68172 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

(iii) Table. The following Table 2 

identifies the crop subgroups for Crop 

Group 24, specifies the representative 

commodities for each subgroup, and 

lists all the commodities included in 

each subgroup. 

TABLE 2—CROP GROUP 24: SUBGROUP LISTING

Representative 

commodities Commodities 

Crop Subgroup 24A. Small fruit, inedible peel subgroup 

Lychee ...................... Aisen; bael fruit; Burmese grape; cat’s eyes; inga ́; lychee; madras-thorn; manduro; matisia; mesquite; mongongo, fruit; 

pawpaw, small-flower; satinleaf; Sierra Leone-tamarind; Spanish lime; velvet tamarind; wampi; white star apple; 

cultivars, varieties, and hybrids of these commodities. 

Crop Subgroup 24B. Medium to large fruit, smooth, inedible peel subgroup 

Avocado, plus pomegranate or banana.Abiu; akee apple; avocado; avocado, Guatemalan; avocado, Mexican; avocado, West Indian; bacury; banana; banana, 

dwarf; binjai; canistel; cupuacu ́; etambe; jatoba ́; kei apple; langstat; lanjut; lucuma; mabolo; mango; mango, horse; 

mango, Saipan; mangosteen; paho; papaya; pawpaw, common; pelipisan; pequi; pequia; persimmon, American; plantain; pomegranate; poshte; quandong; sapote, black; sapote, green; sapote, white; sataw; screw-pine; star apple; tamarind-of-the-Indies; wild loquat; cultivars, varieties, and hybrids of these commodities. 

Crop Subgroup 24C. Medium to large fruit, rough or hairy, inedible peel subgroup 

Pineapple, plus 

Atemoya or sugar 

apple.

Atemoya; biriba; breadfruit; champedak; cherimoya; custard apple; durian; elephant-apple; ilama; jackfruit; karuka; 

longan; mammy-apple; marmalade-box; marang; monkey-bread tree; nicobar-breadfruit; pandanus; pineapple; pulasan; 

rambutan; sapodilla; sapote, mamey; soncoya; soursop; sugar apple; sun sapote; cultivars, varieties, and hybrids of 

these commodities. 

Crop Subgroup 24D. Cactus, inedible peel subgroup 

Dragon fruit and 

Prickly pear fruit.

Dragon fruit; pitahaya; pitaya; pitaya amarilla; pitaya roja; pitaya, yellow; prickly pear, fruit; prickly pear, Texas, fruit; 

saguaro; cultivars, varieties, and hybrids of these commodities. 

Crop Subgroup 24E. Vine, inedible peel subgroup 

Passionfruit ............... Granadilla; granadilla, giant; monstera; passionflower, winged-stem; passionfruit; passionfruit, banana; passionfruit, purple; passionfruit, yellow; cultivars, varieties, and hybrids of these commodities. 

[FR Doc. 2014–26661 Filed 11–13–14; 8:45 am] 

BILLING CODE 6560–50–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Parts 1 and 27 

[RM–11395, GN Docket No. 12–268, WT 

Docket Nos. 14–170, 05–211; FCC 14–146] 

Updating Competitive Bidding Rules; 

Expanding the Economic and 

Innovation Opportunities of Spectrum 

Through Incentive Auctions; 

Implementation of the Commercial 

Spectrum Enhancement Act 

AGENCY: Federal Communications 

Commission. 

ACTION: Proposed rule. 

SUMMARY: This Notice of Proposed 

Rulemaking (NPRM) seeks comment on 

the revision of certain competitive 

bidding rules and provides notice of the 

Commission’s intention to resolve 

longstanding petitions for 

reconsideration. 

DATES: Comments are due on or before 

December 29, 2014 and reply comments 

are due on or before January 20, 2015. 

ADDRESSES: All filings in response to the 

NPRM must refer to GN Docket No. 12– 

268 and WT Docket Nos. 14–170 and 

05–211. The Commission strongly 

encourages parties to develop responses 

to the NPRM that adhere to the 

organization and structure of the NPRM. 

Comments may be filed using the 

Commission’s Electronic Comment 

Filing System (ECFS): 

D Electronic Filers: Comments may be 

filed electronically using the Internet by 

accessing ECFS: http://fjallfoss.fcc.gov/

ecfs2. 

D 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 messengerdelivered paper filings for the 

Commission’s Secretary must be 

delivered to FCC Headquarters at 445 

12th Street 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. 

People with Disabilities: To request 

materials in accessible formats for 

people with disabilities (braille, large 

print, electronic files, or audio format), 

send an email to fcc504@fcc.gov or call 

the Consumer & Governmental Affairs 

Bureau at 202–418–0530 (voice), 202– 

418–0432 (TTY). 

FOR FURTHER INFORMATION CONTACT: 

Wireless Telecommunications Bureau, 

Auctions and Spectrum Access 

Division: Kathryn Hinton at (202) 418– 

0660. 

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Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 68173 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Competitive Bidding 

NPRM released on October 10, 2014. 

The complete text of the Competitive 

Bidding NPRM is available for public 

inspection and copying from 8:00 a.m. 

to 4:30 p.m. Eastern Time (ET) Monday 

through Thursday or from 8:00 a.m. to 

11:30 a.m. ET on Fridays in the FCC 

Reference Information Center, 445 12th 

Street SW., Room CY–A257, 

Washington, DC 20554. The Competitive 

Bidding NPRM may be purchased from 

the Commission’s duplicating 

contractor, Best Copy and Printing, Inc. 

(BCPI), 445 12th Street SW., Room CY– 

B402, Washington, DC 20554, telephone 

202–488–5300, facsimile 202–488–5563, 

or by contacting BCPI on its Web site: 

http://www.BCPIWEB.com. When 

ordering documents from BCPI, please 

provide the appropriate FCC document 

number, for example, FCC 14–146. The 

complete text is also available on the 

Commission’s Web site at http://

wireless.fcc.gov, or by using the search 

function on the ECFS Web page at 

http://www.fcc.gov/cgb/ecfs. 

Initial Paperwork Reduction Act of 

1995 Analysis 

The NPRM contains proposed new or 

modified information collection 

requirements. The Commission, as part 

of its continuing effort to reduce 

paperwork burdens, invites the general 

public and the Office of Management 

and Budget (OMB) to comment on the 

information collection requirements 

contained in this document, as required 

by the Paperwork Reduction Act of 

1995, Public Law 104–13. In addition, 

pursuant to the Small Business 

Paperwork Relief Act of 2002, Public 

Law 107–198, see 44 U.S.C. 3506(c)(4), 

the Commission seeks specific comment 

on how it might further reduce the 

information collection burden for small 

business concerns with fewer than 25 

employees. 

I. Introduction 

1. The Commission proposes to 

reform some of its general part 1 rules 

governing competitive bidding for 

spectrum licenses to reflect changes in 

the marketplace, including the 

challenges faced by new entrants. The 

Commission’s proposals also advance 

the statutory directive to ensure that 

small businesses, rural telephone 

companies, and businesses owned by 

members of minority groups and women 

(collectively, designated entities or DEs) 

are given the opportunity to participate 

in the provision of spectrum-based 

services, and fulfill the commitment the 

Commission made in the Broadcast 

Television Spectrum Incentive Auction 

Report & Order. Expanding the 

Economic and Innovation Opportunities 

of Spectrum Through Incentive 

Auctions, 79 FR 48442, Aug. 15, 2014. 

Together these proposals will assure 

that the Commission’s part 1 rules 

continue to promote the Commission’s 

fundamental statutory objectives. The 

Commission expects to act on the issues 

it raises here soon enough to allow all 

parties to account for any changes while 

planning for the Broadcast Television 

Spectrum Incentive Auction 

(hereinafter, Incentive Auction or BIA). 

2. In the Competitive Bidding NPRM, 

the Commission proposes to: (1) Provide 

small businesses greater opportunity to 

participate in the provision of a wide 

range of spectrum-based services by 

modifying the Commission’s eligibility 

requirements, updating the standardized 

schedule of small business sizes, and 

eliminating duplicative reporting 

requirements, while also seeking 

comment on whether to strengthen its 

rules to prevent the unjust enrichment 

of ineligible entities; (2) Amend the 

Commission’s former defaulter rule to 

balance concerns that the current rule is 

overly broad with the Commission’s 

continued need to ensure that auction 

bidders are financially reliable; (3) 

Codify an established competitive 

bidding procedure that prohibits the 

same individual or entity from 

becoming qualified to bid on the basis 

of more than one short-form (FCC Form 

175) application in a specific auction; 

(4) Prevent entities that are exclusively 

controlled by a single individual or set 

of individuals from becoming qualified 

to bid on overlapping licenses based on 

more than one short-form application in 

a specific auction; and (5) Retain the 

current rules governing joint bidding 

arrangements among non-nationwide 

providers and prohibit joint bidding 

arrangements among nationwide 

providers. 

3. The Commission also provides 

notice of its intention to resolve long 

standing petitions for reconsideration 

and proposes necessary clean-up 

revisions to its part 1 competitive 

bidding rules. 

II. Eligibility for Bidding Credits 

4. In establishing the Commission’s 

auction authority, Congress vested the 

Commission with broad discretion in 

balancing a number of competing 

objectives. These included, among other 

things, special provisions to ensure that 

DEs, including small businesses, have 

the opportunity to participate at auction 

and in the provision of spectrum-based 

services. Section 309(j)(4)(D) of the 

Communications Act (the Act) requires 

that when the Commission prescribes 

regulations in designing systems of 

competitive bidding, it shall ‘‘ensure 

that small businesses, rural telephone 

companies, and businesses owned by 

members of minority groups and women 

are given the opportunity to participate 

in the provision of spectrum-based 

services, and, for such purposes, 

consider the use of . . . bidding 

preferences.’’ In addition, the statute 

directs that in designing such systems of 

competitive bidding, the Commission 

shall seek to promote ‘‘economic 

opportunity and competition . . . by 

avoiding excessive concentration of 

licenses and by disseminating licenses 

among a wide variety of applicants, 

including small businesses, rural 

telephone companies, and businesses 

owned by members of minority groups 

and women.’’ At the same time, the Act 

requires the Commission to ‘‘prevent 

unjust enrichment as a result of the 

methods employed to issue 

licenses. . . .’’ 

5. The Commission’s challenge in 

providing opportunities to small 

businesses and entrepreneurs pursuant 

to these provisions has always been to 

find a reasonable balance between the 

competing goals of affording such 

entities reasonable flexibility to obtain 

the capital necessary to participate in 

the provision of spectrum-based 

services and effectively preventing the 

unjust enrichment of ineligible entities. 

See Implementation of the Commercial 

Spectrum Enhancement Act and 

Modernization of the Commission’s 

Competitive Bidding Rules and 

Procedures, 71 FR 26245, May 4, 2006 

(DE Second Report and Order). Over the 

two-decade span of the auctions 

program, the Commission has 

periodically modified its rules to 

achieve the right balance given changing 

circumstances in the wireless industry. 

6. The Commission takes the 

opportunity to consider whether its 

rules continue to serve their intended 

purposes and the public interest in an 

evolving mobile wireless marketplace. 

In the past decade, the rapid adoption 

of smartphones and tablet computers 

and the widespread use of mobile 

applications, combined with the 

increasing deployment of high-speed 3G 

and now 4G technologies, have driven 

significantly more intensive use of 

mobile networks. This progression from 

the provision of mobile voice services to 

the provision of mobile broadband 

services has increased the need for 

access to spectrum. In addition, in the 

past decade, the number of small and 

regional mobile wireless service 

providers has significantly decreased, 

yet regional and local service providers 

continue to offer consumers additional 

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68174 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

choices in the areas they serve. As the 

costs of spectrum and network 

deployment have increased in the last 

20 years, especially for small and new 

entrants, access to capital for acquiring 

licenses is critical for these providers to 

take advantage of different opportunities 

to participate in the provision of 

spectrum-based services, including 

through facilities-based deployment, 

spectrum leasing, and mobile virtual 

network operator arrangements. 

7. The Commission addresses the 

concerns of parties that argue that its 

current rules inhibit, rather than foster, 

the inclusion of small businesses in the 

wireless marketplace. The Commission 

offers proposals to increase the 

opportunities for small businesses to 

become spectrum licensees. At the same 

time, the Commission remains mindful 

of its responsibility to ensure that 

benefits are provided only to qualifying 

entities and seeks comment on 

modifying its current unjust enrichment 

rules. 

8. As a first step in reassessing how 

the Commission determines small 

business eligibility, the Commission 

proposes to repeal the attributable 

material relationship (AMR) rule and to 

re-examine the need for the related 

decade-old policy that has limited small 

businesses seeking bidding credits to 

providing primarily retail, facilitiesbased service directly to the public with 

each of their licenses. The Commission 

proposes to instead adopt a more 

flexible approach under which it would 

evaluate small business eligibility on a 

license-by-license basis, using a twopronged test. Under this proposal, the 

Commission would apply existing rules 

requiring attribution of controlling 

interests in, and affiliates of, a small 

business venture to determine whether 

the applicant: (1) Meets the applicable 

small business size standard, and (2) 

retains control over the spectrum 

associated with the individual licenses 

for which it seeks benefits. The 

Commission further proposes to modify 

the language of 47 CFR 1.9020 to make 

clear that DE lessors may fully engage in 

spectrum manager leasing under the 

same de facto control standard as nonDE lessors. With these proposals, the 

Commission revisits its statutory 

mandate under 47 U.S.C. 309(j)(4)(D) 

‘‘to ensure that small businesses, rural 

telephone companies, and businesses 

owned by members of minority groups 

and women are given the opportunity to 

participate in the provision of spectrumbased services’’ in light of today’s 

wireless marketplace. Alternatively, the 

Commission also seeks comment on 

retaining the policy and/or some 

variation of the AMR rule. The 

Commission also asks whether it should 

revisit its unjust enrichment rules to 

assure that the Commission maintains 

the right balance considering its 

responsibility to safeguard the award of 

small business benefits to only eligible 

entities. 

9. The Commission also proposes to 

modify the generally applicable 

schedule of small business size 

standards and bidding credits, which 

has remained unchanged in the 17 years 

since it was first adopted. The goal of 

these proposals is to encourage small 

business participation in spectrum 

license auctions and to ensure that the 

Commission’s gross revenue definitions 

accurately reflect what constitutes a 

‘‘small business’’ in today’s 

marketplace, taking into consideration 

the relative size of the large, national 

providers. Specifically, the Commission 

proposes revisions to its small business 

definitions and seeks comment on 

whether to change the bidding credit 

percentages that would apply to those 

definitions. The Commission also seeks 

comment on whether to offer alternative 

bidding preferences to entities based on 

criteria other than business size by 

revenue. 

10. Additionally, the Commission 

proposes to repeal the DE annual 

reporting requirement. The Commission 

questions whether the value of the 

information provided in those reports 

outweighs the regulatory burden that 

the reporting obligation places on small 

businesses. 

11. Collectively, these proposals seek 

to update the Commission’s rules to 

reflect that small businesses need 

greater opportunities to gain access to 

capital so that they may have an 

opportunity to participate in the 

provision of spectrum-based services in 

today’s communications marketplace. 

The Commission recognizes that high 

capital costs associated with building 

and operating wireless broadband 

networks may require small businesses 

to find alternative revenue streams, 

including through secondary markets, 

so that they have an opportunity to 

acquire licenses at auction and 

participate in the provision of spectrumbased services. The Commission 

anticipates that by revising its rules to 

allow small businesses to take 

advantage of the same opportunities to 

utilize their spectrum capacity and gain 

access to capital as those afforded to 

larger licensees, the Commission can 

better achieve its statutory directives. 

The Commission nonetheless remains 

mindful of its obligation to prevent 

unjust enrichment of ineligible entities. 

The Commission describes and seeks 

comment on each of its specific 

proposals. 

A. Attribution Rules and Small Business 

Policies 

12. Background. As its principal 

means of fulfilling the statutory goals for 

DEs, the Commission makes auction 

bidding credits available to eligible 

small businesses. A small business is 

eligible for bidding credits if its gross 

revenues, in combination with those of 

its ‘‘attributable’’ interest holders, fall 

below applicable service-specific 

financial caps. Since 2000, the 

Commission has applied a ‘‘controlling 

interest’’ standard to all services when 

making these attribution determinations 

in the small business context. Under 

this standard, the Commission attributes 

to an applicant the gross revenues of the 

applicant, its controlling interests, its 

affiliates, and the affiliates of the 

applicant’s controlling interests. A 

‘‘controlling interest’’ includes 

individuals or entities, or groups of 

individuals or entities, that have control 

of the applicant under the principles of 

either de jure or de facto control. 

Affiliates include entities or individuals 

that directly or indirectly control or 

have the power to control the applicant, 

directly or indirectly are controlled by 

the applicant, directly or indirectly are 

controlled by a third party that also 

controls the applicant, or have an 

‘‘identity of interest’’ with the applicant. 

13. In adopting secondary markets 

rules in the 2004 Secondary Markets 

Second Report and Order, the 

Commission sought to expand and 

enhance secondary markets to permit 

spectrum to flow more freely among 

users and uses in response to economic 

demand, to the extent consistent with 

its public interest objectives. Promoting 

Efficient Use of Spectrum Through 

Elimination of Barriers to the 

Development of Secondary Markets, 

Second Report and Order, Order on 

Reconsideration, and Second Further 

Notice of Proposed Rulemaking, 69 FR 

77522, Dec. 27, 2004 (Secondary 

Markets Second Report and Order). The 

Commission explained that it intended 

for its rules to allow more flexible use 

of spectrum by licensees and other 

spectrum users, better define licensees’ 

and spectrum users’ rights and 

responsibilities, enable the use of 

spectrum across various dimensions 

(frequency, space, and time), promote 

the efficient use of spectrum, and 

provide for continued technological 

advances. While the Commission 

ostensibly extended the new de facto 

control standard for spectrum manager 

leasing to DE lessors, it nonetheless 

required that a licensee receiving DE 

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Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 68175 

benefits be an entity that actually 

provides service under the license. The 

Commission explained that it intended 

that DEs should remain primarily 

providers of facilities-based service 

directly to the public. That conclusion 

was based on an interpretation of the 

legislative history underlying the Act’s 

provisions regarding unjust enrichment, 

as well as the continued application of 

the Commission’s controlling interest 

standard and affiliation rules. 

14. In the Secondary Markets Second 

Report and Order, the Commission also 

advised that in examining whether a 

spectrum lessee would, under a 

spectrum manager lease, become a 

controlling interest or affiliate of the 

licensee, the licensee should look to all 

of the relevant circumstances, including 

how large a portion of its total capacity 

to provide spectrum-based services 

would be leased, what involvement it 

would have with the spectrum lessee as 

a result of the spectrum lease, and what 

relationship the two parties have with 

one another apart from the lease. The 

Commission concluded that a spectrum 

manager lease between a designated 

entity licensee and a spectrum lessee 

with a prior business relationship where 

substantially all of the spectrum 

capacity of the licensee is to be leased 

would cause the spectrum lessee to 

become an attributable affiliate of the 

licensee. Such affiliation would render 

the licensee ineligible for designated 

entity or entrepreneur benefits and, 

therefore, would make such a spectrum 

lease impermissible. On the other hand, 

the Commission reasoned that a 

spectrum manager lease involving a 

small portion of the designated entity or 

entrepreneur licensee’s spectrum 

capacity where no relationship existed 

between the licensee and spectrum 

lessee apart from the lease would likely 

be permissible. Situations falling 

somewhere between these two examples 

would have to be evaluated according to 

the individual circumstances involved. 

15. Subsequently in 2006, at the 

behest of interested parties, including 

Council Tree, the Commission released 

a further notice, which sought comment 

on the specific nature of the types of 

relationships that should trigger the 

attribution of revenues to determine 

eligibility for designated entity benefits. 

See Implementation of the Commercial 

Spectrum Enhancement Act and 

Modernization of the Commission’s 

Competitive Bidding Rules and 

Procedures, 71 FR 6992, Feb. 10, 2006. 

For instance, Council Tree initially 

proposed that the Commission should 

restrict a designated entity applicant’s 

‘‘material relationships,’’ including both 

financial and operational agreements, in 

order to more carefully ensure that 

designated entity benefits are awarded 

only to bona fide eligible entities. In the 

DE Second Report and Order, the 

Commission, to further protect against 

unjust enrichment, departed from its 

case-by-case approach and instead 

adopted a bright-line test to require a 

small business applicant or licensee to 

automatically attribute to itself the gross 

revenues of any entity with which it had 

an ‘‘attributable material relationship.’’ 

It reasoned that an agreement that 

concerns the actual use of the DE’s 

spectrum capacity is one that causes the 

relationship to be ripe for abuse and 

creates the potential for the relationship 

to impede a DE’s ability to become a 

facilities-based provider, as intended by 

Congress. The Commission concluded 

that an applicant or licensee has an 

AMR when it has one or more 

agreements with any individual entity 

for the lease (under either spectrum 

manager or de facto transfer leasing 

arrangements) or resale (including 

under a wholesale arrangement) of, on 

a cumulative basis, more than 25 

percent of the spectrum capacity of any 

individual license held by the applicant 

or licensee. 

16. Council Tree and others 

challenged the AMR rule and other 

aspects of the Commission’s 2006 Order 

in the United States Court of Appeals 

for the Third Circuit on the grounds that 

they failed to take into account 

circumstances regarding small 

businesses’ access to capital, among 

other things. In subsequent years, the 

Office of Advocacy in the U.S. Small 

Business Administration (SBA) also 

expressed its belief to the Commission 

that the 2006 changes to the small 

business rules had ‘‘inhibited 

participation by small entities and 

minority businesses in recent spectrum 

auctions,’’ and that the changes were 

unnecessary in light of the availability 

of the audit process included in the 

Commission’s original auction rules. In 

2010, although the court ultimately 

upheld the AMR rule, it nonetheless 

questioned some of the Commission’s 

reasoning, noting what it termed the 

Commission’s ‘‘inattention’’ to the 

nature of the wireless wholesale 

business. Questioning why the 

Commission chose to attribute certain 

relationships to achieve its stated policy 

of DEs as facilities-based providers, the 

court observed that wholesaling 

includes an extensive provision of 

service component. The court said that 

it was therefore not obvious that the 

Commission needed to prohibit DEs 

from engaging primarily in a wholesale 

business in order to prevent them from 

simply monetizing their bidding credits 

with a large carrier, ‘‘so long as [DEs] do 

not sell or lease overly large quantities 

of their capacity to any single lessee or 

buyer.’’ Remarking that the Commission 

appeared not to have acknowledged this 

issue, the court commended it to the 

Commission’s attention on remand. 

17. Recently, in February 2014, the 

Minority Media & Telecom Council 

(MMTC) filed a white paper with the 

Commission making nine 

recommendations to facilitate the 

participation of minority- and womenowned businesses in upcoming 

auctions. Listed first among these is the 

repeal of the AMR rule. MMTC argues 

that the rule impedes the ability of small 

entities to become providers of 

spectrum-based service, explaining that 

wholesaling and leasing arrangements 

are important vehicles for small and 

minority-owned businesses to build and 

efficiently use capital. 

18. MMTC’s White Paper argues that 

‘‘over the course of fifty-six wireless 

auctions during the past 20 years, the 

majority of DEs that currently hold 

wireless licenses are incumbent rural 

telephone companies, very few DEs are 

new entrants, and even fewer DEs are 

(minority-owned business enterprises) 

MBEs.’’ MMTC and its supporters 

maintain that DE participation in 

spectrum auctions dramatically 

decreased after the Commission’s 

adoption of its 2006 rule modifications 

and claim that the results from Auctions 

66 and 73 ‘‘showed a precipitous drop 

in DE participation from the average 

70% value of winning bids over 

previous years, to only 4.0% and 2.6% 

respectively.’’ 

19. Other parties concur with 

MMTC’s concerns about the AMR rule, 

arguing that the development of the 

Commission’s rules and policies over 

the last decade, including adoption of 

the AMR rule, have significantly 

hindered their ability to access capital 

and largely impeded their ability to 

acquire and use wireless spectrum 

licenses in today’s wireless marketplace. 

