80 FR 67337 - Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions; Channel Sharing by Full Power and Class A Stations Outside the Broadcast Television Spectrum Incentive Auction Context

FEDERAL COMMUNICATIONS COMMISSION

Federal Register Volume 80, Issue 211 (November 2, 2015)

In this document, the Commission refines the rules it adopted in the Incentive Auction Report and Order and the preceding Channel Sharing Report and Order to provide greater flexibility and certainty regarding channel sharing agreements (``CSAs''). Among other things, we modify our rules to allow broadcasters that relinquish rights in the incentive auction in order to channel share to enter into CSAs after the auction and, whether they enter into CSAs before or after the auction, to determine the length of their agreements.

[Federal Register Volume 80, Number 211 (Monday, November 2, 2015)]
[Rules and Regulations]
[Pages 67337-67344]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-27738]



[[Page 67337]]

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 73

[GN Docket No. 12-268; MB Docket No. 15-137; FCC 15-67]


Expanding the Economic and Innovation Opportunities of Spectrum 
Through Incentive Auctions; Channel Sharing by Full Power and Class A 
Stations Outside the Broadcast Television Spectrum Incentive Auction 
Context

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission refines the rules it adopted 
in the Incentive Auction Report and Order and the preceding Channel 
Sharing Report and Order to provide greater flexibility and certainty 
regarding channel sharing agreements (``CSAs''). Among other things, we 
modify our rules to allow broadcasters that relinquish rights in the 
incentive auction in order to channel share to enter into CSAs after 
the auction and, whether they enter into CSAs before or after the 
auction, to determine the length of their agreements.

DATES: Effective December 2, 2015, except for Sec. Sec.  1.2204(c)(4) 
and 73.3700(b)(1), which contain new or modified information collection 
requirements that require approval by OMB under the PRA and will become 
effective after the Commission publishes a notice in the Federal 
Register announcing such approval and the relevant effective date.

FOR FURTHER INFORMATION CONTACT: Kim Matthews, Media Bureau, Policy 
Division, 202-418-2154, or email at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's First 
Order on Reconsideration, FCC 15-67, adopted on June 11, 2015 and 
released on June 12, 2015. The full text of this document is available 
for public inspection and copying during regular business hours in the 
FCC Reference Center, Federal Communications Commission, 445 12th 
Street SW., Room CY-A257, Washington, DC 20554. The complete text may 
be purchased from the Commission's copy contractor, 445 12th Street 
SW., Room CY-B402, Washington, DC 20554. This document will also be 
available via ECFS at http://fjallfoss.fcc.gov/ecfs/. Documents will be 
available electronically in ASCII, Microsoft Word, and/or Adobe 
Acrobat. Alternative formats are available for people with disabilities 
(Braille, large print, electronic files, audio format) by sending an 
email to [email protected] or calling the Commission's Consumer and 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(TTY).

Paperwork Reduction Act of 1995 Analysis

    The First Order on Reconsideration contains new or modified 
information collection requirements subject to the Paperwork Reduction 
Act of 1995 (``PRA''), Public Law 104-13. It will be submitted to the 
Office of Management and Budget (``OMB'') for review under section 
3507(d) of the PRA. The Commission, as part of its continuing effort to 
reduce paperwork burdens, will invite the general public to comment on 
the information collection requirements contained in this First Order 
on Reconsideration as required by the PRA in a separate published 
Federal Register notice.
    In addition, the Commission notes that pursuant to the Small 
Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4), we previously sought specific comment on how the 
Commission might further reduce the information collection burden for 
small business concerns with fewer than 25 employees. We have assessed 
the effects of the policies adopted in this First Order on 
Reconsideration with regard to information collection burdens on small 
business concerns, and find that these policies will benefit many 
companies with fewer than 25 employees by providing them with options 
for voluntarily relinquishing broadcast spectrum usage rights and by 
streamlining the pre-auction application process. In addition, we have 
described impacts that might affect small businesses, which includes 
most businesses with fewer than 25 employees, in the Supplemental FRFA.

