The purpose of this subpart is to implement the Enhanced Competition Incentive Program (ECIP), a program designed to incentivize Qualifying Transactions in the Wireless Radio Services to increase spectrum access for small carriers and Tribal Nations and to increase competition, and also facilitate the provision of advanced telecommunications services in rural areas by eligible entities.

The following definitions are applicable to the ECIP.

(a) Affiliate. A person holding an attributable interest in an applicant if such individual or entity:

(1) Directly or indirectly controls or has the power to control the applicant; or

(2) Is directly or indirectly controlled by the applicant; or

(3) Is directly or indirectly controlled by a third party or parties that also controls or has the power to control the applicant; or

(4) Has an “identity of interest” with the applicant.

(b) Qualifying transaction. A transaction between unaffiliated parties involving a partition and/or disaggregation, long-term leasing arrangement, or full assignment that meets the requirements of either the small carrier or Tribal Nation transaction prong pursuant to § 1.60003 or the rural-focused transaction prong pursuant to § 1.60004.

(c) Qualifying geography. Qualifying Geography is the minimum geography threshold required for the rural-focused transaction prong.

(d) Rural area. Rural area is any area except:

(1) A city, town, or incorporated area that has a population of more than 20,000 inhabitants; or

(2) An urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants.

(e) Small carrier. A small carrier is a carrier, defined as any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio or interstate or foreign radio transmission of energy in section 3 of the Communications Act of 1934 (47 U.S.C. 153), that:

(1) Has not more than 1,500 employees (as determined under 13 CFR 121.106); and

(2) Offers services using the facilities of the carrier.

(f) Transaction geography. Transaction Geography is the total geography included in a Qualifying Transaction.

(g) Tribal nation. A Tribal Nation is any federally-recognized American Indian Tribe and Alaska Native Village, the consortia of federally recognized Tribes and/or Native Villages, and other entities controlled and majority-owned by such Tribes or consortia.

Applicants seeking to participate in the ECIP must submit an application on FCC Form 603 or 608, as applicable, to the Wireless Telecommunications Bureau for review and approval that details a Qualifying Transaction through a partition and/or disaggregation pursuant to § 1.950, a full assignment pursuant to § 1.948, a long-term spectrum manager lease arrangement pursuant to § 1.9020, or a long-term de facto transfer lease arrangement pursuant to § 1.9030, and that:

(a) Designates that the Qualifying Transaction identified in the application seeks consideration under the ECIP;

(b) Selects the prong applicable to its Qualifying Transaction, either § 1.60003 or § 1.60004, but not both, even if a party to the transaction is eligible under both prongs, and demonstrates that the applicants meet each requirement under § 1.60003 or § 1.60004;

(c) Demonstrates that the applicants to the Qualifying Transaction are unaffiliated by providing a list of all affiliated entities for each party to the transaction through the filing of a new FCC Form 602, or the filing of an updated FCC Form 602 if the ownership information is not current;

(d) Includes a certification that the applicants to the Qualifying Transaction are not barred from the ECIP pursuant to § 1.60007;

(e) Includes a certification that the license(s) included in the application have not previously received benefits under the ECIP pursuant to § 1.60005;

(f) Includes a certification that the applicants entered into the Qualifying Transaction in good faith and that the licensee/lessor reasonably believes the assignee/lessee has the resources and a bona fide intent to meet the program's obligations;

(g) Includes a certification that the assignor or lessor either did not confer any benefit (monetary or otherwise) to the assignee or lessee as consideration for entering into the proposed ECIP transaction or, if benefits were conferred to the assignee or lessee, the application must include a narrative with a detailed description of any benefits so conferred by the assignor or lessor to the assignee or lessee, respectively; and

(h) Includes a certification that any lease arrangement entered into for purposes of ECIP participation is for a minimum term of five (5) years, whether a long-term de facto transfer lease arrangement or a long-term spectrum manager lease arrangement.

