The Federal Communications Commission (“FCC”) has released a draft Second Report and Order and Further Notice of Proposed Rulemaking on renewal requirements and permanent discontinuance rules for a variety of wireless services.[1] The Draft Further Notice proposes new rules—such as additional renewal term construction obligations to enhance rural build-out—that, if adopted, would have far-reaching implications for wireless licensees.

In 2010, the FCC proposed to “create consistent requirements for renewal of [wireless spectrum] licenses and consistent consequences for discontinuance of service, and to clarify construction obligations for spectrum licenses that have been divided, by geographic partitioning or disaggregation of the spectrum.”[2] The FCC did not adopt a final order implementing the proposed rules under Chairmen Julius Genachowski or Tom Wheeler, but current FCC Chairman Ajit Pai issued a request for the public to “refresh the record” in June 2017. The Draft Order currently on circulation addresses the comments filed in 2010 and the latest round of comments.

The Draft Order adopts new, streamlined renewal standards for all wireless radio service (“WRS”) licenses, including both geographic and site-based licenses.[3] To qualify for renewal, each WRS licensee must demonstrate that it provided service to the public or operated to address private, internal communications needs over the course of its license term.[4]

To address concerns from commenters that the renewal framework would cause uncertainty and undue administrative burdens on licensees, the Draft Order adopts a set of safe harbors for renewal applicants.[5] A licensee seeking safe harbor must certify that it has met obligations for ongoing provision of service or operations, that no permanent discontinuance occurred during its license term, and that it substantially complied with all applicable FCC rules.[6] The safe harbors will apply to site-based licenses, wireless providers and private systems using geographic licenses, and partitioned or disaggregated licenses without a performance requirement.[7]

Consistent with the original NPRM, the Draft Order additionally eliminates legacy “comparative renewal” rules, and prohibits the filing of competing applications in the WRS renewal process.[8]

Also in accordance with the original NPRM, the Draft Order replaces service-specific rules for permanent discontinuance with a standard rule for all WRS licensees.[9] It adopts a new section defining permanent discontinuance of service as a period of 180 or 365 consecutive days (for geographic and site-based licenses, respectively) during which a licensee does not operate, or, in the case of licensees providing service to customers, does not provide service to at least one subscriber with which it is not affiliated.[10] For services that do not currently have an explicit definition of permanent discontinuance, such as (i) Part 24 Personal Communications Services, (ii) Part 27 Miscellaneous Wireless Communications Services; (iii) Part 80 Safety and Special Radio Services; and (iv) Part 95 218-219 MHz Service, licensees will have until January 1, 2019 to comply with the new rules.[11]

The Draft Order modifies the FCC’s original proposal to require each party to a partitioning or disaggregation arrangement to certify that it will independently satisfy service-specific construction and performance requirements.[12] The Draft Order affords parties the additional option of sharing in these requirements, which will go into effect prospectively.[13]

Finally, the FCC seeks comment in the Draft Further Notice on “additional, reasonable construction obligations during renewal terms that are targeted to reach areas that lack adequate service.”[14] Specifically, the FCC seeks to accelerate deployment of wireless services to rural areas.[15] The proposal would subject licensees to significant new construction obligations.[16] Licensees would be required to exceed their original construction metric by an additional 10 percent in the next renewal term, and then by increments of five or 10 percent in subsequent renewal terms up to a certain threshold.[17] The FCC seeks comment on imposing a similar requirement on licensees that met a Commission-defined “safe harbor” (e.g., service to a certain percentage of the population) to satisfy their substantial service requirements.[18] The FCC asks if substantial service requirements should include a specific percentage of the rural population, and whether some licenses should be excluded from any additional renewal term construction requirements.[19]

The proposals in the Draft Further Notice are a substantial departure from the FCC’s current performance requirements for most wireless services. WRS licensees may need to expend significant additional resources to meet ongoing, post-renewal performance obligations. The FCC will vote on the Draft Order and Draft Further Notice at its Open Meeting scheduled for August 3, 2017.