Parties claim that the AMR rule creates 

insurmountable obstacles for new and 

existing small businesses to gain access 

to capital in secondary markets where 

they argue small businesses can play 

important roles in assuring that licensed 

spectrum is effectively and efficiently 

utilized. In a March 2014 request for 

clarification or waiver of the AMR rule, 

Grain Management, LLC described how 

the rule could prevent a small, minorityowned, new-entrant lessor of spectrum 

capacity on licenses acquired without 

DE benefits from being eligible for such 

benefits in future auctions. See Grain 

Management, LLC’s Request for 

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68176 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

Clarification or Waiver of 47 CFR 

1.2110(b)(3)(iv)(A); Implementation of 

the Commercial Spectrum Enhancement 

Act and Modernization of the 

Commission’s Competitive Bidding 

Rules and Procedures; Expanding the 

Economic and Innovation Opportunities 

of Spectrum Through Incentive 

Auctions; Amendment of the 

Commission’s Rules with Regard to 

Commercial Operations in the 1695– 

1710 MHz, 1755–1780 MHz, and 2155– 

2180 MHz Bands, WT Docket No. 05– 

211; GN Docket Nos. 12–268 and 13– 

185, Order, 29 FCC Rcd 9080 (2014). 

20. Discussion. The Commission 

concludes that it is appropriate to revisit 

its small business eligibility rules and 

evaluate whether to rebalance its 

competing goals in order to provide 

small businesses additional 

opportunities to gain access to new 

sources of capital necessary for 

participation in the provision of 

spectrum-based services in today’s 

marketplace, while guarding against 

unjust enrichment of ineligible entities. 

Chief among the actions that the 

Commission takes in the Competitive 

Bidding NPRM is its proposal to repeal 

the AMR rule and to re-examine the 

related decade-old policy underlying it. 

In lieu of the bright-line test of the AMR 

rule, the Commission proposes a twopronged approach to evaluate an entity’s 

eligibility for small business benefits. 

This approach would use its existing 

controlling interest and affiliation 

standards to determine what revenues 

are attributable to an applicant based 

upon a rigorous review of all relevant 

relationships and agreements, which 

will ensure that the small business 

makes independent decisions about its 

business operation. Alternatively, the 

Commission also seeks comment on 

whether it should retain the policy but 

modify the AMR rule with some other 

attribution threshold to determine an 

applicant’s eligibility for small business 

benefits. 

21. Using long standing principles of 

control and affiliation, the Commission 

proposes to safeguard small business 

benefits by attributing the revenues of 

any entity that has the ability to control, 

or potentially control, an applicant’s 

business venture. The Commission’s 

existing attribution rules examine the 

extent to which a small business may 

combine its efforts, property, money, 

skill and knowledge with another. 

Further, where there is an agreement to 

share profits/losses proportionate to 

each party’s contribution to the business 

operation, the existing rules consider 

these issues as a factor in whether to 

attribute that party to the applicant as 

its affiliate. Because the Commission’s 

proposals should allow small businesses 

greater flexibility to engage in business 

ventures that include increased forms of 

leasing and other spectrum use 

arrangements, the Commission 

anticipates that the combined effect of 

the proposals—by allowing a small 

business greater flexibility to adopt a 

more individualized business model for 

each license it holds—should increase 

the potential sources of revenue for the 

small business and potentially decrease 

the likelihood that it would be subject 

to undue influence by any particular 

user of a single license. The 

Commission’s proposed approach 

would also ensure that a licensee retains 

control of all licenses for which it seeks 

bidding credits, while providing greater 

flexibility in potential uses for any 

licenses acquired without such benefits. 

The Commission seeks comment on this 

proposal and asks commenters to 

specifically address how and why a 

small business may be more or less 

likely to be subject to undue influence 

by a user of its spectrum under this 

approach. Additionally, the 

Commission proposes to modify the 

language of 47 CFR 1.9020 to make clear 

how the secondary market rules apply 

to DE lessors, which should provide 

greater flexibility to small businesses in 

how they choose to use their spectrum. 

The Commission also seeks comment on 

whether any corresponding changes 

may be warranted in its unjust 

enrichment rules to ensure that small 

business bidding credits are extended 

only to qualifying small businesses. 

22. The AMR rule and the policy that 

spurred its adoption were intended to 

prevent unjust enrichment by 

establishing safeguards to ensure that 

entities ineligible for small business 

incentives could not circumvent the 

Commission’s rules by obtaining those 

benefits indirectly, through their 

relationships with eligible entities. The 

Commission based its decisions, in large 

measure, on legislative history 

suggesting that anti-trafficking 

restrictions and unjust enrichment 

payment obligations were needed to 

deter participation in the licensing 

process by those who have no intention 

of offering service to the public. For 

example, in the Secondary Markets 

Second Report and Order, the 

Commission relied on the legislative 

history in rejecting a commenter’s 

argument that ‘‘[t]here [was] no reason 

to believe that Congress intended to 

limit designated entities to only one 

form of participation in the spectrum 

market—construction and operation of a 

facilities-based network.’’ In adopting 

the AMR rule, the Commission 

reaffirmed that interpretation of the 

legislative history, concluding that the 

adoption of the AMR rule, along with 

other modifications, was necessary to 

strengthen its implementation of 

Congress’s directives with regard to DEs 

and to ensure that, in accordance with 

the intent of Congress, every recipient of 

its DE benefits is an entity that uses its 

licenses to directly provide facilitiesbased telecommunications services for 

the benefit of the public. 

23. Yet, in the Commission’s attempts 

to safeguard small business benefits 

from unjust enrichment, it appears that 

the Commission’s policy and 

corresponding rule modifications may 

have had the unintended consequence 

of hindering the Commission’s ability to 

satisfy its statutory goal of promoting 

opportunities for wireless entry by small 

businesses. Moreover, the Commission 

notes that the statute does not 

specifically state, nor does the House 

Report make clear, that Congress 

intended to require that ‘‘offering 

service to the public’’ be defined only as 

DEs directly providing facilities-based 

telecommunications services for the 

benefit of the public. The Commission 

may have placed undue weight on 

language from the House Report, given 

all of the various factors that the actual 

text of 47 CFR 309(j) gives the 

Commission the discretion to balance. 

In interpreting statutes, analysis of the 

statutory text, aided by established 

principles of interpretation, controls. 

24. While the policy of requiring 

primarily the direct provision of 

facilities-based service by a small 

business seeking bidding credits is one 

way to protect against unjust 

enrichment, the Commission tentatively 

concludes that it is not the only way to 

ensure that benefits are provided solely 

to those entities that Congress intended. 

The Commission also recognizes that 

the AMR rule, which was adopted to 

further that policy, may inhibit the 

highest and best use of spectrum by 

preventing small businesses that lack 

access to traditional sources of capital 

from being able to acquire alternative 

revenue streams through leasing and 

other spectrum use arrangements, even 

in circumstances where they retain 

control over their business venture. 

MMTC argues that there has been a 

documented decline in DE participation 

and success at auction following the 

adoption of the Commission’s rule 

changes in 2006, based on the relative 

value of licenses won by DEs compared 

to non-DEs. While the Commission 

notes that the relative value of licenses 

won at auction is only one measure to 

gauge success of the small business 

program and that there are other 

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relevant factors to consider in assessing 

whether the Commission has met its 

statutory obligations for small 

businesses, the Commission nonetheless 

concurs that over the last decade small 

businesses have faced various increased 

difficulties in becoming wireless 

licensees. 

25. The Commission contemplates 

that a different approach may be more 

effective in balancing its competing 

goals of affording small businesses 

reasonable flexibility to obtain the 

capital necessary to participate in the 

provision of spectrum-based services 

and effectively preventing the unjust 

enrichment of ineligible entities. 

Inasmuch as Congress has granted the 

Commission the discretion to weigh the 

varying objectives of section 309(j), the 

Commission proposes rule 

modifications that, if adopted, could 

offer a more balanced approach for 

achieving its statutory directives. The 

Commission therefore proposes to 

repeal the AMR rule and evaluate small 

business eligibility in a manner that 

could provide DEs with greater 

opportunities to participate in the 

provision of spectrum-based services, 

including through secondary market 

transactions. The Commission 

anticipates that this, in turn, will help 

DEs gain access to capital by enabling 

leasing and other spectrum use 

arrangements. Allowing more DEs and 

small businesses to participate in 

spectrum leases and other spectrum use 

agreements will also promote the 

Commission’s goals of promoting more 

efficient and dynamic use of the 

important spectrum resource through 

secondary market spectrum 

transactions. 

26. The Commission seeks comment 

on this proposal to repeal the AMR rule, 

and its tentative conclusions regarding 

its need to re-evaluate its small business 

policy. Should the Commission 

discontinue its policy requiring small 

businesses seeking bidding credits to 

provide primarily direct, facilities-based 

service on each individual license? 

Would this proposal better promote 

Congress’s intent for small businesses? 

Would the proposal to eliminate this 

policy and to repeal the AMR rule have 

the unintended effect of providing 

ineligible entities with access to 

discounted spectrum? 

27. In a mature wireless industry 

where leasing and other spectrum use 

arrangements may be important tools to 

enable wireless providers to raise 

capital and participate at auction, is it 

appropriate to provide small businesses 

seeking bidding credits with greater 

flexibility to enter into such spectrum 

use arrangements? Should the 

Commission consider an alternative 

spectrum capacity use limit for a brightline attribution test, and if so what is the 

appropriate percentage and what 

spectrum use arrangements should it 

include? Would eliminating the policy 

that small businesses provide primarily 

facilities-based service with each 

individual license increase or decrease 

the risk of unjust enrichment to 

ineligible entities and/or the 

warehousing of spectrum? What 

safeguards should the Commission 

consider to ensure that bidding credits 

are extended only to qualifying small 

businesses, as Congress intended? 

Alternatively, should the Commission 

retain the AMR rule and the related 

policy that small businesses primarily 

provide facilities-based service, but 

stipulate that neither would kick in for 

a set number of years? This approach 

might provide small businesses with an 

opportunity to raise capital early in the 

license term but still require that they 

eventually become primarily facilitiesbased providers of service when the 

AMR rule kicks in. Commenters should 

address when the AMR rule and the 

related policy regarding facilities-based 

service should kick in and how 

construction build-out requirements 

should be measured. Commenters 

should also address whether the 

Commission’s proposed shift in policy 

would continue to allow auctions to 

award licenses to those entities that 

value the spectrum most highly, which 

fosters the Commission’s ability to 

accomplish Congress’s multi-faceted 

policy objectives. Will rebalancing the 

Commission’s approach to Congress’s 

goals provide adequate safeguards 

against unjust enrichment to ensure that 

bidding credits are awarded only to 

qualifying small businesses? 

28. Proposed Standard for Evaluating 

Small Business Eligibility. The 

Commission proposes a more focused 

approach to evaluate small business 

eligibility that looks at who controls, or 

has the potential to control, the 

applicant and any spectrum acquired 

with the use of small business benefits. 

Specifically, the Commission proposes 

to apply a two-pronged test using its 

existing controlling interest and 

affiliation rules to determine: (1) 

Whether an applicant meets the 

applicable small business size standard, 

and (2) whether it retains control over 

the spectrum associated with the 

licenses for which it seeks small 

business benefits. This approach will 

allow the Commission to separate its 

review of those who control, or have the 

power to control, the small business 

applicant’s business venture, and are 

therefore attributable for purposes of 

determining eligibility, from those that 

use (and may control) its spectrum 

capacity, which would affect the small 

business’s ability to retain its benefits 

with respect to any particular license. 

Consistent with the Commission’s 

existing controlling interest and 

affiliation rules under 47 CFR 

1.2110(c)(2)(ii)(H)–(I), it will attribute 

the revenues of those entities or 

individuals that determine or 

significantly influence the nature or 

types of services offered by the small 

business, the terms upon which such 

services are offered, and the prices 

charged for such services. The 

Commission’s proposals would expand 

the types of services the small business 

might offer as part of its overall business 

venture, but would not alter how the 

Commission carefully monitors those 

that have the ability to control, or 

potentially control, the applicant or 

licensee and its business venture. The 

Commission seeks comment on these 

specific proposals. 

29. The first prong would evaluate 

whether an applicant meets the 

applicable small business size standard 

and is therefore eligible for benefits. To 

evaluate small business eligibility, the 

Commission proposes to apply its 

existing controlling interest standard 

and affiliation rules to determine 

whether an entity should be attributable 

based on whether that entity has de jure 

or de facto control of, or is affiliated 

with, the applicant’s overall business 

venture. De jure control is typically 

evidenced by the holding of greater than 

50 percent of the voting stock of a 

corporation or, in the case of a 

partnership, general partnership 

interests. De facto control is determined 

on a case-by-case basis to determine 

whether the licensee has actual control 

over its business venture. Thus, 

pursuant to 47 CFR 1.2110 and 

consistent with the Commission’s 

current analysis, under its proposal, 

control and affiliation may arise 

through, among other things, ownership 

interests, voting interests, or the terms 

of any agreements that create a 

controlling, or potentially controlling, 

relationship over the applicant’s 

business venture. The Commission 

therefore notes that its proposal to 

eliminate the policy that small 

businesses seeking benefits primarily 

provide facilities-based service does not 

alter the rules that require it to consider 

whether facilities-sharing and other 

agreements confer control of or create 

affiliation with the applicant. The 

proposal also does not alter the general 

standard by which the Commission 

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evaluates whether a licensee has ceded 

de facto control and effected an 

unauthorized transfer of control of its 

spectrum authorization to a third party. 

30. The Commission’s continued 

careful and targeted examination of 

these issues will allow it to ensure that 

a small business applicant has the 

independent ability to direct its 

decision making regarding its overall 

business venture and how its licenses 

are used to offer service to the public. 

Moreover, those claiming small business 

benefits will continue to be bound by 

the Commission’s existing rules 

regarding control and attribution, which 

should be familiar to all existing and 

future Commission licensees. By 

providing small businesses with greater 

opportunities to access revenue streams 

through leasing and other spectrum use 

agreements, the Commission anticipates 

that they will have more flexibility to 

employ business models that suit their 

individual needs and therefore will be 

less likely to be influenced by deeppocketed investors or parties with 

which they have a spectrum use 

agreement. Furthermore, this approach 

recognizes the Commission’s earlier 

conclusion in the Secondary Markets 

proceeding that the mere existence of a 

spectrum use agreement between a 

small business and another party does 

not, without more, cause the other party 

to become an attributable interest holder 

in the applicant. This approach, 

coupled with the Commission’s 

proposed departure from the policy of 

requiring small businesses to provide 

primarily facilities-based service 

directly to the public with each of its 

licenses, should allow small businesses 

to gain access to capital and better 

enable them to participate in auctions 

and in the provision of spectrum-based 

services, so long as the terms of any 

spectrum use agreement do not confer 

control or create an affiliation that 

would lead to attribution of 

disqualifying revenues. Will this 

approach promote long-term 

investment, market participation and 

competition in the wireless industry by 

small businesses? 

31. Once the first prong has been met, 

the Commission would evaluate 

eligibility under the second prong. 

Under the second prong, the 

Commission proposes to determine an 

entity’s eligibility to retain small 

business benefits on a license-by-license 

basis, based on whether the entity has 

maintained de jure and de facto control 

of the license. Under this proposed 

license-by-license approach, an entity 

will not necessarily lose its eligibility 

for all current and future small business 

benefits solely because of a decision 

associated with any particular license. 

Instead, while a small business might 

incur unjust enrichment obligations if it 

relinquishes de jure or de facto control 

of any particular license for which it 

claimed benefits, so long as the 

revenues of its attributable interest 

holders (i.e., the DE’s affiliates, its 

controlling interests, and the affiliates of 

its controlling interests) continue to 

qualify under the relevant small 

business size standard, it could still 

retain its eligibility to retain current and 

future benefits on existing and future 

licenses. In other words, an applicant 

need not be eligible for small business 

benefits on each of the licenses it holds 

in order to demonstrate its overall 

eligibility for such benefits. For 

instance, if a small business chooses to 

permissibly relinquish benefits, 

incurring any applicable unjust 

enrichment obligation, and transfer de 

facto control of a license through a de 

facto transfer lease, that lease will not 

necessarily make the lessee an 

attributable interest holder in the 

applicant or cause the applicant to 

become ineligible for other small 

business benefits it might have or want 

to acquire. 

32. The Commission stresses that 

small businesses, like all its licensees, 

remain subject to its rules to prevent 

unauthorized transfers of control of 

their license authorizations pursuant to 

section 310(d) of the Act. Accordingly, 

if a small business seeking benefits 

executes a spectrum use agreement that 

does not comply with the Commission’s 

relevant standard of de facto control, it 

will be subject to unjust enrichment 

obligations for the benefits associated 

with that particular license. If the terms 

of that spectrum use agreement go so far 

as to confer control of, or the potential 

to control, the small business’s overall 

business venture, the business could 

risk the attribution of revenues, which 

could render it ineligible for all current 

and future small business benefits on all 

licenses. Except where the leasing 

standard of de facto control applies 

under the secondary market rules, the 

criteria of Intermountain Microwave and 

Ellis Thompson will continue to apply 

to any Commission licensee, including 

a small business, for purposes of 

assessing whether it can demonstrate 

that it retains de facto control of its 

business venture and spectrum 

authorization. See Applications for 

Microwave Transfers to Teleprompter 

Approved with Warning; Non-broadcast 

and General Action Report No. 1142, 

Public Notice (by the Commission en 

banc), 12 FCC 2d 559, 559–60 (1963) 

(Intermountain Microwave); Ellis 

Thompson Corporation, 60 FR 1776, 

Jan. 5, 1995. Small businesses will, 

however, be free under this proposal 

from the added policy requirement 

regarding the extent to which it must 

use each individual spectrum license for 

the provision of facilities-based service 

in order to retain eligibility for small 

business benefits. 

33. The Commission seeks comment 

on its proposed two-pronged approach 

to evaluate attribution and establish 

eligibility for small business benefits. 

Will this proposal provide small 

businesses with the flexibility necessary 

to participate in an evolving wireless 

marketplace? Does the absence of a 

bright-line attribution standard hinder 

an applicant’s ability to assess its 

eligibility for small business benefits? 

Will the Commission’s proposed 

approach allow it to safeguard the 

benefits it awards and prevent ineligible 

entities from obtaining benefits 

indirectly, through arrangements with 

eligible small businesses? Should the 

Commission take additional steps to 

assure that ineligible entities cannot 

exercise undue influence over a small 

business, or will its proposed approach 

empower small businesses to make their 

own decisions with respect to the 

highest and best use of each of their 

licenses without risking the undue 

influence of their investors or spectrum 

users? For instance, should the 

Commission, in considering whether the 

user’s revenues should be attributable to 

the small business applicant, consider 

any limits on the amount of its spectrum 

capacity a small business seeking 

benefits can allow a third party to use, 

even where such use is otherwise 

permissible under Commission rules 

and the agreement on its own does not 

create a controlling interest or affiliation 

in the applicant’s business venture? 

34. Should the Commission limit the 

ability of a small business seeking 

benefits to lease all of its spectrum 

capacity or should the Commission 

allow it to be primarily engaged in the 

business of leasing provided that it 

complies with small business eligibility 

rules? Would allowing a small business 

seeking benefits to lease 100 percent of 

its spectrum capacity on any individual 

license, and/or on all of its licenses, 

increase the potential of the unjust 

enrichment of ineligible entities? 

Commenters should address how that 

risk increases or decreases based on the 

amount of spectrum capacity that may 

be leased. Should the Commission be 

concerned that a small business leasing 

large quantities of its spectrum capacity 

to a single user has allowed another 

entity to receive the benefit of its 

bidding credits? 

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35. Should there be a standard by 

which the Commission should 

automatically attribute the gross 

revenues of an entity with which a 

small business seeking benefits has 

spectrum use agreements if it has such 

agreements with a single entity in 

numerous markets? How should the 

Commission view small businesses that 

have multiple financial and/or 

operational arrangements with another 

licensee or entity where the agreements 

do not otherwise create a controlling 

interest or affiliation with the small 

business? Should the existence of such 

multiple agreements create a rebuttable 

presumption of affiliation similar to the 

kinship affiliation rule, or does the 

Commission’s existing rule of 

‘‘affiliation through contractual 

relationships’’ already adequately guard 

against a third party acquiring control, 

or the potential to control, the small 

business through such agreements? For 

instance, should the Commission permit 

a small business seeking benefits to 

have a combination of capital 

investments, loan, marketing, 

management and leasing agreements 

with another Commission licensee 

without attributing the gross revenues of 

that entity to the small business? Is 

there a combination of agreements that 

should cause more concern in assessing 

small business benefit eligibility, and 

should any combination of agreements 

with a single party create a rebuttable 

presumption of attribution or an 

ineligibility for small business benefits? 

Are there any specific types of 

agreements that are more likely to 

confer control or undue influence of the 

small business seeking benefits that 

should cause the Commission to 

automatically attribute the gross 

revenues of the entity to the small 

business or render the small business 

ineligible for benefits? 

36. Do the Commission’s proposals 

provide small business applicants with 

sufficient flexibility to access capital, 

compete in auctions, and participate in 

new and innovative ways in the 

provision of service in the wireless 

marketplace while retaining their 

benefits? Do the Commission’s 

proposals make it more or less likely 

that a small business will be unduly 

influenced by the entities with which it 

engages in spectrum use agreements? 

Commenters opposing these proposals 

should indicate specific concerns. 

Commenters supporting these proposals 

should offer any other suggestions the 

Commission should consider to revise 

its rules and reform its small business 

policies. To what extent do the 

Commission’s proposed changes for 

small business eligibility positively or 

negatively affect auction revenues? To 

what extent do the Commission’s 

proposals appropriately balance its 

competing statutory obligations in 

section 309(j) of the Act? 

37. Proposed Standard for Evaluating 

DE Leasing. The Commission also 

proposes to modify the language of 47 

CFR 1.9020 to comport with the 

Commission’s proposed approach to 

assessing small business eligibility. 

Specifically, the Commission proposes 

to make clear that DEs may fully benefit 

from the same de facto control standard 

for spectrum manager leasing in the 

Commission’s secondary market rules as 

non-DE lessors. 

38. In developing its regulatory 

scheme for leasing generally, the 

Commission determined that section 

310(d) of the Act did not require the 

continued application of the facilitiesbased Intermountain Microwave six-part 

test that had, since 1963, been applied 

to determine whether a licensee was 

exercising the requisite level of de facto 

control over its licensed operations. 

Instead, the Commission adopted a 

revised de facto control standard for 

leasing arrangements for purposes of 

applying the requirements of section 

310(d). Under the revised standard, a 

spectrum manager lease does not 

constitute a transfer of de facto control 

so long as the licensee (1) maintains an 

active, ongoing oversight role in 

ensuring that the lessee complies with 

Commission rules and policies; (2) 

retains responsibility for all interactions 

with the Commission required under 

the license related to the use of the 

leased spectrum; and (3) remains 

primarily and directly accountable to 

the Commission for any lessee violation 

of these policies and rules. 

39. While the Commission nominally 

applied the new standard to all 

licensees, it explained that DEs would 

be required to retain their eligibility 

under the traditional facilities-focused 

de facto control standard of 47 CFR 

1.2110 and Intermountain Microwave. 

Thus, the Commission stated that small 

businesses could engage in leasing only 

to the extent that doing so would not 

affect their eligibility for benefits. 

Further, it required that a licensee 

receiving DE benefits be an entity that 

actually provides service under the 

license. As explained above, the 

Commission expressed concern that 

unless it continued to require DEs to 

remain engaged primarily in the 

provision of facilities-based services to 

the public it would run the risk that 

small business incentives, particularly 

bidding credits, would indirectly benefit 

entities that would not qualify for those 

incentives in the primary market. To 

that end, the Commission specified that 

small businesses could not retain their 

benefits if they made spectrum leasing 

their primary business. 