(a) Eligibility. The following parties are eligible to participate through a Qualifying Transaction under the small carrier or Tribal Nation transaction prong of the ECIP: an assignor that is a covered geographic licensee as defined under § 1.907; a lessor in an included service as set forth in § 1.9005 that is also a covered geographic licensee as defined under § 1.907; and an unaffiliated assignee or unaffiliated lessee that is a small carrier or a Tribal Nation as defined in this subpart, except that a transaction shall not be eligible for participation in the ECIP under this prong if it includes either:

(1) A license(s) with existing shared construction obligations pursuant to § 1.950(g);

(2) An application to participate in ECIP that includes an election from the parties to share construction obligations pursuant to § 1.950(g);

(3) A light-touch leasing spectrum manager lease arrangement(s) of 3.5 GHz Priority Access Licenses in the Citizens Band Radio Service; or

(4) An application to participate in ECIP that includes a barred party pursuant to § 1.60007.

(b) Qualification requirements. An applicant in a Qualifying Transaction under the small carrier or Tribal Nation transaction prong must demonstrate that:

(1) The ECIP transaction involving a disaggregation, partition/disaggregation in combination, full license assignment, or a lease, includes a minimum of 50% of the licensed spectrum, and meets the minimum spectrum threshold at every point in the Transaction Geography (where the percentage is calculated at any point as the amount of spectrum being assigned/leased (in megahertz)/total spectrum held under the license (in megahertz);

(2) The ECIP transaction involving a partition, partition/disaggregation in combination, full license assignment, or a lease, includes a minimum Transaction Geography of 25% of the total licensed area for licenses with a licensed area that contains 30,000 square miles or less, or a minimum Transaction Geography of 10% of the total licensed area for licenses with a licensed area 30,001 square miles or larger;

(3) If a lease arrangement, the minimum term of a long-term spectrum manager lease or de facto transfer lease is at least five (5) years; and

(4) The ECIP transaction was entered into in good faith with a bona fide intent by all parties to meet the program's obligations.

(c) Qualifying Transaction limitations. Multiple licenses may be included in a Qualifying Transaction between unaffiliated parties under this prong, however, spectrum and geography cannot be aggregated across multiple licenses to meet the respective minimum thresholds; each license in a Qualifying Transaction shall be considered separately and must independently meet the respective minimum spectrum and geography thresholds in paragraph (b) of this section. Each license included in a Qualifying Transaction under this prong shall either be the subject of an assignment (full, partition and/or disaggregation) or a lease arrangement, but not both. A party to a Qualifying Transaction under this prong is not permitted to assign a part of a license and lease a different part of the same license to meet the respective minimum spectrum and geographic thresholds.

(a) Eligibility. The following parties are eligible to participate through a Qualifying Transaction under the rural-focused transaction prong of the ECIP: an assignor that is a covered geographic licensee as defined by § 1.907; a lessor in an included service as set forth in § 1.9005 that is also a covered geographic licensee as defined by § 1.907; and an unaffiliated assignee or lessee that commits to meeting the requirements of the rural-focused transaction prong, except that a transaction shall not be eligible for participation in the ECIP under this prong if it includes either:

(1) A license(s) with existing shared construction obligations pursuant to § 1.950(g);

(2) An application to participate in ECIP that includes an election from the parties to share construction obligations pursuant to § 1.950(g);

(3) A light-touch leasing spectrum manager lease arrangement(s) of 3.5 GHz Priority Access Licenses in the Citizens Band Radio Service; or

(4) An application to participate in ECIP that includes a barred party pursuant to § 1.60007.

