Source: https://www.fcc.gov/print/node/49334
Timestamp: 2015-07-29 02:17:08
Document Index: 456606289

Matched Legal Cases: ['art 101', 'art 101', 'art 101', 'art 101', 'arts 1', 'art 101', '§ 101', '§ 101']

Fibertower Spectrum Holdings LLC, Memorandum Opinion and Order
FCC 13-67
In this Memorandum Opinion and Order, we deny an application for review (“AFR”) filed by FiberTower Corporation, on behalf of itself and its subsidiary FiberTower Spectrum Holdings, LLC (collectively, “FiberTower”). FiberTower seeks review of a Wireless Telecommunications Bureau (“Bureau”) decision holding that FiberTower had failed to demonstrate compliance with the substantial service requirements for 94 of its 24 GHz Digital Electronic Message Service (“DEMS”) licenses and 595 of its 39 GHz licenses. FiberTower also seeks review of the Bureau’s denial of FiberTower’s requests for extension of time to demonstrate substantial service for these licenses, and FiberTower’s associated requests for waiver of the June 1, 2012 substantial service deadline. II.
As of November 30, 2012, FiberTower, which was established in 2000, provided wireless backhaul (i.e., the transport of voice and data from the cell site to the switch) and access transport (i.e., the network link between the local area network and the local fiber ring) to approximately 5,390 customer locations at approximately 3,188 deployed sites in thirteen markets throughout the United States, predominantly through more than 3,000 Common Carrier Point-to-Point Microwave licenses in the 11, Federal Communications Commission
18, and 23 GHz bands.1 Licenses in the 11, 18, or 23 GHz band are licensed under Part 101 of the Commission’s Rules on a site-by-site, first-come-first-served non-exclusive basis.2 3.
In addition, FiberTower holds 352 Economic Area (“EA”) licenses in the 39 GHz band, 283 Rectangular Service Area (“RSA”) licenses in the 39 GHz band, and 102 DEMS licenses in the 24 GHz band.3 Licenses in the 24 and 39 GHz bands are also subject to Part 101 of the Commission’s Rules,and licensees must demonstrate substantial service at the time of license renewal.4 According to FiberTower, its spectrum holdings in the 24 and 39 GHz bands constitute a significant asset that includes 740 MHz of spectrum “in the top twenty (20) U.S. Metropolitan areas and, in the aggregate, approximately 1.72 billion channel pops (calculated as the number of channels in a given area multiplied by the population, as measured in the 2010 census, covered by these channels).”5 Also according to FiberTower, this “Spectrum Portfolio represents one of the largest and most comprehensive collections of millimeter wave spectrum in the U.S., covering areas with a total population of over 300 million.”6 This Memorandum Opinion and Order addresses only certain 39 GHz RSA, 39 GHz EA, and 24 GHz DEMS licenses held by FiberTower.7
Under Sections 101.17 and 101.67 of the Commission’s Rules, FiberTower was required to demonstrate substantial service for its 39 GHz EA and RSA licenses at the time of license renewal.8 On October 2, 2008, however, the Bureau, acting in response to an extension request from FiberTower, 1 Debtors’ Motion for Approval of Binding Term Sheet with Participating Carriers for Migration of Services Off Debtors’ Backhaul Network and Wind-Down of Debtors’ Business at 3 (“FiberTower Bankruptcy Motion”), submitted as Exhibit A in Comments of the Affected Carriers, T-Mobile USA, Inc., AT&T Inc., Cricket Communications, Inc., MetroPCS Communications Inc., and Sprint Nextel Corporation, WC Docket No. 12-334 (filed Nov. 30, 2012) (“Comments of Affected Carriers”). The markets where FiberTower was providing service were Dallas/Fort Worth; Washington, DC-Baltimore; Atlanta; Boston; Chicago; Cleveland; Denver; Detroit; Houston; New York/New Jersey; Pittsburgh; San Antonio/Austin/Waco; and Tampa. See FiberTower Bankruptcy Motion at 3. FiberTower received Commission approval to discontinue service for all customers as of April 30, 2013. See ¶ 12, infra.2 Part 101 of the Commission’s Rules generally governs terrestrial microwave operations. See 47 C.F.R. Part 