The Federal Communications Commission (“FCC”) has adopted a Further Notice of Proposed Rulemaking (“Further Notice”) in which it proposes an Enhanced Competition Incentive Program (“ECIP”) meant to incentivize licensees to make spectrum available to small carriers and tribal nations.  Parties to a qualifying transaction would become eligible to participate in the program under one of two prongs: (1) providing spectrum to Tribal Nations or small carriers; or (2) committing to serve a specific portion of a rural area. Although certain transactions may qualify for both prongs, each applicant must select only one prong and cannot change this selection post application grant.

In order for a licensee to qualify for the ECIP benefit under the first prong, the FCC proposes that a licensee would enter into an agreement with an unaffiliated entity to assign or lease a portion of its licensed spectrum and (1) the agreement must designate at least 50% of the licensed spectrum and (2) at least 25% of the licensed market area. The second, rural-focused, prong must also (1) designate a minimum of 50% of licensed spectrum and (2) must include a minimum amount of “Qualifying Geography,” to cover at least 300 contiguous square miles of rural area for market sizes of Partial Economic Areas or smaller.  An assignee or lessee that is a party to rural-focused transaction would, for three years, be required either (1) to provide and continue to provide service to the public; or (2) to operate and continue to operate to address the licensee’s private, internal communications needs.

In order to incentivize licensees to make spectrum available, the FCC proposes that the ECIP would offer the following: a five (5) year extension of the license terms; a one (1) year extension of the interim and final construction deadlines for all parties in a partition or disaggregation transaction and for lessors in a qualifying spectrum lease arrangement; and will establish an alternate rural-focused construction requirement for certain transactions.  Any licensee in the program that fails to meet program or construction requirements would have the license automatically terminated and would not be eligible to participate in the ECIP in the future.

In addition to the proposals described above, the Further Notice also seeks comments on whether the FCC should allow full license assignments within the ECIP.

Comments on this important rural proceeding are due 60 days following publication of the Further Notice in the Federal Register, which has not occurred yet.  Reply comments are due 90 days following publication.  If you would like to submit comments or have any questions about the ECIP, please contact Dee Herman [email protected] or Hilary Rosenthal [email protected].