(b) Qualification requirements. An applicant in a Qualifying Transaction under the rural-focused transaction prong must demonstrate that:

(1) The ECIP transaction involving a disaggregation, partition/disaggregation in combination, or a lease, includes a minimum of 50% of the licensed spectrum, and meets the minimum spectrum threshold at every point in the Transaction Geography (where the percentage is calculated at any point as the amount of spectrum being assigned/leased (in megahertz)/total spectrum held under the license (in megahertz));

(2) The minimum Qualifying Geography threshold of exclusively rural area is included in the application based on the following scaled categories:

(i) 300 contiguous square miles for contributing licenses with licensed area containing up to 30,000 square miles;

(ii) 900 contiguous square miles for contributing licenses with licensed area containing between 30,001-90,000 square miles;

(iii) 5,000 contiguous square miles for contributing licenses with licensed area containing between 90,001-500,000 square miles; or

(iv) 15,000 contiguous square miles for contributing licenses with licensed area containing 500,001 square miles or more;

(3) If a lease arrangement, the minimum term of a long-term spectrum manager lease or de facto transfer lease is at least five (5) years; and

(4) The ECIP transaction was entered into in good faith with a bona fide intent by all parties to meet the program's obligations.

(c) Multiple contributing licenses. Qualifying Transactions between unaffiliated parties under the rural-focused transaction prong must specify at least one area of Qualifying Geography, and one or more licenses may contribute, via any combination of full assignment, partitioning and/or disaggregation, and/or lease(s), provided the Qualifying Geography intersects each contributing license included in the underlying application. Where multiple licenses with different size licensed areas are included in the Qualifying Transaction and each contributes to the Qualifying Geography, the Qualifying Geography must consist of the minimum geographic threshold applicable to the contributing license with the greatest square mileage in its licensed area.

(a) Program benefits. The following benefits for license(s) included in an ECIP Qualifying Transaction filed pursuant to § 1.60002, shall be conferred upon consummation of a Commission approved assignment application, grant of a de facto transfer lease application, or acceptance of a spectrum manager lease application, as specified:

(1) License term extension. All parties to a partition and/or disaggregation Qualifying Transaction; the lessor entering into a spectrum lease arrangement Qualifying Transaction; and the assignee in a full license assignment Qualifying Transaction, shall receive a five-year license term extension on the license(s) subject to the application.

(2) Construction extension. All parties to a partition and/or disaggregation Qualifying Transaction; the lessor entering into a spectrum lease arrangement Qualifying Transaction; and the assignee in a full license assignment Qualifying Transaction, shall receive a one-year construction extension of both the interim and final performance requirement deadline, where applicable, on the license(s) subject to the application. Where the Commission has previously extended a performance requirement deadline on the license(s) and that deadline has not passed, the one year extension conferred through ECIP is in addition to the prior extension, provided the extension that was previously granted, whether by rule or through waiver, is transferrable, and the assignee separately justifies such relief if required.

(3) Substitution of alternative construction requirement. The assignee in a qualifying partition, combination partition disaggregation transaction, or full license assignment filed under the rural focused-transaction prong in § 1.60004, shall be subject to the alternative construction requirement set forth in § 1.60006 in lieu of any applicable service-based performance requirement for the license(s) resulting from an ECIP transaction. Where the Commission has previously modified the assignor's substantive service-based performance requirement through conditions granted by waiver and such requirements have not been met, the assignee will receive the substituted alternative construction requirement benefit if the assignee separately requests, and is granted, a waiver.

(b) Limitation on duplicative benefits. (1) A license included in a Commission approved Qualifying Transaction in the ECIP shall be eligible for program benefits a single time per license for the license term and all subsequent renewal terms.

(2) A license, including a license resulting from a partition and/or disaggregation, previously included in a Qualifying Transaction approved by the Commission in the ECIP, shall be ineligible to receive benefits in any subsequent ECIP transaction, regardless of whether the current licensee was the beneficiary in the original or a subsequent Qualifying Transaction.

(a) Compliance with requirements under selected prong. An assignee or lessee must comply with the requirements of either the small carrier or Tribal Nation transaction prong in § 1.60003 or the rural-focused transaction prong in § 1.60004, as selected in its ECIP application, and is not permitted to change prongs after the consummation of the Commission approved assignment application, grant of a de facto transfer lease application, or acceptance of a spectrum manager lease application for a Qualifying Transaction in ECIP.