Synopsis of the First Order on Reconsideration

I. Introduction

    1. Broadcasters will have the unique financial opportunity in the 
broadcast television spectrum incentive auction to voluntarily return 
some or all of their licensed spectrum usage rights in exchange for 
incentive payments. One of broadcasters' bid options will be to 
relinquish rights in order to share a channel with another licensee. 
The Commission established rules governing channel sharing agreements 
(``CSAs'') in the Incentive Auction Report & Order, 79 FR 48442 (August 
15, 2014) (``IA R&O'') and the preceding Channel Sharing Report & 
Order, 77 FR 30423 (May 23, 2012) (``Channel Sharing R&O''). In this 
First Order on Reconsideration, we refine those rules to provide 
greater flexibility and certainty regarding CSAs. Among other things, 
we modify our rules to allow broadcasters that relinquish rights in the 
incentive auction in order to channel share to enter into CSAs after 
the auction and, whether they enter into CSAs before or after the 
auction, to determine the length of their agreements. In the companion 
Notice of Proposed Rulemaking (``NPRM''), 80 FR 40957, July 14, 2015, 
we tentatively conclude that we should authorize channel sharing by 
full power and Class A stations outside the incentive auction context, 
including ``second generation'' agreements in which one or both 
entities were parties to an auction-related CSA whose term has expired 
or that has otherwise been terminated. By providing greater flexibility 
and certainty regarding CSAs, our objective is to encourage voluntary 
participation by broadcasters in the incentive auction.

II. Background

    2. Congress authorized the Commission to conduct the incentive 
auction to help meet the Nation's growing spectrum needs. Section 
1452(a)(2) of the Spectrum Act provides for three bid options that will 
be available to eligible full power and Class A broadcast television 
licensees in the auction, including relinquishment of ``usage rights in 
order to share a television channel with another licensee'' (``channel 
sharing bid''). Section 1452(a)(4) provides that a licensee that 
voluntarily relinquishes usage rights in order to channel share and 
that possessed carriage rights on November 30, 2010 ``shall have, at 
its shared location, the carriage rights . . . that would apply to such 
station at such location if it were not sharing a channel.'' In the 
Channel Sharing R&O, the Commission established rules authorizing 
channel sharing in connection with the incentive auction.
    3. The Commission addressed a variety of further issues related to 
channel sharing in the IA R&O. The Commission concluded that applicants 
that participate in the auction in order to share a channel must 
provide information concerning their Channel Sharing Agreements 
(``CSAs'') prior to the auction, as part of their pre-auction 
applications, and must submit a copy of the executed CSA with their 
applications. With respect to licensing, the Commission determined 
that, following the auction, a licensee that

[[Page 67338]]

enters into a CSA as the result of a winning reverse auction bid will 
be issued a new license indicating the station's ``shared'' status and 
specifying the station's designated shared operating frequency. The 
Commission also decided that shared channels will be designated 
permanently as shared in the Table of Allotments, absent a future 
rulemaking proceeding to redesignate the channel for non-shared use.
    4. The Expanding Opportunities for Broadcasters Coalition 
(``EOBC'') filed a Petition for Reconsideration of our channel sharing 
decisions in the IA R&O, urging the Commission to ``(1) clarify that 
parties to broadcast CSAs are free to negotiate for common contractual 
rights; (2) permit broadcasters to enter into CSAs either before or 
after the incentive auction; (3) ensure that parties to CSAs have the 
flexibility to choose whether those agreements are permanent or for a 
fixed term; and (4) clarify that the Commission will never force a 
broadcaster to accept a channel sharing partner.''
    5. The National Cable & Telecommunications Association (``NCTA'') 
filed an opposition arguing that extending carriage rights to 
broadcasters that enter into post-auction CSAs would contravene the 
Spectrum Act. NCTA argues that this would cause uncertainty in the 
post-auction broadcaster transition process; confer greater cable 
carriage rights than Congress intended; lead to customer confusion; and 
might leave MVPDs unreimbursed. CTIA supports all of EOBC's requests, 
as do Fox, Ion Media, Tribune, and Univision.

III. First Order on Reconsideration

    6. We grant the EOBC Petition, with the exceptions noted below. In 
addition to addressing each of EOBC's above-stated requests for 
reconsideration below, we modify and clarify the pre- and post-auction 
CSA filing requirements that apply before and after the auction and 
address the scope of CSA review by Commission staff.

