APCO CITES ‘GRAVE CONCERNS’ ABOUT PUBLIC SAFETY SPECTRUM LEASING

The FCC adopted rules to let spectrum licensees lease unused or unneeded spectrum. They were designed to remove barriers to leasing stemming from a 40-year-old case, Intermountain Microwave, that had been interpreted to mean that a licensee must keep relatively tight hands-on control of licensed property. The FCC created 2 ways to lease spectrum, depending on the amount of responsibility assumed by the lessee: (1) “Spectrum manager” leasing, in which parties enter leasing arrangements without prior FCC approval as long as the licensee retains both de jure (legal) control of the license and de facto (working) control of the leased spectrum. (2) “De facto transfer leasing,” in which the licensee retains de jure control of the license while the de facto control is transferred to the lessee for the term of the lease. The further notice looked beyond commercial wireless spectrum, lining up questions about public safety and broadcast bands.

The FCC asked whether public safety licensees should be allowed to lease excess capacity, stressing that such arrangements would be voluntary not mandatory. APCO’s concerns focused on the extent to which the Commission had examined allowing public safety licenses to lease spectrum on a commercial basis. One type of leasing under review would involve capacity over which the public safety system had total control and could reclaim leased capacity “on the fly” when needed for emergencies. The 2nd type would grant the lessee authority to use the public safety system on its own radio system, using its own radios and infrastructure. APCO said if that type were allowed, it would have to be subject to “'ruthless preemption’ using yet-to-be developed cognitive radio technologies that give the public safety agency dynamic control over all users of the relevant channels.”

APCO raised concerns about the impact leasing could have on scarce public safety spectrum. “While most public safety agencies would act responsibly in deciding whether and how to lease channels, some agencies could be pressured by cash- strapped state and local governments to lease more and more capacity, potentially to the detriment of public safety operational requirements,” it said. “Some state and local governments could even seek authority for more channels than necessary, merely to have additional capacity for leasing.” APCO said there were few curbs on the amount of spectrum licensed to a particular agency and frequency coordinators lacked authority to “second-guess” an applicant’s request other than on technical grounds. “A related concern is that a small public safety agency could become a ‘front’ for a commercial entity, licensing a system for minimal ‘public safety’ use, with the principal purpose of the spectrum being commercial,” APCO said. If the FCC were to permit public safety spectrum leasing, APCO urged strict, enforceable rules to ensure most systems were used for public safety, both as defined by bandwidth and time. It stressed the need for eligibility rules to prevent “sham” licensing.

Meanwhile, SBC warned the FCC not to inadvertently create a new spectrum cap. The Commission repealed a wireless spectrum cap of 45 MHz for nonrural markets and 55 MHz for rural markets as of Jan. 1, 2003. SBC said the further notice proposed allowing notification filings for spectrum leases only where the lessee would control less than a benchmark amount of commercial mobile radio service (CMRS) spectrum. SBC said that suggested the same benchmark would apply for notification filings for transfers of control and assignments. While the FCC took pains to say that the benchmark wouldn’t be another spectrum cap, SBC said “as a practical matter, the benchmark would be exactly that.”

“Since the CMRS spectrum cap was eliminated on Jan. 1, 2003, the Commission has provided little guidance on how much CMRS aggregation it believes is consistent with the public interest,” SBC said. “Thus, any benchmark that the Commission adopts here might weigh heavily in any future analysis of CMRS spectrum aggregation. CMRS spectrum aggregation policies should be considered in a proceeding more directly related to that issue and not in this proceeding.” Other proposed restrictions should be adequate to prevent “excessive aggregation” of CMRS spectrum, at least until the FCC provided additional guidance on spectrum aggregation in a separate proceeding, it said. SBC also urged the Commission not to bar notification filings for non- CMRS spectrum leases, transfers of control or assignments unless the lessee would control less than a benchmark amount of non-CMRS spectrum. “There is no record in this proceeding on which to base such a benchmark,” SBC said. “No evidence has been introduced about who holds how much spectrum, how the spectrum is being used, what level of concentration is potentially excessive.”

Some wireless carriers urged the FCC to not impose new information collection requirements and to let the private sector decide if new tools such as spectrum clearinghouses or brokers are needed. “All parties that may want to participate in the leasing process already have full access to the information necessary to determine the availability of spectrum in any specific geographic area in which they are interested, the identity of the licensees and the services that are authorized,” AT&T Wireless told the FCC. It said the agency’s Universal Licensing System had relevant information. “There is no reason for the Commission to engage in the difficult business of attempting to predict market needs,” AT&T Wireless said.

Cantor Fitzgerald Telecom Services told the FCC it was “uniquely qualified” based on its past spectrum sales and leasing efforts to provide a clearinghouse for secondary spectrum market transactions. It urged the Commission to use as much of its forbearance power as possible to refrain from requiring prior agency approval for many classes of transactions. Cantor Fitzgerald said it was a promising “first step” that the FCC was making a distinction between spectrum manager leasing that didn’t require approval and “de facto transfer” control leasing that did require prior FCC approval. “The market would be made even more efficient if these remaining approval barriers could be removed by exercise of the Commission’s forbearance power,” it said.

Several carriers cautioned the FCC not to use this proceeding to allow noninterfering, unlicensed devices to operate as an underlay or through an easement to licensed spectrum. Commercial wireless operators have raised concerns in the past over the Commission’s Spectrum Policy Task Force report that the agency not diminish the rights of licensed spectrum users by increasing the risk posed by unlicensed users in such bands. “If an underlay or easement is not under the licensee’s control, any future increases in a licensed user’s efficiency yield benefits for the unlicensed users in the band,” Verizon Wireless said: “The Commission should rightfully limit any ‘easements’ in exclusive use spectrum to those that are negotiated by the licensee in the secondary market.”

The FCC asked about the possibility of extending its secondary markets rules to Instructional TV Fixed Service (ITFS) licensees. ITFS licensees can lease part of their capacity to a commercial firm, with certain requirements for minimum educational uses. The National ITFS Assn. and Catholic TV Network told the FCC they supported extending those secondary markets to ITFS under 3 conditions: (1) That substantive use requirements now applied to ITFS leasing be maintained to keep intact the educational nature of ITFS. (2) That new rules and policies be applied only prospectively, “to avoid unnecessary and disruptive changes to existing ITFS contractual relationships.” (3) That ITFS lease agreements may continue to have a maximum 15-year term. the Wireless Communications Assn. (WCA) said that if the secondary markets rules were extended to ITFS and MMDS, it would be a “natural fit” with proposed rule changes the FCC was examining separately that would allow a new licensing regime in that spectrum. The proposed licensing rules would move away from a “facilities-centric” focus for MMDS and ITFS, WCA said. The secondary markets notice “provides a parallel opportunity for the Commission to eliminate the facilities-centric focus of its current MDS/ITFS leasing policies,” WCA said.