Radio frequency spectrum is used to provide an array of commercial and governmental services, like mobile voice and data, air-traffic control, broadcast television and radio, and public safety activities. In the United States, responsibility for spectrum management is divided between two agencies: FCC and the Department of Commerce’s National Telecommunications and Information Administration (NTIA). FCC manages spectrum use for nonfederal users, including commercial, private, and state and local government users under authority provided in the Communications Act. NTIA manages spectrum for federal government users and acts for the President with respect to spectrum management issues. FCC is an independent regulatory agency composed of five commissioners appointed by the President and confirmed by the Senate. The commissioners delegate many of FCC’s day-to-day responsibilities, including processing applications for licenses and analyzing consumer complaints, to the agency’s 7 bureaus and 10 offices. According to its fiscal year 2014 budget request, FCC has just over 1,700 full-time equivalent staff in Washington, D.C., and other locations; FCC requested $359 million for its fiscal year 2014 budget. Among other duties, FCC bureaus responsible for granting spectrum licenses administer service rules that outline technical and operating requirements for spectrum licenses. Service rules may be set at the time FCC allocates spectrum into bands for a specific type of service or group of users. FCC develops rules through a process defined by the Administrative Procedure Act (APA). The APA process requires FCC to provide the public with notice of its proposed and final rules and with an opportunity to comment as the rules are developed. All comments and information gathered by FCC constitute the public record to support rulemakings and are electronically maintained in a docket. FCC maintains the dockets in an electronic system that is available to the public on its website. After spectrum is allocated and service rules are set, depending on the type of service or user, one of four FCC bureaus assigns licenses to users (see table 2). For example, the Wireless Telecommunications Bureau (WTB) develops and executes policies and procedures for the licensing of all wireless services (except wireless public safety services), and the Media Bureau administers television and radio broadcast licenses. Licenses for wireless services are assigned through competitive bidding (auctions) or administrative processes. The assignment process used depends in large part upon whether applications for licenses are mutually exclusive—that is, on whether granting a license to one entity would preclude granting a license to another entity for the same portion of the spectrum in the same geographic location. For licenses that are mutually exclusive, FCC typically uses auctions to assign licenses for commercial wireless services. Auctions are a market-based mechanism used to assign a license to the entity that submits the highest bid. In the report, we refer to these licenses as market-based licenses. For licenses that are not mutually exclusive, primarily public-safety and private-wireless licenses, FCC generally assigns licenses through administrative processes. For example, FCC distributes some licenses on a first-come, first-served basis, where licenses are assigned based on when the license applications were submitted. To maximize the number of spectrum users, FCC often requires license applicants to coordinate. License applicants retain a private third-party firm, known as a frequency coordinator, to select a frequency that minimizes interference to existing licensees. We refer to these licenses as site-based licenses. FCC uses its ULS database to assign and track licenses for wireless services. ULS operates as a single licensing system used by FCC and licensees to apply for, modify, cancel, and take other actions on licenses for all wireless services in a uniform manner. FCC has established buildout requirements for most wireless services, including paging, cellular, land mobile radio, and wireless communications services (see appendix II). FCC officials said that the Commission makes every effort to ensure efficient use of each spectrum license, and, in line with these efforts, FCC uses buildout requirements to help ensure that spectrum is put to use. FCC establishes buildout requirements for wireless services through its rulemaking process, and the buildout requirement for each wireless service is tailored to the particular service. According to FCC officials, they take into account, when setting buildout requirements, (1) stakeholders’ comments about the proposed requirements in the notice of proposed rulemaking; (2) the characteristics of the relevant spectrum in terms of propagation of the signal through space and its interaction with obstacles, which could affect the infrastructure costs for the intended coverage; and (3) the types of service in adjacent spectrum, including considerations of harmful interference with those services. Buildout requirements have three common features, which vary based on the differences in wireless services. Type of requirement. This refers to the benchmark or outcome that a licensee must meet. There are three types of requirements. A population or geographic coverage requirement sets the percentage of the license’s population or geographic area, respectively, that must be covered by service. A construction requirement