40. Consistent with the Commission’s 

proposed revisions to assessing small 

business eligibility, including the 

elimination of the requirement that 

small businesses primarily provide 

facilities-based service on each license 

they hold, the Commission proposes a 

modification to its spectrum manager 

leasing rule. Specifically, the 

Commission proposes to modify the 

language in 47 CFR 1.9020(d)(4) to 

remove the conflicting reference to the 

control standard of 47 CFR 1.2110 in 

order to make clear that small business 

lessors are fully subject to the same de 

facto control standard for spectrum 

manager leasing that applies to all other 

licensees. This modification should 

clarify that 47 CFR 1.9010 alone defines 

whether a licensee, including a small 

business, retains de facto control of the 

spectrum that it leases to a spectrum 

lessee in the context of spectrum 

manager leasing. This proposal does not 

alter the fact that small businesses must 

remain eligible for benefits under 47 

CFR 1.2110. Instead, the proposed 

modification clarifies that one de facto 

standard applies to determine whether 

the licensee has de facto control of the 

spectrum in the context of a spectrum 

manager lease (i.e., 47 CFR 1.9010), and 

the other applies to determine whether 

a third party has control, or the 

potential to control, the licensee and its 

business venture for the purposes of 

attribution of revenues (i.e., 47 CFR 

1.2110). In sum, the Commission’s 

proposal departs from the traditional 

Intermountain Microwave facilitiesfocused de facto control standard with 

regard to an individual spectrum lease 

agreement for a particular license. As 

long as the small business: (1) Maintains 

an active, ongoing oversight role in 

ensuring that the lessee complies with 

Commission rules and policies; (2) 

retains responsibility for all interactions 

with the Commission required under 

the license related to the use of the 

leased spectrum; and (3) remains 

primarily and directly accountable to 

the Commission for any lessee violation 

of these policies and rules, it will be 

considered to maintain de facto control 

of its spectrum for the purposes of that 

spectrum manager lease. Spectrum 

manager leasing applications will 

continue to be evaluated to determine 

whether control of, or affiliation with, 

the small business applicant and its 

overall business venture has arisen 

through any the terms of the leasing 

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agreement that might lead to attribution 

and result in unjust enrichment under 

47 CFR 1.2110. 

41. When the Commission adopted 47 

CFR 1.9010, it noted that a licensee’s 

continued control over the licensed use 

of spectrum lies at the heart of what it 

means to retain the license and the 

rights thereunder and that it could no 

longer generally assume that the 

licensee must perform the non-licensed 

activities identified in Intermountain 

Microwave in order to conclude that the 

licensee has retained its license and all 

rights thereunder. The Commission 

proposes that its modification will make 

clear that this conclusion applies 

equally to all licensees. Are there any 

reasons why the Commission should 

retain its existing language in 47 CFR 

1.9020(d)(4)? Should the Commission 

consider limiting the amount of 

spectrum a small business can lease to 

a single entity under 47 CFR 1.9020, in 

order to ensure that the small business 

retains control over its business venture 

as required in 47 CFR 1.2110? 

Commenters opposing the 

Commission’s proposal should offer 

alternative suggestions for how it could 

allow small businesses to play a larger 

role in secondary market transactions. 

B. Unjust Enrichment 

42. The integrity of the small business 

benefit program depends on ensuring 

that only entities eligible for benefits 

receive them. To safeguard against 

abuse, the Commission has long relied 

on unjust enrichment provisions, which 

require a small business to pay back the 

benefits it accrued where appropriate, 

and careful vigilance in approving 

applications and transactions. With the 

proposals set forth in the Competitive 

Bidding NPRM, the Commission 

anticipates that these provisions will be 

as important as ever and that strong 

enforcement of the provisions is critical. 

The Commission therefore seeks 

comment on whether any changes are 

appropriate to strengthen its unjust 

enrichment rules and how best the 

Commission can continue to scrutinize 

applications and proposed transactions 

to ensure that only eligible entities 

receive benefits, while not undermining 

the Act’s directive to ensure that DEs are 

given the opportunity to participate in 

the provision of spectrum-based 

services. 

43. Pursuant to 47 CFR 1.2111(b), 

small businesses are obligated to make 

unjust enrichment payments if they 

seek, inter alia, to assign or transfer 

control of licenses to a non-eligible 

party, for a period of up to five years 

from the initial issuance of the license. 

In rebalancing the Commission’s policy 

objectives to provide small businesses 

greater opportunities to participate at 

auction and in the provision of 

spectrum-based services, it remains 

focused on its responsibility to ensure 

that benefits are provided only to 

qualifying entities. 

44. The Commission therefore invites 

comment on whether its existing five 

year unjust enrichment payment 

schedule continues to provide a 

sufficient safeguard to ensure that 

benefits are provided only to qualifying 

entities. Commenters should be specific 

about whether there is a need to adjust 

its current five year unjust enrichment 

repayment schedule, and the 

appropriate length and reimbursement 

percentages for any repayment schedule 

revisions. If commenters support a 

different repayment period or different 

percentages for the repayment schedule, 

they should be specific about why their 

suggested approach would better meet 

its goals and balance the Commission’s 

statutory objectives. 

45. Specifically, the Commission also 

seeks comment on whether it should 

consider adopting a 10 year unjust 

enrichment repayment schedule for 

licenses acquired with bidding credits, 

including its benefits and costs. 

Extending the length of the unjust 

enrichment repayment schedule to 10 

years may help deter speculation and 

prevent spectrum warehousing. At the 

same time, extending the length of the 

unjust enrichment repayment schedule 

could restrict small businesses’ access to 

capital, which could limit their ability 

to participate in the provision of 

spectrum-based services, contrary to the 

Commission’s underlying goals in this 

proceeding. How does the length of the 

repayment schedule affect a small 

business’s capital fundraising and 

business planning efforts? Are there 

lessons the Commission can draw from 

based on parties’ experience raising 

capital when the 10 year unjust 

enrichment period was in place from 

2006 until 2010? If the Commission 

repeals the AMR rule as proposed and 

also modifies the unjust enrichment 

rules, what would be the combined 

effect on the ability of a small business 

to raise capital and participate at 

auction and in the provision of service, 

particularly when compared to the 

existing rule? 

46. Are there other unjust enrichment 

provisions that the Commission should 

consider? For example, should the 

Commission require full reimbursement, 

plus interest, if a small business loses its 

eligibility prior to meeting the 

construction requirements applicable at 

the end of the license term? 

Commenters should discuss how such 

an approach would impact the 

Commission’s interest in protecting 

against unjust enrichment, while 

ensuring that small businesses have 

access to capital to participate at auction 

and in the provision of service. Is a 

different reimbursement percentage 

(something less than 100 percent) 

preferable? Are other safeguards 

sufficient to protect the Commission’s 

interests regarding unjust enrichment? 

47. The Commission seeks comment 

on whether it may grant small 

businesses greater flexibility to 

participate in the provision of spectrumbased services, as it has proposed, while 

also ensuring that only those entities 

Congress intended have access to 

benefits. The Commission asks 

commenters to address how the unjust 

enrichment rules affect their ability to 

secure and retain capital and whether 

its rules require other further 

modifications to safeguard the award of 

small business benefits. By granting 

small businesses greater regulatory 

flexibility to demonstrate eligibility, 

does the Commission increase or 

decrease the likelihood that non-eligible 

entities can assert undue influence over 

a small business’s decision making for 

its business venture and its utilization 

of licenses to participate in the 

provision of spectrum-based services? 

48. The Commission also seeks 

comment on how other government 

programs ensure that only an intended 

class of recipients receive benefits that 

are awarded to eligible entities. Are 

there other government programs that 

have greater safeguards than the 

Commission currently employs? How 

do other government agencies and small 

business benefit programs prevent abuse 

and guard against unjust enrichment of 

ineligible entities? Commenters should 

be specific about any analogies that can 

be drawn between the Commission’s 

small business benefits and similar 

benefits awarded by other agencies and 

programs. 

49. The Commission’s efforts to 

provide increased flexibility to small 

businesses must be balanced with 

vigilant enforcement to ensure that only 

bona fide small businesses receive 

benefits. The Commission has a strong 

interest in ensuring that truthful and 

accurate information is available to the 

Commission and the public for purposes 

of implementing and enforcing policies 

it finds to be in the public interest. Such 

information is imperative to the 

Commission’s ability to safeguard the 

benefits it awards and to prevent unjust 

enrichment. To the extent the 

Commission modifies rules regarding its 

small business benefits, it will remain 

vigilant in undertaking careful review of 

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all applications of those seeking to 

acquire or retain bidding credits to 

ensure that the gross revenues of all 

parties that control, or have the 

potential to control, the applicant are 

properly attributed in compliance with 

its controlling interest and affiliation 

rules. The Commission emphasizes that 

it will remain focused on ensuring that 

an applicant’s certifications for 

eligibility comport with the actual terms 

of its agreements with relevant parties. 

In so doing, the Commission expects 

that it can properly execute its statutory 

responsibility to continue to prevent 

unjust enrichment of ineligible entities. 

C. Bidding Credits 

50. The Commission also takes a fresh 

look at the primary way that it facilitates 

participation by small businesses at 

auction through its bidding credit 

program. The Commission notes that the 

generally applicable small business 

definitions and corresponding bidding 

preferences were adopted in 1997 and 

finds that it is appropriate to revisit 

whether these standards have kept pace 

with an evolving wireless marketplace. 

Toward that end, the Commission 

proposes to increase the general size 

standards, measured by gross revenues, 

for purposes of determining an entity’s 

eligibility for a bidding preference. The 

Commission also proposes to continue 

its practice of evaluating which small 

business definitions will apply on a 

service-by-service basis, based upon 

associated capital requirements for a 

particular service. In addition, the 

Commission seeks comment on whether 

to increase the bidding credit 

percentages applicable to associated 

small business categories. Finally, the 

Commission seeks comment on its 

ability to consider bidding preferences 

for other types of DEs, entities that serve 

unserved/underserved areas or areas 

with persistent poverty, as well as 

persons and entities that have overcome 

disadvantages. The Commission expects 

that the questions raised here will 

provide a meaningful opportunity to 

evaluate whether its bidding credit 

program continues to achieve its 

objectives. The Commission seeks 

concrete, specific, data-driven feedback 

by commenters to facilitate its review. 

The Commission invites commenters to 

suggest other creative ideas that would 

promote its statutory objectives, but it 

emphasizes that for any such proposals 

it is imperative to provide ample 

supporting evidence. 

51. An auction applicant may claim 

eligibility for a bidding credit when 

filing a short-form application. The 

Commission’s short-form application is 

the first part of its two-phased auction 

application process. In the first phase, 

any party desiring to participate in an 

auction must file a streamlined shortform application in which it certifies 

under penalty of perjury as to its 

qualifications to participate in a 

Commission auction. In its review of the 

short-form applications, Commission 

staff presume the information and 

certifications contained in the shortform applications are true unless they 

are incomplete, internally inconsistent 

or contradicted by information in the 

Commission’s records. Eligibility to 

participate in bidding is based on 

information in an applicant’s short-form 

application and its certifications, and on 

its upfront payment. In the second 

phase of the Commission’s application 

process, a winning bidder files a more 

comprehensive long-form (FCC Form 

601) application. The long-form 

application is subject to more extensive 

review and is the basis for any 

determination that a winning bidder is 

qualified to hold a Commission license 

and for the award of any claimed 

bidding credit. 

1. Small Business Bidding Credits 

52. Background. Bidding credits 

operate as a percentage discount on the 

winning bid amounts of a qualifying 

small business. By making the 

acquisition of spectrum licenses more 

affordable for new and existing small 

businesses, bidding credits facilitate 

their access to needed capital. The 

Commission establishes eligibility for 

bidding credits for each auctionable 

service, adopting one or more 

definitions of the small businesses that 

will be eligible. The Commission’s small 

business definitions have been based on 

an applicant’s average annual gross 

revenues over a three-year period. In 

establishing the gross revenues 

thresholds for the small business 

definitions to be applied to a specific 

service, the Commission takes into 

account the capital requirements and 

other characteristics of the particular 

service. In order to qualify for a small 

business bidding credit an applicant 

must demonstrate that its gross 

revenues, in combination with those of 

its ‘‘attributable’’ interest holders, fall 

below the applicable financial caps. 

53. The Commission’s rules provide a 

schedule of small business definitions 

and corresponding bidding credits. In 

adopting bidding credits for a particular 

service, the Commission has found that 

the use of the small business size 

standards and credits set forth in the 

part 1 schedule provides consistency 

and predictability for small businesses. 

Section 1.2110(f) sets forth three tiers of 

bidding credits: (1) A 35 percent 

bidding credit for businesses with 

average annual gross revenues for the 

preceding three years not exceeding $3 

million; (2) A 25 percent bidding credit 

for businesses with average annual gross 

revenues for the preceding three years 

not exceeding $15 million; and (3) A 15 

percent bidding credit for businesses 

with average annual gross revenues for 

the preceding three years not exceeding 

$40 million. 

54. Discussion. The Commission 

proposes to increase the gross revenues 

thresholds defining the three tiers of 

small businesses in the part 1 schedule 

by which the Commission provides the 

corresponding available bidding credits 

and seeks comment on alternatives. The 

Commission also proposes to continue 

its practice of deciding which small 

business definitions will apply on a 

service-by-service basis depending on 

the capital requirements of the 

particular spectrum to be auctioned. In 

addition, the Commission seeks 

comment on whether the bidding credit 

percentages that apply to these small 

business definitions should be 

increased. 

55. Since the inception of the 

Commission’s DE program, and 

particularly in the past decade, the 

evolution of the mobile wireless 

marketplace from mobile voice to 

mobile broadband has increased the 

demands on wireless networks and the 

need for access to spectrum, heightening 

the capital-intensive nature of the 

industry. Moreover, the number of small 

and regional mobile wireless service 

providers has significantly decreased, 

though regional and local service 

providers continue to offer consumers 

additional choices in the areas they 

serve. In light of these changes and 

statutory goals, the Commission seeks 

comment on how it should reconsider 

definitions of what constitutes a small 

business in the wireless industry. 

56. The Commission proposes to 

increase the gross revenues thresholds 

in its part 1 schedule to reflect the 

changing nature of the wireless 

industry, including the overall increase 

in the size of wireless networks and the 

increase in capital costs to deploy them. 

The Commission notes that these 

changes have resulted in an increase in 

the size of the wireless service providers 

that can be considered to be ‘‘small’’ 

relative to the large nationwide 

providers. By proposing adjustments to 

the Commission’s small business size 

standards, it aims to promote the 

effective participation of small 

businesses in auctions and in the 

provision of spectrum-based services. 

57. In considering how much to adjust 

the gross revenues thresholds, the 

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Commission proposes to use the price 

index for the U.S. Gross Domestic 

Product (GDP price index) published by 

the U.S. Department of Commerce 

(Commerce). The Commission notes that 

the SBA, as part of its size standards 

review, recently used the GDP price 

index to adjust its receipts-based 

industry size standards. In particular, 

the Commission proposes to adjust the 

current gross revenues thresholds with 

the percentage change in the GDP price 

index between 1997 and 2013. The 

indices are available on Commerce’s 

Bureau of Economic Analysis Web site, 

under Tables 1.1.4 and 1.1.15, at http:// 

www.bea.gov/itable. 

58. The Commission believes that the 

GDP price index may reflect certain 

industry trends and a relevant range of 

economic activity better than the 

available wireless industry price indices 

published by the Bureau of Labor and 

Statistics (BLS). In barely a decade, the 

shift from a voice-centric to a datacentric wireless industry has seen 

mobile broadband data services grow 

from their nascent stage to become a 

significant share of the industry’s 

market revenues. However, the available 

wireless industry price indices may 

under represent broadband data services 

because the indices are based on voicecentric definitions of service plans. 

Moreover, broadband data plans are not 

treated as a separate category in the 

indices, and the BLS description of the 

indices is unclear about how the advent 

of mobile broadband services has been 

factored into the voice-centric consumer 

and producer prices indices that were 

introduced in 1997 and 1999, 

respectively. Furthermore, the wireless 

industry consumer and producer price 

indices may exclude goods and inputs 

that are relevant for the range of 

economic activity involved in the 

provision of wireless services. 

Therefore, the Commission proposes to 

use the broader GDP price index. The 

GDP price index increased by 36.4 

percent from 1997 to 2013. Based on 

this 36.4 percent increase, the 

Commission proposes new gross 

revenues thresholds that are obtained by 

multiplying the current thresholds by 

1.364 and rounding to the nearest 

million. Specifically, the Commission 

proposes to revise the standardized 

schedule in 47 CFR 1.2110(f) as follows: 

(1) Businesses with average annual gross 

revenues for the preceding three years 

not exceeding $4 million would be 

eligible for a 35 percent bidding credit; 

(2) Businesses with average annual gross 

revenues for the preceding three years 

not exceeding $20 million would be 

eligible for a 25 percent bidding credit; 

and (3) Businesses with average annual 

gross revenues for the preceding three 

years not exceeding $55 million would 

be eligible for a 15 percent bidding 

credit. 

59. The Commission seeks comment 

on its proposal to adjust the current 

gross revenues thresholds in its small 

business size standards using the GDP 

price index. Is there a different price 

index that better reflects industry 

developments and the relevant range of 

economic activity? Is there an 

alternative method for setting new gross 

revenues thresholds that does not 

require adjusting the current gross 

revenues thresholds with a price index? 

60. The Commission tentatively 

concludes that its proposed gross 

revenues thresholds better reflect the 

larger size of wireless networks today, 

and thus expect that they will preserve 

the effectiveness of the Commission’s 

bidding credit program in the current 

mobile wireless marketplace. Consumer 

demand for widely available mobile 

broadband services has increased 

providers’ need for additional capital to 

acquire spectrum and deploy service. 

This trend is reflected in the changing 

structure of the industry. By increasing 

the gross revenues thresholds that 

define small businesses and thereby 

making bidding credits available to a 

larger number of entities, the 

Commission seeks to facilitate a higher 

rate of participation by entities that 

might otherwise find it difficult to 

obtain the necessary capital to 

participate at auction. The Commission 

seeks comment on whether the 

proposed increases in the revenues 

thresholds are likely to increase the 

percentage of entities that will benefit 

from its small business bidding credits, 

by providing better access to capital and 

enabling them to seek access to the 

spectrum necessary to meet consumer 

demand for mobile broadband services. 

At the same time, to further the 

statutory objectives of the auction 

program, the Commission must adopt 

revenues thresholds that will avoid 

including firms that have adequate 

access to financing for spectrum based 

on their revenue levels. The 

Commission therefore seeks to avoid 

setting eligibility for bidding credits at 

a level that is over inclusive, which 

would defeat the purpose of the bidding 

credits and undermine the statutory 

objectives of the program. Any new 

thresholds the Commission adopts 

should provide economic opportunity to 

small businesses, while maintaining 

good economic incentives for small 

businesses to seek diverse forms of 

financing for spectrum. 

61. The Commission seeks comment 

on this proposal. Specifically, how have 

capital costs, construction costs, and 

administrative costs faced by wireless 

providers changed since the mid-1990s? 

Have the costs of spectrum usage rights 

increased significantly since the early 

stages of the Commission’s auction 

program such that it is more difficult for 

small businesses to acquire wireless 

spectrum today? 

62. Commenters who agree that the 

industry’s evolution warrants new 

definitions for small businesses should 

discuss what gross revenues thresholds 

are appropriate for defining small 

businesses in the wireless context. 

Commenters should explain their 

methodologies for deriving alternative 

thresholds and should supply 

supporting data or justifications for the 

Commission’s use in evaluating and 

applying such methodologies. If 

commenters do not provide data on 

wireless providers’ gross revenues, what 

alternative factors should the 

Commission consider in determining 

what constitutes a ‘‘small business’’ in 

today’s wireless marketplace? 

63. The Commission also seeks 

comment on whether to adopt a small 

business size standard based on criteria 

other than gross revenues. As the 

Commission recently noted in the 

AWS–3 proceeding, in first adopting 

gross revenues-based small business 

size standards for eligibility for DE 

benefits, the Commission rejected the 

SBA’s employee-based business size 

standard for cellular or other wireless 

telecommunications entities as a means 

to qualify as a DE. The Commission 

concluded that such a definition would 

be too inclusive and would allow many 

large telecommunications firms to take 

advantage of preferences not intended 

for them. The Commission notes that 

according to census data, if it adopted 

the SBA’s small business employeebased size standard for cellular or other 

wireless telecommunications entities 

(i.e., 1,500 or fewer employees) more 

than 96 percent of wireless companies 

would be considered small businesses. 

The Commission therefore tentatively 

concludes not to reconsider its 

conclusion that the SBA’s employeebased definition is too inclusive for the 

purposes of establishing DE eligibility. 

64. In addition, the Commission asks 

commenters to consider whether it 

should increase the bidding credit 

percentages (i.e., discount amounts) 

currently available to small businesses 

in 47 CFR 1.2110(f). Should the 

Commission use the existing bidding 

credit percentages, but apply them to 

higher gross revenues thresholds? 

Should the Commission add additional 

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small business definitions and 

associated tiers of bidding credits above 

or below the tiers proposed above? 

Commenters supporting additional tiers 

of bidding credits should propose a 

corresponding gross revenues threshold 

for each additional tier. Commenters 

supporting changes to the existing 

bidding credit percentages in the 

Commission’s part 1 rules should 

explain the basis for their proposals and 

provide any supporting data for the 

Commission’s use in evaluating 

potential changes to the part 1 schedule. 

Commenters should also address 

whether increases in the bidding credit 

percentages are necessary if the 

Commission adopts its proposal to 

modify the gross revenues thresholds for 

its small business definitions since that 

will have the effect of increasing the 

level of bidding credit a substantial 

number of small businesses would 

receive compared to its current rules. 

For instance, by increasing the revenues 

thresholds, entities previously eligible 

for small business bidding credits under 

the current schedule may become 

eligible for a higher bidding credit tier 

under the proposed amended schedule, 

and entities that previously exceeded 

the highest revenue threshold may 

become eligible. Similarly, bidders that 

previously exceeded the thresholds as a 

result of attributable revenues under the 

AMR rule may fall below the thresholds, 

and thus become eligible for small 

business bidding credits, if the AMR 

rule is eliminated as proposed in the 

Competitive Bidding NPRM. 

65. Further, the Commission proposes 

to continue its practice of soliciting 

comment on the appropriate small 

business size standards in connection 

with establishing rules for any 

particular service. As the Commission 

has done in the past and pursuant to 47 

CFR 1.2110(c)(1), it would continue to 

take into consideration the 

characteristics and capital requirements 

of each service. The Commission seeks 

comment on this proposal. 

Alternatively, should the Commission 

utilize all three small business 

definitions and bidding credit tiers in 

every service? Under this approach, the 

Commission would make bidding 

credits available to any business that 

meets one of the small business 

definitions without engaging in an 

assessment of the likely capital 

requirements of the specific service for 

which licenses are being offered. What 

are the advantages and disadvantages of 

this alternative approach? If the 

Commission continues to adopt small 

business definitions on a service-byservice basis, are there other factors that 

it should consider in determining which 

small business definition to apply to a 

specific service? Alternatively, if the 

Commission adopts its proposed 

modifications to the AMR and small 

business size standards, should it 

consider reducing the level of bidding 

credits it awards? Commenters should 

provide specific suggestions on how the 

Commission should weigh its proposals 

collectively. 

66. The Commission also seeks 

comment on whether any revisions it 

adopts in this proceeding to its part 1 

schedule of small business size 

standards and associated bidding credit 

percentage levels should apply to the 

specific small business definitions and 

bidding credit percentages the 

Commission has previously adopted for 

specific services, and, if so, how such 

revisions would be implemented. In 

particular, the Commission proposes 

that any new rules adopted in this 

proceeding would apply to the 600 MHz 

band spectrum licenses to be offered in 

the BIA. In the BIA proceeding, the 

Commission adopted a 15 percent 

bidding credit for small businesses 

(defined as entities with average annual 

gross revenues for the preceding three 

years not exceeding $40 million) and a 

25 percent bidding credit for very small 

businesses (defined as entities with 

average annual gross revenues for the 

preceding three years not exceeding $15 

million). Consistent with the increased 

gross revenues thresholds the 

Commission proposes for the 

standardized schedule in its part 1 

competitive bidding rules, the 

Commission also proposes to increase 

the gross revenues thresholds associated 

with the 15 and 25 percent bidding 

credits adopted for the 600 MHz band. 

That is, for the 600 MHz band, the 

Commission proposes to provide a 

bidding credit of 25 percent for 

businesses with average gross revenues 

for the preceding three years not 

exceeding $20 million and a bidding 

credit of 15 percent for businesses with 

average gross revenues for the preceding 

three years not exceeding $55 million. 

The Commission seeks comment on this 

proposal. In addition, the Commission 

seeks comment on whether to adopt a 

third tier of small business bidding 

credits for the 600 MHz band that would 

provide a 35 percent bidding credit to 

businesses with average gross revenues 

for the preceding three years not 

exceeding $4 million. If the Commission 

re-auctions licenses for existing 

services, should the previously adopted 

service-specific small business 

definitions and bidding credit 

percentages be revised for those services 

to reflect any changes to its part 1 

schedule in 47 CFR 1.2110(f)(2)? 

