The Federal Communications Commission (FCC) has established a new program, the Enhanced Competition Incentive Program (ECIP), designed to further help close the digital divide by fostering increased access to wireless spectrum for tribal nations, small carriers and other eligible entities. The program creates incentives for carriers to lease or assign some or all of the airwaves they hold under FCC-granted licenses. Eligible entities can then use this spectrum for advanced wireless services like 5G, enhancing competition and helping to close the digital divide. The FCC order establishing ECIP can be found here.
Here is how the program might work. Tribal areas may receive poor or nonexistent wireless services even though a carrier may have obtained licensed spectrum rights that cover the area. The license holder may not, however, have built out a network with that spectrum that serves tribal needs. Under this program, the tribal nation could contact the license holder to obtain those unused or underused spectrum rights and build out its own much more robust wireless network using that spectrum. The license holder would receive the benefits of the program as incentive to give up some of its spectrum rights and the tribe would have needed airwaves to provide wireless services. As an initial step, tribal nations should undertake a review to determine which carriers hold licensed spectrum over their area.
Through auctions or other means, the FCC enables entities to obtain wireless licenses that give them the exclusive right to use specified swaths of airwaves over discrete geographic areas. The FCC has long allowed license holders to sell parts of their spectrum rights, thus creating a secondary market for spectrum. There are several mechanisms to do this. License holders can assign a portion of their spectrum rights over a part of the geographic area for which they have been granted a license, called partitioning. For example, if the geographic license area is a county, the license holder can assign another entity the right to use the spectrum in the northern half of the county. A license holder can also assign to another entity some of the spectrum band. For example, a carrier may have a license to use 40 MHz of spectrum in a particular band and it could assign 20 MHz of that spectrum block. This is called disaggregation. Finally, a spectrum holder can lease its spectrum rights to other entities.
ECIP Program Framework
Although license holders can engage in these spectrum transactions, they are not required to do so, and for various reasons may be reluctant to lease or assign spectrum rights even if they may not be fully utilizing all of their licensed spectrum. As its name implies, the ECIP program creates incentives for license holders to lease or assign some or all of their spectrum rights to tribal nations or other eligible entities. License holders that enter into qualifying transactions will have their license term extended by five years and will be given an additional year to meet any applicable network build-out requirements.
The ECIP program has two prongs. One prong allows license holders to assign or lease spectrum to tribal nations or small common carriers (those with 1,500 or fewer employees) that are not affiliated with the license holder. The transaction can occur in rural, suburban or urban areas. To qualify for the incentives, the license holder must assign or lease at last half of the applicable spectrum rights. For example, if the license provides 40 MHz of spectrum, the license holder must assign or lease at least 20 MHz of that spectrum block. The assignment or lease must also entail at least 25% of the geographic area covered by the license, if the geographic licensed area is 30,000 square miles or less, or 10% of the licensed area is more than 30,000 square miles.
The second prong is limited to rural areas but is open to more eligible entities, including large or small common or non-common carriers (e.g., wireless internet service providers or WISPs), tribal nations, critical infrastructure entities (e.g., electric utilities or coops), and other entities operating private wireless systems. As with the first prong, to qualify, the assignment or lease must include at least half of the applicable licensed spectrum. There is also a minimum geographic area that the assigned or leased spectrum must cover. For the rural prong, this area must be 300 contiguous square miles if the licensed area is 30,000 square miles or less. The minimum area is increased under a specific formula as the size of licensed areas exceeds 30,000 square miles. These minimum requirements are designed to ensure that a license holder does not assign or lease a de minimis amount of spectrum in order to obtain the benefits of an extended license period or build-out obligation.
The entity that obtains spectrum through an assignment or lease under this program may be subject to network build-out requirements that were applicable to the original license, subject to a one-year extension of any applicable deadline. Moreover, an entity receiving an assignment or lease under the rural prong must provide wireless coverage over 100% of the area subject to the lease or assignment and generally agree to operate a network for three years. The program contains a number of other specific obligations that should be carefully assessed before engaging in a qualifying transaction.
Tribal nations seeking more robust mobile or fixed wireless service to enhance voice communications, access to emergency services or improved access to the internet should consider contacting carriers that hold licensed spectrum that covers the areas in need.
The program’s success in making more spectrum available to tribal nations or other entities remains to be seen. The numerous minimum obligations may dissuade otherwise eligible entities from entering into a qualifying transaction. The order directs the FCC’s wireless bureau to report on the program’s progress in five years.
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