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controlling interests, has had average annual gross revenues not exceeding $15 million for the preceding
three years.241 Neither of the two winning bidders claimed small business status.242
40.

Broadband Radio Service and Educational Broadband Service

. Broadband Radio
Service systems, previously referred to as Multipoint Distribution Service (“MDS”) and Multichannel
Multipoint Distribution Service (“MMDS”) systems, and “wireless cable,” transmit video programming
to subscribers and provide two-way high speed data operations using the microwave frequencies of the
Broadband Radio Service (“BRS”) and Educational Broadband Service (“EBS”) (previously referred to as
the Instructional Television Fixed Service (“ITFS”).243 In connection with the 1996 BRS auction, the
Commission established a small business size standard as an entity that had annual average gross
revenues of no more than $40 million in the previous three years.244 The BRS auctions resulted in 67
successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (“BTAs”). Of the 67
auction winners, 61 met the definition of a small business. BRS also includes licensees of stations
authorized prior to the auction. At this time, we estimate that of the 61 small business BRS auction
winners, 48 remain small business licensees. In addition to the 48 small businesses that hold BTA
authorizations, there are approximately 392 incumbent BRS licensees that are considered small entities.245
After adding the number of small business auction licensees to the number of incumbent licensees not
already counted, we find that there are currently approximately 440 BRS licensees that are defined as
small businesses under either the SBA or the Commission’s rules. In 2009, the Commission conducted
Auction 86, which resulted in the licensing of 78 authorizations in the BRS areas.246 The Commission
offered three levels of bidding credits: (i) a bidder with attributed average annual gross revenues that
exceed $15 million and do not exceed $40 million for the preceding three years (small business) will
receive a 15 percent discount on its winning bid; (ii) a bidder with attributed average annual gross
revenues that exceed $3 million and do not exceed $15 million for the preceding three years (very small
business) will receive a 25 percent discount on its winning bid; and (iii) a bidder with attributed average
annual gross revenues that do not exceed $3 million for the preceding three years (entrepreneur) will
receive a 35 percent discount on its winning bid.247 Auction 86 concluded in 2009 with the sale of 61
licenses.248 Of the ten winning bidders, two bidders that claimed small business status won 4 licenses;
one bidder that claimed very small business status won three licenses; and two bidders that claimed
entrepreneur status won six licenses.
41.
In addition, the SBA’s Cable Television Distribution Services small business size
standard is applicable to EBS. There are presently 2,032 EBS licensees. All but 100 of these licenses are


241 Auction No. 69 Closing PN, Attachment C.
242 See Auction No. 69 Closing PN.
243 Amendment of Parts 21 and 74 of the Commission’s Rules with Regard to Filing Procedures in the Multipoint
Distribution Service and in the Instructional Television Fixed Service, MM Docket No. 94-131, Report and Order,
10 FCC Rcd 9589, 9593 ¶ 7 (1995).
244 Id. at 9670-9673, ¶¶ 190-92.
245 47 U.S.C. § 309(j). Hundreds of stations were licensed to incumbent MDS licensees prior to implementation of
Section 309(j) of the Communications Act of 1934, 47 U.S.C. § 309(j). For these pre-auction licenses, the
applicable standard is SBA’s small business size standard of 1500 or fewer employees.
246 Auction of Broadband Radio Service (BRS) Licenses, Scheduled for October 27, 2009, Notice and Filing
Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 86, Public Notice, 24
FCC Rcd 8277 (2009).
247 Id. at 8296 ¶ 73.
248 Auction of Broadband Radio Service Licenses Closes, Winning Bidders Announced for Auction 86, Public
Notice
, 24 FCC Rcd 13572 (2009).
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held by educational institutions. Educational institutions are included in this analysis as small entities.249
Thus, we estimate that at least 1,932 licensees are small businesses. Since 2007, Cable Television
Distribution Services have been defined within the broad economic census category of Wired
Telecommunications Carriers; that category is defined as follows: “This industry comprises
establishments primarily engaged in operating and/or providing access to transmission facilities and
infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using
wired telecommunications networks. Transmission facilities may be based on a single technology or a
combination of technologies.”250 For these services, the Commission uses the SBA small business size
standard for the category “Wireless Telecommunications Carriers (except satellite),” which is 1,500 or
fewer employees.251 To gauge small business prevalence for these cable services we must, however, use
the most current census data. According to Census Bureau data for 2007, there were a total of 955 firms
in this previous category that operated for the entire year.252 Of this total, 939 firms employed 999 or
fewer employees, and 16 firms employed 1,000 employees or more.253 Thus, the majority of these firms
can be considered small.