2. Other Bidding Preferences 

67. The Commission’s primary 

method of fulfilling its statutory 

mandate regarding DEs has been to offer 

auction bidding credits to small 

business applicants. Periodically, 

however, interested parties have 

suggested that the Commission offer 

bidding preferences to entities based on 

criteria other than business size. As the 

Commission has explained in the past, 

its ability to implement suggestions to 

target bidding credits to other types of 

entities is constrained by both its 

statutory authority and standards of 

judicial review. The Commission seeks 

comment on these suggestions and asks 

commenters to specifically address the 

statutory authority and judicial scrutiny 

issues that may limit its ability to 

entertain recommendations to alter the 

focus of its current bidding preferences. 

a. Minority- and Women-Owned 

Businesses and Rural Telephone 

Companies 

68. Section 309(j)(4)(D) of the Act 

directs the Commission to consider the 

use of bidding preferences to ensure that 

small businesses, rural telephone 

companies, and businesses owned by 

members of minority groups and women 

are given the opportunity to participate 

in the provision of spectrum-based 

services. The Commission seeks 

comment on whether the current small 

business provisions are sufficient to 

promote participation by businesses 

owned by minorities and women, as 

well as rural telephone companies. To 

the extent that commenters propose 

additional provisions to ensure 

participation by minority-owned or 

women-owned businesses, they should 

address how such provisions could be 

crafted to meet the relevant standards of 

judicial review. The Commission asks 

commenters advocating for the adoption 

of rural bidding credits to supply data 

demonstrating that rural telephone 

companies lack access to capital or face 

barriers to capital formation similar to 

those faced by other DEs. 

b. Unserved/Underserved Areas and 

Persistent Poverty Preferences 

69. The Commission seeks comment 

on whether it should extend bidding 

credits to winning bidders that deploy 

facilities and provide service to 

unserved or underserved areas. If the 

Commission adopts bidding credits for 

service to unserved or underserved 

areas what criteria should it consider to 

determine if an area is unserved or 

underserved? Should any unserved/

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68184 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

underserved area bidding credits be 

available in all areas lacking service, 

only in rural areas, or only in 

persistently poor counties? As required 

of providers awarded universal service 

funds through the Mobility Fund Phase 

I auctions, should a wireless provider 

awarded an unserved/underserved 

bidding credit be required to provide a 

certain level of service (e.g., 3G or 4G) 

by a certain time frame (e.g., two or 

three years) in order to retain the benefit 

of the bidding credit? 

70. The Commission also seeks 

comment on whether the Commission 

should offer a bidding credit to winning 

bidders that will use their licensed 

spectrum to deploy service to persistent 

poverty counties. As defined by the 

Department of Agriculture’s Economic 

Research Service (ERS), a county is 

persistently poor if 20 percent or more 

of its population was living in poverty 

over the last 30 years. According to the 

ERS, ‘‘there are currently 353 

persistently poor counties in the United 

States (comprising 11.2 percent of all 

U.S. counties).’’ The ERS further 

explains that ‘‘[t]he large majority (301 

or 85.3 percent) of the persistentpoverty counties are nonmetro, 

accounting for 15.2 percent of all 

nonmetro counties. Persistent poverty 

also demonstrates a strong regional 

pattern, with nearly 84 percent of 

persistent-poverty counties in the 

South, comprising of more than 20 

percent of all counties in the region.’’ 

The ERS information is available on the 

ERS Web site under ‘‘Geography of 

Poverty,’’ at http://www.ers.usda.gov/

topics/rural-economy-population/ruralpoverty-well-being/geography-ofpoverty.aspx. If the Commission adopts 

such a bidding credit, should it impose 

strict performance requirements on 

providers awarded bidding credits for 

licenses covering persistent poverty 

counties similar to those required of 

winning bidders awarded Tribal land 

bidding credits? Should this type of 

bidding credit only apply to licenses 

covering persistent poverty counties 

that are only served by two or fewer 

wireless service providers? 

71. If the Commission adopts 

unserved/underserved area and/or 

persistent poverty county bidding 

credits, should the bidding credits be 

available only to small businesses and/ 

or other DEs, or to any applicant? How 

would the Commission calculate the 

credit amount where the unserved or 

underserved area or targeted counties 

cover a portion of a license area? Should 

the bidding credit be applied to the total 

amount of the winning bid for a license, 

or should it be applied to a portion of 

the winning bid based on a percentage 

of population or square miles of the 

license area covered by the unserved/

underserved area or identified counties 

or some other metric? What size bidding 

credit would be appropriate for either 

an unserved/underserved area bidding 

credit or a persistent poverty county 

bidding credit? If an applicant qualifies 

for both bidding credits, should the 

Commission limit the amount of the 

combined credit? Similarly, if an 

applicant qualifies for one of these 

credits in addition to a small business 

bidding credit, should the credits be 

cumulative and, if so, should there be a 

limit on the amount of the aggregate 

bidding credit provided? Should any 

limit be an amount greater than the 

maximum small business bidding credit 

to allow DEs eligible for the highest 

bidding credit tier to receive an 

increased benefit for also providing 

service to an unserved/underserved area 

and/or persistent poverty county? 

Commenters supporting cumulative 

bidding credits should provide data or 

support justifying the need for higher 

bidding credits in unserved/

underserved and/or persistent poverty 

areas. Alternatively, are issues relating 

to lack of deployment or low levels of 

deployment of wireless services in rural 

and poor areas better addressed through 

means other than the Commission’s 

bidding credit program, such as through 

service-specific build-out requirements 

or reliance on incentives through its 

Mobility Fund and other universal 

service programs? 

72. The Commission seeks comment 

on its authority to implement these 

types of bidding preferences. The 

Commission notes that it has previously 

implemented bidding credits based on 

other criteria than business size in order 

to facilitate service to Tribal lands. See 

In the Matter of Extending Wireless 

Telecommunications Services to Tribal 

Lands, 65 FR 47366, May 2, 2003 (Tribal 

Lands Report and Order). In that 

proceeding, the Commission found that 

the objectives and requirements of 

section 309(j) of the Act, which the 

Commission must consider in designing 

competitive bidding systems, authorized 

it to grant bidding credits targeted 

specifically to entities that commit to 

bringing much needed wireless 

telecommunications services to Tribal 

lands. Specifically, in the Tribal Lands 

Report and Order, the Commission 

found that Tribal Land bidding credits 

further the objective of section 

309(j)(3)(A) to ensure ‘‘the development 

and rapid deployment of new 

technologies, products, and services for 

the benefit of the public, including 

those residing in rural areas. . . .’’ and 

the objective of section 309(j)(3)(D) of 

promoting ‘‘efficient and intensive use 

of the electromagnetic spectrum.’’ The 

Commission also found that there is no 

indication in section 309(j)(4)(D) or in 

its legislative history that the 

Commission’s authority to award 

bidding preferences is limited to small 

businesses, rural telephone companies, 

and businesses owned by members of 

minority groups and women. As such, 

the Commission tentatively concludes 

that section 309(j) of the Act similarly 

authorizes the Commission to provide 

bidding credits for service to unserved/ 

underserved areas and persistent 

poverty counties. The Commission 

seeks comment on its tentative 

conclusion. 

c. Overcoming Disadvantages Preference 

73. In view of renewed interest raised 

in the BIA proceeding, the Commission 

also seeks additional comment on the 

2010 Recommendation by the FCC’s 

Advisory Committee on Diversity for 

Communications in the Digital Age 

(2010 Recommendation) to implement a 

bidding preference for persons or 

entities who have overcome substantial 

disadvantage (referred to herein as an 

overcoming disadvantages preference or 

ODP). In that 2010 Recommendation, 

the Committee proposed that the 

Commission should provide an auction 

bidding credit for otherwise qualified 

persons or entities that have overcome 

substantial disadvantages, to allow them 

to compete on equal footing with other 

applicants. The Committee stated that 

an ODP would provide a fair 

opportunity for highly qualified 

applicants to compete for spectrum 

licenses, thereby expanding the pool of 

eligible bidders in an auction. The 2010 

Recommendation is available at http:// 

www.fcc.gov/DiversityFAC/

meeting101410.html. The Media and 

Wireless Telecommunications Bureaus 

subsequently issued a public notice 

seeking comment on additional 

information that would be helpful in 

evaluating whether and how to pursue 

the Committee’s proposal: The 

Overcoming Disadvantage Preference 

Public Notice, 75 FR 81274, Dec. 27, 

2010. 

74. Commenters should specifically 

address the Commission’s statutory 

authority to adopt such a preference and 

how such a preference could be crafted 

to meet the relevant standards of 

judicial review. Would a preference for 

those who have overcome a substantial 

disadvantage be subject to a ‘‘rational 

basis’’ constitutional standard, as the 

2010 Recommendation indicates? 

Additionally, the Commission seeks 

detailed comment on how the 

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preference would provide additional 

opportunities not available under the 

current bidding credit program, 

particularly if the current program is 

amended as proposed in the 

Competitive Bidding NPRM. 

75. The Commission also asks for 

input on how it might systematically 

collect and maintain data in order to 

implement and administer an ODP. 

What legal basis does it have to collect 

data, and what precise data would the 

Commission need to support such a 

proposal? 

76. The Commission asks commenters 

to address how eligibility for an ODP 

could be demonstrated, providing 

specific information as to what 

definitions of disadvantages could 

qualify individuals or entities for the 

preference. How would it measure when 

any particular disadvantage had been 

overcome? The 2010 Recommendation 

provides a non-exhaustive list that 

includes disadvantages such as physical 

disabilities or psychological disorders 

that rendered professional or business 

advancement substantially more 

difficult than for most individuals. How 

could the Commission avoid subjective 

determinations and implement and 

apply an ODP on a neutral basis? The 

Commission asks commenters to discuss 

how it could establish eligibility for the 

preference objectively. How could the 

Commission render eligibility 

determinations for an ODP without 

appearing arbitrary? How could it 

safeguard any such benefits to ensure 

they are awarded only to eligible 

persons or entities? 

77. The Commission also seeks 

detailed comment on how it could 

administer an ODP. Commenters should 

identify the costs and benefits 

associated with such a program, 

addressing matters such as how reviews 

would be conducted, and the nature of 

the demonstration applicants seeking a 

preference would be required to make, 

as well as how individualized 

evaluation for the preference would be 

incorporated into a time-sensitive shortform application process or whether 

alternatives such as pre-qualification 

would be necessary. 

78. As acknowledged by the Advisory 

Committee, its ODP proposal raises a 

number of issues that need to be refined 

and resolved in order to design and 

implement such a preference, and 

comment provided to date has not 

provided sufficient basis or justification 

for doing so. Therefore, commenters that 

continue to support the adoption of an 

ODP are encouraged to provide as 

detailed and specific suggestions as 

possible regarding the Commission’s 

authority to establish the ODP and its 

objectives in doing so, as well as 

eligibility for, and administration of, the 

preference, to assist the Commission in 

determining a legal, neutral, and 

efficient way in which it could 

implement an ODP. Alternatively, the 

Commission asks commenters to 

consider whether the proposals the 

Commission has made to amend its 

existing DE program would obviate the 

need for the adoption of such a 

preference. 

D. DE Reporting Requirements 

79. Background. Section 1.2110(n) 

requires DE licensees to file an annual 

report with the Commission that 

includes, at a minimum, a list and 

summaries of all agreements and 

arrangements, extant or proposed, that 

relate to eligibility for DE benefits. The 

list must include the parties (including 

affiliates, controlling interests, and 

affiliates of controlling interests) to each 

agreement or arrangement, as well as the 

dates on which the parties entered into 

each agreement or arrangement. DEs are 

required to file a report for each of their 

licenses no later than, and up to five 

business days before, the anniversary of 

the date of license grant. 

80. Discussion. The Commission 

proposes to repeal this reporting 

requirement. The information DEs are 

required to include in their annual 

reports is duplicative of information 

that they provide in their auction and 

license applications. See 47 CFR 

1.2110(j), 1.2112(b)(2)(iii). In addition, 

before entering into leases or other 

agreements that might affect their 

eligibility, DEs must seek Commission 

approval and must list and summarize 

those agreements, including the parties 

to and the dates of the agreements. See 

47 CFR 1.2114. Moreover, for licensees 

with multiple auction licenses, each 

having a different grant date, the burden 

of the annual reporting requirement is 

exacerbated by the obligation to file 

multiple reports each year. For these 

reasons, the Commission tentatively 

concludes that the value of the 

information provided in these annual 

reports may no longer outweigh the 

reporting burden that they impose on 

DEs. 

81. The Commission seeks comment 

on its proposal. In particular, 

commenters are invited to address 

whether there are any benefits to 

retaining the annual reporting 

requirement that the Commission has 

failed to consider. Does this reporting 

requirement in any way help the 

Commission identify agreements 

between parties relating to small 

business eligibility that might otherwise 

escape attention? Commenters should 

specifically address how other rules 

render this reporting requirement 

duplicative and how other rules 

adequately ensure that the Commission 

is aware of all agreements between 

parties relating to small business 

eligibility. Will relieving DEs of this 

annual reporting requirement reduce 

their regulatory burdens to any 

measurable degree? Without this 

reporting requirement, will the 

Commission continue to have the 

necessary tools to safeguard DE benefits 

from unjustly enriching ineligible 

entities? If the Commission adopts this 

proposal to eliminate this annual 

reporting requirement, should the 

Commission amend the requirement in 

47 CFR 1.2114 that a small business list 

and summarize all existing agreements 

to provide context each time it reports 

a new eligibility event? 

E. MMTC’s White Paper Requests 

82. Background. In February 2014, 

MMTC submitted a White Paper 

detailing several policy 

recommendations to advance minority 

and women spectrum license 

ownership. In addition to requesting the 

elimination of the AMR, an increase in 

bidding credits, and a substantive 

review of proposed DE rules, the White 

Paper requests Commission action in 

the following areas: (1) Reinstitute select 

DE-only closed spectrum auctions; (2) 

Incorporate diversity and inclusion in 

the Commission’s public interest 

analysis of mergers and acquisitions 

(M&As) and secondary market spectrum 

transactions; (3) Conduct ongoing 

recordkeeping of DE performance; (4) 

Complete the Adarand Studies, 

updating the section 257 studies 

released in 2000; (5) Regularize 

procedural requirements; and (6) 

Support increased funding for and 

statutory amendments regarding the 

Telecommunications Development 

Fund. The Commission notes that 

MMTC’s above request with respect to 

‘‘ongoing recordkeeping of DE 

performance’’ refers to retaining specific 

information about minority- and 

woman-owned business enterprise 

bidders, in addition to the small 

business status. 

83. Discussion. The Commission seeks 

comment on the proposals that are not 

otherwise addressed in the NPRM, and 

to the extent that they relate to its 

competitive bidding rules. The 

Commission observes that certain 

proposals appear to be outside the scope 

of this proceeding and others may not 

be needed in light of other changes 

proposed herein. Toward that end, the 

Commission tentatively concludes that 

the following MMTC proposals are 

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68186 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

outside the scope of this proceeding, 

which is focused on its competitive 

bidding rules, and thus will not be 

addressed here: (1) Incorporating 

diversity and inclusion in the 

Commission’s public interest analysis of 

mergers and acquisitions and secondary 

market spectrum transactions; and (2) 

supporting increased funding for and 

statutory amendments regarding the 

Telecommunications Development 

Fund. The Commission seeks comment 

on MMTC’s additional requests, 

including discussion regarding the 

relative costs and benefits of each 

proposal. Are the proposals that the 

Commission describes elsewhere in the 

NPRM, including the elimination of the 

AMR rule, sufficient to address the 

concerns identified by MMTC regarding 

the participation of businesses owned 

by members of minority groups and 

women in the provision of spectrumbased services? 

III. Other Part 1 Considerations 

84. In advance of an auction that 

could hold historic potential for 

interested applicants to acquire licenses 

for below-1-GHz spectrum, the 

Commission also explores the need for 

other revisions to its general part 1 

competitive bidding rules to improve 

the transparency and efficiency of the 

auction and its processes. The 

Commission proposes changes to its 

former defaulter rule that seek to 

balance commenters’ concerns that the 

current rules are overly broad with its 

continued need to ensure that auction 

bidders are financially reliable. The 

Commission also proposes to codify an 

existing competitive bidding procedure 

that prohibits the same individual or 

entity from filing more than one shortform application to participate in an 

auction and it proposes a new rule that 

would prevent entities that are 

exclusively controlled by a single 

individual or set of individuals from 

becoming qualified to bid on the basis 

of more than one short-form application 

in a specific auction. Both proposals 

seek to prevent duplicative filings and 

to avert anticompetitive bidding 

behavior at auction. Regarding the joint 

bidding rules, the Commission seeks 

comment on, among other issues, its 

tentative conclusions that it would be in 

the public interest to retain the current 

rules governing joint bidding 

arrangements among non-nationwide 

providers and to prohibit joint bidding 

arrangements among nationwide 

providers. Additionally, the 

Commission provides notice of its 

intention to resolve long standing 

petitions for reconsideration and 

proposes necessary clean-up revisions 

to its part 1 competitive bidding rules. 

A. Former Defaulter Rule 

85. Background. Each potential 

participant in a Commission auction 

must certify on its pre-auction shortform application whether or not the 

applicant, its affiliates, its controlling 

interests, and the affiliates of its 

controlling interests have ever been in 

default on any Commission license or 

have ever been delinquent on any nontax debt owed to any federal agency. 

With the exception of the Commission’s 

upcoming auction for AWS–3 licenses 

(Auction 97) for which it recently 

granted a limited blanket waiver, an 

applicant is considered to be a ‘‘former 

defaulter’’ if the applicant, including 

any of its affiliates, its controlling 

interests, or any of the affiliates of its 

controlling interests, has defaulted on 

any Commission license or been 

delinquent on any non-tax debt owed to 

any federal agency, but has since 

remedied all such defaults and cured all 

of its outstanding non-tax 

delinquencies. Former defaulters are 

eligible to bid in a Commission auction 

provided they are otherwise qualified, 

but are required to pay upfront 

payments that are 50 percent more than 

the normal upfront payment amounts. 

86. In the Part 1 Fifth Report and 

Order, the ‘‘former defaulter’’ policies 

were incorporated into the 

Commission’s part 1 general 

competitive bidding rules. See 

Amendment of Part 1 of the 

Commission’s Rules—Competitive 

Bidding Procedures, 65 FR 52323, Aug. 

29, 2000 (Part 1 Fifth Report and Order). 

The Commission reasoned that the 

integrity of the auctions program and 

the licensing process dictates requiring 

a more stringent financial showing from 

applicants with a poor federal financial 

track record. Thus, while cure of an 

outstanding federal default or 

delinquency enables the former 

defaulter to participate in an auction, 

the rules require the former defaulter to 

make a larger upfront payment. Other 

than in the recent waiver for Auction 

97, the former defaulter rule has been 

applied without any limitation as to age 

or scope of an applicant’s prior default 

or delinquency. 

87. On August 29, 2014, in response 

to unopposed requests from wireless 

industry parties, the Commission 

granted a limited blanket waiver to 

narrow the circumstances under which 

an applicant for Auction 97 would be 

considered a former defaulter and 

required to submit a larger upfront 

payment to qualify to bid. The 

Commission concluded that the 

underlying purpose of the upfront 

payment and former defaulter rules 

would not be served by their broad 

application in the AWS–3 auction, and 

that a limited waiver served the public 

interest. Specifically, for Auction 97, the 

Commission waived the former 

defaulter rule for applicants to exclude 

any cured default or delinquency for 

which any of the following criteria were 

met: (1) The notice of the final payment 

deadline or delinquency was received 

more than seven years before the 

Auction 97 short-form application 

deadline of September 12, 2014; (2) the 

amount of the default or delinquency 

falls below $100,000; (3) the default or 

delinquency was paid within two 

quarters (i.e., 6 months) after receiving 

the notice of the final payment deadline 

or delinquency; or (4) the default or 

delinquency was the subject of a legal 

or arbitration proceeding that was cured 

upon resolution of the proceeding. See 

Petition of DIRECTV Group, Inc. and 

EchoStar LLC (collectively, DIRECTV/

EchoStar) for Expedited Rulemaking to 

Amend Section 1.2105(a)(2)(xi) and 

1.2106(a) of the Commission’s Rules 

and/or for Interim Condition Waiver; 

Auction of Advanced Wireless Services 

(AWS–3) Licenses Scheduled for 

November 13, 2014 (Auction 97), RM– 

11395; AU Docket No. 14–78, Order, 

FCC 14–130, para. 1 (rel. Aug. 29, 2014) 

(Auction 97 Former Defaulter Waiver 

Order). Pursuant to the Auction 97 

Former Defaulter Waiver Order, only 

applicants that have had a cured default 

or delinquency that falls outside of 

these exclusions would have to certify 

to being a ‘‘former defaulter’’ and 

submit a larger upfront payment in 

Auction 97. The Auction 97 Former 

Defaulter Waiver Order noted that the 

Commission’s limited grant of the 

blanket waiver for Auction 97 was 

without prejudice to its further 

examination and disposition, based on a 

complete record, of the issues 

surrounding the former defaulter rule 

through a rulemaking proceeding. 

88. Discussion. Although the former 

defaulter rule serves an important and 

necessary function to ensure that 

bidders are capable of meeting their 

financial commitments, the Commission 

tentatively concludes that the rule may 

be too far-reaching and impose 

unnecessary costs and burdens on 

auction participants. The Commission 

proposes a more tailored approach by 

balancing concerns that the current 

application of the rule is overbroad with 

its continued need to ensure that 

auction bidders are financially reliable. 

The Commission seeks comment on 

revising the rule to narrow the scope of 

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the defaults and delinquencies that will 

be considered in determining whether 

or not an auction participant is a former 

defaulter. Specifically, the Commission 

proposes to exclude any cured default 

on any Commission license or 

delinquency on any non-tax debt owed 

to any federal agency for which any of 

the following criteria are met: (1) The 

notice of the final payment deadline or 

delinquency was received more than 

seven years before the relevant shortform application deadline; (2) the 

default or delinquency amounted to less 

than $100,000; (3) the default or 

delinquency was paid within two 

quarters (i.e., 6 months) after receiving 

the notice of the final payment deadline 

or delinquency; or (4) the default or 

delinquency was the subject of a legal 

or arbitration proceeding that was cured 

upon resolution of the proceeding. The 

Commission seeks comment on limiting 

the individuals and entities that an 

applicant must consider when 

determining its status as a former 

defaulter. 

89. In offering these proposals to limit 

the former defaulter rule, the 

Commission keeps in mind the 

underlying purposes of the upfront 

payment rule generally, and the 

increased upfront payment required of 

former defaulters. The Commission 

typically requires auction participants 

to provide upfront payments in order to 

qualify to bid in an auction. Upfront 

payments help prevent frivolous or 

insincere bidding and provide the 

Commission with a source of funds from 

which to collect payments owed at the 

close of auction. In adopting an upfront 

payment requirement, the Commission 

also recognized that it was balancing the 

goal of encouraging bidders to submit 

serious, qualified bids with the desire to 

simplify the bidding process and 

minimize implementation costs that 

will be imposed on bidders. The 

original former defaulter rule appeared 

in the Commission’s part 24 Broadband 

PCS rules in the wake of financial 

difficulties of participants in the C 

Block auctions. The Commission 

subsequently incorporated the part 24 

former defaulter policies into the part 1 

general competitive bidding rules, 

noting that the rule’s purpose was to 

preserve the integrity of the auction 

process and ensure that bidders are 

capable of meeting their financial 

commitments to the Commission. As the 

Commission noted in the Auction 97 

Former Defaulter Waiver Order, in the 

14 years since that Commission action, 

its auctions program has matured and 

the mobile wireless industry has grown 

into a major segment of the nation’s 

economy. Accordingly, the Commission 

considers in the Competitive Bidding 

NPRM whether the current broad rule 

continues to strike the right balance to 

promote the goals of its upfront 

payment and former defaulter rule. 

90. The parties that requested waiver 

of the former defaulter rule also suggest 

that the Commission modify the rule. 

