BroadBand PCS Auction No. BroadBand PCS Auction No. 5858

Post-Auction OverviewPost-Auction Overview

Erin McGrathErin McGrathAssistant ChiefAssistant ChiefMobility DivisionMobility Division

DisclaimerDisclaimer

Nothing herein is intended to supersede any Nothing herein is intended to supersede any provision of the Commission's rules or public notices. provision of the Commission's rules or public notices. These slides should not be used as a substitute for These slides should not be used as a substitute for a prospective applicant's review of the Commission's a prospective applicant's review of the Commission's relevant orders, rules, and public notices. relevant orders, rules, and public notices. Prospective applicants must familiarize themselves Prospective applicants must familiarize themselves thoroughly and remain current with the Commission's thoroughly and remain current with the Commission's rules relating to Broadband PCS, rules relating to rules relating to Broadband PCS, rules relating to application and auction procedures, and the application and auction procedures, and the procedures, terms and conditions contained in the procedures, terms and conditions contained in the Auction No. 58 public notices.Auction No. 58 public notices.

FilingFiling RequirementsRequirements

Within 10 business days after the Within 10 business days after the release of the Closing Public Notice:release of the Closing Public Notice:

(1)(1) FCC Form 601 (Long-Form Application) FCC Form 601 (Long-Form Application) must be filed.must be filed.

(2)(2) FCC Form 602, Ownership Form, must FCC Form 602, Ownership Form, must be filed or updated, if necessary.be filed or updated, if necessary.

Form 602 – Ownership FormForm 602 – Ownership Form

If an applicant already has an FCC Form 602 If an applicant already has an FCC Form 602 on file, and it is complete and accurate, it is not on file, and it is complete and accurate, it is not necessary to file another FCC Form 602. necessary to file another FCC Form 602. SeeSee 47 C.F.R. § 1.919. 47 C.F.R. § 1.919.

If necessary, applicants must file the FCC If necessary, applicants must file the FCC Form 602 electronically at Form 602 electronically at http://wireless.fcc.gov/licensing/ownership/ or http://wireless.fcc.gov/licensing/ownership/ or through http://wireless.fcc.gov/uls by clicking through http://wireless.fcc.gov/uls by clicking on the ownership link.on the ownership link.

Form 601 – General InformationForm 601 – General Information

Filed electronically on ULS at Filed electronically on ULS at http://wireless.fcc.gov/uls.http://wireless.fcc.gov/uls.

Applicants can apply for multiple licenses on Applicants can apply for multiple licenses on one Form 601.one Form 601.

Applicants are responsible for the continuing Applicants are responsible for the continuing accuracy and completeness on information. accuracy and completeness on information. SeeSee 47 C.F.R. § 1.65 47 C.F.R. § 1.65

Incomplete or defective applications may be Incomplete or defective applications may be returned. returned. SeeSee 47 C.F.R. §§ 1.934, 1.933. 47 C.F.R. §§ 1.934, 1.933.

Form 601 – AttachmentsForm 601 – Attachments

Applicants must file all applicable Applicants must file all applicable attachments.attachments. OwnershipOwnership Foreign OwnershipForeign Ownership Designated EntitiesDesignated Entities Agreements & Other InstrumentsAgreements & Other Instruments Confidentiality RequestsConfidentiality Requests Waiver RequestsWaiver Requests Tribal Lands AttachmentsTribal Lands Attachments

Form 601 – OwnershipForm 601 – Ownership

Applicants must disclose the real party- Applicants must disclose the real party- or parties-in-interest. or parties-in-interest. SeeSee 47 C.F.R. § 47 C.F.R. § 1.2112.1.2112.

Ownership information can be provided Ownership information can be provided by: by:

(1)(1) Attaching a separate exhibit, or Attaching a separate exhibit, or (2)(2) Scanning and attaching the FCC Form 602 Scanning and attaching the FCC Form 602

to the Form 601.to the Form 601.

Form 601 – Foreign OwnershipForm 601 – Foreign OwnershipSection 310(b) of the Communications ActSection 310(b) of the Communications Act

Licenses cannot be granted to:Licenses cannot be granted to:

(1) Any alien or the representative of any alien;(1) Any alien or the representative of any alien;(2) Any corporation organized under the laws of any (2) Any corporation organized under the laws of any

foreign government;foreign government;(3) Any corporation of which more than one-fifth of the (3) Any corporation of which more than one-fifth of the

capital stock is owned of record or voted by aliens or capital stock is owned of record or voted by aliens or their representatives or by a foreign government or their representatives or by a foreign government or representative thereof or by any corporation representative thereof or by any corporation organized under the laws of a foreign country.organized under the laws of a foreign country.