requires that the system operate consistent with the rules governing the service, specified in the license, by a specific time. Lastly, a “substantial service” requirement describes the level of service that must be provided in narrative terms rather than in absolute, numeric benchmarks, such as with a coverage requirement. When FCC establishes a substantial service requirement, it sometimes includes “safe harbors” in the rulemaking documents. Safe harbors illustrate specific ways that a licensee could demonstrate substantial service for a particular wireless service, such as constructing a certain number of point- to-point links or serving populations that are outside areas served by other licensees. Number of benchmarks. This refers to whether the licensee must complete the buildout requirement by one deadline, or whether the licensee must complete multiple requirements in stages with corresponding deadlines. When FCC sets more than one benchmark and thus deadline for a license, it refers to the requirements as the interim and final requirements or as the first requirement, second requirement, and so forth. Length of buildout period. This refers to the length of time from the grant of a license to the buildout deadline or deadlines. We examined five wireless services, which have buildout requirements that vary in each of the features discussed above (see table 3). Licenses in these five services are subject to all three types of requirements described above. For example, FCC set a substantial service requirement for 39 GHz licenses. In the rulemaking proceeding for 39 GHz, FCC stated that setting a substantial service requirement would permit flexibility in licensees’ system design, as the types of possible service vary tremendously and may develop in unpredictable ways. For some services, FCC gave licensees the option to choose the type of requirement. For Broadband PCS, FCC set a population coverage requirement, but also provided the alternative of meeting a substantial service requirement. In terms of the number of benchmarks, FCC set two benchmarks for the Broadband PCS (depending on the license) and 220 MHz services and set a single benchmark for the other three services we selected. The lengths of the buildout period for the five services range from 12 months (for industrial/business private land mobile radio) to 10 years (for all three market-based services). Under some circumstances, a particular license may not be subject to a buildout requirement, even if FCC established buildout requirements in the wireless-service rules for the license. For the three market-based services we examined, for example, a licensee can divide its license into smaller pieces by disaggregating or partitioning, which divides the assigned spectrum into smaller amounts of bandwidth or smaller geographical areas, respectively. In such cases, some of the resultant licenses may not have buildout requirements because the requirements are met by one of the other pieces of the original license. For example, for Broadband PCS licenses, parties seeking to disaggregate a license must decide which party will be responsible for meeting the buildout requirements or agree to share responsibility for meeting the requirements. Additionally, fixed-microwave and private land-mobile-radio licenses that authorize certain temporary or itinerant use of the spectrum, such as construction work or event planning, would not normally include a buildout requirement, since the license does not permit any long-term or ongoing operations. In other circumstances, licenses for industrial/business private land mobile radio and fixed microwave site-based services can authorize the use of multiple frequencies. For industrial/business private land-mobile- radio licenses, for example, the purpose of authorizing multiple frequencies is to improve the efficiency of a multi-user system in which users can use any available channel; it is similar to a multi-lane highway in which cars can use any lane. In such cases, FCC sets a buildout requirement for each frequency authorized by the license. If a licensee fails to construct for a given frequency, FCC automatically terminates the authorization to use that frequency as of the buildout deadline. If all the frequencies for a license are terminated, FCC will terminate the license. To enforce buildout requirements for wireless services, FCC requires licensees to self certify that they met buildout requirements and automatically terminates licenses that fail to do so, in line with FCC rules. Through ULS—the computerized system FCC and licensees use to process and track licenses for all wireless services—licensees submit notifications to inform FCC that a requirement is met. However, if the licensee does not notify FCC that it met a buildout requirement in a timely manner, FCC takes steps through ULS to terminate the license. Specifically, ULS is programmed to automatically carry out steps to terminate a license. Thirty days after a buildout deadline, ULS puts a license into “termination pending” mode. FCC releases a weekly public notice of all the market-based and site-based licenses that entered termination-pending mode. If a licensee does not file a petition for reconsideration within 30 days of the public notice demonstrating that it timely met the requirement, ULS will automatically terminate the license effective as of the buildout deadline. Once terminated, the license is then made available for re-assignment or re-auction.