For instance, in their petition, 

DIRECTV/EchoStar argue that, as 

currently written, the former defaulter 

rule applies too broadly to effectively 

advance the Commission’s goal of 

ensuring that auction bidders are 

financially reliable. In their joint filing, 

CCA, CEA, CTIA and NTCA (the Four 

Associations) mirror that sentiment and 

suggest that the scope of the rule is 

unnecessary to achieve its purpose, 

particularly when the former defaults or 

delinquencies are in a relatively small 

amount or were cured years prior. These 

parties offer a variety of ways to limit 

the scope of the former defaulter 

inquiry, but all consistently contend 

that the rule is unnecessarily broad to 

serve its underlying purpose. The 

Commission seeks comment on its 

specific proposals to narrow the scope 

of the defaults and delinquencies that 

would trigger an auction applicant’s 

former defaulter status and asks 

commenters to address whether, if such 

proposals are adopted, the Commission 

can still promote the important 

protective functions of its upfront 

payment and former defaulter rules. 

91. Parties urge first that prior 

delinquencies and defaults more than a 

certain number of years old should be 

excluded from the scope of the former 

defaulter rule. In the Auction 97 Former 

Defaulter Waiver Order, the 

Commission excluded from 

consideration under the former 

defaulter rule any cured default or 

delinquency for which the notice of the 

final payment deadline or delinquency 

was received more than seven years 

before the Auction 97 short-form 

application deadline of September 12, 

2014. The Commission concluded that 

the rule’s current unlimited time period 

may capture former defaults and 

delinquencies that have lost their 

relevance to a bidder’s current 

capability to meet its financial 

commitments to the Commission, and 

thus may no longer warrant a larger 

upfront payment for Auction 97. 

Initially, advocates seeking a more 

limited time frame for the rule’s 

application argued that a three year 

period would correspond to certain 

Federal tax statute of limitations. In 

seeking a waiver for Auction 97, CCA, 

CTIA and NTCA (the Three 

Associations) suggested that the 

Commission should define former 

defaulters to include only those 

applicants who have received notice of 

defaults or delinquencies within seven 

years before the Auction 97 short-form 

application deadline. In the Auction 97 

Former Defaulter Waiver Order, the 

Commission noted that while federal tax 

laws have a three-year statute of 

limitations to determine if certain forms 

of additional tax are owed, the period of 

limitations to determine whether 

income was under-reported is six years 

and the Internal Revenue Service has a 

seven-year period to review a claim for 

a loss from worthless securities or a bad 

debt deduction. Likewise, the 

Commission acknowledged that the Fair 

Credit Reporting Act limits many types 

of reporting by consumer credit agencies 

for a period of seven years. In light of 

these longer federal limitations periods, 

the Commission tentatively concludes 

that the purposes of the upfront 

payment and former defaulter rules may 

be furthered more precisely if the 

Commission excludes any cured default 

on a Commission license or a 

delinquency on a non-tax debt owed to 

a federal agency where the notice of the 

final payment deadline or delinquency 

was received more than seven years 

before the short-form application 

deadline. In doing so, the Commission 

notes that the determination of a notice 

of a final payment deadline or 

delinquency depends on the origin of 

the federal non-tax debt giving rise to a 

default or delinquency and such notice 

may be express or implied. To the 

extent that the rules providing for 

payment of a specific federal debt 

permit payment after an original 

payment deadline accompanied by late 

fee(s), such debts would not be in 

default or delinquent for purposes of 

applying the former defaulter rules until 

after the late payment deadline. For the 

purposes of the certifications required 

on a short-form auction application, 

notice provided by Commission staff 

assessing a default payment arising out 

of a default on a winning bid constitutes 

notice of the final payment deadline 

with respect to a default on a 

Commission license. The Commission 

seeks comment on all aspects of this 

proposal—the number of years specified 

(seven), the triggering event (upon 

receipt of the notice of the final 

payment deadline or delinquency), and 

the point at which the counting of the 

age of the triggering event is cut off (the 

short-form application deadline). To the 

extent commenters advocate a different 

length of time, an alternate triggering 

event, or another way of calculating 

how long ago the triggering event 

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68188 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

occurred, the Commission urges them to 

be specific as to why their proposal is 

more appropriate given the policies 

behind its rule. Should the length of 

time it took the defaulter to cure the 

debt, or how recently the cure occurred, 

be a factor? 

92. Those favoring modification of the 

rule also suggest excluding former 

defaults or delinquencies that fall below 

a certain amount. The Auction 97 

Former Defaulter Waiver Order 

excluded from consideration under the 

former defaulter rule for Auction 97 any 

former default or delinquency for which 

the amount of the resolved debt or 

delinquency fell below $100,000. Parties 

initially suggested excluding defaults or 

delinquencies of what they defined as 

de minimis in nature, and specifically 

suggested that the Commission should 

ignore any former default or 

delinquency totaling less than the lesser 

of $100,000 or 0.1 percent of the average 

annual revenues of the applicant, as 

computed by its competitive bidding 

rules. The Three Associations later 

suggested that the Commission exclude 

from the definition of former defaulter 

any cured defaults on a Commission 

license or delinquencies on a non-tax 

debt owed to a federal agency in an 

amount of less than $100,000. In the 

Auction 97 Former Defaulter Waiver 

Order, the Commission noted the 

$100,000 amount is used in other 

contexts to distinguish between less 

significant or material issues and more 

significant ones and the Commission 

concluded that for the purposes of 

Auction 97, requiring a larger upfront 

payment based on any cured default or 

delinquency that is less than $100,000 

could discourage participation in 

Auction 97 without appreciably 

ameliorating the risk of bidder defaults, 

and thereby undermine the underlying 

purposes of its upfront payment and 

former defaulter rules. 

93. For clarity and efficiency of the 

administration of the former defaulter 

rule from both the Commission’s and 

applicants’ perspectives, the 

Commission now proposes to adopt for 

future auctions generally the same 

bright-line standard established in the 

Auction 97 Former Defaulter Waiver 

Order that would exclude from the rule 

any former default on a Commission 

license or delinquency on a non-tax 

debt owed to a federal agency where the 

amount of the resolved debt falls below 

$100,000. The Commission tentatively 

concludes that such an exclusion will 

simplify the application process and 

minimize implementation costs 

imposed on applicants by excluding 

former defaults and delinquencies for 

which consideration is no longer 

necessary to ensure bidders in a more 

mature wireless industry submit 

serious, qualified bids. The $100,000 

threshold aligns with Commission 

precedent and is used in other contexts 

to determine the materiality or 

significance of various issues. See 

Auction 97 Former Defaulter Waiver 

Order at para. 18. If commenters 

disagree with the amount proposed, the 

Commission encourages them to 

provide specific examples of how 

former defaults or delinquencies of a 

different amount would better reflect an 

auction applicant’s financial reliability. 

The Commission also seeks comment on 

whether its proposal adequately weighs 

its need to consider debts of a serious 

nature that are indicative of a bidder’s 

poor federal track record with the 

burdens faced by many applicants in 

complying with the current rule, which 

might be considered open-ended in 

scope. 

94. To address situations where, due 

to incorrect addresses, delivery 

problems, or internal issues, applicants 

may not timely pay obligations, but cure 

such debts when discovered, the Three 

Associations also contend that the 

Commission should for the purposes of 

the former defaulter rule exclude certain 

additional resolved debts. For Auction 

97 applicants, the Commission waived 

the former defaulter rule to exclude any 

cured default or delinquency where the 

debt was paid within two quarters (i.e., 

6 months) after receiving the notice of 

final payment deadline or delinquency. 

There, the Commission concluded that 

the prompt cure of such a default or 

delinquency sufficiently demonstrated 

an applicant’s financial wherewithal, 

that therefore it was unnecessary to 

require a larger upfront payment from 

the applicant, and that a waiver under 

such circumstances served the public 

interest by encouraging prompt payment 

of debts owed to the government. The 

Commission now proposes to modify 

the former defaulter rule generally to 

exclude a default or delinquency that 

was paid within two quarters (i.e., 6 

months) after receiving the notice of the 

final payment deadline or delinquency 

for the same reasons articulated in the 

Auction 97 Former Defaulter Waiver 

Order. The Commission seeks comment 

on whether this exclusion will allow it 

to appropriately balance the 

practicalities that may affect the 

applicants’ ability to timely resolve their 

debts with the need to ensure that 

bidders are capable of meeting their 

financial commitments to the 

Commission. The Commission also 

invites commenters to address whether 

payment within some other time period 

might better strike that balance, and 

whether receipt of the notice of the final 

payment deadline or delinquency is the 

appropriate triggering event for this 

exclusion. 

95. Similarly, the Three Associations 

also suggest for the purposes of 

modifying the former defaulter rule that 

an applicant should not be considered 

to be in default if any debt is the subject 

of a good faith dispute or a pending 

legal or arbitration proceeding. In the 

Auction 97 Former Defaulter Waiver 

Order, the Commission included this 

suggestion in part, and concluded that 

where the default or delinquency was 

the subject of a legal or arbitration 

proceeding and was cured upon 

resolution of the proceeding, an 

applicant has demonstrated sufficient 

financial credibility so that it was not 

necessary to require a larger upfront 

payment from it in Auction 97. The 

Commission determined that waiver 

under such circumstances served the 

public interest by encouraging prompt 

resolution of debts associated with legal 

or arbitration proceedings. The 

Commission declined, however, to 

waive the larger upfront payment 

requirement for debts that are subject to 

a ‘‘good faith dispute’’ because it 

reasoned that such a provision, even for 

cured debts, would be too ambiguous to 

be efficiently applied during the auction 

short-form application process. The 

Commission proposes to modify the 

former defaulter rule generally to 

exclude a default or delinquency that 

was the subject of a legal or arbitration 

proceeding and was cured upon 

resolution of the proceeding. As in the 

Auction 97 Former Defaulter Waiver 

Order, the Commission does not intend 

to include within the scope of this 

exclusion any proceedings based on 

requests for waiver of a rule requiring 

payment of a debt or delinquency. The 

Commission seeks comment on whether 

its proposed exclusion addresses 

parties’ concerns that debts such as 

these are not indicative of an applicant’s 

financial credibility such that they 

should require an applicant to submit a 

larger upfront payment. Should the 

Commission also exclude debts cured 

after resolution of a ‘‘good faith 

dispute,’’ and if so, how could such 

‘‘good faith disputes’’ be verified during 

the short-form application process, if 

necessary? Is the proposed general 

exclusion for debts cured upon 

resolution of a legal or arbitration 

proceeding necessary? In the alternative, 

should the Commission expect 

financially reliable applicants to pay 

outstanding defaults on Commission 

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tax debt owed to any federal agency, 

while legal or arbitration proceedings 

are pending, even if the applicant’s 

liability or the amount of the debt is in 

dispute? 

96. In their petition, DIRECTV/

EchoStar also maintain that the former 

defaulter rule should apply only to 

auction participants and those 

individuals or entities that are in a 

position to affect whether such 

applicants meet their auction-related 

financial responsibilities and urge the 

exclusion of debts/delinquencies 

relating to personal obligations of 

officers or directors of entities that are 

not the auction applicant, e.g., 

excluding personal obligations of 

officers and directors of the applicant’s 

parent companies. More recent requests 

to amend the former defaulter rule do 

not include any suggestion to limit the 

scope of individuals and entities that an 

applicant needs to consider in 

evaluating its former defaulter status. 

97. In implementing the former 

defaulter provisions, the Commission 

has included the applicant’s affiliates, 

its controlling interests, and affiliates of 

its controlling interests in determining if 

an applicant is a former defaulter. The 

Commission recognizes, however, that 

some of the individuals and entities that 

fall within these definitions may play 

no role in the applicant’s general 

financial responsibilities and may not 

affect an applicant’s ability to meet its 

financial obligations arising from an 

auction. Therefore, the Commission 

seeks comment on possible ways to 

amend the former defaulter provisions 

to apply only to individuals and entities 

that play a role in the applicant’s 

financial responsibilities. If the 

Commission were to adopt DIRECTV/

EchoStar’s proposal to include only 

individuals or entities that are in a 

position to affect whether such 

applicants meet their auction-related 

financial responsibilities, how could it 

verify who would fit within such a 

category? In their request for waiver, 

DIRECTV/EchoStar suggest specifically 

not applying the rule to officers and 

directors of parent entities. Under such 

an option, however, what would 

prevent applicants from evading the 

rule by simply creating a shell company 

to be the auction applicant? 

98. Another option would be to limit 

the former defaulter inquiry to those 

individuals or entities that an applicant 

must disclose on its short-form 

application pursuant to 47 CFR 1.2112. 

For non-DEs, this would limit the 

inquiry to the applicant and disclosable 

interest holders under 47 CFR 1.2112(a). 

For DEs, the Commission could, under 

this option, continue to include those 

individuals and entities that are 

attributable to the applicant under 47 

CFR 1.2112(b)(iv) in any consideration 

of an applicant’s form defaulter status. 

As such, the Commission recognizes 

that, while such an option may exclude 

some individuals and entities not 

directly related to an applicant’s auction 

finances, it could also expand the scope 

of individuals or entities that must be 

considered in some respects. The 

Commission could limit the inquiry to, 

for example, the real party or parties in 

interest in the applicant or application, 

which must be disclosed pursuant to 47 

CFR 1.2112(a)(1). Would this option 

capture the individuals and entities that 

are in a position to affect whether an 

applicant meets its auction-related 

financial responsibilities? Would 

excluding officers and directors not 

otherwise covered by 47 

CFR1.2112(a)(1) be inconsistent with 

the Commission’s policy to attribute 

them for purposes of evaluating 

eligibility for designated entity bidding 

credits in light of their potential ability 

to influence the management or 

operation of the applicant? 

99. Finally, the Commission seeks 

comment as to other possible ways to 

limit the scope of the former defaulter 

rule. For example, the Commission 

could define the rules to include only 

defaults or delinquencies related to its 

auction payments, or defaults or 

delinquencies on debt owed only to the 

Commission as opposed to those owed 

on other government non-tax debt, such 

as student loans. The Commission 

notes, however, that such further 

limitations may not be necessary given 

the other limitations that it proposes. 

B. Commonly Controlled Entities 

100. The Commission proposes to 

codify an established competitive 

bidding procedure that prohibits the 

same individual or entity from filing 

more than one short-form application. 

Additionally, the Commission proposes 

a new rule that would prevent entities 

that are exclusively controlled by a 

single individual or set of individuals 

from qualifying to bid on licenses in the 

same or overlapping geographic areas in 

a specific auction on more than one 

short-form application. 

101. Background. The Commission’s 

competitive bidding procedures have 

long prohibited the same individual or 

entity from submitting multiple shortform applications in any auction. This 

restriction prevents duplicative filings 

and may avert anticompetitive bidding 

behavior. 

102. There is currently no similar 

procedure for commonly controlled 

entities. The competitive bidding rules 

and procedures currently contain no 

explicit prohibition on commonly 

controlled entities participating in the 

same auction and bidding on the same 

licenses. Several years ago, the 

Commission declined to set aside the 

results of an auction based on 

allegations relating to the participation 

of separate applicants that were 

commonly controlled. In that decision, 

the Commission acknowledged that 

auction participation by commonly 

controlled applicants could serve 

legitimate business purposes if such 

entities have different business plans, 

financing requirements, or marketing 

needs; however, it noted that there 

could be risks inherent in allowing 

commonly controlled bidders to 

participate in an auction. See Petition 

for Reconsideration and Motion for Stay 

of Paging Systems, Inc., Memorandum 

Opinion and Order, 25 FCC Rcd 4036 

(2010). 

103. Discussion. The Commission 

proposes to amend its competitive 

bidding rules to codify its restriction on 

the filing of multiple auction 

applications by the same individual or 

entity and to adopt a new rule that 

would prevent entities that are 

controlled exclusively by the same 

single individual or set of individuals 

from qualifying to bid based on multiple 

auction applications for the same or 

overlapping geographic license areas. By 

proposing these amendments to its Part 

1 competitive bidding rules, the 

Commission seeks to improve the 

transparency and efficiency of the 

auction process, by making clearer who 

the qualified bidders actually are and 

ensuring against the potential for 

anticompetitive auction behavior. 

104. Duplicate auction applications. 

The Commission proposes to amend 47 

CFR 1.2105 to prohibit the same 

individual or entity from filing more 

than one short-form application for an 

auction. The Commission observes that 

in contexts other than competitive 

bidding, its rules already limit 

repetitious or conflicting applications. 

Prohibiting the same individual or 

entity from filing multiple applications 

to participate in an auction protects the 

Commission against the burden of 

duplicative, repetitious or conflicting 

applications. Moreover, in this context, 

such applications raise potential 

concerns that duplicate filers may be 

able to manipulate the auction 

process—using, for example, identical 

bids or multiple activity waivers—to 

pursue potentially anticompetitive ends. 

The Commission seeks comment on this 

proposal. Are there any specific reasons 

the Commission should allow for the 

filing of more than a single short-form 

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68190 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

application from the same individual or 

entity? Commenters should describe any 

public interest benefits to support their 

positions. 

105. Applications by entities 

exclusively controlled by the same 

individual or set of individuals. The 

Commission also proposes to adopt a 

new rule to provide that where entities 

are under the common, exclusive 

control of a single individual or set of 

individuals (i.e., a single individual or 

same set of individuals is the exclusive 

controlling interest of more than one 

entity) only one short-form application 

from such entities could become 

qualified to participate with respect to 

any particular geographic license area or 

overlapping areas. In defining the 

entities that would be subject to this 

rule, the Commission proposes to use 

the concepts of ‘‘control’’ or 

‘‘controlling interest’’ from 47 CFR 

1.2110, which also applies by its terms 

to DEs. Even when applicants are not 

identical, if more than one applicant is 

under the exclusive control of a single 

individual or set of individuals, such 

common control may allow the 

controlling individual or set of 

individuals to attempt to gain 

advantages in the bidding process based 

on certain coordinated bidding actions 

(e.g., tied bids, activity waivers). While 

such entities may have different 

business plans, financing, accounting, 

non-controlling interest holders or 

minority investors, if they are under 

exclusive control of a single individual 

or set of individuals, under the 

Commission’s proposal those entities 

could not become qualified to bid in an 

auction with respect to the same or 

overlapping geographic license areas. 

The Commission seeks comment on this 

proposal and on specific alternatives to 

address its concerns. 

106. Multiple applicants under the 

common control of a single individual 

or set of individuals may coordinate 

their bidding actions in ways not 

available to a single bidder, and may, in 

some cases, derive some advantage from 

doing so. For example, such multiple 

applicants would have more activity 

waivers to use to ensure that the auction 

remains open, or would be able to 

submit identical bids on a license in 

ways intended to exploit auction 

bidding procedures. In addition, such 

multiple applicants could potentially 

coordinate their bidding to gain some 

advantage in the context of random tiebreakers or through increasing the 

bidding activity on a single license in 

order to raise minimum acceptable bids 

more quickly through application of the 

exponential smoothing formula. 

107. Further, the mere presence of 

commonly controlled applicants making 

identical bids in a single auction may 

damage the transparency of the auction 

process. For example, the placing of 

multiple identical bids by commonly 

controlled applicants may mislead other 

bidders about the extent of bidding 

competition, especially in an 

anonymous bidding auction where 

competitors are unable to discern 

whether bids are placed by commonly 

controlled applicants or independent 

competitors. The Commission 

anticipates that these and other 

potentially problematic behaviors could 

be curbed by requiring such applicants 

to participate as a single applicant with 

respect to any particular geographic 

license area or overlapping areas. 

108. Do commenters share the 

Commission’s concern that the 

participation of commonly controlled 

applicants in an auction potentially 

undermines evenhandedness and 

transparency in the auction process? 

Commenters opposing the 

Commission’s proposals should indicate 

how codifying its existing auction 

procedure and/or adopting its new 

proposed rule would harm the 

efficiency or undermine the 

competitiveness of the Commission’s 

current auction process. The 

Commission notes that to the extent that 

the commonly controlled entities have 

an interest in holding licenses won at 

auction separately, such entities might 

consider assigning the licenses to 

related entities in the secondary market. 

Are there legitimate business reasons for 

filing these types of applications that 

the Commission has failed to consider 

that could be undermined by its 

proposal? 

C. Joint Bidding 

109. The Commission initiates a 

review of its rules and policies 

governing joint bidding and other 

arrangements in order to ensure that 

they fulfill its statutory objectives, given 

the changes in the mobile wireless 

marketplace since the Commission’s 

initial adoption of its bidding rules two 

decades ago, and the increasing 

importance of spectrum for service 

providers to meet consumer demand for 

mobile wireless services. The 

Commission’s goal in reviewing these 

rules and policies is to ensure that they 

preserve and promote competition in 

the mobile wireless marketplace and 

facilitate competition among bidders at 

auction, while providing potential 

bidders with greater clarity regarding 

the types of joint bidding arrangements 

that would be permissible. 

110. Consistent with the 

Commission’s commitment in the 

Mobile Spectrum Holdings Report and 

Order, it seeks to develop a record on 

how joint bidding and other 

arrangements affect competition in the 

mobile wireless marketplace, and the 

appropriate policies and procedures for 

substantive competitive review of joint 

bidding. Policies Regarding Mobile 

Spectrum Holdings; Expanding the 

Economic and Innovation Opportunities 

of Spectrum Through Incentive 

Auctions, 79 FR 39977, Jul. 11, 2014 

(Mobile Spectrum Holdings Report and 

Order). In that regard, the Commission 

notes that the scope of its inquiry here— 

unlike its other proposals in the NPRM 

applies only to joint bidding and other 

arrangements in auctions of licenses 

likely to be used for mobile telephony/ 

mobile broadband services. 

111. To best serve the public interest 

and preserve and promote robust 

competition, the Commission also 

proposes to adopt policies tailored to 

the characteristics of joint bidding and 

other arrangements and the likely 

competitive effects on the mobile 

wireless marketplace. Specifically, the 

Commission tentatively concludes that 

it would best serve the public interest to 

retain the current rules governing joint 

bidding arrangements among nonnationwide providers and to prohibit 

joint bidding arrangements among 

nationwide providers. In addition, the 

Commission seeks comment on whether 

it should revise any of its current rules 

as applied to arrangements between 

nationwide providers and other entities, 

including its rules governing short-form 

applications. Further, the Commission 

seeks comment on whether any 

revisions to its rules governing longform applications are necessary in light 

of its consideration of the potential 

harms and benefits of joint bidding and 

other arrangements. 

112. Background. Rules and Policies 

Governing Joint Bidding. In 1994, the 

Commission adopted rules to serve the 

objectives of the Act by preventing 

parties, especially the largest firms, from 

agreeing in advance to bidding strategies 

that divide the market according to their 

strategic interests and disadvantage 

other bidders. See Implementation of 

Section 309(j) of the Communications 

Act—Competitive Bidding, 59 FR 22980, 

May 4, 1994 (Competitive Bidding 

Second Report and Order). The 

Commission also sought to help ensure 

that the government receives a fair 

market price for the use of the spectrum. 

In the Competitive Bidding Second 

Report and Order, the Commission 

further concluded that adopting 

safeguards to prevent collusive behavior 

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among bidders would help ensure 

prompt delivery of services (including 

to rural areas), rapid deployment of new 

services and technologies, development 

of competitive markets, and wide access 

to a variety of services. Moreover, the 

Commission observed that collusive 

conduct among bidders could prevent 

the formation of a competitive postauction market structure. At the same 

time, the Commission recognized that if 

anticollusion rules are too strict or are 

not sufficiently clear, they could 

prevent the formation of efficiency 

enhancing bidding consortia that pool 

capital and expertise and reduce entry 

barriers for small firms and other 

entities that might not otherwise be able 

to compete in the auction process. 

113. The Commission concluded that, 

in most cases, the number of bidders 

likely to participate in the auction, 

auction design safeguards, and existing 

antitrust law would effectively deter 

collusion. However, the Commission 

also adopted certain measures to help 

ensure collusion would not jeopardize 

the competitiveness of the auction 

process. Importantly, the Commission 

found these safeguards sufficient in the 

context of other competition-related 

determinations it had made regarding 

the initial licensing of Broadband PCS 

licenses through competitive bidding. 

Specifically, the Commission had set a 

limit on the amount of broadband PCS 

spectrum that the incumbent cellular 

licensees in each market could acquire 

at the upcoming PCS auctions as well as 

a separate limit on the amount of such 

spectrum that any bidder could acquire 

at the upcoming Broadband PCS 

auctions. In 1991, the Commission had 

adopted a cellular cross-interest rule 

that substantially limited any affiliation 

between the two cellular licensees in an 

area. 