101.3 DEMS licenses were originally licensed in 1983 based on Standard Metropolitan Statistical Areas (“SMSAs”), and the service was transitioned from 18 GHz to 24 GHz in 1997. See Amendment of the Commission’s Rules to Relocate the Digital Electronic Message Service from the 18 GHz Band to the 24 GHz Band and To Allocate the 24 GHz Band for Fixed Services, ET Docket No. 97-99, Order, 12 FCC Rcd 3471 (1997) (reallocating DEMS from the 18 GHz band to the 24 GHz Band), reconsideration denied, Memorandum Opinion and Order, 13 FCC Rcd 15147 (1998); Amendment of the Commission’s Rules to Relocate the Digital Electronic Message Service from the 18 GHz Band to the 24 GHz Band and To Allocate the 24 GHz Band for Fixed Services, Order, 12 FCC Rcd 8266 (PSPWD 1997) (modifying DEMS-based licenses to change authorized band of operations from 18 GHz to 24 GHz). See also Amendments to Parts 1, 2, 87 and 101of the Commission’s Rules to License Fixed Services at 24 GHz, WT Docket No. 99-327, Report and Order, 15 FCC Rcd 16934, 16937 ¶ 3 (2000) (“24 GHz R&O”) (adopting competitive bidding and service rules for 24 GHz Band, including DEMS); 47 C.F.R. Part 101.4 47 C.F.R. §§ 101.17, 101.67, 101.526, 101.527.5 FiberTower Bankruptcy Motion at 3.6 Id.7 The 39 GHz licenses for which FiberTower has previously demonstrated substantial service and the 24 GHz and 39 GHz licenses for which FiberTower filed substantial service notifications showing actual construction are not under consideration in this Memorandum Opinion and Order and remain valid. See FiberTower Spectrum Holdings LLC, Memorandum Opinion and Order, 27 FCC Rcd 13562, 13563 nn.5, 6 (WTB 2012) (“FiberTower MO&O”).8 47 C.F.R. §§ 101.17, 101.67.
extended the substantial service deadline for 183 RSA licenses and 352 EA licenses to June 1, 2012.9 The Bureau found that FiberTower potentially could provide wireless backhaul services to licensees in the 700 MHz band, the Advanced Wireless Services-1 (“AWS-1”) band, and/or the Broadband Radio Service/Educational Radio Service (“BRS/EBS”) band, all of which at that time had recently been auctioned, licensed, or put into use.10 The Bureau anticipated that these bands would develop robustly, along with other mobile and fixed wireless services, and that FiberTower potentially could provide wireless backhaul service to these new services.11 Based on such anticipated developments in these new services and the resulting possibilities in the market for providing wireless backhaul service, the Bureau concluded that an extension of time until June 1, 2012, would provide FiberTower and other 39 GHz licensees with a sufficient amount of additional time to meet their buildout obligations. The Bureau also held that FiberTower had demonstrated substantial service for 31 licenses.12 Two years later, the Bureau also extended the construction deadline applicable to the 24 GHz DEMS licenses to June 1, 2012.13
On May 14, 2012, FiberTower filed an Extension Request asking the Bureau to once again extend the construction deadline an additional three years for its 24 and 39 GHz licenses for which it had not yet demonstrated substantial service, until June 1, 2015.14 In the alternative, FiberTower sought a “limited waiver” of Sections 101.17 and 101.527 of the Commission’s rules, as another means of extending the construction deadline applicable to the licenses until June 1, 2015.15 FiberTower later reduced the amount of time sought for the extension to meet the substantial service safe harbor standardsto 18 months.16 FiberTower argued that such relief was justified by (1) a lack of a national market for 9 Art Licensing Corporation, Order on Reconsideration and Memorandum Opinion and Order, 23 FCC Rcd 14116, 14125-14127 ¶¶ 20-21 (WTB 2008) (“ART Order”). The Bureau had earlier granted a similar extension to IDT Spectrum, LLC for its 39 GHz licenses. See IDT Spectrum, LLC, Order on Reconsideration and Memorandum Opinion and Order, 23 FCC Rcd 12005 (WTB 2008). On February 3, 2011, the Bureau granted extensions until June 1, 2012 for an additional 62 39 GHz RSA licenses, consistent with the Bureau’s 2008 order. See File Nos. 0004570076-0004570137 (filed Jan. 12, 2011, granted Feb. 3, 2011). 