# Presentation: 705735

## Tribal Lands Bidding Credits

**Extending Wireless Services to Tribal Lands**
- Michael Connelly
- Attorney, Policy and Rules Branch, CWD
- October 29, 2003

- Multichannel Video Distribution
- and Data Service (MVDDS)
- Auction No. 53 Seminar

**Notes:**
Hello I’m Michael Connelly, an attorney with the CWD, and I’ll be discussing the Commission’s program of Tribal Land Bidding Credits.

## Disclaimer

-    Nothing herein is intended to supersede any provision of the Commission's rules or public notices.  These slides should not be used as a substitute for a prospective applicant's review of the Commission's relevant orders, rules, and public notices.  Prospective applicants must familiarize themselves thoroughly and remain current with the Commission's rules relating to MVDDS, rules relating to application and auction procedures, and the procedures, terms and conditions contained in the Auction No. 53 public notices.

## What Are Tribal Lands Bidding Credits (“TLBC”)?

- Credits given to winning bidders in Commission spectrum auctions who deploy facilities on and provide services to qualifying tribal lands.
- Promulgated by FCC rule § 1.2110(f)

**Notes:**
What are TLBCs?
They are bidding credits given to winning bidders in Commission spectrum auctions who deploy facilities on and provide services to qualifying tribal lands.   

## Legal Authority

- Section 309(j) of the Communications Act (the “Act”) directs the Commission to design bidding systems that promote the rapid and efficient deployment of wire and radio communications “to all people of the United States.”
- Census data showed low telephone penetration rates for most tribal lands

**Notes:**
Section 309-J seeks the rapid deployment of wire and radio communications service nationwide
And directs the creation of bidding systems to achieve that goal

In a 1999 notice, the commission recognized the unusually low telephone penetration rates on tribal lands. 
Census data available at that time showed that 23 of the 48 largest tribal reservations had telephone penetration rates below 60 percent, and 10 of those reservations had penetration rates below 50 percent. 
By contrast, the telephone penetration rate for the nation as a whole was 94 percent. 

## Qualifying Tribal Land

- A qualifying tribal land is:
- Any federally recognized tribal area that has a wireline telephone penetration rate equal to or less than 70 percent.
- 2000 census data now being used
- Visit the auctions website at  _[http://wireless.fcc.gov/auctions/tribal/](http://wireless.fcc.gov/auctions/tribal/)__ for a listing of federally-recognized tribal lands._

**Notes:**
A qualifying tribal land is any federally recognized tribal area that has a wireline telephone penetration rate equal to or less than 70 percent. 

2000 census data should now be used.  There was a huge jump in the penetration rate on tribal lands, causing many tribal communities to lose their qualifications for TLBC.  The Commission is currently seeking comment in the Second FNPRM on whether to change the scope of the TLBC in order to encourage deployment of services to tribal lands.

On the auctions website they’ve posted a listing of federally-recognized tribal lands that qualified using 2000 census data.  Note that the list contains tribal lands with telephone penetration rates above 70% and are therefore not “qualifying tribal lands.”  Again, the list reflects data from the 2000 census; there was  dramatic increase in wireline penetration rates in the 1990s.

## Calculation and Credit Amount

- Credit amount is tied to the level of infrastructure investment in qualifying tribal lands.
- Tying the credit to the infrastructure investment provides a correlation between the financial commitment made by the carrier to the deployment of facilities and the financial benefit derived in the auction.

**Notes:**
The bidding credit amount is tied to the level of infrastructure investment in qualifying tribal lands. 

This is intended to correlate the financial benefit with the carrier’s commitment.

## Method of Calculation

- The Commission awards:
- $300,000 for the first 200 square miles (518 square kilometers) of qualifying tribal land; and
- $1500 for each additional square mile (2.59 square kilometers).

**Notes:**
The Commission will award:
1) $300,000 for the first 200 square miles of qualifying tribal land; and 
2) $1,500 for each additional square mile

## Bidding Credit Limit

- Maximum limit placed on credits.
- For gross bid amounts of $1 million or less, the cap will be 50 percent of the gross bid.
- For gross bid amounts of greater than $1 million, but less than or equal to $2 million, the cap will be $500,000.
- For gross bid amounts exceeding $2 million, the cap will be 25 percent of the gross bid.

**Notes:**
All credits will be subject to a maximum limit based on the gross bid amount for the license for which the credit is sought.
Where the gross bid amount is $1 million or less, the cap will be 50 percent of the gross bid.
Where the gross bid amount is greater than $1 million, but less than or equal to $2 million, the cap will be $500,000.
Where the gross bid exceeds $2 million, the cap will be 25 percent of the gross bid. 