114. With relatively minor changes 

adopted since 1994, the Commission’s 

current rules allow potential 

participants in a Commission auction, 

prior to the short-form application 

deadline, to enter into various kinds of 

agreements related to the licenses being 

auctioned as long as the applicants 

disclose on the short-form application 

on both the existence (but not the terms 

and conditions) of any joint bidding 

arrangements and the real-parties-ininterest to the application. After the 

short-form application deadline, 

applicants may not enter into any 

additional arrangements regarding the 

amount of bids, bidding strategies or 

particular licenses on which they will or 

will not bid, subject to certain limited 

exceptions, and may not communicate 

bidding information to other applicants 

for licenses in any of the same 

geographic areas unless those other 

applicant(s) were identified on the 

short-form application. Post-auction, 

winning bidders must disclose on the 

long-form application the specific terms, 

conditions, and parties involved in any 

agreement into which the applicant has 

entered, and the winning bidder must 

be the same entity that files the longform application. 

115. The Commission notes that it has 

always made clear with respect to its 

rules and policies governing joint 

bidding that conduct that is permissible 

under the Commission’s Rules may be 

prohibited by the antitrust laws, review 

under which is subject to other and 

differing standards under the Sherman 

and Clayton Acts. Specifically, joint 

bidding arrangements under section 1 of 

the Sherman Act are prohibited if they 

constitute a ‘‘contract, combination 

. . ., or conspiracy, in restraint of 

trade,’’ whereas joint bidding 

arrangements subject to section 7 of the 

Clayton Act are prohibited if their effect 

‘‘may be substantially to lessen 

competition, or to tend to create a 

monopoly.’’ The Commission’s auction 

procedures public notices for specific 

auctions caution that compliance with 

the disclosure requirements of 47 CFR 

1.2105(c) will not insulate a party from 

enforcement of the antitrust laws. 

Bidders who are found to have violated 

the antitrust laws or the Commission’s 

rules in connection with their 

participation in the competitive bidding 

process may be subject to forfeiture, 

prohibition from auction participation, 

and other sanctions. 

116. Evolution of the Mobile Wireless 

Marketplace. The Commission adopted 

these joint bidding rules 20 years ago 

when the mobile wireless industry was 

at a nascent stage: For example, at the 

end of 1994, the nationwide penetration 

rate for mobile wireless service was 

approximately 9 percent, compared to 

106 percent at the end of 2011. 

Moreover, when the Commission 

adopted its joint bidding rules in 1994, 

it had yet to hold even the first of the 

numerous auctions it has conducted in 

its history of licenses likely to be used 

for mobile telephony/mobile broadband 

services. 

117. The Commission’s competitive 

bidding rules, as adopted in 1994, 

reflected the developing nature of the 

mobile wireless industry, as the 

Commission sought to promote 

economic growth in the ‘‘new wireless 

services’’ and to enhance access to 

telecommunication services by 

encouraging broad participation in the 

provision of spectrum-based services 

and ensuring that spectrum-based 

services are available to a wide range of 

consumers. In 1998, the Commission 

observed again that much of the mobile 

telephone market was still in its 

infancy. 

118. Since 1994, and particularly in 

the past decade, the marketplace has 

changed significantly. It is no longer 

nascent. Consumer demand for wireless 

services has exploded, with the industry 

focus changing from the provision of 

mobile voice services to the provision of 

mobile broadband services. The 

adoption of smartphones and tablet 

computers, and the widespread use of 

mobile applications, combined with the 

increasing deployment of high-speed 3G 

and now 4G technologies, is driving 

significantly more intensive use of 

mobile networks and increasing 

providers’ need for spectrum. In 

addition, during the past decade, the 

wireless marketplace has undergone 

significant consolidation, with a 

reduction from six to four nationwide 

providers, an increase in the market 

share of the major providers, and a 

smaller number of regional and local 

providers. Indeed, by December 2013, 

the top four facilities-based nationwide 

providers had combined market share of 

approximately 97 percent of subscribers. 

See UBS Investment Research, US 

Wireless 411: Version 51, Mar. 18, 2014, 

Figure 21 at 14. 

119. Consistent with the evolution of 

the mobile wireless marketplace and the 

Commission’s statutory directives and 

policy goals, it continues to strive to 

adopt policies to preserve and promote 

consumer choice and competition 

among multiple service providers, 

promote the efficient and intensive use 

of spectrum, maximize economic 

opportunity, and foster the deployment 

of innovative technologies. For instance, 

the Commission recently concluded in 

the Mobile Spectrum Holdings Report 

and Order that any mobile spectrum 

limit on the initial licensing of a 

spectrum band through competitive 

bidding should be articulated and 

applied prior to the start of the auction 

in order to provide bidders greater 

certainty regarding how many licenses 

they would be permitted to acquire. 

120. In the Mobile Spectrum Holdings 

Report and Order, the Commission 

established a market-based spectrum 

reserve for the Incentive Auction of up 

to 30 megahertz in each license area, 

recognizing that the Incentive Auction 

represents a once-in-a-generation 

opportunity to auction significant 

amounts of greenfield low-band 

spectrum. The Commission limited 

nationwide providers from bidding on 

reserved spectrum in Partial Economic 

Areas (PEAs) where they hold 45 

megahertz or more of suitable and 

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available below-1–GHz spectrum. By 

contrast, the Commission permitted 

regional and local service providers to 

bid on reserved spectrum in all PEAs, 

observing that non-nationwide service 

providers present a significantly lower 

risk of effectively denying their rivals 

access to low band spectrum to 

foreclose competition or to raise rivals’ 

costs because of their relative lack of 

resources. At the same time, in the 

Mobile Spectrum Holdings Report and 

Order, the Commission placed no 

limitation on the amount of spectrum 

that bidders could acquire in the AWS– 

3 auction. 

121. In the Mobile Spectrum Holdings 

Report and Order, the Commission also 

stated it would consider in a further 

notice of proposed rulemaking possible 

changes to certain auction rules relating 

to joint bidding arrangements and 

strategies in the Incentive Auction. The 

Commission here undertakes a 

reexamination of its auction rules on 

these issues, including but not limited 

to their application in the Incentive 

Auction. 

122. Discussion. In light of the 

changes in the mobile wireless 

marketplace since the Commission 

adopted the current joint bidding rules 

20 years ago, the Commission reviews 

its rules on joint bidding and other 

arrangements to ensure that the 

potential competitive harms that may 

arise out of such arrangements do not 

outweigh any public interest benefits. 

To best serve the public interest and 

preserve and promote robust 

competition into the foreseeable future, 

the Commission seeks to further its 

statutory objectives by adopting policies 

tailored to the type of arrangement and 

its likely competitive effect on the 

conduct of the auction and on the 

mobile wireless marketplace. 

Specifically, the Commission tentatively 

concludes that it would serve the public 

interest to retain the current rules 

governing joint bidding and other 

arrangements among non-nationwide 

providers, but to prohibit certain joint 

bidding and other arrangements among 

nationwide providers. In addition, the 

Commission seeks comment on whether 

the Commission should revise any of its 

current rules as applied to arrangements 

between nationwide providers and other 

entities, including its rules governing 

short-form applications. Further, the 

Commission seeks comment on whether 

any revisions to its rules governing longform applications are necessary in light 

of its consideration of the potential 

harms and benefits of joint bidding and 

other arrangements. 

123. For purposes of this proceeding, 

the Commission defines ‘‘joint bidding 

and other arrangements’’ to include any 

bidding consortia, joint venture, 

partnership, or agreement, 

understanding, or other arrangement 

entered into relating to the competitive 

bidding process, including any 

agreement relating to post-auction 

market structure or operation. In light of 

the Commission’s focus on promoting 

and preserving competition, it considers 

this definition to include not only 

arrangements among entities that apply 

to bid in an auction, but also 

arrangements between entities that 

apply to bid in an auction and those 

entities that do not, insofar as such 

arrangements have the potential to affect 

competition in the mobile wireless 

telephony/mobile broadband 

marketplace. 

124. Competitive Effects of Joint 

Bidding and Other Arrangements. When 

assessing the competitive effects of joint 

bidding and other arrangements, the 

Commission must ensure that its 

policies and rules facilitate access to 

spectrum in a manner that promotes 

competition to the benefit of consumers. 

As the Commission has found in the 

Mobile Spectrum Holdings Report and 

Order, in order for there to be robust 

competition, multiple competing service 

providers must have access to or hold 

sufficient spectrum to be able to enter 

the marketplace or expand output 

rapidly in response to any price 

increase, reduction in quality, or other 

competitive change that would harm 

consumer welfare. 

125. Joint conduct or competitor 

collaboration that is more limited in 

scope and does not result in a full 

integration of economic activity does 

not end all competition between 

participants post bidding and is 

analyzed differently from joint ventures 

that fully integrate the participants 

downstream competition. The latter, in 

certain circumstances, may be properly 

analyzed as a merger. Either type of 

competitor collaboration however may 

result in procompetitive benefits and/or 

anticompetitive effects. 

126. Because some joint bidding and 

other competitor collaborations 

contemplate competition among 

participants post auction, they raise the 

risk that the spectrum acquired through 

a winning bid will be allocated among 

the joint venture participants in a 

manner that could harm the public 

interest. Because the joint venture may 

be comprised of same market 

competitors, the arrangement may 

require proper safeguards to prevent the 

exchange of competitively sensitive 

price and output information, ensure 

independent decision making or 

otherwise avoid lessening competition 

among the participants in the 

downstream mobile wireless 

marketplace. 

127. Joint bidding and other 

arrangements, however, also have the 

potential to result in procompetitive 

benefits if they enable participation in 

auctions by those otherwise without 

sufficient financial resources to bid, or 

otherwise reduce entry costs into a 

geographic area or enable the joint 

bidders to compete more robustly 

against other competitors in the 

marketplace. For example, the pooling 

of capital resources could allow smaller 

providers to better exploit financial 

economies of scale and enter into 

bidding for geographic areas that 

otherwise would not have been 

accessible, which may be particularly 

important given the high capital costs of 

network deployment and spectrum 

acquisition. 

128. The Commission seeks comment 

on the foregoing analysis. The 

Commission’s public interest review of 

applications for assignment of licenses 

through competitive bidding generally 

encompasses a review of the 

competitive effects of such assignments. 

In light of the changing marketplace and 

consistent with the Commission’s recent 

emphasis in the Mobile Spectrum 

Holdings proceeding on the need for 

clearly-defined rules prior to the auction 

on the licenses a bidder would be 

permitted to acquire, the Commission 

seeks comment on how best to conduct 

its competitive review of joint bidding 

arrangements going forward. 

129. Given the potential benefits and 

harms of different types of 

arrangements, the Commission seeks 

comment on the rules and procedures 

that should govern its review of joint 

bidding and other arrangements entered 

into relating to the competitive bidding 

process, including any agreement 

relating to post-auction market structure 

or operation. In addition, the 

Commission seeks comment on whether 

the distinctions as to arrangements 

among non-nationwide providers, 

among nationwide providers, and 

between nationwide providers and other 

entities—provide an effective 

framework for addressing the relative 

harms and benefits of joint bidding 

arrangements in light of its goal of 

providing clearly-defined rules for 

potential bidders in auctions. Further, 

the Commission seeks comment on 

whether these rules or procedures 

should differ in instances in which it 

has adopted a mobile spectrum holding 

limit for the initial licensing of a 

particular spectrum band through 

competitive bidding and, if so, how the 

type of mobile spectrum holding limit 

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and the statutory goals applicable to the 

particular auction should affect these 

rules and procedures. 

130. For purposes of the joint bidding 

rules, the Commission proposes to 

define ‘‘nationwide’’ providers to 

include the providers in the U.S. with 

networks that cover a majority of the 

population and land area of the 

country—currently, Verizon Wireless, 

AT&T, Sprint and T-Mobile—with other 

providers being considered ‘‘nonnationwide’’ providers. The 

Commission seeks comment on how 

this definition of nationwide providers 

should take into account entities 

partially owned by Verizon Wireless, 

AT&T, Sprint and T-Mobile. Should the 

definition include entities that are 

‘‘affiliates’’ (as that term is defined in its 

rules for attributing revenues to small 

businesses) of the four providers, 

entities with spectrum holdings that 

would be attributable to these four 

providers (as defined by its mobile 

spectrum holdings rules), or a category 

of entities defined in some other 

manner? 

131. Arrangements among NonNationwide Providers. Considering the 

current competitive landscape and the 

need for access to spectrum by nonnationwide providers, the Commission 

tentatively concludes that its current 

rules are sufficient to prevent any 

potential competitive harm from 

outweighing the likely public interest 

benefits associated with allowing joint 

bidding and other arrangements among 

non-nationwide providers. For example, 

joint bidding and other arrangements 

among non-nationwide providers can 

better overcome the challenging capital 

costs of license acquisition to maintain 

or increase their competitive presence to 

the benefit of American consumers. In 

light of the relatively small size and 

scope of non-nationwide providers 

following substantial consolidation 

since the Commission’s current rules 

were adopted, and the increased costs of 

spectrum and other capital expenditures 

necessary to provide mobile broadband 

service over large license areas, the 

Commission believes it is highly 

unlikely in most circumstances that 

such arrangements would lead to 

competitive harm or otherwise harm the 

public interest. Moreover, in the Mobile 

Spectrum Holdings Report and Order, 

the Commission observed that nonnationwide service providers presented 

a significantly lower risk of effectively 

denying their rivals access to spectrum 

in order to foreclose downstream 

competition or to raise rivals’ costs 

because of their relative lack of 

resources. The Commission seeks 

comment on these views in connection 

with the competitive impact of joint 

bidding and other arrangements. 

132. Commenters proposing any 

changes to the Commission’s joint 

bidding rules for arrangements among 

non-nationwide providers should 

discuss why such changes are necessary 

to address particular competitive 

concerns and whether, on balance, such 

changes would ensure that the 

procompetitive benefits and bidding 

flexibility arising out of its current rules 

remain in place. In addition, the 

Commission seeks comment on whether 

any types of arrangements between nonnationwide service providers and 

potential new entrants would warrant 

closer examination of the competitive 

effects and, if so, whether any changes 

to its joint bidding rules are necessary 

to address any such scenarios. 

133. Arrangements among 

Nationwide Providers. In contrast, the 

Commission tentatively concludes that 

joint bidding arrangements between or 

among nationwide providers likely 

would raise competitive concerns, as 

these arrangements would have the 

potential to serve as a vehicle for 

anticompetitive conduct by altering post 

auction incentives to compete, and thus, 

would outweigh any public interest 

benefits from such arrangements such as 

the attainment of scale or scope 

economies. As the Commission noted in 

the Mobile Spectrum Holdings Report 

and Order, the mobile wireless 

marketplace today is characterized by 

factors—such as high market 

concentration, high margins and high 

barriers to entry—that increase the 

potential for anticompetitive conduct. In 

particular, by year end 2013, the top 

four facilities-based nationwide 

providers had a combined market share, 

as measured by the number of 

subscribers or mobile wireless service 

revenues, of at least 97 percent. 

134. Moreover, in light of these 

factors, joint bidding arrangements 

among nationwide providers would 

reduce the participants’ ability or 

incentive to compete independently, 

which would lessen competition in the 

downstream mobile wireless 

marketplace and could harm American 

consumers by increasing the price or 

reducing the quality of mobile wireless 

services. Because of these greater risks 

of public interest harms, the 

Commission believes it is unlikely that 

the potential benefits of joint bidding 

arrangements among nationwide 

providers would outweigh these risks. 

The Commission seeks comment on this 

analysis. 

135. Further, as the Commission has 

emphasized recently, it is important to 

provide bidders with certainty and 

clarity in advance of the start of an 

auction regarding whether any 

limitations on their ability to acquire 

licenses would apply. In that regard, the 

Commission observes that post-auction 

enforcement of antitrust law— 

envisioned as a safeguard by the 

Commission in 1994—may not be as 

well suited to preventing anticompetitive joint bidding arrangements 

as the bright-line prohibition the 

Commission proposes herein. In 

addition, the Commission notes that, 

while in 1994 bright-line prohibitions 

on certain types of bidding 

arrangements might not have been 

ideally suited for an industry at a 

nascent stage, the mobile wireless 

industry today is much more mature 

than it was in 1994. Moreover, the limit 

set by the Commission at that time on 

the amount of broadband PCS spectrum 

that the two incumbent cellular 

licensees in each market could acquire 

at the auctions effectively eliminated 

the incentives of those providers to 

enter into joint bidding arrangements, 

which would have raised significant 

competitive concerns. 

136. Accordingly, the Commission 

tentatively concludes that it would best 

serve the public interest at this time to 

have a bright-line rule that would 

prohibit joint bidding and other 

arrangements among nationwide 

providers, including agreements to 

participate in an auction through a 

newly formed joint entity, given that 

such arrangements have a greater 

potential to harm the public interest by 

negatively affecting the competitive 

bidding process and downstream 

competition in the provision of mobile 

wireless services. The Commission 

seeks comment on the costs and benefits 

of prohibiting applications to participate 

in an auction that involve joint bidding 

and other arrangements, such as a new 

joint venture, between two or more 

nationwide providers. The Commission 

notes that its tentative conclusion to 

prohibit joint bidding and other 

arrangements between two nationwide 

providers would also include 

prohibiting arrangements among two 

nationwide providers, together with 

other entities. 

137. Arrangements between a 

Nationwide Provider and Other Entities. 

The Commission seeks comment on 

what policies and procedures should 

apply to bidding arrangements between 

a single nationwide provider and other 

entities, either non-nationwide 

providers or potential new entrants, in 

order to promote competition. Under 

what circumstances would these 

arrangements raise competitive 

concerns? Under what circumstances 

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would these arrangements likely result 

in public interest benefits, such as the 

expansion of mobile wireless services in 

additional geographic areas and 

increasing access to capital by more 

applicants to acquire spectrum? Should 

any limits apply to these types of 

arrangements, or should the 

Commission continue to review these 

types of arrangements on a case-by-case 

basis? 

138. If the Commission reviews these 

types of arrangements on a case-by-case 

basis, what process and factors should 

it use in assessing the competitive 

implications? The Commission’s current 

approach for reviewing joint ventures in 

the context of assignment or transfer of 

licenses involves the determination of 

the appropriate market definitions and 

the likelihood of public interest harm 

from the incentive and ability of the 

joint venture to act anticompetitively, 

either unilaterally or in concert with 

other service providers. Should a 

similar approach apply to its 

competitive review of joint bidding 

arrangements? How should a case-bycase approach to review joint bidding 

arrangements be designed to provide 

clarity to potential bidders? What are 

the costs and benefits of Commission 

review of joint bidding arrangements on 

a case-by-case basis, including the 

administrative cost and burden to make 

such a case-by-case determination prior 

to the start of an auction? 

139. To make case-by-case 

determinations regarding arrangements 

between nationwide providers and other 

entities, should the Commission modify 

any of its current rules that apply to the 

pre-auction review process? In 

particular, should the terms and 

conditions of such joint bidding 

arrangements be disclosed prior to the 

auction, in the short-form application, 

or even prior to the filing of that 

application? If so, are there changes to 

its rules or procedures that would be 

necessary to protect any confidential 

information? If the deadline for 

disclosure of terms and conditions is in 

advance of the short-form application 

deadline, how would this process be 

affected by the rules prohibiting certain 

types of communications? Commenters 

on this issue should include any costs 

or benefits to changing the rules and 

procedures regarding the disclosure of a 

joint bidding requirement. 

140. If the Commission were to make 

a determination that the potential harms 

associated with a particular joint 

bidding arrangement outweigh the 

potential benefits, what remedies 

should it impose either at the short-form 

application stage or the long-form 

application stage? For example, should 

the Commission find that a short-form 

application is unacceptable or 

incomplete and bar the applicant from 

bidding in the auction? Should it find 

that an applicant at the long-form stage 

is unqualified to hold the license and 

deemed in default? Commenters 

proposing particular remedies should 

discuss the costs and benefits of such 

remedies. 

141. Other Issues. The Commission’s 

current rules require the entity that filed 

the short-form application to be the 

same entity that files the long-form 

application seeking consent to acquire a 

new license. The Commission’s public 

interest review of long-form 

applications generally encompasses a 

review of the competitive effects of such 

assignments, as would its review of a 

secondary market transaction to 

disseminate licenses from a joint entity 

to its individual members. The 

Commission seeks comment on whether 

it is necessary to modify its current joint 

bidding rules, standards, and 

procedures that apply to the postauction review of long-form 

applications or review of a secondary 

market transaction to disseminate 

licenses from a joint entity to its 

individual members, in order to 

promote competition in the mobile 

wireless marketplace. 

142. Further, the Commission 

proposes to clarify a provision under 47 

CFR 1.2107(g) which permits DEs to 

participate in an auction as a nonlegally-recognizable consortium, with a 

requirement that each member of the 

consortium file separate applications for 

licenses covered by the winning bids of 

the consortium. This provision is 

applicable only in the DE context, 

where there are special provisions 

regarding the attribution of revenues for 

purposes of qualifying for bidding 

credits. The Commission seeks 

comment on this clarification. 

D. Miscellaneous Part 1 Revisions 

143. Background. Part 1, Subpart Q, of 

the Commission’s rules generally 

governs competitive bidding 

proceedings to assign spectrum licenses. 

The Commission proposes changes to 

two of its part 1, Subpart Q, rules, 47 

CFR 1.2111 and 1.2112. The 

Commission also intends, when it 

resolves the issues raised in the 

Competitive Bidding NPRM, to resolve 

long standing petitions for 

reconsideration to its part 1 competitive 

bidding rules. 

144. Discussion. 47 CFR 1.2111. The 

Commission proposes to repeal the first 

two paragraphs of 47 CFR 1.2111. It 

proposes to repeal 47 CFR 1.2111(a), 

under which applicants for assignments 

or transfers during the first three years 

of a license term must provide the 

Commission with detailed contract and 

marketing information. The Commission 

believes that this requirement places a 

burden on licensees without a 

corresponding benefit to the 

Commission or the public. The 

Commission also proposes to repeal 47 

CFR 1.2111(b), a never-used unjust 

enrichment payment requirement for 

broadband PCS C and F block set-aside 

licenses. 

145. 47 CFR 1.2112. The 

Commission’s proposed changes to this 

rule would clarify the auction 

application requirements for reporting 

an entity’s percentage ownership in the 

applicant and in FCC-regulated entities. 

The Commission proposes further 

changes to specify application 

requirements for bidding consortia. 

Finally, the Commission proposes to 

correct two errors in the rule caused by 

the inadvertent substitution of an 

incorrect paragraph in the Code of 

Federal Regulations publication of the 

rule for the correct one published in the 

Federal Register summary of the DE 

Second Report and Order. Compare 71 

FR 26245, 26253, May 4, 2006, with 47 

CFR 1.2112, Oct. 1, 2006. The first error 

was the addition of a requirement that 

DE short-form applicants list and 

summarize all their agreements that 

support their DE eligibility, a 

requirement that the Commission 

intended to apply only to long-form 

applicants. The Commission proposes to 

delete the requirement with respect to 

the short form. The second error was the 

deletion of a requirement that DE shortform applicants list the parties with 

which they have lease or resale 

arrangements for any of the DE 

applicants’ spectrum licenses. The 

Commission proposes to reinstate this 

requirement. 

146. The Commission seeks comment 

on these proposals. 

E. Initial Regulatory Flexibility Analysis 

147. As required by the Regulatory 

Flexibility Act of 1980, as amended 

(RFA), the Commission has prepared 

this Initial Regulatory Flexibility 

Analysis (IRFA) concerning the possible 

significant economic impact on small 

entities by the policies and rules 

proposed in the Competitive Bidding 

NPRM. Written public comments are 

requested for this IRFA. Comments to 

the IRFA must be identified as 

responses to the IRFA and filed by the 

deadlines for comments on the 

Competitive Bidding NPRM in the Dates 

section. The Commission will send a 

copy of the Competitive Bidding NPRM, 

including the IRFA, to the Chief 

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Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 68195 

Counsel for Advocacy of the Small 

Business Administration. 