(b) Construction requirement for rural-focused transaction prong assignees. Assignees shall be subject to the following construction requirements for any resulting license(s) granted in a Commission approved Qualifying Transaction through partition, a combination partition/disaggregation, or full license assignment filed under the rural-focused transaction prong in ECIP, which supersedes any service-based requirement:

(1) The assignee must construct and operate, or provide signal coverage and offer service to, 100% of the Qualifying Geography identified in the Commission approved Qualifying Transaction.

(2) The construction period is the applicable construction deadline identified on the respective license(s), as extended by § 1.60005. If no such deadline remains for the license(s), the assignee must construct and operate, or provide signal coverage and offer service to, 100% of the Qualifying Geography no later than two (2) years after the consummation of the Commission approved application.

(3) Where the assignee is subject to both an interim and final performance benchmark, the performance requirements in this paragraph (b) shall replace the interim performance benchmark and the assignee shall not be subject to a final performance requirement. Where the assignee has only a remaining final performance requirement, the performance requirements in this paragraph (b) shall replace the final benchmark.

(4) All end user devices throughout the Qualifying Geography must be capable of operation on all spectrum bands associated with license(s) that contribute to the Qualifying Geography.

(5) Consistent with § 1.946(d), notification of completion of construction must be provided to the Commission through the filing of FCC Form 601, no later than 15 days after the applicable construction deadline or the expiration of the two (2) year period in paragraph (b)(2) of this section.

(c) Operational requirement for rural-focused transaction prong assignees. Assignees in a Commission approved rural-focused transaction pursuant to § 1.60004 are subject to the following operational requirements:

(1) Assignees must construct and operate in, or provide signal coverage and offer service to, 100% of the Qualifying Geography identified in the Commission approved Qualifying Transaction for a period of at least three (3) consecutive years;

(2) Operation or service must not fall below that used to meet the construction requirement in paragraph (b) of this section for the entire three (3) year period; and

(3) Assignees must construct and operate, or provide signal coverage and offer service, as required pursuant to paragraph (b) of this section, by the applicable construction deadline identified on the license(s), as extended by § 1.60005. Where no such deadline remains for the license(s), the three (3) year continuous operational requirement must commence no later than two (2) years after the consummation of the Commission approved application filed pursuant to § 1.60002.

(d) Construction and operational requirements for rural-focused transaction prong leases. Lessees must construct and operate, or provide signal coverage and offer service to, 100% of the Qualifying Geography identified in the underlying Qualifying Transaction that was the basis for Commission approval in the ECIP. Lessees must meet this requirement no later than two (2) years after grant of the underlying de facto transfer lease application or acceptance of the underlying spectrum manager lease application, and must maintain operation for a period of at least three (3) consecutive years during any period within the initial minimum required five (5) year lease term.

(e) Operational requirement notifications. Assignees and/or lessees of rural-focused transactions subject to § 1.60004 must file the following notifications to demonstrate compliance with the requirements in paragraphs (a) through (c) of this section:

(1) Initial operational requirement notification. Assignees and/or lessees must file an initial operational notification with the Commission within 30 days of the commencement of operations that:

(i) Provides the date operations began;

(ii) Certifies that the operational requirement of 100% coverage of the Qualifying Geography for that assigned license or lease has been satisfied; and

(iii) Provides technical data demonstrating such compliance.

(2) Final operational requirement notification. Assignees and/or lessees must file a final operational notification requirement with the Commission within 30 days of completion of the three consecutive year operational requirement that:

(i) Certifies that the operational requirement of 100% coverage of the Qualifying Geography for three (3) consecutive years has been satisfied;

(ii) Provides the date the three (3) year period was completed; and

(iii) Provides technical data demonstrating the coverage provided during the three (3) year period.