Form 601 – Foreign OwnershipForm 601 – Foreign OwnershipSection 310(b) of the Communications ActSection 310(b) of the Communications Act

Any corporation directly or indirectly controlled Any corporation directly or indirectly controlled by any other corporation of which more than by any other corporation of which more than one-fourth of the capital stock is owned of one-fourth of the capital stock is owned of record or voted by aliens, their representative, record or voted by aliens, their representative, or by a foreign government or representative or by a foreign government or representative thereof, or by any corporation organized under thereof, or by any corporation organized under the laws of a foreign country, if the Commission the laws of a foreign country, if the Commission finds that the public interest will be served by finds that the public interest will be served by the refusal or revocation of such licenses. the refusal or revocation of such licenses. SeeSee 47 U.S.C. § 310(b)(4).47 U.S.C. § 310(b)(4).

Form 601 – Foreign OwnershipForm 601 – Foreign Ownership

The applicant must explain the circumstances The applicant must explain the circumstances regarding foreign ownership in the applicant. regarding foreign ownership in the applicant.

The applicant must provide the following The applicant must provide the following information for each direct and indirect information for each direct and indirect foreign owner:foreign owner:

(1)(1) Percentage of InterestPercentage of Interest(2)(2) Country of Origin and AddressCountry of Origin and Address(3)(3) Public Interest Statement - Demonstrating how Public Interest Statement - Demonstrating how

allowing the applicant to hold the requested allowing the applicant to hold the requested license is consistent with the Commission’s license is consistent with the Commission’s policies pursuant to Section 310(b)(4) of the policies pursuant to Section 310(b)(4) of the Communications Act of 1934, as amended. Communications Act of 1934, as amended.

Form 601 – Foreign Ownership Form 601 – Foreign Ownership Petition for Declaratory RulingPetition for Declaratory Ruling

Applicants must indicate in their Form 601 Applicants must indicate in their Form 601 applications that they either have received a applications that they either have received a declaratory ruling that grants them permission declaratory ruling that grants them permission to exceed the statutory benchmark of Section to exceed the statutory benchmark of Section 310(b)(4) or that they have a request currently 310(b)(4) or that they have a request currently pending at the Commission.pending at the Commission.

The Commission must approve the indirect The Commission must approve the indirect foreign ownership that causes them to exceed foreign ownership that causes them to exceed Section 310(b)(4)’s twenty-five percent Section 310(b)(4)’s twenty-five percent benchmark prior to any license being granted.benchmark prior to any license being granted.

Form 601 – Closed BiddingForm 601 – Closed Bidding

An applicant must demonstrate that the An applicant must demonstrate that the applicant, its controlling interests, its applicant, its controlling interests, its affiliates, and the controlling interests of affiliates, and the controlling interests of the affiliates have combined total assets the affiliates have combined total assets of less than $500 million and have had of less than $500 million and have had combined gross revenues of less than combined gross revenues of less than $125 million in each of the last two years. $125 million in each of the last two years. See See 47 C.F.R. 24.709(a)(1).47 C.F.R. 24.709(a)(1).

Form 601 – Designated EntitiesForm 601 – Designated Entities

Small and very small businesses, or consortia Small and very small businesses, or consortia thereof, which are the high bidders on open thereof, which are the high bidders on open licenses are eligible for bidding credits of licenses are eligible for bidding credits of fifteen and twenty-five percent, respectively.fifteen and twenty-five percent, respectively.

An applicant applying for small or very small An applicant applying for small or very small business status must demonstrate that the business status must demonstrate that the applicant, its controlling interests, its affiliates, applicant, its controlling interests, its affiliates, and the controlling interests of the affiliates and the controlling interests of the affiliates have combined average gross revenues of less have combined average gross revenues of less than $15 or $40 million in the last three years. than $15 or $40 million in the last three years.

