[Federal Register Volume 75, Number 211 (Tuesday, November 2, 2010)]
[Rules and Regulations]
[Pages 67227-67233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27577]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 74 and 78

[WT Docket No. 02-55, ET Docket No. 00-258 and 95-18; FCC 10-179]


Relocation Cost Sharing in the Broadcast Auxiliary Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document concludes the Commission's longstanding efforts 
to relocate the Broadcast Auxiliary Service (BAS) from the 1990-2110 
MHz band to the 2025-2110 MHz band, freeing up 35 megahertz of spectrum 
in order to foster the development of new and innovative services. This 
decision addresses the outstanding matter of Sprint Nextel 
Corporation's (Sprint Nextel) inability to agree with Mobile Satellite 
Service (MSS) operators in the band on the sharing of the costs to 
relocate the BAS incumbents. To resolve this controversy, the 
Commission applies its time-honored relocation principles for emerging 
technologies previously adopted for the BAS band to the instant 
relocation process, where delays and unanticipated developments have 
left ambiguities and misconceptions among the relocating parties. In 
the process, the Commission balances the responsibilities for and 
benefits of relocating incumbent BAS operations among all the new 
entrants in the different services that will operate in the band.

DATES: Effective December 2, 2010.

FOR FURTHER INFORMATION CONTACT: Nicholas Oros, (202) 418-0636, Policy 
and Rules Division, Office of Engineering and Technology, 
<a href="/cdn-cgi/l/email-protection#5b1532383334373a2875142934281b3d3838753c342d"><span class="__cf_email__" data-cfemail="c688afa5aea9aaa7b5e889b4a9b586a0a5a5e8a1a9b0">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Fifth 
Report and Order, Eleventh Report and Order, Sixth Report and Order, 
and Declaratory Ruling, WT Docket No. 02-55, ET Docket No. 00-258 and 
95-18, adopted September 29, 2010, and released September 29, 2010. The 
full text of this document is available on the Commission's Internet 
site at www.fcc.gov. It is also available for inspection and copying 
during regular business hours in the FCC Reference Center (Room CY-
A257), 445 12th Street, SW., Washington, DC 20554. The full text of 
this document also may be purchased from the Commission's duplication 
contractor, Best Copy and Printing Inc., Portals II, 445 12th St., SW., 
Room CY-B402, Washington, DC 20554; telephone (202) 488-5300; fax (202) 
488-5563; e-mail <a href="/cdn-cgi/l/email-protection#07414444474544574e5042452944484a"><span class="__cf_email__" data-cfemail="c2848181828081928b958780ec818d8f">[email protected]</span></a>.

Summary of the Fifth Report and Order, Eleventh Report and Order, Sixth 
Report and Order, and Declaratory Ruling

    1. This Report and Order and Declaratory Ruling concludes the 
Commission's longstanding efforts to relocate the Broadcast Auxiliary 
Service (BAS) from the 1990-2110 MHz band to the 2025-2110 MHz band, 
freeing up 35 megahertz of spectrum in order to foster the development 
of new and innovative services that can provide mobile broadband and 
nationwide communications capabilities. This decision in particular 
addresses the outstanding matter of Sprint Nextel Corporation's (Sprint 
Nextel) inability to agree with Mobile Satellite Service (MSS) 
operators in the band on the sharing of the costs to relocate the BAS 
incumbents. To date, Sprint has shouldered the entire cost of this 
relocation, which was completed on July 15, 2010.
    2. To resolve this important issue, the Commission applied its 
time-honored relocation principles for emerging technologies previously 
adopted for the BAS band to the instant relocation process, where 
delays and unanticipated developments have left ambiguities and 
misconceptions among the relocating parties. These principles have been 
a fundamental part of the Commission's past efforts to unlock value and 
promote investment through the relocation process. In the end, the

[[Page 67228]]

Commission balanced the responsibilities for and benefits of relocating 
incumbent BAS operations among all the new entrants in the different 
services that will operate in the band.
    3. The Commission has sought to relocate BAS licensees to a more 
spectrally efficient band plan and make spectrum available for other 
uses, while fairly distributing the relocation costs among the new 
users. Because the path leading to this Fifth Report and Order, 
Eleventh Report and Order, Sixth Report and Order, and Declaratory 
Ruling (Report and Order and Declaratory Ruling) has been especially 
complex, the Commission summarized the history of this proceeding to 
the extent relevant to the decisions it was making; see paragraphs 4 
through 12 of the Report and Order and Declaratory Ruling. In the 
Declaratory Ruling the Commission addresses a number of disputes that 
have arisen in this proceeding involving requirements that were 
established when the current BAS relocation scheme was adopted in 2004; 
see paragraphs 15 through 44 of the Report and Order and Declaratory 
Ruling.

