FCC Releases FNPRM on Enhanced Competition Incentive Program

On November 18, 2021, the FCC released a Further Notice of Proposed Rulemaking (“FNPRM”), which was adopted at its November Open Meeting, that seeks comment on an Enhanced Competition Incentive Program (“ECIP”) to encourage licensees to partition, disaggregate, or lease spectrum to small carriers, Tribal Nations, and entities in rural areas.

In accordance with the MOBILE NOW Act, the ECIP seeks to increase spectrum access for small carriers and Tribal Nations, as well as increase the availability of advanced telecommunications services in rural areas, by providing specific incentives for stakeholders to engage in qualifying transactions that would make spectrum available to these entities and in these areas.  The FNPRM seeks comment on a two-pronged proposal for the ECIP, where parties to the following types of qualifying transactions would be eligible to participate in the program: 1) those that increase spectrum access for small carriers and Tribal nations; and (2) those that involve any interested party that commits to providing service to a certain minimum amount of rural area.  Participants in the program would be provided with a range of incentive benefits, including: extension of license terms by five years, construction extension of one year, and alternate rural-focused construction benchmarks.  To be eligible for ECIP benefits through a qualifying transactions, covered geographic licensees may offer spectrum to an unaffiliated eligible entity through a partition or disaggregation, and any Wireless Radio Services licensees eligible to lease in an included service may offer spectrum to an unaffiliated eligible entity through a long-term leasing arrangement.   Participants that may be eligible to participate under both prongs will be required to elect to participate under either prong one or prong two, not both.  The FNPRM seeks comment on this overall framework and the FCC proposed definitions.

Under the first prong, small carriers and Tribal Nations would be able to access unused spectrum in any market licensed to a covered geographic licensee.  These transactions must include a minimum of at least: 1) 50% of the licensed spectrum for each license that is part of the transaction in a geographic area, and 2) 25% of the licensed market area for each license that is part of the transaction.  The FNPRM seeks comment on this proposal, including how to best define “eligible entities,” whether there should be a lower or higher spectrum threshold percentage, alternative approaches to ensure sufficient spectrum is made available to Small Carriers or Tribal Nations, whether the geographic thresholds should be different based upon the size of the overall licensed market area, and whether parties can count multiple transactions involving partitions of the same license in aggregate to meet the minimum geographic threshold, among other things.

Under the second prong, parties can enter into rural-focused transactions that are intended to facilitate coverage to rural areas, where the ECIP benefits are tied to construction and operation obligations.  These transactions must include: (1) a minimum of at least 50% of the licensed spectrum for each license included in the transaction; and (2) a minimum amount of Qualifying Geography that covers at least 300 contiguous square miles of rural area for market sizes of Partial Economic Areas or smaller.  The FNPRM seeks comment on this proposal, including how to best define “eligible entities,” whether there should be a lower or higher spectrum threshold percentage, whether there are alternative ways to ensure there is sufficient spectrum to meet stakeholder needs, whether the geographic areas should be limited to those with a census defined population, whether to require a minimum percentage of land within each license involved in the single transaction, and whether to consider coverage on Tribal lands as an alternative to coverage on rural lands, among other things.

In addition, the FNPRM seeks comment on alternatives to population-based construction requirements, permitting reaggregation of spectrum licenses, whether and how to promote Open RAN technologies through the program, and whether to promote a “use or share” model of spectrum rights, among other things.

Comments will be due 30 days after publication in the Federal Register.  Reply Comments will be due 60 days after publication in the Federal Register.

On October 28, 2021, the FCC released a Draft Further Notice of Proposed Rulemaking (“Draft FNPRM”). The following substantive changes have been made from the Draft FNPRM:

  • ¶ 15 – adding a sentence clarifying that stakeholders that may be eligible to participate in the program under both prongs will be limited to selecting one prong for participation to minimize the risk of abuse.
  • ¶ 24 – adding a request for comment on the appropriate definition of “affiliated” in the context of rural-focused transactions.
  • ¶ 34 – adding a request for comment on whether, for licenses that qualify under the rural-focused transaction approach, a proposal to require 100% coverage of the Qualifying Geography ensures that an assignor does not enter into partitioning transactions solely for the purpose of reducing the area or population it must cover under its service-specific performance requirements, and whether assignors should be obliged to meet assignee construction obligations when the assignee fails to do so.
  • ¶ 39 – further clarifying and seeking comment on a requirement that applicants elect to qualify for the ECIP through either prong 1 or prong 2, not both, and prohibiting applicants from making modifications to the selected prong after the application grant.
  • ¶ 44 – adding a request for comment on whether the FCC should impose a construction notification requirement on spectrum license lessees.
  • ¶ 46 – adding a request for comment on whether the FCC should condition assignor/lessor program benefits on assignee/lessee performance of construction and continuity of service obligations, and whether to condition the assignor/lessor’s one-year construction extension on an assignee/lessee’s timely compliance with a construction deadline.
  • ¶ 50 – adding a request for comment on whether the Wireless Telecommunications Bureau should be required to review and draft a report on the ECIP, with an opportunity for stakeholder input, to assess the program’s effectiveness within five years from the effective date of the final order adopting the program.

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