Why does the Commission provide bidding credits to auction licensees who pledge to provide wireless services to qualifying tribal lands?

When the tribal lands bidding credit program, was implemented in the fall of 2000, the 1990 Census estimated that only 46.6% of all American Indian households on American Indian Reservations and Federal Off-Reservation Trust Lands had telephone service. While the 2000 Census estimates that number to have increased to 67.9%, over half of the tribes continue to have telephone penetration rates below the national average. The Commission fully supports and continues to improve its tribal lands bidding credit program to encourage carriers to provide access to affordable, quality service to American Indians living on American Indian Reservations and Federal Off-Reservation Trust Lands.

What is a bidding credit?

A bidding credit is a discount applied to the gross bid amount for a license when the high bidder meets specific designated criteria. The credit amount is determined by a formula. In this case, the formula is based on a combination of the number of square kilometers of tribal lands being served within the license area and the gross bid amount.

In addition to the formula used to calculate the tribal lands bidding credit, there is a maximum limit (cap) on the credit amount a bidder may receive. This cap is based on the gross bid amount of the license for which the bidding credit is being sought.

How do I qualify for a tribal lands bidding credit?

A tribal lands bidding credit is available to any winning bidder (for auctions held on or after October 2, 2000) when it commits to deploying facilities and providing wireless services to qualifying tribal lands. In this instance, qualifying tribal lands are defined as federally-recognized tribal areas that are either unserved by any telecommunications carrier or that have a telephone service penetration rate penetration rate of 85% or less. The tribal lands bidding credit is in addition to any other bidding credit for which the applicant qualifies, such as the small business bidding credit.

What is the process for obtaining a tribal lands bidding credit?

There are three steps in obtaining a tribal lands bidding credit. First, the winning bidder must indicate on its long-form application, FCC Form 601, that it intends to provide service to qualifying tribal lands.

Second, within 180 calendar days after the filing deadline for long-form applications, the application must be amended to attach a certification from the tribal government(s) being served. There are three specific areas the tribal government(s) must certify. See What information must be included in the tribal government certification? Finally, by the conclusion of the 180-day period, the applicant must amend its long-form application to certify that it will comply with tribal lands bidding credit buildout requirements and that it will consult with the tribal government(s) regarding the siting of facilities and deployment of service on the tribal lands. Once the certifications from the applicant and the tribal government(s) being served are received at and reviewed by the Commission, the bidding credit may be awarded.

What is the tribal lands bidding credit performance requirement?

A licensee receiving a tribal lands bidding credit for providing services to tribal lands has three years from the grant date for constructing and operating its system to cover at least 75 percent of the tribal population within its market.

At the end of this three-year period, the licensee is required to file a notification of construction (FCC Form 601, Schedule K) certifying it has met the 75 percent buildout requirement on the tribal lands for which the credit was awarded. The notification of construction must include an attachment stating affirmatively that the licensee is providing coverage to 75% of the population of the tribal area. The licensee must also provide the total population of the tribal area covered by its license as well as the number of persons it is servicing in the tribal area.

What is the penalty for not meeting the construction performance requirement?

Licensees that fail to make an adequate showing that the 75% benchmark has been met, will be required to repay the bidding credit, plus interest, within thirty (30) days after the conclusion of the construction period. Failure to repay the credit amount will result in automatic termination of the license.

Who assumes responsibility for the construction performance requirement when a license is assigned?

When a license is assigned to another entity, the construction/repayment obligation associated with the credit is transferred with the license. While the assignee is not required to seek re-certification from the tribal government, the assignee bears the risk of the tribal government not allowing them to deploy facilities. Accordingly, potential assignees are advised to perform due diligence.

Who assumes responsibility for the construction/repayment obligation when the transfer of a license is being geographically partitioned?

The tribal area to be partitioned must be wholly contained within either the assignor’s or assignee’s proposed license area. The tribal area can not be split. The construction/repayment obligation for the bidding credit attaches to the licensee of the partitioned area encompassing the tribal area for which the credit was originally awarded.

Who assumes responsibility for the construction/repayment obligation when the transfer of a license involves spectrum disaggregation?

If the partial license transfer involves spectrum disaggregation, but not partitioning, the construction/repayment obligation will be presumed to remain with the original licensee. Spectrum covering the tribal land must be disaggregated in its entirety; it can’t be disaggregated to only a portion of the tribal area.

What additional measures is the Commission taking to increase wireless services in tribal lands?

In its Third Report and Order, the Commission enhanced its tribal lands bidding credit program by raising the wireline telephone penetration rate, from 70% or less to 85% or less, increasing the number of tribal lands eligible for the program. The Commission also increased the amount of the bidding credit available to carriers that commit to provide service to qualifying tribal lands.

For more information on the above, refer to the Commission's Third Report and Order adopted August 18, 2004.

Tuesday, March 2, 2010