Discussion

    4. The Report and Order and Declaratory Ruling addresses disputes 
regarding sharing the cost of relocating the 2 GHz BAS incumbents. The 
Commission concludes that the best course of action is to clarify and 
modify the cost sharing requirements to address the ambiguity or lack 
of definition in the current requirements to correspond to the stated 
purposes and structure of the cost sharing principles set forth in the 
Commission decision which established Sprint Nextel's entry into the 
band, the 800 MHz R&O (69 FR 67823), as well as to balance the 
responsibilities for and benefits of relocating incumbent BAS 
operations among all the new entrants in the band in a way that is 
consistent with the Commission's relocation policies set forth in the 
Emerging Technologies proceeding. One of the important underlying 
principles of the relocation policy is that licensees that ultimately 
benefit from the spectrum cleared by the first entrant shall bear the 
cost of reimbursing the first entrant for the accrual of that benefit. 
The Commission noted its concern that were it to stray from the 
traditional application of the Emerging Technologies relocation policy, 
future licensees might be unwilling or unable to assume the burden and 
cost of clearing spectrum quickly if they were unsure of the likelihood 
that they will be reimbursed by other new entrants.

Termination Date of the Cost Sharing Obligations

    5. As explained in the Declaratory Ruling adopted along with this 
Report and Order, the MSS and AWS entrants have an obligation to 
reimburse Sprint Nextel for a portion of the costs of relocating the 
BAS incumbents if they enter the band prior to either the end of two 
future events connected to adoption of the 800 MHz R&O: the 800 MHz 
reconfiguration or the 800 MHz true-up. Because the timing of either of 
these events is presently unknown, the new entrants are in a state of 
uncertainty as to their financial obligation. The Commission believes 
that all of the parties will be served by adopting a date certain for 
extinguishing cost-sharing obligations--the band sunset date of 
December 9, 2013. This will harmonize the relocation requirements for 
the BAS band with the relocation rules for other bands that were based 
on the Emerging Technologies principles. The MSS entrants argue that 
the cost sharing requirements for this band have departed from the 
Emerging Technologies principles in a number of ways and argue that the 
Commission should not follow the principles in regard to their cost 
sharing obligations. While the Commission has made departures from the 
Emerging Technologies procedures, those limited departures were made 
because of the unique features of the BAS transition. However, where 
circumstances do not require some deviation from Emerging Technologies, 
the Commission shall adhere closely to these time-tested principles to 
balance the interest of incumbent licensees, new entrants who relocate 
incumbents, and new entrants who benefit from the band clearing. In 
this case, because the main reason for allowing early termination of 
the new entrants' cost-sharing obligation no longer applies--i.e. 
Sprint Nextel will probably not be taking credit for all of its BAS 
relocation costs against the anti-windfall payment that is described in 
the 800 MHz R&O--there is no compelling reason to end the cost sharing 
obligation of the new entrants any earlier than the band sunset date. 
Consequently, any new entrant that enters the band before December 9, 
2013 will be required to reimburse the entrant who relocated BAS 
incumbents a pro rata share of the relocation costs, subject to the 
limitations discussed in the Report and Order.
    6. The Commission left in place the current band sunset date of 
December 9, 2013, despite the request by Sprint Nextel to adjust the 
date until 2015. The sunset date is a vital component of the Emerging 
Technologies policies because, among other things, it specifies the 
date upon which unrelocated incumbents become secondary and it provides 
a length of time for incumbent licensees to transition from the band. 
Because the BAS relocation has been completed, there is no need to 
change the sunset date to 2015. While Sprint Nextel is correct that AWS 
licensees may not enter the band by the current sunset date, the 
Commission's goal in choosing the sunset date is not to provide the 
entrant who relocates incumbents with a greater likelihood of receiving 
cost sharing from later entrants. When Sprint Nextel undertook the 
responsibility to relocate the BAS incumbents as a result of the 800 
MHz R&O, it knew the timing of the band sunset and the uncertainties of 
the entrance of AWS licensees.

Definition of ``Enter the Band''

    7. The ``enter the band'' terminology was used in the 800 MHz R&O 
and AWS Sixth R&O to denote when the new entrants would incur an 
obligation to reimburse Sprint Nextel for a pro rata share of the cost 
of relocating the BAS incumbents, but neither order defined the term.
    8. The Commission concludes that an MSS entrant will ``enter the 
band'' and therefore incur a cost sharing obligation when the MSS 
entrant certifies that its satellite is operational for purposes of 
meeting its operational milestone. In previous Emerging Technologies 
band clearings, the later entrant becomes responsible for reimbursing 
the earlier entrants' relocation cost when the later entrant is in the 
position to cause interference to the incumbent licensees prior to 
their relocation. The Commission previously determined that it does not 
believe in general that the MSS entrants may operate without causing 
interference to the BAS incumbents. Consequently, once the MSS 
satellites are operational, they would have the potential for causing 
interference to the incumbent BAS operations. As with the tests used in 
previous band clearings, the definition adopted here is easy to apply 
and not subject to contention. Also, the test is in keeping with the 
nature of the BAS service.
    9. The AWS entrants require a different definition of ``enter the 
band.'' The Commission concludes that an AWS entrant will ``enter the 
band'' on a license-by-license basis on the date that the grant of each 
long-form application becomes a final action. This requirement has the 
advantage of ease of administration, and conforms to the overall 
Emerging Technologies policies.