Form 601 – AgreementsForm 601 – Agreements

All applicants must provide a detailed All applicants must provide a detailed explanation of the terms and conditions explanation of the terms and conditions and parties involved in any bidding and parties involved in any bidding consortia, joint ventures, partnerships or consortia, joint ventures, partnerships or other agreements or arrangements into other agreements or arrangements into which the applicant has entered relating which the applicant has entered relating to the competitive bidding process prior to the competitive bidding process prior to the time the bidding was completed. to the time the bidding was completed. SeeSee 47 C.F.R. § 1.2107(d). 47 C.F.R. § 1.2107(d).

Form 601 – AgreementsForm 601 – AgreementsDesignated Entity/Closed BiddingDesignated Entity/Closed Bidding

Applicants must list and summarize all Applicants must list and summarize all agreements that support the applicant's agreements that support the applicant's designated entity and closed bidding designated entity and closed bidding eligibility, including the establishment of eligibility, including the establishment of de factode facto and and de jurede jure control. control. SeeSee 47 47 C.F.R. §§ 24.709(c)(2)(ii), 1.2112(b)(2)(i).C.F.R. §§ 24.709(c)(2)(ii), 1.2112(b)(2)(i).

Form 601 – AgreementsForm 601 – AgreementsDesignated Entity/Closed BiddingDesignated Entity/Closed Bidding

Such agreements and instruments include, but are not Such agreements and instruments include, but are not limited to: limited to:

(1)(1) Articles of incorporation and bylaws, Articles of incorporation and bylaws, (2)(2) Shareholder agreements, Shareholder agreements, (3)(3) Voting or other trust agreements, Voting or other trust agreements, (4)(4) Partnership or LLC agreements, Partnership or LLC agreements, (5)(5) Management agreements, Management agreements, (6)(6) Joint marketing agreements, Joint marketing agreements, (7)(7) Franchise agreements, Franchise agreements, (8)(8) Lease agreements, and Lease agreements, and (9)(9) Any other relevant agreements (including letters of Any other relevant agreements (including letters of

intent), oral or written. intent), oral or written. See See 47 C.F.R. § 1.2112(b)(2)(i).47 C.F.R. § 1.2112(b)(2)(i).

Form 601 – AgreementsForm 601 – AgreementsDesignated Entity/Closed BiddingDesignated Entity/Closed Bidding

These applicants also must list and These applicants also must list and summarize any investor protection summarize any investor protection agreements, including rights of first agreements, including rights of first refusal, supermajority clauses, options, refusal, supermajority clauses, options, veto rights, and rights to hire and fire veto rights, and rights to hire and fire employees and to appoint members to employees and to appoint members to boards of directors or management boards of directors or management committees. committees. See See 47 C.F.R. § 1.2112(b)47 C.F.R. § 1.2112(b)(2)(ii).(2)(ii).

Form 601 – Confidentiality Form 601 – Confidentiality RequestsRequests

Applicants should be aware that all information required by the Applicants should be aware that all information required by the Commission’s Rules in connection with applications to Commission’s Rules in connection with applications to participate in spectrum auctions is necessary to determine the participate in spectrum auctions is necessary to determine the applicants’ qualifications and, as such, will be available for applicants’ qualifications and, as such, will be available for public inspection.public inspection.

Required proprietary information may be redacted, and Required proprietary information may be redacted, and

confidentiality may be sought pursuant to Section 0.459 of the confidentiality may be sought pursuant to Section 0.459 of the Commission’s Rules. Commission’s Rules. SeeSee 47 C.F.R. § 0.459. 47 C.F.R. § 0.459.

Applicants requesting confidential treatment for any information Applicants requesting confidential treatment for any information required as a condition to participate in the auction must follow required as a condition to participate in the auction must follow the procedures set out in Section 0.459 of the Commission’s the procedures set out in Section 0.459 of the Commission’s Rules. Rules. SeeSee 47 C.F.R. § 0.459. 47 C.F.R. § 0.459.

Form 601 – Waiver RequestForm 601 – Waiver Request

In the event that a winning bidder wishes In the event that a winning bidder wishes to file a request for waiver, the request to file a request for waiver, the request should be filed with the corresponding should be filed with the corresponding application. application. SeeSee 47 C.F.R. § 1.925. 47 C.F.R. § 1.925.