D.

Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements for Small Entities

42.
The NPRM initiates a review of the FCC’s policies and rules governing mobile spectrum
holdings. The FCC seeks comment on whether it should retain or modify its current rules. To the extent
the Commission retains its current policies, this proceeding will not result in any additional reporting,
recordkeeping, or other compliance burdens. If the FCC modifies its rules, those changes could alter the
compliance requirements (and burdens) that apply to small entities. Those burdens, which may be offset by
efficiencies associated with any modified rules, could include professional skills necessary to monitor and
abide by the new rules, burdens associated with the ability to retain or acquire additional spectrum, and costs
associated with changes in market competition.

E.

Steps Taken to Minimize Significant Economic Impact on Small Entities and
Significant Alternatives Considered

43.
The RFA requires an agency to describe any significant alternatives that it has considered
in developing its approach, which may include the following four alternatives (among others): (1) the
establishment of differing compliance or reporting requirements or timetables that take into account the
resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use of performance, rather than design,
standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.254
44.
In light of the surge in consumer demand for mobile broadband services that require
greater bandwidth, spectrum is becoming increasingly critical for all providers. With that in mind, the
Commission initiates a review of policies governing mobile spectrum holdings. This proceeding provides
the opportunity to obtain valuable input from a broad range of active participants in the mobile broadband