[[Page 67229]]

Once the AWS entrant's long form application has been granted, 
signifying the issuance of a license, the AWS entrant will be in the 
position to roll out service and benefit from Sprint's relocation of 
the BAS incumbents. Sprint Nextel's right to seek reimbursement from an 
AWS licensee that enters the band prior to the sunset date is limited 
to an AWS licensee's proportional share of the costs incurred in the 
BAS clearance, on a pro rata basis according to the amount of spectrum 
that each licensee is assigned in the 1990-2025 MHz band. The 
Commission intends to adopt specific cost sharing rules for AWS in the 
1995-2000 MHz and 2020-2025 MHz bands when it adopts service rules 
which define the licensing scheme for these bands.

Limitations on MSS Cost Sharing Obligations

    10. In the 800 MHz R&O, the costs for which the MSS entrants had to 
reimburse Sprint Nextel were limited to a pro rata share of relocating 
the top 30 markets and fixed BAS links because these were the BAS 
incumbents that the MSS entrants had to relocate before they could 
begin operations. The Commission concludes that even with the changed 
circumstances surrounding the BAS relocation, the most appropriate 
course is to retain the current cost sharing obligations for MSS 
entrants. Although the Commission recognizes that the parties have 
conflicting interests at stake, this requirement was clearly 
established from the outset and the Commission declines to reverse it 
now, where all parties involved have been aware of their respective 
rights and obligations and presumably structured their activities 
accordingly.
    11. TerreStar, one of the MSS entrants, claims that equitable 
factors argue for limiting the MSS entrants' reimbursement obligation 
to the expenses Sprint Nextel incurred before September 7, 2007 because 
if Sprint Nextel had completed the BAS relocation by the end of the BAS 
30-month relocation period there would have been no relocation expenses 
incurred after this date. The Commission is not persuaded that 
equitable factors support allowing TerreStar or DBSD (the other MSS 
entrant) to escape paying a pro rata share of the BAS relocation costs. 
The MSS entrants have suffered little harm from the delays in the BAS 
relocation, and the Commission has taken steps to minimize the impact 
that delays in the transition would have on DBSD and TerreStar's plans 
to begin operations. It concludes that there is no reason to reduce 
their cost sharing obligations further.
    12. The Commission rejects DBSD's suggestion that the amount that 
the MSS entrants owe for BAS relocation be depreciated from when Sprint 
Nextel signed frequency relocation agreements with the BAS incumbents. 
The Commission also rejects DBSD's suggestion that cost caps be applied 
to the BAS relocation costs. Finally, the Commission will not limit 
Sprint Nextel's ability to seek reimbursement from MSS entrants to only 
those expenses it cannot receive credit against the 800 MHz anti-
windfall payment, as suggested by TerreStar.

Payment Issues

    13. In the Report and Order the Commission adopts a policy 
affirming the tentative conclusion made in the June 2009 Further Notice 
that Sprint Nextel may not both receive credit in the 800 MHz true-up 
and receive reimbursement from the MSS and AWS entrants for the same 
costs. This has been the rule since the cost sharing requirements were 
adopted in the 800 MHz R&O, and is necessary to prevent Sprint Nextel 
from receiving the unjustified windfall of a double recovery, and no 
party has objected to this conclusion. If the true-up occurs prior to 
Sprint Nextel receiving reimbursement from another entrant, the 
Commission will require Sprint Nextel to inform the other entrant of 
the expenses for which it has received credit in the 800 MHz true-up 
prior to receiving reimbursement. The other entrant will not be 
obligated to reimburse Sprint Nextel for what would otherwise be its 
share of those particular expenses.
    14. The principle that Sprint Nextel is not entitled to make a 
double recovery also applies to reimbursements it receives from among 
the new entrants. Multiple new entrants may have an interest in the 
same portion of the relocated BAS spectrum because, for example, 
entrants change business structure or assign their licenses. 
Accordingly, the Commission specifies that Sprint Nextel is not 
entitled to obtain reimbursement from a new entrant for relocation 
costs that Sprint Nextel has already received from another new entrant. 
Thus, if a new entrant assigns its license to a third party after the 
new entrant has reimbursed Sprint Nextel, the Commission would reject a 
claim that the assignee is responsible for reimbursing Sprint Nextel 
for that same relocation expense. The converse also holds: An assignee 
would be considered a new entrant and is responsible for unpaid cost 
sharing associated with a particular portion of the spectrum. However, 
to the extent that a new entrant seeks to assign its license to a third 
party prior to satisfying its reimbursement obligation, the assignor 
and assignee would be jointly and severally liable for the 
reimbursement costs until paid.
    15. As for when Sprint Nextel should be reimbursed by the other new 
entrants for its BAS relocation cost, the Commission does not adopt 
either of the proposals on which it sought comment on the June 2009 
Further Notice. The Commission concludes that the reimbursement 
deadline for a new MSS or AWS entrant will be based on when the new 
entrant has ``entered the band.'' Once the new entrant has entered the 
band, but no later than the sunset date, Sprint Nextel may provide the 
new entrant with the required documentation and request payment. The 
new entrant will then have thirty days to submit its reimbursement to 
Sprint Nextel, unless, the parties agree to different terms (such as an 
installment plan). This approach avoids complexities of administering 
separate deadlines for each market and provides certainty to the 
parties.
    16. The Commission will not require, nor will it object if parties 
agree to, an installment payment plan for BAS relocation reimbursement. 
The Commission encourages the parties interested in making installment 
payments to use the 30-day payment window to negotiate an appropriate 
installment payment plan. If no installment plan is agreed upon, a new 
entrant must pay the full cost sharing amount in one payment at the 
reimbursement deadline.
    17. The Commission sees no reason to link the payment of new 
entrants' cost sharing obligations to the true-up as the MSS entrants 
have suggested. The Commission does not think it would be prudent to 
introduce the uncertainty associated with the true-up date to the 
payment date of the BAS cost sharing, especially given that it has 
prohibited Sprint Nextel from both claiming credit for BAS relocation 
costs against the anti-windfall payment and receiving cost sharing 
payments from new entrants for the same costs.
    18. As the Commission proposed in the June 2009 Further Notice, it 
will require that Sprint Nextel share with any other entrant from whom 
it seeks reimbursement its relocation cost as documented in its annual 
audit as provided to the transition administrator, copies of third-
party audited statements of expenses associated with the BAS 
relocation, and copies of the relevant