Secondary Market TransactionsSecondary Market Transactions

Assignments and Transfers of ControlAssignments and Transfers of Control Limitations for licenses with bidding credits Limitations for licenses with bidding credits

or closed eligibilityor closed eligibility PartitionPartition DisaggregationDisaggregation

Spectrum LeasingSpectrum Leasing

Assignments and Transfers of Assignments and Transfers of ControlControl

PCS licenses can be assigned or PCS licenses can be assigned or transferred, pursuant to 47 C.F.R. § transferred, pursuant to 47 C.F.R. § 1.948.1.948.

Assignments and Transfers of Control Assignments and Transfers of Control are filed via ULS on FCC Form 603.are filed via ULS on FCC Form 603.

PCS licenses can be assigned in full or in PCS licenses can be assigned in full or in part.part.

Assignments and Transfers of Assignments and Transfers of Control Partial AssignmentsControl Partial Assignments

Partition – assigning a specific Partition – assigning a specific geographic area of a license.geographic area of a license.

Disaggregation – assigning certain Disaggregation – assigning certain frequencies associated with the license.frequencies associated with the license.

Partition and Disaggregation – assigning Partition and Disaggregation – assigning certain frequencies within a specific certain frequencies within a specific geographic area.geographic area.

Assignments and Transfers of Assignments and Transfers of Control Designated EntitiesControl Designated Entities

During the first five years of the license term, if a During the first five years of the license term, if a license with bidding credits is transferred/assigned to license with bidding credits is transferred/assigned to an entity that is ineligible for bidding credits or eligible an entity that is ineligible for bidding credits or eligible for a lesser bidding credit, unjust enrichment will be for a lesser bidding credit, unjust enrichment will be due.due.

If a license with bidding credits is assigned/transferred If a license with bidding credits is assigned/transferred to an entity eligible for bidding credits, the to an entity eligible for bidding credits, the assignee/transferee has to demonstrate that it, along assignee/transferee has to demonstrate that it, along with its controlling interests, its affiliates, and the with its controlling interests, its affiliates, and the controlling interests of the affiliates, have combined controlling interests of the affiliates, have combined average gross revenues of less than $15 or $40 million average gross revenues of less than $15 or $40 million in the last three years. in the last three years.

Assignments and Transfers of Assignments and Transfers of Control Designated EntitiesControl Designated Entities

Unjust Enrichment = Amount of the Unjust Enrichment = Amount of the Bidding Credit + InterestBidding Credit + Interest

The amount of Unjust Enrichment due The amount of Unjust Enrichment due decreases over time:decreases over time: Years 1 & 2 – 100% of bidding credit.Years 1 & 2 – 100% of bidding credit. Year 3 – 75% of bidding credit.Year 3 – 75% of bidding credit. Year 4 – 50% of bidding credit.Year 4 – 50% of bidding credit. Year 5 – 25% of bidding credit.Year 5 – 25% of bidding credit.

Assignments and Transfers of Assignments and Transfers of Control Closed Bidding LicensesControl Closed Bidding Licenses

A closed bidding license may only be A closed bidding license may only be assigned/transferred to an entity meeting the closed assigned/transferred to an entity meeting the closed bidding requirements unless: bidding requirements unless:

(1)(1) The license has been held for more than five years, or The license has been held for more than five years, or (2)(2) The license has been constructed and the construction The license has been constructed and the construction

notification has been filed with the Commission.notification has been filed with the Commission. If a closed bidding license is assigned/ transferred to If a closed bidding license is assigned/ transferred to

an entity eligible for closed bidding licenses, the an entity eligible for closed bidding licenses, the assignee/transferee must demonstrate that it, along assignee/transferee must demonstrate that it, along with its controlling interests, its affiliates, and the with its controlling interests, its affiliates, and the controlling interests, meets the $500 million assets/ controlling interests, meets the $500 million assets/ $125 million revenues requirements in each of the $125 million revenues requirements in each of the last two yearslast two years

Leasing – General InformationLeasing – General Information

The Commission implemented secondary market leasing The Commission implemented secondary market leasing in:in:

SeeSee Promoting Efficient Use of Spectrum Through Elimination of Promoting Efficient Use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets, WT Docket Barriers to the Development of Secondary Markets, WT Docket No. 00-230, No. 00-230, Report and Order and Further Notice of Proposed Report and Order and Further Notice of Proposed RulemakingRulemaking, 18 FCC Rcd. 20,604 (2003) (“, 18 FCC Rcd. 20,604 (2003) (“Report and OrderReport and Order”).”).