1. Need for, and Objectives of, the 

Proposed Rules 

148. The NPRM proposes to: (1) 

Provide small businesses greater 

opportunity to participate in the 

provision of a wide range of spectrumbased services by modifying the 

Commission’s eligibility requirements, 

updating the standardized schedule of 

small business sizes, and eliminating 

duplicative reporting requirements, 

while also seeking comment on 

strengthening the Commission’s rules to 

prevent the unjust enrichment of 

ineligible entities; (2) Amend the 

Commission’s former defaulter rule to 

balance concerns that the current rule is 

overly broad with the Commission’s 

continued need to ensure that auction 

bidders are financially reliable; (3) 

Codify an established competitive 

bidding procedure that prohibits the 

same individual or entity from 

becoming qualified to bid on the basis 

of more than one short-form application 

in a specific auction; (4) Prevent entities 

that are exclusively controlled by a 

single individual or set of individuals 

from becoming qualified to bid on 

overlapping licenses based on more 

than one short-form application in a 

specific auction; and, (5) Retain the 

current rules governing joint bidding 

arrangements among non-nationwide 

providers and prohibit joint bidding 

arrangements among nationwide 

providers. The NPRM also provides 

notice of the Commission’s intention to 

resolve long standing petitions for 

reconsideration and proposes necessary 

clean-up revisions to the Commission’s 

part 1 competitive bidding rules. 

149. With respect to small businesses, 

the Commission’s proposals seek to 

update its rules to reflect that small 

businesses need greater opportunities to 

gain access to capital so that they may 

have an opportunity to participate in the 

provision of spectrum-based services in 

today’s communications marketplace. In 

the past decade, the rapid adoption of 

smartphones and tablet computers and 

the widespread use of mobile 

applications, combined with the 

increasing deployment of high-speed 3G 

and now 4G technologies, have driven 

significantly more intensive use of 

mobile networks. This progression from 

the provision of mobile voice services to 

the provision of mobile broadband 

services has increased the need for 

access to spectrum. In addition, in the 

past decade, the number of small and 

regional mobile wireless service 

providers has significantly decreased, 

yet regional and local service providers 

continue to offer consumers additional 

choices in the areas they serve. The 

Commission anticipates that by revising 

its rules to allow small businesses to 

take advantage of the same 

opportunities to utilize their spectrum 

capacity and gain access to capital as 

those afforded to larger licensees, the 

Commission can better achieve its 

statutory directives. Nonetheless, the 

Commission remains mindful of its 

obligation to prevent unjust enrichment 

of ineligible entities. 

2. Description and Estimate of the 

Number of Small Entities To Which the 

Proposed Rules Will Apply 

150. The RFA directs the Commission 

to provide a description of and, where 

feasible, an estimate of the number of 

small entities that will be affected by the 

proposed rules, if adopted. The RFA 

generally defines the term ‘‘small 

entity’’ as having the same meaning as 

the terms ‘‘small business,’’ ‘‘small 

organization,’’ and ‘‘small government 

jurisdiction.’’ In addition, the term 

‘‘small business’’ has the same meaning 

as the term ‘‘small business concern’’ 

under the Small Business Act. 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. 

151. Small Businesses, Small 

Organizations, and Small Governmental 

Jurisdictions. If adopted, the NPRM’s 

proposals may, over time, affect small 

entities that are not easily categorized at 

present. The Commission therefore 

describes three comprehensive, 

statutory small entity size standards 

under 5 U.S.C. 601(4). First, nationwide, 

there are a total of approximately 27.5 

million small businesses, according to 

the SBA. In addition, a ‘‘small 

organization’’ is generally ‘‘any not-forprofit enterprise which is independently 

owned and operated and is not 

dominant in its field.’’ Nationwide, as of 

2007, there were approximately 

1,621,315 small organizations. Finally, 

the term ‘‘small governmental 

jurisdiction’’ is defined generally as 

‘‘governments of cities, towns, 

townships, villages, school districts, or 

special districts, with a population of 

less than fifty thousand.’’ U.S. Census 

Bureau (hereinafter, Census Bureau or 

Census) data for 2011 indicate that there 

were 89,476 local governmental 

jurisdictions in the United States. The 

Commission estimates that, of this total, 

as many as 88,506 entities may qualify 

as ‘‘small governmental jurisdictions.’’ 

Thus, the Commission estimates that 

most governmental jurisdictions are 

small. 

152. Licenses Assigned by Auction. 

The changes and additions to the 

Commission’s rules proposed in the 

NPRM are of general applicability to all 

auctionable services. Accordingly, the 

IRFA provides a general analysis of the 

impact of the proposals on small 

businesses rather than a service-byservice analysis. The number of entities 

that may apply to participate in future 

Commission spectrum auctions is 

unknown. Moreover, the number of 

small businesses that have participated 

in prior spectrum auctions has varied. 

As a general matter, the number of 

winning bidders that qualify as small 

businesses at the close of an auction 

does not necessarily represent the 

number of small businesses currently in 

service. Also, the Commission does not 

generally track subsequent business size 

unless, in the context of changes in 

control, changes in material 

relationships or assignments or 

transfers, unjust enrichment issues are 

implicated. 

153. Wireless Telecommunications 

Carriers (except satellite). The Census 

Bureau defines this 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. The SBA has 

developed a small business size 

standard for Wireless 

Telecommunications Carriers (except 

satellite). Under the SBA’s standard, a 

business is small if it has 1,500 or fewer 

employees. For this category, Census 

data for 2007 show that there were 1,383 

firms that operated for the entire year. 

Of this total, 1,368 firms (approximately 

99%) had employment of 999 or fewer 

employees and only 15 (approximately 

1%) had employment of 1,000 

employees or more. 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 the NPRM’s proposed 

actions. 

154. 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 

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Broadband Radio Service (BRS) and 

Educational Broadband Service (EBS) 

(previously referred to as the 

Instructional Television Fixed Service 

(ITFS)). 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 

calendar years. The BRS auction 

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, based 

on the Commission’s review of licensing 

records, it estimates 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 86 incumbent BRS 

licensees that are considered small 

entities (18 incumbent BRS licensees do 

not meet the small business size 

standard). After adding the number of 

small business auction licensees to the 

number of incumbent licensees not 

already counted, there are currently 

approximately 133 BRS licensees that 

are defined as small businesses under 

either the SBA or the Commission’s 

rules. In 2009, the Commission 

conducted Auction 86, the sale of 78 

licenses in the BRS areas. The 

Commission established three small 

business size standards that were used 

in Auction 86: (i) An entity with 

attributed average annual gross revenues 

that exceeded $15 million and do not 

exceed $40 million for the preceding 

three years was considered a small 

business; (ii) an entity with attributed 

average annual gross revenues that 

exceeded $3 million and did not exceed 

$15 million for the preceding three 

years was considered a very small 

business; and (iii) an entity with 

attributed average annual gross revenues 

that did not exceed $3 million for the 

preceding three years was considered an 

entrepreneur. Auction 86 concluded in 

2009 with the sale of 61 licenses. Of the 

10 winning bidders, two bidders that 

claimed small business status won four 

licenses; one bidder that claimed very 

small business status won three 

licenses; and two bidders that claimed 

entrepreneur status won six licenses. 

The Commission notes that, as a general 

matter, the number of winning bidders 

that qualify as small businesses at the 

close of an auction does not necessarily 

represent the number of small 

businesses currently in service. 

155. In addition, the SBA’s placement 

of Cable Television Distribution 

Services in the category of Wired 

Telecommunications Carriers is 

applicable to cable-based educational 

broadcasting services. Since 2007, the 

Census Bureau has defined Wired 

Telecommunications Carriers as 

follows: ‘‘This industry comprises [of] 

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.’’ Establishments in this 

industry use the wired 

telecommunications network facilities 

that they operate to provide a variety of 

services, such as wired telephony 

services, including VoIP services; wired 

(cable) audio and video programming 

distribution; and wired broadband 

Internet services. By exception, 

establishments providing satellite 

television distribution services using 

facilities and infrastructure that they 

operate are included in this industry. 

The SBA has developed a small 

business size standard for this category, 

which is: All such firms having 1,500 or 

fewer employees. Census data for 2007 

shows that there were 3,188 firms that 

operated for the duration of that year. Of 

those, 3,144 had fewer than 1,000 

employees, and 44 firms had more than 

1,000 employees. Thus under this 

category and the associated small 

business size standard, the majority of 

such firms can be considered small. In 

addition to Census data, the 

Commission’s Universal Licensing 

System indicates that as of July 2014, 

there are 2,006 active EBS licenses. The 

Commission estimates that of these 

2,006 licenses, the majority are held by 

non-profit educational institutions and 

school districts, which are by statute 

defined as small businesses. 

156. Television Broadcasting. As 

defined by the Census Bureau, this 

category ‘‘comprises [of] establishments 

primarily engaged in broadcasting 

images together with sound. These 

establishments operate television 

broadcasting studios and facilities for 

the programming and transmission of 

programs to the public.’’ The SBA has 

created the following small business 

size standard for Television 

Broadcasting firms: those having $38.5 

million or less in annual receipts. The 

Commission has estimated the number 

of licensed commercial television 

stations to be 1,387. In addition, 

according to Commission staff review of 

the BIA/Kelsey, LLC’s Media Access Pro 

Television Database on July 30, 2014, 

about 1,276 of an estimated 1,387 

commercial television stations (or 

approximately 92 percent) had revenues 

of $38.5 million or less. The 

Commission therefore estimates that the 

majority of commercial television 

broadcasters are small entities. 

157. The Commission notes, however, 

that in assessing whether a business 

concern qualifies as small, business 

(control) affiliations must be included. 

The Commission’s estimates, therefore, 

likely overstates the number of small 

entities that might be affected by the 

NPRM’s proposals because the revenue 

figure on which it is based does not 

include or aggregate revenues from 

affiliated companies. In addition, an 

element of the definition of ‘‘small 

business’’ is that the entity not be 

dominant in its field of operation. The 

Commission is unable at this time to 

define or quantify the criteria that 

would establish whether a specific 

television station is dominant in its field 

of operation. Accordingly, the estimate 

of small businesses to which rules may 

apply does not exclude any television 

station from the definition of a small 

business on this basis and is therefore 

possibly over-inclusive to that extent. 

158. In addition, the Commission has 

estimated the number of licensed 

noncommercial educational (NCE) 

television stations to be 395. These 

stations are non-profit, and therefore 

considered to be small entities. 

159. There are also 2,460 LPTV 

stations, including Class A stations, and 

3,838 TV translator stations. Given the 

nature of these services, the 

Commission will presume that all of 

these entities qualify as small entities 

under the above SBA small business 

size standard. 

160. Radio Broadcasting. The SBA 

defines a radio broadcast station as a 

small business if such station has no 

more than $38.5 million in annual 

receipts. As defined by the Census 

Bureau, business concerns in this 

industry are those ‘‘primarily engaged in 

broadcasting aural programs by radio to 

the public.’’ According to review of the 

BIA/Kelsey, LLC’s Media Access Pro 

Radio Database as of July 30, 2014, 

about 11,332 (or about 99.9 percent) of 

11,343 commercial radio stations have 

revenues of $38.5 million or less and 

thus qualify as small entities under the 

SBA definition. The Commission notes, 

however, that, in assessing whether a 

business concern qualifies as small, 

business (control) affiliations must be 

included. This estimate, therefore, likely 

overstates the number of small entities 

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that might be affected, because the 

revenue figure on which it is based does 

not include or aggregate revenues from 

affiliated companies. 

161. In addition, an element of the 

definition of ‘‘small business’’ is that the 

entity not be dominant in its field of 

operation. The Commission is unable at 

this time to define or quantify the 

criteria that would establish whether a 

specific radio station is dominant in its 

field of operation. Accordingly, the 

estimate of small businesses to which 

rules may apply does not exclude any 

radio station from the definition of a 

small business on this basis and 

therefore may be over-inclusive to that 

extent. Also, as noted, an additional 

element of the definition of ‘‘small 

business’’ is that the entity must be 

independently owned and operated. 

The Commission notes that it is difficult 

at times to assess these criteria in the 

context of media entities and the 

estimates of small businesses to which 

they apply may be over-inclusive to this 

extent. 

3. Description of Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements for Small Entities 

162. Eligibility for Bidding Credits. 

The NPRM proposes changes to the 

Commission’s process for evaluating 

small business eligibility for bidding 

credits. In particular, the NPRM 

proposes to repeal the AMR rule and 

tentatively concludes that the 

Commission should re-examine the 

need for the related decade-old policy 

that has limited small businesses 

seeking bidding credits to providing 

primarily retail, facilities-based service 

directly to the public with each of their 

licenses. Under the AMR, a small 

business applicant or licensee must 

automatically attribute to itself the gross 

revenues of any entity with which it has 

an ‘‘attributable material relationship.’’ 

An applicant or licensee has an AMR 

when it has one or more agreements 

with any individual entity for the lease 

(under either spectrum manager or de 

facto transfer leasing arrangements) or 

resale (including under a wholesale 

arrangement) of, on a cumulative basis, 

more than 25 percent of the spectrum 

capacity of any individual license held 

by the applicant or licensee. The NPRM 

seeks comment on the proposal to 

repeal the AMR rule, and the 

Commission’s tentative conclusions 

regarding its need to re-evaluate its 

small business policy. Alternatively, the 

NPRM also seeks comment on retaining 

the Commission’s small business policy 

and/or some variation of the AMR rule. 

For instance, the NPRM seeks comment 

on whether the Commission should 

adopt a rule with some other spectrum 

capacity use limit that would render an 

applicant ineligible for all current and 

future benefits. 

163. The NPRM also proposes to 

adopt a more flexible approach under 

which the Commission would evaluate 

small business eligibility on a licenseby-license basis, using a two-pronged 

test. The first prong would evaluate 

whether an applicant meets the 

applicable small business size standard 

and is therefore eligible for benefits. To 

evaluate small business eligibility, the 

NPRM proposes to apply the 

Commission’s existing controlling 

interest standard and affiliation rules to 

determine whether, an entity should be 

attributable based on whether that entity 

has de jure or de facto control of, or is 

affiliated with, the applicant’s overall 

business venture. Once the first prong 

has been met, the Commission would 

evaluate eligibility under the second 

prong. Under the second prong, the 

NPRM proposes to determine an entity’s 

eligibility to retain small business 

benefits on a license-by-license basis, 

based on whether it has maintained de 

jure and de facto control of the license. 

Under this proposed license-by-license 

approach, an entity will not necessarily 

lose its eligibility for all current and 

future small business benefits solely 

because of a decision associated with 

any particular license. Instead, while a 

small business might incur unjust 

enrichment obligations if it relinquishes 

de jure or de facto control of any 

particular license for which it claimed 

benefits, so long as the revenues of its 

attributable interest holders (i.e., the 

DE’s affiliates, its controlling interests, 

and the affiliates of its controlling 

interests) continue to qualify under the 

relevant small business size standard, it 

could still retain its eligibility to retain 

current and future benefits on existing 

and future licenses. The NPRM seeks 

comment on the proposed two-pronged 

approach to evaluate attribution and 

establish eligibility for small business 

benefits. 

164. The NPRM also proposes to 

modify the Commission’s secondary 

market rules to comport with the 

Commission’s proposed approach to 

assessing small business eligibility. 

Specifically, the NPRM proposes to 

modify the language in 47 CFR 

1.9020(d)(4) to remove the conflicting 

reference to the control standard of 47 

CFR 1.2110 in order to make clear that 

small business lessors are fully subject 

to the same de facto control standard for 

spectrum manager leasing that applies 

to all other licensees. This modification 

should clarify that 47 CFR 1.9010 alone 

defines whether a licensee, including a 

small business, retains de facto control 

of the spectrum that it leases to a 

spectrum lessee in the context of 

spectrum manager leasing. 

165. The NPRM seeks comment on 

whether any changes are appropriate to 

the Commission’s unjust enrichment 

rules that provide additional safeguards 

by requiring repayment of small 

business benefits where an applicant 

loses eligibility for any reason. 

Specifically, the NPRM invites comment 

on, among other things, whether to 

adjust the Commission’s current five 

year unjust enrichment schedule either 

in terms of the duration of the 

requirements or the percentages of the 

repayment schedule. The NPRM also 

seeks comment on how best the 

Commission can continue to scrutinize 

applications and proposed transactions 

to ensure that only eligible entities 

receive benefits, while not undermining 

the Act’s directive to ensure that DEs are 

given the opportunity to participate in 

the provision of spectrum-based 

services. Specifically, the NPRM seeks 

comment on adopting a 10 year unjust 

enrichment repayment schedule similar 

to the one it adopted in 2006, but 

vacated by the Third Circuit for lack of 

notice. 

166. Bidding Credits. The NPRM 

examines the primary way that the 

Commission facilitates participation by 

small businesses at auction through its 

bidding credit program. Bidding credits 

operate as a percentage discount on the 

winning bid amounts of a qualifying 

small business. By making the 

acquisition of spectrum licenses more 

affordable for new and existing small 

businesses, bidding credits facilitate 

their access to needed capital. The 

Commission establishes eligibility for 

bidding credits for each auctionable 

service, adopting one or more 

definitions of the small businesses that 

will be eligible. The Commission’s small 

business definitions have been based on 

an applicant’s average annual gross 

revenues over a three-year period. The 

NPRM proposes to increase the general 

schedule of size standards in its part 1 

rules, measured by gross revenues, for 

purposes of determining an entity’s 

eligibility for a bidding preference. 

Specifically, the NPRM proposes to 

revise the standardized schedule in 47 

CFR 1.2110(f) as follows: (1) Businesses 

with average annual gross revenues for 

the preceding three years not exceeding 

$4 million would be eligible for a 35 

percent bidding credit; (2) Businesses 

with average annual gross revenues for 

the preceding three years not exceeding 

$20 million would be eligible for a 25 

percent bidding credit; and (3) 

Businesses with average annual gross 

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68198 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

revenues for the preceding three years 

not exceeding $55 million would be 

eligible for a 15 percent bidding credit. 

The NPRM also asks about alternative 

methods for setting new gross revenues 

thresholds. 

167. The NPRM seeks comment on 

whether to adopt a small business size 

standard based on criteria other than 

gross revenues, and proposes to 

continue the Commission’s practice of 

evaluating which small business 

definitions will apply on a service-byservice basis, based upon associated 

capital requirements for a particular 

service. In addition, the NPRM seeks 

comment on whether to increase the 

bidding credit percentages (i.e., 

discount amounts) applicable to 

associated small business categories. 

The NPRM also seeks comment on 

whether any revisions the Commission 

adopts in this proceeding to its part 1 

schedule of small business size 

standards and associated bidding credit 

percentage levels should apply to the 

specific small business definitions and 

bidding credit percentages the 

Commission previously adopted for 

specific services, and, if so, how such 

revisions would be implemented. The 

NPRM proposes that any new rules 

adopted in this proceeding would apply 

to the 600 MHz band spectrum licenses 

to be offered in the BIA. In the BIA 

proceeding, the Commission adopted a 

15 percent bidding credit for small 

businesses (defined as entities with 

average annual gross revenues for the 

preceding three years not exceeding $40 

million) and a 25 percent bidding credit 

for very small businesses (defined as 

entities with average annual gross 

revenues for the preceding three years 

not exceeding $15 million). 

Accordingly, the NPRM proposes to 

adopt, for the 600 MHz band, increases 

in the gross revenues thresholds 

associated with the 25 percent and 15 

percent bidding credits that are 

consistent with the increased gross 

revenues thresholds proposed in the 

NPRM for the standardized schedule in 

the Commission’s part 1 competitive 

bidding rules. The NPRM also seeks 

comment on whether the Commission 

should adopt a third small business 

bidding credit tier for the 600 MHz band 

that would provide a 35 percent bidding 

credit to businesses with average gross 

revenues for the preceding three years 

not exceeding $4 million. 

168. Further, the NPRM seeks 

comment on the Commission’s ability to 

consider bidding preferences for other 

types of DEs, entities that serve 

unserved/underserved areas or areas 

with persistent poverty, as well as 

persons or entities that have overcome 

disadvantages. The NPRM asks 

commenters to specifically address the 

statutory authority and judicial scrutiny 

issues that may limit the Commission’s 

ability to entertain recommendations to 

alter the focus of its current bidding 

preferences by offering bidding 

preferences to entities based on other 

criteria than business size. 

169. The Commission expects that the 

questions raised in the NPRM will 

provide a meaningful opportunity to 

evaluate whether its bidding credit 

program continues to achieve the 

Commission’s objectives. To facilitate 

the Commission’s review, the NPRM 

seeks concrete, specific, data-driven 

feedback by commenters. In addition, 

the NPRM invites commenters to 

suggest other creative ideas that would 

promote the Commission’s statutory 

objectives, but emphasizes that for any 

such proposals it is imperative to 

provide ample supporting evidence. 

170. DE Reporting Requirements. The 

NPRM proposes to eliminate the DE 

annual reporting requirement in 47 CFR 

1.2110(n) and questions whether the 

value of the information provided in 

those reports outweighs the regulatory 

burden that the reporting obligation 

places on small businesses. The NPRM 

seeks comment on this proposal. Among 

other things, the NPRM asks if the 

Commission adopts the proposal to 

eliminate this annual reporting 

requirement, whether it should amend 

its rule for reporting eligibility events to 

require that a small business must list 

and summarize all existing agreements 

to provide context each time it reports 

a new eligibility event. 

171. MMTC White Paper Requests. In 

February 2014, MMTC submitted a 

White Paper detailing several policy 

recommendations to advance licensing 

of spectrum to minority- and womenowned businesses. The NPRM raises 

and addresses several of these issues 

and seeks comments on the other 

proposals that are not otherwise 

addressed in the NPRM, and to the 

extent that they relate to the 

Commission’s competitive bidding 

rules. The NPRM observes that certain 

proposals appear to be outside the scope 

of this proceeding and others may not 

be needed in light of other changes 

proposed in the NPRM. Toward that 

end, the NPRM tentatively concludes 

that the following MMTC proposals are 

outside the scope of this proceeding, 

which is focused on the Commission’s 

competitive bidding rules, and thus will 

not be addressed in the NPRM: (1) 

Incorporating diversity and inclusion in 

the Commission’s public interest 

analysis of mergers and acquisitions and 

secondary market spectrum 

transactions; and (2) supporting 

increased funding for and statutory 

amendments regarding the 

Telecommunications Development 

Fund. 

172. Former Defaulter Rule. The 

NPRM proposes changes to the 

Commission’s former defaulter rule to 

balance concerns that the current rule is 

overly broad with the Commission’s 

continued need to ensure that auction 

bidders are financially reliable. The 

NPRM seeks comment on revising the 

rule to narrow the scope of the defaults 

and delinquencies that will be 

considered in determining whether or 

not an auction participant is a former 

defaulter. Specifically, the NPRM 

proposes to exclude any cured default 

on any Commission license or 

delinquency on any non-tax debt owed 

to any federal agency for which any of 

the following criteria are met: (1) The 

notice of the final payment deadline or 

delinquency was received more than 

seven years before the relevant shortform application deadline; (2) the 

default or delinquency amounted to less 

than $100,000; (3) the default or 

delinquency was paid within two 

quarters (i.e., 6 months) after receiving 

the notice of the final payment deadline 

or delinquency; or (4) the default or 

delinquency was the subject of a legal 

or arbitration proceeding that was cured 

upon resolution of the proceeding. 

Additionally, the NPRM seeks comment 

on limiting the individuals and entities 

that an applicant must consider when 

determining its status as a former 

defaulter. 

173. Commonly Controlled Entities. 

The NPRM proposes to codify an 

established competitive bidding 

procedure that prohibits the same 

individual or entity from filing more 

than one short-form application to 

participate in an auction. The NPRM 

also proposes a new rule that would 

prevent entities that are exclusively 

controlled by a single individual or set 

of individuals from qualifying to bid on 

licenses in the same or overlapping 

geographic areas in a specific auction on 

more than one short-form application. 

These proposals seek to improve the 

transparency and efficiency of the 

auction process, by making clearer who 

the qualified bidders actually are and 

ensuring against the potential for 

anticompetitive auction behavior. The 

NPRM seeks comment on these 

proposals and on specific alternatives to 

address the Commission’s concern that 

common control may allow the 

controlling individual or set of 

individuals to attempt to gain 

advantages in the bidding process based 

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on certain coordinated bidding actions 

(e.g., tied bids, activity waivers). 

174. Joint Bidding. The NPRM 

initiates a review of the Commission’s 

rules and policies governing joint 

bidding and other arrangements in order 

to ensure that they fulfill the 

Commission’s statutory objectives, given 

the changes in the mobile wireless 

marketplace since the initial adoption of 

the bidding rules two decades ago, and 

the increasing importance of spectrum 

for service providers to meet consumer 

demand for mobile wireless services. 