[[Page 67230]]

frequency relocation agreements. As discussed, the new entrant will 
have 30 days, unless other terms are agreed upon, to make its 
reimbursement payment after Sprint Nextel has provided this 
documentation.
    19. The MSS entrants have requested the ability to examine and 
contest individual expenses while Sprint Nextel has expressed concern 
that the MSS entrants are merely trying to delay or limit their cost 
sharing obligations. With regard to disputes that may arise with either 
MSS entrants or future AWS entrants, we note that parties have several 
options to resolve disputes that may arise including mediation, 
arbitration, or pursuing civil remedies in the court system. Parties 
contesting a specific cost sharing obligation shall provide evidentiary 
support to demonstrate that their calculation is reasonable and made in 
good faith; specifically, they are expected to exercise due diligence 
to obtain the information necessary to prepare an independent estimate 
of the relocation costs in question.
    20. The Commission did not adopt the proposal in the June 2009 
Further Notice to allow Sprint Nextel to recover relocation costs 
associated with all 20 megahertz of MSS spectrum from a single MSS 
entrant. In reaching the decision, we observe that under the 
Commission's Emerging Technologies policies the amount that the earlier 
entrant could recover has always been based on the amount of the later 
entrant's spectrum that the earlier entrant has cleared. The Commission 
concludes that it should not depart from these traditional Emerging 
Technologies policies.
    21. As to future AWS entrants, the Commission adopted rules 
consistent with the tentative conclusion the Commission made in the 
June 2009 Further Notice that the future AWS licensees that enter the 
band prior to the sunset date will be responsible for reimbursing 
Sprint Nextel for relocating the BAS incumbents, less any BAS 
relocation costs for which Sprint Nextel had received credit against 
the anti-windfall payment. This conclusion is consistent with past 
actions in this proceeding and with the traditional Emerging 
Technologies policies. However, as the Commission noted in the June 
2009 Further Notice, determining how to apportion the relocation cost 
among the future AWS licensees will have to wait until the licensing 
scheme for the AWS licensees is adopted. The Commission intends to 
adopt specific cost sharing rules, consistent with this Order, to 
govern the cost-sharing process between Sprint Nextel and AWS entrants 
in the 1995-2000 MHz and the 2020-2025 MHz bands, when the Commission 
adopted service rules which defined the licensing scheme for these 
bands.
    22. The Commission will adopt no specific policies or procedures as 
to how it should proceed if later new entrants fail to reimburse an 
earlier entrant for the cost of relocating BAS incumbents as required. 
Instead, it will address complaints regarding failure to make required 
payments that are filed before the Commission through our existing 
enforcement mechanisms.