[We aggregate the TLBC when serving the same tribal land with multiple channel blocks.]

## Increased Bidding Credits

- Waiver requests for a higher bidding credit will be considered by the Commission, pursuant to rule § 1.925
- Applicant must demonstrate that its infrastructure costs exceed the available credit under the formula.
- Such requests will be subject to the applicable bidding credit cap.

**Notes:**
Waiver requests for a higher bidding credit will be considered by the Commission where an applicant demonstrates that its infrastructure costs exceed the available credit under the formula.
Such requests will be subject to the applicable bidding credit cap.
Note: Eligibility for, or calculation of, tribal land bidding credits is not related to, or affected by, that for small business bidding credits.
If qualified, you may receive both a small business bidding credit and a tribal lands bidding credit for a particular market. 
(If receiving both small business BC and TLBC, the TLBC is calculated on the gross bid.)

## Applicants must indicate each market for which they seek tribal lands bidding credits on their long-form (FCC Form 601) by the 601 filing deadline.
Applicants are allowed 180 calendar days to amend their long-forms and attach the required certifications. 
The former 90-day certification period was extended to 180 days in a Second Report and Order; the new rule took effect on July 1, 2003.

- Applicants are allowed 180 calendar days to amend their long-forms and attach the required certifications.
- The former 90-day certification period was extended to 180 days in a Second Report and Order; the new rule took effect on July 1, 2003.

- Applying for Tribal Lands Bidding Credits

**Notes:**
When applying for TLBC, you will need to Indicate on your long form the markets for which you are seeking TLBC

After filing your long form, you will have 180 days to amend your 601 to provide your required certifications. 
The former 90-day certification period was extended to 180 days in a Second Report and Order; and took effect on July 1 of this year.

## Applying for Tribal Lands Bidding Credits (continued)

- Applicants seeking tribal lands bidding credits are encouraged to submit _two_ applications:
- one application should contain markets for which the applicant is seeking tribal lands bidding credits; and
- the second application should contain markets for which the applicant is not seeking tribal lands bidding credits.

**Notes:**
Applicants seeking tribal lands bidding credits are encouraged to submit two applications:
1) One application for all of the tribal lands markets; and
2) The Second for the non-tribal lands markets.

## Required Certifications

- Required certifications consist of:
- Tribal Government Certification
- Applicant Certification

**Notes:**
The required certifications that must be supplied include:
1) Tribal Government Certification; and
2) Applicant Certification

## Tribal Government Certification

- The Tribal Government must state that:
- It will allow the applicant to site facilities and provide service on its tribal land(s), in accordance with FCC rules;
- It has not and will not enter into an exclusive contract with the applicant precluding entry by other carriers, and will not unreasonably discriminate against any carrier; and
- Its tribal land is a qualifying tribal land as defined by the FCC rules, *i.e.* areas that have a telephone penetration rate at or below 70 percent.

**Notes:**
The Tribal Government must state that:
1) It will allow the applicant to site facilities and provide service on its tribal land(s), in accordance with our rules;
2) That it has not and will not enter into an exclusive contract with the applicant precluding entry by other carriers, and will not unreasonably discriminate against any carrier; and
3) That its tribal land is a qualifying tribal land as defined by our rules.

## Applicant Certification

- The applicant must certify that:
- It will consult with the tribal government about siting facilities and providing service on its land; and
- It will comply with the three-year buildout requirement.

**Notes:**
In the Applicant Certification, the applicant must certify that: 
1) It will consult with the tribal government about siting facilities and providing service on its land; and 
2) That it will comply with the three-year buildout requirement.  

## Post-Auction Performance Requirements

- Section 309(j)(4)(B) of the Act directs the Commission to “include performance requirements, such as deadlines and penalties for performance failures, to ensure the delivery of service...”

**Notes:**
Applicants for tribal lands bidding credits are subject to certain post-auction performance requirements, such as construction requirements and performance penalties.

Such requirements were directed by Section 309-J of the Communications Act

## Construction Requirement

- In order to verify compliance with the tribal lands buildout requirement, licensees are required to file a notification of construction (FCC Form 601, Schedule K)
- Must be filed at the conclusion of the three-year buildout period.
- Must state that they have constructed and are operating a system that covers 75 percent of the population of the qualifying tribal land.