249 The term “small entity” within SBREFA applies to small organizations (nonprofits) and to small governmental
jurisdictions (cities, counties, towns, townships, villages, school districts, and special districts with populations of
less than 50,000). 5 U.S.C. §§ 601(4)–(6). We do not collect annual revenue data on EBS licensees.
250 U.S. Census Bureau, 2007 NAICS Definitions, 517110 Wired Telecommunications Carriers, (partial definition),
www.census.gov/naics/2007/def/ND517110.HTM#N517110.
251 13 C.F.R. § 121.201, NAICS code 517210.
252 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms
for the United States: 2007, NAICS code 5171102 (issued November 2010).
253 Id.
254 See 5 U.S.C. § 603(c).
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industry, trade associations, and consumer groups that have requested that our policies be revised to keep
pace with market changes. We seek comment on whether and how to revise our policies and rules
regarding mobile spectrum holdings. In particular, we seek alternatives that address how to ensure that
our policies and rules afford all interested parties greater certainty, transparency and predictability to
make investment and transactional decisions, while reducing the regulatory burdens on small entities.
45.
First, we seek comment on retaining or modifying the current case-by-case analysis used
to evaluate mobile spectrum holdings in the context of transactions and auctions, as well as on bright-line
limit proposals advocated by some providers and public interest groups. We seek comment on the costs
and benefits of a case-by-case analysis to consumers, wireless service providers and others, as well as the
overall effectiveness of such an approach in achieving our public policy objectives. The Commission
requests alternatives that would reduce the burdens on small entities while making the process more
transparent, predictable, or better tailored to promote our goals.
46.
We also seek comment on whether adoption of bright-line limits would now serve the
public interest, and if so on its potential application, and on the specific costs and benefits of adopting
bright-line limits. The Commission seeks possible alternatives that would best balance the goal of
providing greater certainty, clarity, and predictability with regard to auction participation and secondary
market transactions while maximizing the Commission’s flexibility to consider individualized
circumstances and respond swiftly to the changing needs of the mobile wireless industry and consumers,
all while reducing the burden on small entities. Further, we seek comment on any alternative approaches
regarding the competitive effect of spectrum aggregation, how alternative approaches could be
implemented, and on any other alternatives that would further reduce burdens on small businesses.
47.
The Commission also seeks comment on whether the current approach to the product and
geographic market definitions continues to be appropriate when evaluating a licensee’s mobile spectrum
holdings. We seek alternate proposals that might increase the transparency with which we determine
what spectrum we would include in a case-by-case spectrum analysis or in implementing bright-line
limits, as well as any other approach that would promote competition and prevent excessive concentration
of spectrum in any given area. Such alternative proposals should address the issue of reducing burdens on
small business.
48.
In addition, we seek comment on updating the spectrum bands that should be considered
in any evaluation of mobile spectrum holdings and whether to make distinctions between bands. The
Commission requests alternatives that would reduce the burdens on small entities while advancing the
goals of promoting wireless competition, innovation, investments and broadband deployment in rural
areas.
49.
The Commission also seeks comment on whether and how the attribution rules that are
used to implement our policies regarding mobile spectrum holdings should be amended if we decide to
continue our existing case-by-case review of transactions and in the event that we alter our transaction
review mechanism. Further, we seek comment on our proposed rules regarding attribution standards,
which include a waiver provision, and more generally on the types of interests that should be of primary
importance when we review proposed wireless transactions, and whether and how the importance of any
attributable interests may have changed over time. The Commission seeks to receive alternate proposals
regarding potential changes to the attribution rules in general, and more specifically how any proposed
changes could limit the burdens on small entities.
50.
The Commission also seeks comment on what remedies, including divestitures, would be
appropriate to prevent competitive harm, and how we might apply them. We seek comment on the value
and types of divestitures that would be effective remedies to redress particular competitive harms, our
proposed divestiture rule, and any other alternative approaches that could provide greater predictability to
allow the industry to better make needed investment decisions, while easing the burden on small entities.
Commenters should discuss and quantify any associated costs or benefits of implementing any remedial
approaches or any other proposals that would best serve the Commission’s goals of providing clarity and
certainty to parties while promoting competition and further reducing the burden on small business.
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51.
Finally, if we were to change our current case-by case approach or adopt new rules or
polices, the Commission seeks comment on whether there are any transition issues to consider as new
rules or policies are implemented, such as considering grandfathering spectrum held before the effective
date of any new rule or policy. The Commission seeks alternate proposals that would best achieve the
goal of reducing the burdens on small business while making our policies regarding mobile spectrum
holdings more clear, transparent and predictable.
52.
For each of the proposals in the Notice, we seek discussion, and where relevant,
alternative proposals, on the effect that each prospective new requirement, or alternative rules, might have
on small entities. For each proposed rule or alternative, we seek discussion about the burden that the
prospective regulation would impose on small entities and how the Commission could impose such
regulations while minimizing the burdens on small entities. For each proposed rule, we ask whether there
are any alternatives the Commission could implement that could achieve the Commission’s goals while at
the same time minimizing the burdens on small entities. For the duration of this docketed proceeding, we
will continue to examine alternatives with the objectives of eliminating unnecessary regulations and
minimizing any significant economic impact on small entities.

F.

Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rules

53.
None.
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STATEMENT OF

CHAIRMAN JULIUS GENACHOWSKI

Re:
Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269
As recently as July 2007, there was no iPhone, no Android phones, no tablets, no app stores.
Back then only 9 million Americans, or about 4% of the mobile market, had smartphones. Today, the
majority of mobile subscribers have smartphones, and those phones generate 35 times more traffic than
old feature phones. For tablets, it’s 121 times more traffic.
This past decade has also seen significant changes in the amount and nature of spectrum used for
mobile broadband.
While we have seen major changes in all aspects of the mobile marketplace, the FCC hasn’t
reviewed its policies for mobile spectrum holdings in more than a decade. And stakeholders from
throughout the mobile ecosystem have increasingly been saying it’s time to take a fresh look, and that we
can increase certainty and predictability for the marketplace.
Today we launch a rulemaking to review the FCC’s mobile spectrum holding policies and make
changes as appropriate, in order to enable a healthy and competitive wireless marketplace with clear and
predictable rules of the road.
Getting these policies right is key to facilitating efficiency-enhancing secondary market
transactions and promoting vibrant competition, both of which are necessary to drive the massive mobile
investment and innovation we need to grow our economy.
It’s another part of our multi-pronged strategy to ensure that the U.S. maintains and extends the
global leadership in mobile services and innovation that we’ve regained over the last few years.
This proceeding will consider a wide range of viewpoints – we’re open to all ideas and are not
prejudging the outcome.
Launching this proceeding does not reflect a change in our views. As I’ve said before, efficiency-
improving spectrum transactions can certainly be consistent with a competitive market. Nothing in this
Notice changes that. Over the past three years, we’ve approved hundreds of transactions involving more
than 1,000 licenses, while also significantly reducing the review time for major transactions.
We’ve also shown that we recognize when transactions require conditions or spectrum
divestitures to preserve competition. Competition is the lifeblood of our free market economy.
Indifference to competition is not good for innovation, investment or economic growth. And when we
concluded that a proposed transaction simply didn’t serve the public interest, we said so.
There’s been one suggestion that, instead of the rulemaking notice we issue today, we begin with
a Notice of Inquiry. This would needlessly add red tape, slow-roll the review, and delay possible
improvements to current policies
This is an important Notice of Proposed Rulemaking. It is timely, appropriate, and necessary. It
will contribute to our goal of increasing certainty and predictability. It will contribute to our goal of U.S.
leadership in mobile.
Thank you to the Wireless Bureau for your thoughtful work on this item.
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STATEMENT OF

COMMISSIONER ROBERT M. McDOWELL

APPROVING IN PART, CONCURRING IN PART

Re:
Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269
Although we may sometimes disagree on substance, I commend Chairman Genachowski on his
longstanding ability to maintain an open and constructive dialogue. As always, I take him at his word
when he explains that his intent for this notice is to create more certainty for the wireless sector. That is a
goal we both share, although we may prefer different paths to get there. In short, today we agree on
process, but respectfully disagree on much of the substance.
Even though I have some reservations, I am taking a small step down this path to examine the
Commission’s approach to analyzing spectrum holdings. I agree that the Commission -- and all
government agencies for that matter -- have an obligation to review regulations from time to time.
Moreover, I respect the views of the service providers and civil society groups that have asked us to do
this. I also recognize that many wireless carriers expressly asked the Commission to undertake a
rulemaking on this issue.

Nonetheless, despite being able to find some common ground, I cannot agree with the view that
the Commission’s current flexible approach, which examines spectrum holdings on a case-by-case basis
transparently and within the unique context of each auction or proposed transaction, is broken at its
foundation. Further, I question whether these proposals are compatible with the Commission’s oft-stated
goal of making spectrum more abundant in the mobile marketplace.
Spectrum, which ultimately ends up in the hands of our nation’s wireless broadband consumers,
is the path to all of the new innovations that boost broadband adoption. Also, I wonder about the
uncertainty we may be creating by merely releasing this notice, contrary to the intent of the notice’s more
enthusiastic proponents. We must always remember that when government just “keeps a watchful eye”
on markets, our scrutiny has an effect on commerce. Indeed, going further with a one-size-fits-all cap, as
suggested in this notice, will likely have unintended negative consequences later.