The Automatic Stay of Section 362 of the Bankruptcy Code

    23. DBSD filed a petition to stay the rulemaking proposed in the 
June 2009 Further Notice on the grounds that the rulemaking must be 
automatically stayed under section 362(a) of the Bankruptcy Code, 11 
U.S.C. 362(a). The Commission finds DBSD's arguments misplaced, and 
denies its petition for stay.
    24. The automatic stay of the Bankruptcy Code, 11 U.S.C. 362(a), 
essentially bars actions against the debtor to recover a pre-petition 
claim against the bankruptcy estate or to obtain possession or exercise 
control over property of the estate. The regulatory exception to the 
automatic stay, 11 U.S.C. 362(b)(4), excepts from the automatic stay 
actions taken pursuant to a government unit's or organization's police 
or regulatory powers, including enforcement of a judgment other than a 
money judgment.
    25. The June 2009 Further Notice, which focused on clarifying the 
cost-sharing and reimbursement obligations set forth in prior 
Commission orders, was designed to further the Commission's long stated 
public policy goals of efficient management of the radio spectrum. The 
June 2009 Further Notice, therefore, falls squarely within the 
regulatory exception to the automatic stay. DBSD's arguments to the 
contrary are without merit. The declaratory ruling, which includes 
matters of Commission policy related to but not subject to the June 
2009 Further Notice, likewise fits the regulatory exception: the 
Commission has no pecuniary interest in the outcome and is acting in 
the public interest for a public purpose.
    26. Based on the legal standards, the Commission agrees with Sprint 
Nextel that the general rulemaking proceeding is not subject to the 
automatic stay merely because one of the parties to the rulemaking is a 
debtor in a bankruptcy case.
    27. Nor is there any basis to exclude the DBSD debtors from the 
effects of this Report and Order and accompanying Declaratory Ruling 
merely because it may result in a financial impact on one or more of 
those parties. Moreover, under the well-established principles of the 
regulatory exception to the automatic stay, a regulatory body can 
implement its public policies, and even adopt orders directed at 
particular industry participants, without violating the automatic stay 
so long as the regulatory body does not seek to enforce a money 
judgment outside of the bankruptcy claims process.
    28. The Commission rejects DBSD's contention that the regulatory 
exception does not apply because, according to DBSD, the June 2009 
Further Notice will effectively adjudicate or resolve the reimbursement 
dispute between Sprint Nextel and DBSD. The express purpose of this 
Report and Order and accompanying Declaratory Ruling is to further the 
policy goals of promoting more efficient use of spectrum and permitting 
the introduction of new services. This Report and Order and 
accompanying Declaratory Ruling promotes the general regulatory 
policies of the Commission, but does not seek to determine the 
pecuniary interest of any individual debtor or creditor. The rulemaking 
and declaratory ruling apply to a variety of industry participants, not 
just to DBSD, and are applicable to all similarly situated entities. 
Moreover, the final result of this Report and Order and accompanying 
Declaratory Ruling is not a judgment for or against Sprint Nextel on 
its particular reimbursement claims. Now that the obligations are 
clarified, it is up to Sprint Nextel to pursue its claims. With respect 
to the DBSD bankruptcy, any proceedings by Sprint Nextel on a claim for 
monetary recovery against a debtor in the DBSD bankruptcy case is a 
matter for the Bankruptcy Court and is not addressed in this Report and 
Order and accompanying Declaratory Ruling. Thus, the Commission's 
rulemaking and issuance of a declaratory ruling have remained within 
the limits of the regulatory exception to the automatic stay.
    29. In addition, the results of this Report and Order and 
Declaratory Ruling meet both the pecuniary purpose and public policy 
tests limiting the regulatory exception. With respect to the pecuniary 
purpose test, the Commission is acting solely in its regulatory 
capacity and has no creditor interest in the DBSD bankruptcy case or in 
the outcome of the Sprint Nextel-DBSD dispute. The Commission's actions 
here also meet the ``public policy'' test. The Commission's actions

[[Page 67231]]

are not designed to protect the claim of Sprint Nextel or any other 
creditor against the DBSD bankruptcy estates.
    30. Although the Eastern District of Virginia has referred claims 
to the Commission for ``resolution,'' the actions the Commission takes 
here are not an adjudication of the claims that Sprint Nextel, DBSD, 
and TerreStar have raised in that court proceeding. Instead, the 
Commission clarifies its relocation rules to assist the parties, as 
well as the court, in determining the responsibilities of each party in 
the ongoing BAS relocation.

Retroactivity

    31. The question about cost sharing requirements in the Report and 
Order involves when the MSS entrants' obligation to share the costs of 
BAS relocation ends, not whether they are under such an obligation. In 
the Declaratory Ruling, the Commission explained that under the 
requirements set out in the 800 MHz Order, the MSS operators incur a 
cost sharing obligation if they enter the band before the 800 MHz band 
reconfiguration or true-up process is complete. Once incurred, the 
operator's reimbursement obligation continues until discharged by 
payment or cut off by intervening events. Because the 800 MHz rebanding 
process has unfolded in unexpected ways, the precise timing and nature 
of the triggering events that would cut off these obligations was 
unspecified, and, under these circumstances, the exact dates that the 
MSS operators' ongoing payment obligations would terminate were not 
set.
    32. To the extent the Commission's clarification of the triggering 
events for termination of the payment obligations constitutes a new or 
modified rule, it would be considered primarily retroactive only if it 
changed the past legal consequences of past actions. This 
clarification, however, has worked no change in the legal consequences 
(i.e., incurrence of the reimbursement obligation) of the MSS 
operators' past actions (i.e., entering the band). Moreover, the 
clarification does not change how the MSS operators would have been 
treated if the band reconfiguration had proceeded according to plan. 
Since it did not, however, the circumstances that would have relieved 
the MSS operators of their payment obligations did not come about, 
leaving them with these obligations intact and the manner of their 
termination (other than for payment) unspecified. In taking action now 
to establish a firm date in the future (December 9, 2013) that will cut 
off the MSS operators' cost sharing obligations, the Commission acts 
prospectively.

Paperwork Reduction Analysis

    33. This document does not contain new or modified information 
collection requirements 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).

Congressional Review Act

    34. The Commission SHALL SEND a copy of this Fifth Report and 
Order, Eleventh Report and Order, Sixth Report and Order, and 
Declaratory Ruling in a report to be sent to Congress and the General 
Accounting Office pursuant to the Congressional Review Act, see 5 
U.S.C. 801(a)(1)(A). In addition, the Commission's Consumer and 
Governmental Affairs Bureau will send a copy of the Fifth Report and 
Order, Eleventh Report and Order, Sixth Report and Order, and 
Declaratory Ruling, including the FRFA, to the Chief Counsel for 
Advocacy of the SBA.