(f) Holding period. Assignees and/or lessees participating in ECIP under either the small carrier or Tribal Nation transaction prong set forth in § 1.60003, or the rural-focused transaction prong set forth in § 1.60004, must comply with the following obligations:

(1) Assignees. An assignee of a license(s) granted in a Qualifying Transaction involving a partition and/or disaggregation or full assignment is required to hold any such license(s) for a period of at least five (5) years, commencing upon the consummation date of the Commission approved application filed pursuant to § 1.60002. During this holding period, except as provided in paragraph (g) of this section, the license(s) received through ECIP is not permitted to be further partitioned, disaggregated, assigned, or leased.

(2) Lessees. Lease arrangements subject to the ECIP shall not be terminated by either lessor or lessee prior to the expiration of the five (5) year term required by § 1.60003(b)(3) or § 1.60004(b)(3), where applicable, and, except as provided in paragraph (g) of this section, may not be transferred or subleased to another party during the five (5) year term.

(3) Rural-focused transaction prong assignees. Any license(s) resulting from a Qualifying Transaction under the rural-focused transaction prong pursuant to § 1.60004 may not be subsequently assigned (partition and/or disaggregation or full assignment), leased or transferred until the following conditions have been met:

(i) The license(s) has been held by the assignee of the Qualifying Transaction for a period of at least five (5) years commencing on the date of consummation of the Commission approved application filed pursuant to § 1.60002; and

(ii) The construction and operational requirements pursuant to paragraphs (a) through (d) of this section, where applicable, have been satisfied.

(g) Exceptions. The requirements in paragraphs (a) through (e) of this section do not apply to pro forma transfers pursuant to § 1.948(c)(1), and do not apply to any area of the Transaction Geography and/or Qualifying Geography, which is covered by a lease or sublease entered into for the purpose of enabling a Contraband Interdiction System (as defined in § 1.9003).

(a) Automatic termination. A license(s) resulting from a Qualifying Transaction in the ECIP shall be automatically terminated without specific Commission action or further notice to the licensee, superseding any service-based penalty, if the assignee fails to comply with any of the following:

(1) The five (5) year holding period pursuant to § 1.60006(f);

(2) The construction requirement pursuant to § 1.60006(b) or (d), or any remaining service-based performance requirement, where applicable; or

(3) The operational requirements pursuant to § 1.60006(c) or (d), where applicable.

(b) Bar from future program participation. A party participating in a Commission approved Qualifying Transaction in the ECIP shall be prohibited from future participation in the ECIP where it is found that it:

(1) Violated the five (5) year holding period requirements of § 1.60006(f), including premature termination of a lease or entering into a sublease in violation of § 1.60006(f)(2), if applicable;

(2) Failed to meet the construction requirement of § 1.60006(b) or (d), or any remaining service-based performance requirement, where applicable;

(3) Failed to meet the operational requirements of § 1.60006(c) or (d), where applicable; or

(4) Entered into a bad faith transaction in violation of § 1.60003(b)(4) or § 1.60004(b)(4).

(c) Effect of program bar. A bar from ECIP is applied as follows:

(1) A program bar shall commence upon the date the assignee or lessee receives notice from the Commission via electronic mail finding a violation pursuant to paragraph (b) of this section. A barred party shall be eligible to continue to receive benefits from Qualifying Transactions in ECIP that are unrelated to the Qualifying Transaction that resulted in the program bar, provided that those benefits were conferred prior to the commencement of the program bar, as a result of the Commission accepting a consummation of an approved assignment application, granting a de facto transfer lease application, or accepting a spectrum manager lease application, as applicable.

(2) A program bar shall also apply to affiliates of barred parties. Third-parties shall be considered affiliates of a barred party if they qualify as an affiliate under § 1.60001. A prospective ECIP participant will be considered a barred affiliate when either:

(i) The third-party was identified, or should have been identified, as an affiliate on the initial Commission approved application for the Qualifying Transaction resulting in the bar; or

(ii) The third-party identifies, or should have identified, a barred affiliate in a subsequent application to participate in the ECIP, regardless of whether they were affiliates at the time of the filing of the initial application for a Qualifying Transaction resulting in the bar.

(3) Transactions that include a barred party shall not be eligible for ECIP benefits, even if all other qualifications are satisfied.