By way of brief background, in 2001, the Commission adopted the current process after
determining that spectrum aggregation limits were no longer necessary due to meaningful competition
among providers of telecommunications services. Since that time, the Commission has analyzed
commercial wireless spectrum holdings on a case-by-case basis, oftentimes in close consultation with the
Department of Justice. The current approach was created to result in narrowly-tailored, transaction-
specific spectrum remedies that safeguard against anticompetitive behavior, encourage increased
investment, and spur the creation of innovative consumer offerings.
Our unfettered wireless market is the envy of the world. The growth of the mobile industry over
the past decade has been staggering. Just listen to some statistics from the Commission’s most recent
Wireless Competition Report: Since 2001, average minutes of use per subscriber per month increased
from 385 minutes255 to about 700 today.256 More important, given today’s emphasis on broadband, is the
growth in mobile data usage. In 2001, analysts estimated that there were between eight to ten million


255 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and
Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, Seventh Report, 17 FCC
Rcd 12985, 13006 (2002) (Seventh Report).
256 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and
Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, Fifteenth Report, 26 FCC
Rcd 9664, 9783 ¶ 191 (2011) (Fifteenth Report).
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mobile Internet users.257 By 2009, 55.8 million users accessed the Internet through mobile devices and
with more powerful technologies.258 Additionally, even with such great innovation in the mobile
industry, consumers are paying less for their service.259 Finally, the number of subscribers has increased
from 128.4 million to 285.6 million through 2009 since the Commission sunset the spectrum cap in
2001.260

Despite this positive and constructive progress, a proposal to cap spectrum holdings is discussed
at length not only in this notice, but also in the companion notice on incentive auctions that we adopt
today. I am concerned that reviving this concept could create unnecessary and harmful market
uncertainty. Until now, spectrum caps were a dead and buried 20th Century industrial policy relic. I am
further concerned that significant language in the Commission’s most recent Wireless Competition and
Section 706 reports, coupled with recent important comments doubting the benefits of usage-based
pricing, or what I call “pricing freedom,” are creating a mosaic of evidence that increasingly points to
greater regulation of the wireless industry. For these reasons, I encourage interested parties to comment
on the potential for negative market effects should the Commission inch down the road toward spectrum
caps or other new mandates.
Our light touch regulatory policy for mobile technologies, which includes the case-by-case
analytical structure for spectrum, has enabled our wireless sector to flourish and continue to lead the
world. I am hopeful that the Commission will not put all of this positive and constructive progress at risk
as we explore the myriad options outlined in this notice. As none of us can predict the next disruptive
technology, or where its spectrum home will be, I caution against inadvertently preventing further
innovation and stifling future uses of spectrum based on what’s-cool-at-the-moment. For instance, these
trends include: labeling certain spectrum as “prime” (i.e., that located below 1 GHz); classifying other
bands as “junk;” or prejudging the “value” of spectrum bands that have yet to be auctioned. History
shows us that today’s “junk” is often tomorrow’s “prime.”
I take heart in knowing that we are at the beginning of what will surely be a lengthy and
complicated process. Hard decisions have yet to be made. With that in mind, I humbly urge my
colleagues to keep in mind just how robust our unfettered wireless market is when contemplating its
regulatory future. I am hopeful that, rather than imposing artificial limits, we will instead work together
to bring additional spectrum to market through auctions for exclusive use licenses to further promote
competition and to foster continued innovation and progress in the wireless arena.
For these reasons, I vote to approve in part (on the process) and concur in part (on the substance).
As always, I acknowledge and thank Ruth Milkman and her team in the Wireless Telecommunications
Bureau for your work on this notice.