Final Regulatory Flexibility Analysis

    35. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA),\1\ an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Further Notice of Proposed Rule Making (FNPRM).\2\ 
The Commission sought written public comment on the proposals in the 
FNPRM, including comment on the IRFA.\3\ No commenting parties 
specifically addressed the IRFA. This present Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA.\4\
---------------------------------------------------------------------------

    \1\ 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), Public Law 104-121, Title II, 110 Stat. 857 (1996).
    \2\ See Improving Public Safety Communications in the 800 MHz 
Band, WT Docket No. 02-55, ET Docket No. 00-258 and ET Docket No. 
95-18, Report and Order and Order and Further Notice of Proposed 
Rulemaking, 24 FCC Rcd 7904 Appendix C (2009).
    \3\ See Id. at ] 1.
    \4\ See 5 U.S.C. 604.
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A. Need for, and Objectives of, the Rules

    36. In this Fifth Report and Order, Eleventh Report and Order, and 
Sixth Report and Order and Declaratory Ruling (collectively, Report and 
Order), we modify and clarify the Commission's requirements for the new 
entrants to the 1990-2025 MHz band to share the cost of relocating the 
incumbent BAS licensees from that band. The BAS incumbents have been 
removed from the 1990-2025 MHz band to make way for Sprint Nextel, MSS 
entrants, and future AWS licensees. Sprint Nextel, who will occupy the 
1990-1995 MHz spectrum, completed relocation of the BAS incumbents from 
the band on July 15, 2010. The MSS entrants (DBSD and TerreStar), who 
will occupy the 2000-2020 MHz spectrum, have both launched satellites. 
The AWS licenses for the 1995-2000 MHz and 2020-2025 MHz bands have not 
yet been issued.
    37. The cost sharing requirements for the BAS relocation must be 
modified because circumstances surrounding the relocation have 
significantly changed since the requirements were adopted. When the 
current cost sharing requirements were adopted in 2004, Sprint Nextel 
was expected to have completed the BAS transition by September 7, 2007; 
one or both of the MSS entrants was expected to have entered the band 
and incurred a cost sharing obligation to Sprint; the reconfiguration 
of the 800 MHz band, which Sprint Nextel was also undertaking, would 
have been completed by June 26, 2008; and Sprint Nextel was expected to 
be able to receive credit for the BAS relocation costs not reimbursed 
by MSS and AWS licenses toward the value of spectrum it was receiving. 
None of these assumptions has in fact been correct. Furthermore, the 
current requirements have a number of ambiguities, such as not 
specifying a standard for determining how MSS and AWS licenses incur a 
cost sharing obligation to Sprint Nextel and not specifying when 
reimbursement of BAS relocation expenses is to occur.
    38. The Report and Order concludes that Sprint Nextel may not both 
receive reimbursement for cost sharing from other new entrants and 
receive credit for the same relocation costs against the value of the 
spectrum it is receiving. The MSS and AWS entrants can incur a 
relocation obligation until the band relocation rules sunset on 
December 9, 2013. The Report and Order further concludes that an MSS 
entrant will incur an obligation to reimburse Sprint for BAS relocation 
costs when it certifies that its satellite is operational for purposes 
of meeting its operational milestone. As for AWS licensees, the Report 
and Order concludes that AWS entrants will incur a cost sharing 
obligation upon grant of their long form application for their 
licenses. The Report and Order decrees that Sprint Nextel may provide a 
new entrant with documentation of the relocation expenses for which 
reimbursement is

[[Page 67232]]

owed only after the new entrant has ``entered the band'' and therefore 
incurred a cost sharing obligation. The new entrant will then have 
thirty days to pay the amount owed Sprint Nextel, unless the parties 
agree to a different schedule.
    39. In addition, the Report and Order concludes that the MSS 
entrants' reimbursement obligation to Sprint Nextel should continue to 
be limited to a pro rata share of the costs of relocating BAS in the 
thirty largest markets (by population) and all fixed BAS links. The 
Report and Order requires Sprint Nextel to share with other new 
entrants from whom it is seeking reimbursement, information about its 
relocation cost as documented in its annual external audit and as 
Sprint Nextel provides to the Transition Administrator of the 800 MHz 
transition, copies of frequency relocation agreements that it has with 
any BAS incumbent for which it is seeking cost sharing, and third-party 
audited statements of expenses associated with the BAS relocation.

B. Legal Basis

    40. The action is taken pursuant to sections 4(i), 301, 303(c), 
303(f), 303(g), 303(r), 303(y), and 332 of the Communications Act of 
1934, as amended, 47 U.S.C. 154(i), 301, 303(c), 303(f), 303(g), 
303(r), 303(y), and 332.