The NPRM seeks comment on the 

Commission’s tentative conclusions that 

it would be in the public interest to 

retain the current rules governing joint 

bidding arrangements among nonnationwide providers and to prohibit 

joint bidding arrangements among 

nationwide providers. Additionally, the 

NPRM seeks comment on whether the 

Commission should revise any of its 

current rules as applied to arrangements 

between nationwide providers and other 

entities, including its rules governing 

short-form applications. Further, the 

NPRM seeks comment on whether any 

revisions to the Commission’s rules 

governing long-form applications are 

necessary in light of the Commission’s 

consideration of the potential harms and 

benefits of joint bidding and other 

arrangements. 

175. Miscellaneous Part 1 Revisions. 

In addition to changes that would 

implement the foregoing proposals, the 

NPRM proposes changes to two of the 

Commission’s part 1, Subpart Q, rules, 

47 CFR 1.2111 and 1.2112. 47 CFR 

1.2111—The NPRM proposes to 

eliminate two provisions of this rule: (1) 

47 CFR 1.2111(a), under which 

applicants for assignments or transfers 

during the first three years of a license 

term must provide the Commission with 

detailed contract and marketing 

information, and (2) 47 CFR 1.2111(b), 

a never-used unjust enrichment 

payment requirement for broadband 

PCS C and F block set-aside licenses. 

47 CFR 1.2112—The NPRM’s proposed 

changes to this rule clarify the auction 

application requirements for reporting 

an entity’s percentage ownership in the 

applicant and in FCC-regulated entities. 

The NPRM proposes further changes to 

specify application requirements for 

bidding consortia. The NPRM also 

proposes to correct two errors in the 

rule caused by the inadvertent 

substitution of an incorrect paragraph in 

the Code of Federal Regulations 

publication of the rule for the correct 

one published in the Federal Register 

summary of the DE Second Report and 

Order. The first error was the addition 

of a requirement that DE short-form 

applicants list and summarize all their 

agreements that support their DE 

eligibility, a requirement that the 

Commission intended to apply only to 

long-form applicants. The NPRM 

proposes to delete the requirement with 

respect to the short-form. The second 

error was the deletion of a requirement 

that DE short-form applicants list the 

parties with which they have lease or 

resale arrangements for any of the DE 

applicants’ spectrum. The NPRM 

proposes to reinstate this requirement. 

176. The NPRM seeks comments on 

these proposals. In addition, the NPRM 

notes that the Commission intends, 

when it resolves the issues raised in the 

NPRM, to resolve long standing 

petitions for reconsideration to the 

Commission’s part 1 competitive 

bidding rules. 

4. Steps Taken To Minimize Significant 

Economic Impact on Small Entities, and 

Significant Alternatives Considered 

177. 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. 

178. If adopted, the NPRM’s proposed 

approach to evaluating attribution and 

establishing small business eligibility 

could provide small businesses with 

greater opportunities to participate in 

the provision of spectrum-based 

services. Moreover, insofar as the 

NPRM’s proposals should allow small 

businesses greater flexibility to engage 

in business ventures that include 

increased forms of leasing and other 

spectrum use arrangements, the 

Commission anticipates that the 

combined intent of the proposals should 

increase the potential sources of 

revenue for the small business and 

decrease the likelihood that it would be 

subject to undue influence by any 

particular user of a single license. The 

NPRM’s proposed two-pronged 

approach to establishing small business 

eligibility would also ensure that a 

licensee retains control of all licenses 

for which it seeks bidding credits, while 

providing greater flexibility for any 

acquired without such benefits. Further, 

the proposal to eliminate the AMR rule 

and to clarify how spectrum manager 

leasing rules apply to DEs should allow 

small businesses greater certainty to 

participate in secondary markets 

transactions. 

179. The NPRM’s proposed increases 

in the gross revenues thresholds that 

define the three tiers of small businesses 

in the part 1 schedule by which the 

Commission provides the corresponding 

available bidding credits would 

encourage small business participation 

in spectrum license auctions. The 

proposed gross revenues thresholds are 

intended to more accurately reflect what 

constitutes a ‘‘small business’’ in today’s 

marketplace, taking into consideration 

the relative size of the large, national 

providers. This proposal will provide an 

economic benefit to small entities by 

making it easier to acquire spectrum 

licenses. Moreover, the NPRM’s 

proposal to repeal the DE reporting 

requirement would eliminate the 

burden on DEs to submit annual reports. 

180. The proposed changes to the part 

1 rules will apply to all entities in the 

same manner the Commission will 

apply these changes uniformly to all 

entities that choose to participate in 

spectrum license auctions. The 

Commission believes that applying the 

same rules equally to all entities in 

these contexts promotes fairness. The 

Commission does not believe that the 

limited costs and/or administrative 

burdens associated with the rule 

revisions will unduly burden small 

entities. In fact, many of the proposed 

rule revisions clarify the Commission’s 

competitive bidding rules, including 

short-form application requirements, as 

well as reduce reporting requirements. 

181. Finally, the NPRM’s joint 

bidding proposals are intended to 

preserve and promote robust 

competition in the mobile wireless 

marketplace and facilitate competition 

among bidders at auction, including 

small entities. These proposals provide 

potential bidders with greater clarity 

regarding the types of joint bidding 

arrangements that would be permissible. 

In addition, the NPRM’s proposal to 

retain its current rules for joint bidding 

arrangements among non-nationwide 

providers would maintain flexibility for 

small businesses to enter into such 

arrangements. 

List of Subjects 

47 CFR Part 1 

Administrative practice and 

procedure. 

47 CFR Part 27 

Communications common carriers, 

Radio. 

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68200 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

Proposed Rules 

For the reasons discussed in the 

preamble, the Federal Communications 

Commission proposes to amend 47 CFR 

Parts 1 and 27 as follows: 

PART 1—PRACTICE AND 

PROCEDURE 

■ 1. The authority citation for part 1 

continues to read as follows: 

Authority: 15 U.S.C. 79 et seq.; 47 U.S.C. 

151, 154(i), 154(j), 155, 157, 225, 227, 303(r), 

309, 1403, 1404, 1451, and 1452. 

■ 2. Section 1.2105 is amended by 

revising paragraphs (a)(2)(xi) and (b)(1) 

to read as follows: 

§ 1.2105 Bidding application and 

certification procedures; prohibition of 

certain communications. 

* * * * * 

(a) * * * 

(2) * * * 

(xi) An attached statement made 

under penalty of perjury indicating 

whether or not the applicant has been 

in default on any Commission license or 

has been delinquent on any non-tax 

debt owed to any Federal agency. For 

purposes of this certification, an 

applicant may exclude from 

consideration as a former default any 

default on a Commission license or 

delinquency on non-tax debt to any 

Federal agency that has been resolved 

and meets any of the following criteria: 

(A) The notice of the final payment 

deadline or delinquency was received 

more than seven years before the shortform application deadline; 

(B) The default or delinquency 

amounted to less than $100,000; 

(C) The default or delinquency was 

paid within two quarters (i.e., 6 months) 

after receiving the notice of the final 

payment deadline or delinquency; or 

(D) The default or delinquency was 

the subject of a legal or arbitration 

proceeding that was cured upon 

resolution of the proceeding. 

* * * * * 

(b) Modification and Dismissal of 

Short-Form Application (FCC Form 

175). 

(1)(i) Any short-form application (FCC 

Form 175) that does not contain all of 

the certifications required pursuant to 

this section is unacceptable for filing 

and cannot be corrected subsequent to 

the applicable filing deadline. The 

application will be deemed incomplete, 

the applicant will not be found qualified 

to bid, and the upfront payment, if paid, 

will be returned. 

(ii) If (A) An individual or entity 

submits multiple applications in a 

single auction; or 

(B) Entities commonly controlled by 

the same individual or same set of 

individuals submit applications for any 

set of licenses in the same or 

overlapping geographic areas in a single 

auction; then only one of such 

applications may be deemed complete, 

and the other such application(s) will be 

deemed incomplete, such applicants 

will not be found qualified to bid, and 

the associated upfront payment(s), if 

paid, will be returned. 

* * * * * 

■ 3. Section 1.2106 is amended by 

revising paragraph (a) to read as follows: 

§ 1.2106 Submission of upfront payments. 

(a) The Commission may require 

applicants for licenses subject to 

competitive bidding to submit an 

upfront payment. In that event, the 

amount of the upfront payment and the 

procedures for submitting it will be set 

forth in a Public Notice. Any auction 

applicant that, pursuant to 

§ 1.2105(a)(2)(xi), certifies that it is a 

former defaulter must submit an upfront 

payment equal to 50 percent more than 

that set for each particular license. No 

interest will be paid on upfront 

payments. 

* * * * * 

■ 4. Amend § 1.2110 as follows: 

■ A. Revise paragraph (b)(1)(i) and (ii); 

■ B. Remove paragraph (b)(3)(iv); 

■ C. Revise paragraphs (f)(2) and (j); 

■ D. Remove paragraph (n); 

■ E. Redesignate paragraphs (o) and (p) 

as paragraphs (n) and (o) 

The additions and revisions read as 

follows: 

§ 1.2110 Designated entities. 

* * * * * 

(b) * * * 

(1) * * * 

(i) The gross revenues of the applicant 

(or licensee), its affiliates, its controlling 

interests, and the affiliates of its 

controlling interests shall be attributed 

to the applicant (or licensee) and 

considered on a cumulative basis and 

aggregated for purposes of determining 

whether the applicant (or licensee) is 

eligible for status as a small business, 

very small business, or entrepreneur, as 

those terms are defined in the servicespecific rules. An applicant seeking 

status as a small business, very small 

business, or entrepreneur, as those 

terms are defined in the service-specific 

rules, must disclose on its short- and 

long-form applications, separately and 

in the aggregate, the gross revenues for 

each of the previous three years of the 

applicant (or licensee), its affiliates, its 

controlling interests, and the affiliates of 

its controlling interests. 

(ii) If applicable, pursuant to § 24.709 

of this chapter, the total assets of the 

applicant (or licensee), its affiliates, its 

controlling interests, and the affiliates of 

its controlling interests shall be 

attributed to the applicant (or licensee) 

and considered on a cumulative basis 

and aggregated for purposes of 

determining whether the applicant (or 

licensee) is eligible for status as an 

entrepreneur. An applicant seeking 

status as an entrepreneur must disclose 

on its short- and long-form applications, 

separately and in the aggregate, the 

gross revenues for each of the previous 

two years of the applicant (or licensee), 

its affiliates, its controlling interests, 

and the affiliates of its controlling 

interests. 

* * * * * 

(f) * * * 

(2) Size of bidding credits. A winning 

bidder that qualifies as a small business 

may use the following bidding credits 

corresponding to its respective average 

gross revenues for the preceding 3 years: 

(i) Businesses with average gross 

revenues for the preceding 3 years not 

exceeding $4 million are eligible for 

bidding credits of 35 percent; 

(ii) Businesses with average gross 

revenues for the preceding 3 years not 

exceeding $20 million are eligible for 

bidding credits of 25 percent; and 

(iii) Businesses with average gross 

revenues for the preceding 3 years not 

exceeding $55 million are eligible for 

bidding credits of 15 percent. 

* * * * * 

(j) Designated entities must describe 

on their long-form applications how 

they satisfy the requirements for 

eligibility for designated entity status, 

and must list and summarize on their 

long form applications all agreements 

that affect designated entity status such 

as partnership agreements, shareholder 

agreements, management agreements, 

spectrum leasing arrangements, 

spectrum resale (including wholesale) 

arrangements, and all other agreements 

including oral agreements, establishing 

as applicable, de facto or de jure control 

of the entity. Designated entities also 

must provide the date(s) on which they 

entered into of the agreements listed. In 

addition, designated entities must file 

with their long-form applications a copy 

of each such agreement. In order to 

enable the Commission to audit 

designated entity eligibility on an 

ongoing basis, designated entities that 

are awarded eligibility must, for the 

term of the license, maintain at their 

facilities or with their designated agents 

the lists, summaries, dates and copies of 

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agreements required to be identified and 

provided to the Commission pursuant to 

this paragraph and to § 1.2114. 

* * * * * 

■ 5. Section 1.2111 is revised to read as 

follows: 

§ 1.2111 Assignment or transfer of control: 

unnjust enrichment. 

(a) Unjust enrichment payment: 

installment financing. 

(1) If a licensee that utilizes 

installment financing under this section 

seeks to assign or transfer control of its 

license to an entity not meeting the 

eligibility standards for installment 

payments, the licensee must make full 

payment of the remaining unpaid 

principal and any unpaid interest 

accrued through the date of assignment 

or transfer as a condition of approval. 

(2) If a licensee that utilizes 

installment financing under this section 

seeks to make any change in ownership 

structure that would result in the 

licensee’s losing eligibility for 

installment payments, the licensee shall 

first seek Commission approval and 

must make full payment of the 

remaining unpaid principal and any 

unpaid interest accrued through the 

date of such change as a condition of 

approval. A licensee’s (or other 

attributable entity’s) increased gross 

revenues or increased total assets due to 

nonattributable equity investments, debt 

financing, revenue from operations or 

other investments, business 

development or expanded service shall 

not be considered to result in the 

licensee losing eligibility for installment 

payments. 

(3) If a licensee seeks to make any 

change in ownership that would result 

in the licensee’s qualifying for a less 

favorable installment plan under this 

section, the licensee shall seek 

Commission approval and must adjust 

its payment plan to reflect its new 

eligibility status. A licensee may not 

switch its payment plan to a more 

favorable plan. 

(b) Unjust enrichment payment: 

bidding credits. 

(1) A licensee that utilizes a bidding 

credit, and that during the initial term 

seeks to assign or transfer control of a 

license to an entity that does not meet 

the eligibility criteria for a bidding 

credit, will be required to reimburse the 

U.S. Government for the amount of the 

bidding credit, plus interest based on 

the rate for ten year U.S. Treasury 

obligations applicable on the date the 

license was granted, as a condition of 

Commission approval of the assignment 

or transfer. If, within the initial term of 

the license, a licensee that utilizes a 

bidding credit seeks to assign or transfer 

control of a license to an entity that is 

eligible for a lower bidding credit, the 

difference between the bidding credit 

obtained by the assigning party and the 

bidding credit for which the acquiring 

party would qualify, plus interest based 

on the rate for ten year U.S. treasury 

obligations applicable on the date the 

license is granted, must be paid to the 

U.S. Government as a condition of 

Commission approval of the assignment 

or transfer. If, within the initial term of 

the license, a licensee that utilizes a 

bidding credit makes any ownership 

change or enters into any agreement that 

would result in the licensee’s losing 

eligibility for a bidding credit (or 

qualifying for a lower bidding credit), 

the amount of the bidding credit (or the 

difference between the bidding credit 

originally obtained and the bidding 

credit for which the licensee would 

qualify after restructuring or under the 

agreement), plus interest based on the 

rate for ten year U.S. treasury 

obligations applicable on the date the 

license is granted, must be paid to the 

U.S. Government as a condition of 

Commission approval of the assignment 

or transfer or of a reportable eligibility 

event (see § 1.2114). 

(2) Payment schedule. 

(i) The amount of payments made 

pursuant to paragraph (b)(1) of this 

section will be reduced over time as 

follows: 

(A) A loss of eligibility in the first two 

years of the license term will result in 

a forfeiture of 100 percent of the value 

of the bidding credit (or in the case of 

very small businesses transferring to 

small businesses, 100 percent of the 

difference between the bidding credit 

received by the former and the bidding 

credit for which the latter is eligible); 

(B) A loss of eligibility in year 3 of the 

license term will result in a forfeiture of 

75 percent of the value of the bidding 

credit (or in the case of eligibility 

changing to qualify for a lower bidding 

credit, 75 percent of the difference 

between the bidding credit received and 

the bidding credit for which it is 

eligible); 

(C) A loss of eligibility in year 4 of the 

license term will result in a forfeiture of 

50 percent of the value of the bidding 

credit (or in the case of eligibility 

changing to qualify for a lower bidding 

credit, 50 percent of the difference 

between the bidding credit received and 

the bidding credit for which it is 

eligible); 

(D) A loss of eligibility in year 5 of the 

license term will result in a forfeiture of 

25 percent of the value of the bidding 

credit (or in the case of eligibility 

changing to qualify for a lower bidding 

credit, 25 percent of the difference 

between the bidding credit received and 

the bidding credit for which it is 

eligible); and 

(E) For a loss of eligibility in year 6 

or thereafter, there will be no payment. 

(ii) These payments will have to be 

paid to the United States Treasury as a 

condition of approval of the assignment, 

transfer, ownership change or reportable 

eligibility event (see § 1.2114). 

(c) Unjust enrichment: partitioning 

and disaggregation— 

(1) Installment payments. Licensees 

making installment payments, that 

partition their licenses or disaggregate 

their spectrum to entities not meeting 

the eligibility standards for installment 

payments, will be subject to the 

provisions concerning unjust 

enrichment as set forth in this section. 

(2) Bidding credits. Licensees that 

received a bidding credit that partition 

their licenses or disaggregate their 

spectrum to entities not meeting the 

eligibility standards for such a bidding 

credit, will be subject to the provisions 

concerning unjust enrichment as set 

forth in this section. 

(3) Apportioning unjust enrichment 

payments. Unjust enrichment payments 

for partitioned license areas shall be 

calculated based upon the ratio of the 

population of the partitioned license 

area to the overall population of the 

license area and by utilizing the most 

recent Census data. Unjust enrichment 

payments for disaggregated spectrum 

shall be calculated based upon the ratio 

of the amount of spectrum disaggregated 

to the amount of spectrum held by the 

licensee. 

■ 6. Section 1.2112 is amended by 

revising paragraphs (a)(7), (b)(1)(iii) and 

(iv); adding paragraph (b)(1)(v); and 

revising paragraph (b)(2)(ii), (iii) and (v) 

to read as follows: 

§ 1.2112 Ownership disclosure 

requirements for applications. 

(a) * * * 

(7) List any FCC-regulated entity or 

applicant for an FCC license, in which 

the applicant or any of the parties 

identified in paragraphs (a)(1) through 

(a)(5) of this section holds a 10 percent 

or greater ownership interest, regardless 

of the type of business entity, including 

both active and passive interests. This 

list must include a description of each 

such entity’s principal business and a 

description of each such entity’s 

relationship to the applicant (e.g., 

Company A owns 10 percent of 

Company B (the applicant) and 10 

percent of Company C, then Companies 

A and C must be listed on Company B’s 

application, where C is an FCC licensee 

and/or license applicant). 

(b) * * * 

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68202 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Proposed Rules 

(1) * * * 

(iii) List all parties with which the 

applicant has entered into arrangements 

for the spectrum lease or resale 

(including wholesale arrangements) of 

any of the capacity of any of the 

applicant’s spectrum. 

(iv) List separately and in the 

aggregate the gross revenues, computed 

in accordance with § 1.2110, for each of 

the following: The applicant, its 

affiliates, its controlling interests, and 

the affiliates of its controlling interests; 

and if a consortium of small businesses, 

the members comprising the 

consortium. 

(v) If applying as a consortium under 

§ 1.2110(b)(3)(i), provide the 

information in paragraphs (b)(1)(i) 

through (iv) separately for each member 

of the consortium. 

(2) * * * 

(ii) List any FCC-regulated entity or 

applicant for an FCC license, in which 

any controlling interest of the applicant 

owns a 10 percent or greater interest or 

a total of 10 percent or more of any class 

of stock, warrants, options or debt 

securities. This list must include a 

description of each such entity’s 

principal business and a description of 

each such entity’s relationship to the 

applicant; 

(iii) List and summarize all 

agreements or instruments (with 

appropriate references to specific 

provisions in the text of such 

agreements and instruments) that 

support the applicant’s eligibility as a 

small business under the applicable 

designated entity provisions, including 

the establishment of de facto or de jure 

control. Such agreements and 

instruments include articles of 

incorporation and by-laws, partnership 

agreements, shareholder agreements, 

voting or other trust agreements, 

management agreements, franchise 

agreements, spectrum leasing 

arrangements, spectrum resale 

(including wholesale) arrangements, 

and any other relevant agreements 

(including letters of intent), oral or 

written; 

* * * * * 

(v) List separately and in the aggregate 

the gross revenues, computed in 

accordance with § 1.2110, for each of 

the following: The applicant, its 

affiliates, its controlling interests, and 

affiliates of its controlling interests; and 

if a consortium of small businesses, the 

members comprising the consortium; 

and 

* * * * * 

■ 7. Section 1.9020 is amended by 

revising paragraph (d)(4) to read as 

follows: 

§ 1.9020 Spectrum manager leasing 

arrangements. 

* * * * * 

(d) * * * 

(4) Designated entity/entrepreneur 

rules. A licensee that holds a license 

pursuant to small business and/or 

entrepreneur provisions (see § 1.2110 

and § 24.709 of this chapter) and 

continues to be subject to unjust 

enrichment requirements (see § 1.2111 

and § 24.714 of this chapter) and/or 

transfer restrictions (see § 24.839 of this 

chapter) may enter into a spectrum 

manager leasing arrangement with a 

spectrum lessee, regardless of whether 

the spectrum lessee meets the 

Commission’s designated entity 

eligibility requirements (see § 1.2110) or 

its entrepreneur eligibility requirements 

to hold certain C and F block licenses 

in the broadband personal 

communications services (see § 1.2110 

and § 24.709 of this chapter), so long as 

the spectrum manager leasing 

arrangement does not result in the 

spectrum lessee’s becoming a 

‘‘controlling interest’’ or ‘‘affiliate’’ (see 

§ 1.2110) of the licensee such that the 

licensee would lose its eligibility as a 

designated entity or entrepreneur. 

* * * * * 

PART 27—MISCELLANEOUS 

WIRELESS COMMUNICATIONS 

SERVICES 

■ 8. The authority citation for part 27 

continues to read as follows: 

Authority: 47 U.S.C. 154, 301, 302a, 303, 

307, 309, 332, 336, 337, 1403, 1404, 1451, 

and 1452, unless otherwise noted. 

■ 9. Section 27.1301 is amended by 

removing the undesignated introductory 

text and revising paragraph (a) to read 

as follows: 

§ 27.1301 Designated entities in the 600 

MHz band. 

(a) Eligibility for small business 

provisions. 

(1) A small business is an entity that, 

together with its affiliates, its 

controlling interests, the affiliates of its 

controlling interests, and the entities 

with which it has an attributable 

material relationship, has average gross 

revenues not exceeding $55 million for 

the preceding three (3) years. 

(2) A very small business is an entity 

that, together with its affiliates, its 

controlling interests, the affiliates of its 

controlling interests, and the entities 

with which it has an attributable 

material relationship, has average gross 

revenues not exceeding $20 million for 

the preceding three (3) years. 

* * * * * 

[FR Doc. 2014–26924 Filed 11–13–14; 8:45 am] 

BILLING CODE 6712–01–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 648 

[Docket No. 140902739–4739–01] 

RIN 0648–BE49 

Fisheries of the Northeastern United 

States; Atlantic Mackerel, Squid, and 

Butterfish Fisheries; Specifications 

and Management Measures 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Proposed rule, request for 

comments. 

SUMMARY: NMFS proposes 2015 

specifications and management 

measures for Atlantic mackerel, 2015– 

2017 specifications for Illex squid, 

2015–2017 specifications for longfin 

squid, and 2015–2017 specifications for 

butterfish. This action also proposes 

simplifying the butterfish fishery 

closure mechanism. These proposed 

specifications and management 

measures are intended to promote the 

utilization and conservation of the 

Atlantic mackerel, squid, and butterfish 

resources. 

DATES: Public comments must be 

received no later than 5 p.m., eastern 

standard time, on December 15, 2014. 

ADDRESSES: Copies of supporting 

documents used by the Mid-Atlantic 

Fishery Management Council, including 

the Environmental Assessment (EA) and 

Regulatory Impact Review (RIR)/Initial 

Regulatory Flexibility Analysis (IRFA), 

are available from: Dr. Christopher M. 

Moore, Executive Director, Mid-Atlantic 

Fishery Management Council, Suite 201, 

800 N. State Street, Dover, DE 19901. 

The EA/RIR/IRFA is accessible via the 

Internet at http://h http://

www.greateratlantic.fisheries.noaa.gov/. 

You may submit comments, identified 

by NOAA–NMFS–2014–0139, by any 

one of the following methods: 

• Electronic Submission: Submit all 

electronic public comments via the 

Federal e-Rulemaking Portal 

www.regulations.gov. To submit 

comments via the e-Rulemaking Portal, 

first click the ‘‘submit a comment’’ icon, 

then enter NOAA–NMFS–2014–0139 in 

mstockstill on DSK4VPTVN1PROD with PROPOSALS