257 Seventh Report, 17 FCC Rcd at 12989 (noting the usage of users on a legacy cellular system).
258 Fifteenth Report, 26 FCC Rcd at 9871 ¶ 366.
259 Id. at 9782.
260 Id. at 9760.
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STATEMENT OF

COMMISSIONER MIGNON L. CLYBURN

Re:
Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269
There is no question that it is time for the Commission to update its policies on measuring how
spectrum aggregation impacts competition in the wireless industry. Our last comprehensive review of
these policies occurred in 2003, and since then, we have seen a number of developments in mobile
wireless services. The two most significant are the dramatic increase in demand for wireless services
especially mobile broadband, and the reduction in the number of carriers, providing competitive mobile
service options for consumers. It is also worth noting that, in the spectrum provisions of the Act passed
earlier this year, Congress reaffirmed the Commission’s authority to, and I quote: “adopt rules of general
applicability, including rules concerning spectrum aggregation that promote competition.”
Under Chairman Genachowski’s leadership, the Commission staff has been working diligently to
improve our understanding about how all relevant aspects of the wireless market impact competitive
options for consumers. We have substantially improved our analysis of the market structure in the annual
mobile wireless reports. We have also adopted a number of important rules or proposed policies in the
areas of universal service reform, tower siting, data roaming, spectrum sharing, wireless backhaul, and of
course, the allocation of more spectrum, for commercial mobile services, to ensure the Commission is
doing what it can to promote rapid deployment of more wireless broadband networks.
To ensure the mobile wireless ecosystem continues to offer consumers the highest quality
services at affordable prices, we must also review our spectrum aggregation policies to facilitate access,
by all providers, to valuable spectrum resources. Therefore, the NPRM properly identifies several
relevant factors, the Commission should consider, in properly reviewing and revising these policies. I
particularly appreciate the analysis and discussion about how the Commission should evaluate different
technical characteristics of the spectrum bands allocated for commercial wireless service. This is relevant
to whether spectrum below 1 GHz should be valued as highly as spectrum above 1 GHz. It is also
important in determining which currently allocated bands should be included in any spectrum screen we
may use in the future. As we learned from the lack of interoperability in the lower 700 MHz band, just
because the Commission auctions a spectrum band, does not necessarily mean it becomes immediately
available and suitable to offer services to the public.

It is important that we review these policies, in a timely fashion, and take into account any
considerations that could also help us design our voluntary incentive auctions. I thank Ruth Milkman,
Jim Schlichting, Nese Guendelsberger, and Maria Kirby for their detailed briefing. I also wish to
commend Christina Clearwater, and Monica DeLong, along with the other staff members who worked
hard to produce an excellent item.
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STATEMENT OF

COMMISSIONER JESSICA ROSENWORCEL

Re:
Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269
It has been nearly a decade since the Commission put in place its current approach to spectrum
holdings. Ten years ago the agency eliminated the spectrum cap in favor of a case-by-case analysis of
how much spectrum any one entity can hold. A decade is a lifetime in the world of wireless—and
perhaps even several generations. The mobile transformation that has taken place over this time has been
built on a foundation of access to spectrum. But as the wireless revolution reaches new heights, the
demand for airwaves has escalated, and the call to revisit our policies regarding spectrum holdings has
grown louder.
Today the Commission answers this call. Section 309(j) of the Communications Act directs the
agency to promote economic opportunity and competition in the wireless industry. That means rules that
encourage a competitive marketplace, with opportunities for incumbents as well as new entrants. Our
policies should foster an environment that will allow businesses to innovate and grow.
At the same time, we must keep a steady eye on the larger context in which this spectrum
holdings review is taking place. We are in the middle of an unprecedented push to identify new spectrum
for wireless broadband services. As part of this effort, Congress has entrusted the Commission to conduct
incentive auctions and use the proceeds from these auctions to support a nationwide, wireless broadband
network for first responders. It is imperative that we not lose sight of this goal.
Thank you to the Wireless Telecommunications Bureau for its work on this rulemaking. I look
forward to the record that develops.
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CONCURRING STATEMENT OF