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

    41. 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 rules, if adopted.\5\ The RFA generally defines the 
term ``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' \6\ In addition, the term ``small business'' has the 
same meaning as the term ``small business concern'' under the Small 
Business Act.\7\ 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.\8\
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    \5\ 5 U.S.C. 603(b)(3).
    \6\ 5 U.S.C. 601(6).
    \7\ 5 U.S.C. 601(3) (incorporating by reference the definition 
of ``small business concern'' in 15 U.S.C. 632). Pursuant to the 
RFA, 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.'' 5 U.S.C. 601(3).
    \8\ Small Business Act, 15 U.S.C. 632 (1996).
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    42. The rule modifications will affect the interest of the new 
entrants to the 1990-2025 MHz band: MSS, Sprint Nextel, and future AWS 
entrants to the band.
    43. MSS. There are two MSS operators in the 1990-2110 MHz band. 
These operators will provide services using the 2000-2020 MHz portion 
of the band. The SBA has developed a small business size for Satellite 
Telecommunications, which consist of all companies having annual 
revenues of less than $15 million.\9\ Neither of the two MSS operators 
currently has revenues because, while they both have operational 
satellites, they are not providing commercial service. However, given 
that as of December 31, 2008, these MSS operators had assets of $1.341 
billion and $664 million, respectively, we expect that both of these 
companies will have annual revenue of over $15 million once they are 
able to offer commercial services.\10\ Consequently, we find that 
neither MSS operator is a small business. Small businesses often do not 
have the financial ability to become MSS system operators due to high 
implementation costs associated with launching and operating satellite 
systems and services.
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    \9\ 13 CFR 121.201, NAICS Code 517410.
    \10\ TerreStar Corp., SEC Form 10-K 2008 Annual Report, filed 
March 12, 2009 at F-2; ICO Global Communications (Holdings) Limited, 
SEC Form 10-K 2008 Annual Report, filed March 31, 2009 at 52. ICO's 
subsidiary which controls its satellite covering the United States 
is currently in bankruptcy. ICO Global Communications (Holdings) 
Limited, Form 8-K, filed May 15, 2009.
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    44. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category.\11\ Prior to that time, such firms 
were within the now-superseded categories of ``Paging'' and ``Cellular 
and Other Wireless Telecommunications.'' \12\ Under the present and 
prior categories, the SBA has deemed a wireless business to be small if 
it has 1,500 or fewer employees.\13\ Because Census Bureau data are not 
yet available for the new category, we will estimate small business 
prevalence using the prior categories and associated data. For the 
category of Paging, data for 2002 show that there were 807 firms that 
operated for the entire year.\14\ Of this total, 804 firms had 
employment of 999 or fewer employees, and three firms had employment of 
1,000 employees or more.\15\ For the category of Cellular and Other 
Wireless Telecommunications, data for 2002 show that there were 1,397 
firms that operated for the entire year.\16\ Of this total, 1,378 firms 
had employment of 999 or fewer employees, and 19 firms had employment 
of 1,000 employees or more.\17\ Thus, we estimate that the majority of 
wireless firms are small.
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    \11\ U.S. Census Bureau, 2007 NAICS Definitions, ``517210 
Wireless Telecommunications Categories (Except Satellite)''; http://www.census.gov/naics/2007/def/ND517210.HTM#N517210.
    \12\ U.S. Census Bureau, 2002 NAICS Definitions, ``517211 
Paging''; http://www.census.gov/epcd/naics02/def/NDEF517.HTM.; U.S. 
Census Bureau, 2002 NAICS Definitions, ``517212 Cellular and Other 
Wireless Telecommunications''; http://www.census.gov/epcd/naics02/def/NDEF517.HTM.
    \13\ 13 CFR 121.201, NAICS code 517210 (2007 NAICS). The now-
superseded, pre-2007 CFR citations were 13 CFR 121.201, NAICS codes 
517211 and 517212 (referring to the 2002 NAICS).
    \14\ U.S. Census Bureau, 2002 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size (Including Legal Form of 
Organization,'' Table 5, NAICS code 517211 (issued Nov. 2005)).
    \15\ Id. The 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 ``1,000 
employees or more.''
    \16\ U.S. Census Bureau, 2002 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size (Including Legal Form of 
Organization,'' Table 5, NAICS code 517212 (issued Nov. 2005)).
    \17\ Id. The 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 ``1,000 
employees or more.''
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    45. AWS. The AWS licenses have not been issued and the Commission 
has no definite plans to issue these licenses. Presumably some of the 
businesses which will eventually obtain AWS licenses will be small 
businesses. However, we have no means to estimate how many of these 
licenses will be small businesses.
    46. Sprint Nextel. Sprint Nextel as a new entrant to the band will 
occupy spectrum from 1990-1995 MHz. The Third Report and Order grants 
Sprint Nextel a waiver of the deadline by which it must relocate the 
BAS, CARS, and LTTS incumbents from the 1990-2025 MHz portion of the 
band. Sprint Nextel belongs to the SBA category, Wireless 
Telecommunications Carriers (except satellite).\18\ Businesses in this 
category are considered small if they have fewer than 1,500 
employees.\19\ As of December 31, 2009 Sprint Nextel had about 40,000 
employees.\20\ Consequently, we find that Sprint Nextel is not a small 
business.
---------------------------------------------------------------------------

    \18\ 13 CFR 121.201, NAICS Code 517210.
    \19\ Id.
    \20\ Sprint Nextel Corp., SEC Form 10-K 2009 Annual Report, 
filed Feb. 26, 2010 at 12.