SeeSee Promoting Efficient Use of Spectrum Through Elimination of Promoting Efficient Use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets, WT Docket Barriers to the Development of Secondary Markets, WT Docket No. 00-230, No. 00-230, Second Report and Order, Order on Second Report and Order, Order on Reconsideration, and Second Further Notice of Proposed Reconsideration, and Second Further Notice of Proposed RulemakingRulemaking, 19 FCC Rcd. 17,503 (2004) (“, 19 FCC Rcd. 17,503 (2004) (“Second Report and Second Report and OrderOrder”).”).

Leasing – TypesLeasing – Types

Spectrum Manager LeaseSpectrum Manager Lease SeeSee 47 C.F.R. § 1.9020. 47 C.F.R. § 1.9020.

De FactoDe Facto Transfer Leasing Transfer Leasing Long-Term Long-Term De FactoDe Facto Transfer Leasing. Transfer Leasing.

More than 360 days.More than 360 days. SeeSee 47 C.F.R. § 1.9010. 47 C.F.R. § 1.9010.

Short-Term Short-Term De FactoDe Facto Transfer Leasing. Transfer Leasing. 360 days or less.360 days or less. SeeSee 47 C.F.R. § 1.9035. 47 C.F.R. § 1.9035.

Spectrum Manager LeasingSpectrum Manager Leasing Licensees must retain Licensees must retain de jurede jure control of the license and control of the license and de factode facto

control over the leased spectrum.control over the leased spectrum.

The licensees must:The licensees must:

(1)(1) Maintain an active, ongoing oversight role to ensure that the Maintain an active, ongoing oversight role to ensure that the lessee complies with all applicable Commission policies and lessee complies with all applicable Commission policies and rules,rules,

(2)(2) Retain responsibility for all interactions with the Commission Retain responsibility for all interactions with the Commission required under the license related to the use of the leased required under the license related to the use of the leased spectrum (including notification requirements), andspectrum (including notification requirements), and

(3)(3) Remain primarily and directly accountable to the Commission Remain primarily and directly accountable to the Commission for any lessee violation of these policies and rules. for any lessee violation of these policies and rules.

SeeSee 47 C.F.R. § 1.9010(b); 47 C.F.R. § 1.9010(b); see alsosee also Report and OrderReport and Order at ¶¶ 64-70. at ¶¶ 64-70.

Spectrum Manager Leasing Spectrum Manager Leasing Designated Entities/Closed BiddingDesignated Entities/Closed Bidding

May lease as long as the leasing May lease as long as the leasing arrangement does not result in the lessee arrangement does not result in the lessee becoming a controlling interest or affiliate becoming a controlling interest or affiliate of the licensee.of the licensee.

The Commission has provided guidance The Commission has provided guidance as to whether designated entities and as to whether designated entities and licensees holding closed bidding licenses licensees holding closed bidding licenses can enter into Spectrum Manager leases. can enter into Spectrum Manager leases. SeeSee Second Report & OrderSecond Report & Order at ¶¶ 67-82. at ¶¶ 67-82.

De FactoDe Facto Transfer Leasing Transfer Leasing

Licensees retain Licensees retain de jurede jure control of the control of the license while license while de factode facto control over the control over the use of the leased spectrum, and use of the leased spectrum, and associated rights and responsibilities, are associated rights and responsibilities, are transferred for a defined period to the transferred for a defined period to the spectrum lessee.spectrum lessee.

De FactoDe Facto Transfer Leasing Transfer Leasing Designated Entities/Closed BiddingDesignated Entities/Closed Bidding

Licensees will have to pay unjust enrichment if Licensees will have to pay unjust enrichment if they lease licenses acquired with bidding they lease licenses acquired with bidding credits to entities ineligible for bidding credits credits to entities ineligible for bidding credits during the unjust enrichment period.during the unjust enrichment period.

Licensees cannot enter into Licensees cannot enter into De FactoDe Facto Transfer Transfer leases for closed bidding licenses with entities leases for closed bidding licenses with entities ineligible for closed bidding licenses until (1) ineligible for closed bidding licenses until (1) the five year holding period has elapsed or (2) the five year holding period has elapsed or (2) the license has been constructed and the the license has been constructed and the construction notification has been filed with the construction notification has been filed with the Commission.Commission.