COMMISSIONER AJIT PAI

Re:
Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269
I share the concerns of my colleagues and many stakeholders that today’s process for evaluating
carriers’ spectrum holdings is flawed. In my view, our framework has failed to keep pace with the
evolving marketplace and is simply unpredictable.
On the first point: Our spectrum screen currently fails to account for all spectrum suitable for
mobile broadband. This includes spectrum in the Broadband Radio Service (BRS) and Educational
Broadband Service (EBS) that companies like Clearwire are using today to provide 4G service across
America. And our approach to spectrum attribution assumes that one company gains de facto control of
another even if it holds no more than 10% equity. Together, these factors ensure that our current process
for evaluating spectrum holdings consistently understates competition in the marketplace.
On the second point: Our approach to evaluating carriers’ spectrum holdings creates needless
regulatory uncertainty. As carriers plan their investments to meet consumer demand, they need to know
the rules of the road, namely, which purchases will trigger the spectrum screen and which won’t.
Unfortunately, that is not the case today. Instead, we only consider whether to adjust the screen on an ad
hoc, transaction-by-transaction basis.
Although there is substantial room for improvement when it comes to the spectrum screen, there
is little consensus when it comes to identifying particular problems, let alone specific solutions. Some
think that the screen includes too little spectrum; others, too much. Some favor the imposition of a hard
cap; others support a more flexible case-by-case approach. Some want to weigh different spectrum bands
differently; others believe taking that step would be counterproductive. I could go on, but you get the
point.
It is for this reason that I find it odd that outside of the attribution issue, today’s Notice of
Proposed Rulemaking contains no notice of proposed rules. In fact, the word “propose” does not appear
in the document. Nor do we reach any tentative conclusions. We simply ask a lot of questions about
where things stand, which is typically what we would do in a Notice of Inquiry. While I of course
support soliciting comment as we begin this journey, I think the better approach here would have been to
ask for input on where we intend to go. The public is better served if attention can be focused on
proposed rules, and the FCC’s ultimate decisions are better informed by direct, as opposed to general,
public engagement.
But since this remains a Notice of Proposed Rulemaking and since we may well adopt rules for
mobile spectrum holdings around the same time that we adopt rules for the broadcast incentive auction, I
want to highlight the linkage between these two proceedings. It is critical that the incentive auction be a
success, and that, in turn, requires vigorous participation and competition for spectrum in the forward
auction. I am thus skeptical of any steps that would depress participation in the auction, such as
tightening the spectrum screen, adopting a hard cap on spectrum holdings, or imposing requirements that
would enable the Commission to second-guess how wireless operators run their networks and thus reduce
the value of spectrum.261
I am particularly concerned about two consequences that would likely result. First, constricting
the spectrum screen will be bad for public safety. By law, the net revenues of a successful incentive
auction must be deposited into the Public Safety Trust Fund. In other words, the more money we raise
through that auction, the more money that will become available for the First Responder Network
Authority, or FirstNet. And given the high costs of rural deployment, raising substantial funds is


261 See, e.g., Notice of Proposed Rulemaking at ¶¶ 20–21, 39, 46.
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especially critical if states like Kansas and West Virginia are going to become a part of the nationwide
public safety broadband network. On the other hand, artificially depressing demand in the auction will
lower net revenues and thus reduce the amount of money received by public safety.
Second, narrowing the spectrum screen will aggravate the spectrum crunch. Unlike in normal
auctions, there is a direct relationship in an incentive auction between aggregate auction demand and the
amount of spectrum that will be made available for mobile broadband: The more demand for spectrum in
the auction, the more spectrum that will be sold. On the other hand, a stricter spectrum screen will lower
overall auction demand, and thus less spectrum will be made available for mobile broadband.
In conclusion, we have the opportunity to make some real improvements in our spectrum screen.
I look forward to reviewing the record that will be developed in the coming months and working through
the issues with my colleagues. And I hope that we will make the right decisions. Considering the stakes
associated with the incentive auction, we should, at a minimum, do no harm.
50

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