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[[Page 67233]]

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

    47. The Report and Order clarifies the existing obligation of new 
entrants to reimburse the party who relocates BAS incumbents for a 
portion of the relocation costs. It specifies that an AWS entrant 
incurs a cost sharing obligation upon grant of the long-form 
application for its license, and an MSS entrant incurs an obligation 
when it certifies that its satellite is operational for purposes of 
meeting its operational milestone. The reimbursement obligation 
continues until the December 9, 2013 band sunset date. The Report and 
Order also specifies when payment of relocation cost is due.

E. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    48. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed 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.\21\
---------------------------------------------------------------------------

    \21\ See 5 U.S.C. 603(c).
---------------------------------------------------------------------------

    49. Most of the decisions in the Report and Order address cost 
sharing obligations between the MSS entrants, future AWS entrants, and 
Sprint Nextel for relocating the BAS incumbents. Of these new entrants 
only the future AWS entrants may be small entities. Because no 
licensing scheme for the AWS spectrum has been determined, we are 
unable to determine how many (if any) of these future licensees may be 
small entities. It is also difficult to determine how the impact of the 
cost sharing rules on them may be reduced.
    50. All of the new entrants benefit from the clarity that the 
Report and Order brings to the cost sharing rules. The new entrants can 
now be certain how they incur a cost sharing obligation, what expenses 
are eligible for cost sharing, when they must make payment, and when 
the obligation will end if they do not incur a cost sharing obligation 
(i.e. they do not enter the band by the sunset date). In this way the 
cost sharing requirements adopted in the Report and Order benefit those 
future AWS entrants who may be small entities.
    51. Under the cost sharing rules, Sprint Nextel may receive cost 
sharing from the other new entrants to the band. One possible 
alternative to lessen the impact on new entrants who are small entities 
would be to reduce the amount that small entities are required to 
reimburse other entrants for the BAS relocation. This would in effect 
require Sprint Nextel to subsidize the small entities. This would be 
unfair because Sprint Nextel did not volunteer to subsidize the small 
entities, the small entities would likely be direct competitors of 
Sprint Nextel, and Sprint Nextel has spent a large sum of money on the 
BAS transition. Sprint Nextel is only receiving 5 megahertz of the 35 
megahertz of spectrum and up to this point has shouldered the entire 
cost of the BAS transition. Not requiring the future AWS entrants who 
are small entities to pay their share of the relocation cost would also 
harm the Commission's future relocation policies. In the future 
licensees are not likely to volunteer to relocate incumbents if they 
are forced to subsidize other licensees.
    52. Another alternative would be to let the small entities pay 
their cost sharing obligation on the installment plan.\22\ Allowing use 
of installment payments would in effect make the party who relocated 
the incumbents a creditor of the small entity. This would be more 
costly for the party who relocated the incumbents because they will 
receive payment later. It would also subject the relocating party to 
increased risk of non-payment. There is also no record as to what 
specific installment plan could be adopted.
---------------------------------------------------------------------------

    \22\ We rejected requiring the MSS entrants to pay their 
obligation under an installment plan. See paragraph 16, supra.
---------------------------------------------------------------------------

    53. Because of these drawbacks, we do not believe either of these 
alternatives is appropriate. Furthermore, because no AWS licenses have 
been issued, no small entities currently have a cost sharing obligation 
for the BAS transition. When AWS licenses are issued at some future 
date, the potential licensees will know for certain that they face a 
cost sharing liability because of the refinement of the cost sharing 
rules adopted in this Report and Order.

F. Federal Rules That May Duplicate, Overlap or Conflict With the Rules

    54. None.

Ordering Clauses

    55. Pursuant to sections 4(i), 301, 303(c), 303(f), 303(g), 303(r), 
303(y), and 332 of the Communications Act of 1934, as amended, 47 
U.S.C. 154(i), 301, 303(c), 303(f), 303(g), 303(r), 303(y), and 332, 
this Fifth Report and Order, Eleventh Report and Order, Sixth Report 
and Order is adopted and will become effective 30 days after 
publication in the Federal Register.
    56. Pursuant to sections 4(i), 301, 303(c), 303(f), 303(g), 303(r), 
303(y), and 332 of the Communications Act of 1934, as amended, 47 
U.S.C. 154(i), 301, 303(c), 303(f), 303(g), 303(r), 303(y), and 332, 
this Declaratory Ruling is adopted and was effective September 29, 
2010.
    57. The Petition for Stay filed by New DBSD Satellite Services G.P. 
is denied.
    58. The Commission shall send a copy of this Fifth Report and 
Order, Eleventh Report and Order, Sixth Report and Order, and 
Declaratory Ruling in a report to be sent to Congress and the General 
Accounting Office pursuant to the Congressional Review Act, see 5 
U.S.C. 801(a)(1)(A).

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2010-27577 Filed 11-1-10; 8:45 am]
BILLING CODE 6712-01-P


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