10 ART Order, 23 FCC Rcd at 14125-14127 ¶¶ 20-21. More specifically, licenses for new wireless services in the 700 MHz band had been auctioned in March 2008, the first group of licenses for AWS-1 band operations was granted on April 16, 2007, and BRS/EBS band licensees were required to meet a construction deadline of May 1, 2011.11 Id.12 Id. at 14122-14123 ¶ 13.13 See the Appendix to the FiberTower MO&O for the file numbers of the relevant applications.14 A list of the file numbers of the relevant applications is contained in the Appendix to the FiberTower MO&O. FiberTower complains that the Bureau “erred by asserting that FiberTower sought a three year extension . . . .” Application for Review, FiberTower Corporation (filed Dec. 7, 2012) (“AFR”) at 23-24. In its original extension request, FiberTower “request[ed] an extension of time, until June 1, 2015, to satisfy the substantial service requirements applicable to its 24 GHz and 39 GHz licenses set forth in Exhibit A.” Request for Extension of Time or, in the Alternative, Limited Waiver of Substantial Service Requirement (dated Apr. 30, 2012, filed May 14, 2012) (“Extension Request”) at 2. 15 Extension Request at 1.16 FiberTower’s subsequent proposal was to build out and thereby meet the substantial service safe harbor standards for all of its licenses by the end of 2013. Supplement #2, FiberTower Corporation (filed July 31, 2012) (“Second Supplement”) at 2. The Bureau addressed this proposal, explaining that since the Commission has rejected the argument that actual construction completed past the buildout deadline, by itself, is sufficient to justify a waiver, FiberTower’s “after-the-fact promise to construct in the future cannot be credited.” See FiberTower MO&O, 27 FCC Rcd at 13575 ¶ 34. FiberTower fails to respond to the Bureau’s reasoning or to address the cases the Bureau cites. 3
microwave backhaul and access service,17 (2) an unforeseeable loss of traffic and future business opportunities,18 and (3) a continuing lack of viable equipment.19 FiberTower characterized all of these factors as circumstances beyond its control, which have prevented it from providing substantial service. In addition, FiberTower argued that building out these licenses would require it to build “links to nowhere” in areas of the country with little or no market for wireless backhaul and access service, thus wasting valuable resources.20 Moreover, FiberTower argued, requiring it to forfeit its millimeter wave band licenses would risk material disruption to FiberTower, its customers, the swift deployment of LTE networks, and the country’s commercial, government and public safety ecosystem, and result in significant amounts of spectrum lying fallow during the height of LTE deployment.21 Over the course of the three months after it filed its Extension Request, FiberTower supplemented its Extension Request seven times.22
Two weeks after filing its extension and waiver requests, on June 1, 2012, FiberTower filed, in the alternative, construction notifications for 689 of its 24 GHz DEMS and 39 GHz licenses.23 In these notifications, FiberTower argued that it demonstrated substantial service by performing thefollowing “antecedent activities:” (1) designing and proposing network builds that meet or exceed similar demonstrations previously found by the Commission to satisfy the construction requirements for other 39 GHz licenses;24 (2) continuing to play a role as a fixed wireless provider for backhaul;25 and (3) engaging in equipment development with equipment developers for the wide-area millimeter bands.26 FiberTower argued, “In light of the significant time, energy, and capital that FiberTower has invested in developing its systems, infrastructure, and personnel required to provide market-leading service and support large-scale regional and national network deployments, the Commission should find that FiberTower has met its substantial service obligations.”27