**Notes:**
In order to verify compliance with the tribal lands buildout requirement, licensees are required to file a notification of construction (FCC Form 601, Schedule K) at the conclusion of the three-year buildout period, stating that they have constructed and are operating a system that covers 75 percent of the population of the qualifying tribal land.
You will need to make an affirmative showing of 75% pop coverage to the tribal land

## Repayment 

- If the certification is not filed or if the buildout requirement is not met, the licensee must repay the bidding credit amount plus interest.
- Repayment is due 30 days after the conclusion of the three-year buildout requirement.
- Failure to repay will result in automatic termination of the license.

**Notes:**
Repayment of the tribal lands bidding credit may be required under certain circumstances.
If the certification is not filed or if the buildout requirement is not met, the licensee must repay the bidding credit amount plus interest (interest is based on 10-year U.S. Treasury rate).
Repayment is due 30 days after the conclusion of the three-year buildout requirement.
Failure to repay will result in automatic termination of the license

## Transfers and Assignments 

- Transfers of Control or assignments of licenses that received tribal lands bidding credits is permitted
- Obligations of license automatically transfer to assignee
- If partitioning a license, transfer of TLBC allowed _only_ if tribal land is "wholly contained" within either the original or partitioned area.

**Notes:**
Transfers of Control or assignments of licenses that received tribal lands bidding credits is permitted, but may require repayment of the credit under certain circumstances.
When transferring a license that received a TLBC, all obligations of license will automatically transfer to the assignee.
If partitioning a license, transfer of the TLBC is allowed only if tribal land is "wholly contained" within either the original or partitioned area.

## Proceedings and Public Notices

- WT Docket No. 99-266: Extending Wireless Telecommunications Services to Tribal Lands
- Second Report and Order and Second Further Notice of Proposed Rulemaking, FCC 03-51 (rel. March 14, 2003); and
- First Report and Order and Further Notice of Proposed Rule Making, FCC 00-209 (rel. June 30, 2000).
- Public Notices:
- "Wireless Telecommunications Bureau Announces Enhancements to the Universal Licensing System to Help Winning Bidders of FCC Auctions File for Tribal Land Bidding Credits," DA 01-613 ( rel. March 8, 2001);
- “Wireless Telecommunications Bureau Releases Additional Information Regarding the Procedures for Obtaining a Tribal Lands Bidding Credit and List of Tribal Lands,” DA 00-2836 (rel Dec 14, 2000); and
- "Wireless Telecommunications Bureau Announces Availability of Bidding Credits For Providing Wireless Services To Qualifying Tribal Lands ... ," DA 00-2219 (rel. Sept. 28, 2000).

**Notes:**
Bidders interested in applying for tribal lands bidding credits should familiarize themselves with the tribal lands bidding credit proceeding, WT Docket No. 99-266.
A Second Report and Order and Second Further Notice of Proposed Rule Making was released by the Commission last spring; those rules took effect on July 1, of this past summer.

Relevant, though dated, Public Notices include: (1) DA 01-613 released March 8, 2001; (2) DA 00-2836 released Dec. 14, 2000; and (3) DA 00-2219 released Sept. 28, 2000.
I can provide FCC Rcd cites for anyone that would like them after the presentation.
2nd RO and FNPRM = 18 FCC Rcd 4775 (2003)
1st RO and FNPRM = 15 FCC Rcd 11,794 (2000)
DA 01-613 = 16 FCC Rcd 5355 (2001)
DA 00-2836 = 15 FCC Rcd 24838 (2000)
DA 00-2219 = 15 FCC Rcd 18351 (2000)

## Further Information

- See:
- 47 C.F.R. § 1.2110(f)(3).
- Winning Bidder/Closing Public Notice
- Auction Website _[www.fcc.gov/wtb/auction](http://www.fcc.gov/wtb/auction)__ (select the link for “Info on Tribal Land Bidding Credit”)_
- Contact:
- Michael Connelly, phone: (202) 418-0132, or email: michael.connelly@fcc.gov

**Notes:**
To date, roughly a dozen applicants have sought TLBC.  The Commission is seeking to encourage more applicants to provide service to tribal lands.

For further information about TLBC, please consult the applicable FCC rule, § 1.2110(f), review the auction’s Closing PN and visit the auction - TLBC website.

Also, please contact me should you have any questions.

## Tribal Lands Bidding Credits

- THE END
***Disclaimer: This presentation is provided as informal staff information and assistance; it is not legal advice, nor is it a binding opinion of the WTB or FCC.  ***

**Notes:**
This concludes the TLBC presentation.

Please note that this presentation is provided as informal staff information and assistance; it is not legal advice, nor is it a binding opinion of the WTB or FCC.  

Thank you, and good luck.