On July 17, 2012, FiberTower Network Services Corp., FiberTower Corporation, FiberTower Licensing Corp., and FiberTower Spectrum Holdings LLC filed a petition for relief under 17 Extension Request at 6-10.18 Id. at 11-13.19 Id. at 13-16.20 Id. at 16-19.21 Id. at 19-22.22 Supplement #1, FiberTower Corporation (filed Jul. 26, 2012) (“First Supplement”); Second Supplement; Letter from Ari Q. Fitzgerald, Counsel for FiberTower Corporation to The Honorable Julius Genachowski, Chairman, Federal Communications Commission (dated Sep. 6, 2012, filed Oct. 2, 2012) (“Third Supplement”); Supplement #4, FiberTower Corporation (dated Sep. 20, 2012, filed Oct. 2, 2012) (“Fourth Supplement”); Supplement #5, FiberTower Corporation (filed Oct. 8, 2012) (“Fifth Supplement”); Supplement #6, FiberTower Corporation (filed Oct. 17, 2012); Supplement #7, FiberTower Corporation (filed Oct. 24, 2012) (“Seventh Supplement”).23 See the Appendix to the FiberTower MO&O for the file numbers of the construction notifications. With each notification, FiberTower filed an exhibit entitled “Attachment A: License Renewal Request and Substantial Service Showing” (“Substantial Service Exhibit”).24 Substantial Service Exhibit at 2. 25 Id. at 4.26 Id. at 4-5.27 Id. at 8.
Chapter 11 of the Bankruptcy Code.28 FiberTower’s licenses in the 11, 18, 23 GHz bands and its 39 GHz RSA, 39 GHz EA, and 24 GHz DEMS licenses are all part of the assets involved in the bankruptcy proceeding.29 On September 27, 2012, upon FiberTower’s request, the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division, issued an order granting a preliminary injunction enjoining the Commission from “granting, transferring, assigning, or selling FiberTower’s 24 GHz and 39 GHz licenses to any entity other than FiberTower or FiberTower’s designee.”30 The Bankruptcy Court also enjoined the Commission from taking any action “that would impair or otherwise adversely alter Debtors’ rights before the Commission on or on appeal of any decision of the Commission to contest (a) cancellation or termination of the FCC Licenses; or (b) a determination that the FCC Licenses were terminated or cancelled prior to entry of this Order.”31 The Preliminary Injunction Order further provides that nothing contained in it “shall stay or otherwise affect proceedings before the Commission, adjudicatory or otherwise, or stay or otherwise affect any appeal from any order of the Commission which proceedings or appeals precede the sale, assignment, or transfer of [FiberTower’s] FCC Licenses to an entity other than [FiberTower] or [its] assignee or designee.”32
After FiberTower had filed for Chapter 11 bankruptcy relief, several customers that receive backhaul or access transport from FiberTower (generally from site-based licenses in the 11, 18, or 23 GHz band) filed either to support FiberTower’s Extension Request or to express concern about the effect that cancelling FiberTower’s 39 GHz and 24 GHz licenses would have on the backhaul services they receive from FiberTower.33 The Official Committee of Unsecured Creditors appointed in the FiberTower Chapter 11 bankruptcy case also filed comments in this proceeding and argued that the Bankruptcy Code implicates important public policy objectives and that cancelling FiberTower’s 24 and 39 GHz licenses could deny creditors the ability to recover any value.34 According to the Committee 28 In re FiberTower Network Services Corp., et al., Case No. 12-44027-DML-11 (Bankr. N.D. Tex).29 See FiberTower Network Services Corp., et al., Debtors; FiberTower Network Services Corp., et al., Debtors v. Federal Communications Commission, Adv. No. 12-4104, Memorandum Opinion (Bankr. N.D. Tex., issued Oct. 11, 2012) at 10-12.30 FiberTower Network Services Corp., et al., Debtors; FiberTower Network Services Corp., et al., Debtors v. Federal Communications Commission, Adv. No. 12-4104, Order Granting Preliminary Injunction (Bankr. N.D. Tex., issued Sep. 27, 2012) (“Preliminary Injunction Order”) at 2. 31 Id.32 Id. at 3.33 Letter from Radio Systems Coordinator, County of Allegheny, Department of Emergency Services to Marlene H. Dortch, Secretary, Federal Communications Commission (dated Sep. 26, 2012); Letter from Christopher Guttman-McCabe, CTIA–The Wireless Association to Marlene H. Dortch, Secretary, Federal Communications Commission (filed Sep. 7, 2012); Letter from Kathleen O’Brien Ham, Vice President, Federal Regulatory Affairs, T-Mobile to Marlene H. Dortch, Secretary, Federal Communications Commission (filed Sep. 4, 2012); Letter from Joan Marsh, Vice President – Federal Regulatory, AT&T Services, Inc. to Marlene H. Dortch, Secretary, Federal Communications Commission (filed Aug. 31, 2012); Letter from Charles W. McKee, Vice President – Government Affairs, Federal and State Regulatory, Sprint Nextel Corporation to Ruth Milkman, Wireless Bureau Chief, Federal Communications Commission (filed Aug. 31, 2012).34 Letter from David M. Posner, Official Committee of Unsecured Creditors to Marlene H. Dortch, Secretary, Federal Communications Commission (filed Sept. 10, 2012) at 2-3 (“Committee Letter”). FiberTower’s suppliers also filed in support of the Extension Request. See FiberTower MO&O, 27 FCC Rcd at 13567 ¶ 15.
Letter, cancellation of the licenses could allow the secured creditors to terminate the Plan and Support Agreement,35 which would prevent FiberTower from using cash collateral.36
On November 7, 2012, the Bureau released the FiberTower MO&O, in which it held that FiberTower had not demonstrated that it provided substantial service for 689 of its 24 and 39 GHz licenses and denied FiberTower’s request for an extension of time to construct those 689 24 GHz DEMS and 39 GHz licenses.37 The Bureau held that FiberTower did not demonstrate substantial service because FiberTower had not constructed any facilities whatsoever and because no precedent supported FiberTower’s argument that undertaking “antecedent activities” alone could constitute substantial service.38 The Bureau denied FiberTower’s extension requests because FiberTower did not show that its failure to meet the construction deadline was due to circumstances beyond its control.39 Instead, the Bureau found that the state of the wireless backhaul market was not a valid reason for FiberTower’s failure to construct.40 The Bureau further explained that, under Commission precedent, FiberTower is not permitted to rely upon actions of third parties, in this case the actions of AT&T Inc. (“AT&T”) and Clearwire Corp. (“Clearwire”) cancelling contracts for backhaul service, as justification for an extension request.41 The Bureau also held that FiberTower did not show that a lack of viable, affordable equipment prevented it from constructing the licenses.42 Instead, the Bureau found that FiberTower made a business decision to enter the nascent wireless backhaul market even though the service rules allowed FiberTower to provide any type of service consistent with the technology and service rules.43 Finally, the Bureau denied FiberTower’s request to waive the June 1, 2012 substantial service deadline.44 The Bureau held that granting FiberTower a further waiver, which would give FiberTower a total of 15 years to construct the licenses, was inconsistent with the underlying purpose of the rule, which is to require a sufficient degree of construction to ensure that the licensee will provide a substantial degree of service, and to prevent spectrum warehousing.45 The Bureau further found that requiring FiberTower to comply with the substantial service requirements was not unduly burdensome when it would have cost FiberTower $10-12 million to construct licenses that FiberTower said were worth $300 million.46 The Bureau’s actions concerned only certain of FiberTower’s 24 and 39 GHz licenses; thus, FiberTower’s licenses in the 11, 18, and 23 GHz band were unaffected by the Bureau’s decision and remained operational. 35 The Plan and Support Agreement is an agreement between FiberTower and its first lien creditors, which allowed FiberTower to continue to operate and develop its spectrum services during the bankruptcy proceedings.36 Committee Letter at 2.37 FiberTower MO&O, 27 FCC Rcd at 13562 ¶ 1.38 Id. at 13569 ¶¶ 21-22.39 Id. at 13570 ¶ 24.40 Id. at 13570 ¶ 25.41 Id. at 13571 ¶ 26.42 Id. at 13571-13572 ¶ 27.