A. Negotiating for Common Contractual Rights

    7. In the IA R&O, we noted that channel sharing agreements for 
contingent rights must not violate the reversionary interest rule, 
which precludes a seller from retaining an interest in the license it 
sells, and prohibits a licensee from granting a third party an 
automatic reversionary interest, such as a security interest, in its 
license.
    8. EOBC asks the Commission to clarify that the act of entering 
into a CSA, in and of itself, does not trigger the reversionary 
interest rule and that parties to CSAs may bargain for common 
contractual rights consistent with existing Commission rules and 
policies. We received no opposition to EOBC's request. In its 
``Opposition and Reply,'' CTIA joins and supports all of EOBC's 
reconsideration requests regarding channel sharing. Fox, Ion Media, 
Tribune, and Univision, who filed a reply comment in response to the 
Incentive Auction Comment PN, agree with this position.
    9. We grant EOBC's request. We clarify that parties to a CSA may 
grant each other options, puts, calls, rights of first refusal, and 
other common contingent interests, subject to all applicable Commission 
rules and policies, including the media ownership rules, without 
committing a per se violation of the reversionary interest rule. The 
reversionary interest rule does not necessarily apply to a CSA, because 
a CSA does not involve the transfer of a license from one sharing 
partner to another. In addition, CSA provisions for contingent 
interests in the licenses involved in a CSA would not violate the 
reversionary interest rule absent grant of a prohibited security 
interest. We recognize that contracting for these common contingent 
rights will enable sharing parties to eliminate some of the uncertainty 
regarding the identity of their sharing partners in the event that one 
sharing party decides to sell its license. Moreover, we share EOBC's 
concern that, without the ability to bargain for these rights, 
broadcasters may not avail themselves of this bid option in the 
auction.

B. Flexibility To Enter Into CSAs After the Incentive Auction

    10. Under the rules adopted in the IA R&O, a reverse auction bidder 
interested in channel sharing must submit an executed copy of the CSA 
with its pre-auction application, as well as certifications under 
penalty of perjury that it can meet its community of license 
requirements from the proposed sharer's site (or that it has identified 
a new community of license that meets the same, or a higher, allotment 
priority as its current community; or the next highest priority if no 
community meets the same or higher priority); that the CSA is 
consistent with all relevant Commission rules and policies; and that 
the applicant accepts any risk that the implementation of the CSA may 
not be feasible for any reason.
    11. EOBC requests that the Commission modify its rules to allow a 
winning license relinquishment bidder to execute a CSA after bidding in 
the auction is complete. Fox, Ion Media, Tribune, and Univision, who 
filed a reply comment in response to the Incentive Auction Comment PN, 
agree with this position. EOBC argues that the carriage rights of 
parties to such post-auction CSAs would be protected under the Spectrum 
Act. CTIA agrees. NCTA, however, asserts that grant of EOBC's request 
would (1) introduce additional uncertainty into the post-auction 
transition process; (2) confer greater cable carriage rights than 
Congress intended; (3) lead to customer confusion; and (4) risk leaving 
cable operators unreimbursed for mandatory carriage of sharee stations.
    12. We grant EOBC's request, subject to the conditions set forth 
herein. Specifically, we modify our rules to allow winning bidders that 
relinquish their spectrum usage rights to enter into CSAs after the 
completion of the incentive auction, provided that they (1) indicate in 
their pre-auction applications that they have a present intent to find 
a channel sharing partner after the auction, and (2) execute and 
implement their CSAs by the date on which they would otherwise be 
required to relinquish their licenses. Parties to post-auction CSAs 
will be entitled to the same carriage rights as parties to pre-auction 
CSAs. We emphasize, however, that the exception to the rule prohibiting 
certain communications before and during the incentive auction will 
apply only to parties to pre-auction CSAs.
    13. Subject to these conditions, we agree with EOBC that pre- and 
post-auction CSAs are the same for purposes of the Spectrum Act. We 
also agree with EOBC that providing this flexibility will encourage 
broadcasters to consider the channel sharing bid option by enabling 
them to participate in the auction even if they do not find a channel 
sharing partner before the auction begins. Indeed, as EOBC notes, 
parties may be able to negotiate CSAs more readily after the auction is 
complete, when fewer variables remain unknown. This action also may 
help to preserve independent voices by enabling licensees to continue 
broadcasting after they voluntarily relinquish rights in the incentive 
auction. As stated above, broadcasters that do not submit executed CSAs 
with their pre-auction applications will be ineligible for the 
exception to the prohibited communications rule. Accordingly, there 
will be no need for the staff to review a CSA prior to the auction to 
verify that the applicant qualifies for the exception.
    14. In order to enter into a post-auction CSA, we will require that 
a license relinquishment bidder indicate

[[Page 67339]]

in its pre-auction application its present intent to find a channel 
sharing partner after the auction. As we noted in the Channel Sharing 
R&O, ``the Spectrum Act does not set a date restriction on the 
execution of channel sharing arrangements.'' It guarantees carriage 
rights, however, only for ``a licensee that voluntarily relinquishes 
rights in order to channel share.'' To fall within the scope of this 
guarantee, we conclude that a licensee availing itself of the 
flexibility we provide here must express a present intent to channel 
share in its pre-auction application. We recognize that a successful 
bidder's interest in a post-auction CSA may depend on the outcome of 
the auction, and that its ability to execute a CSA with a sharing 
partner will not be entirely within its control. A successful bidder's 
expression of present intent, therefore, will not bind it to seek out a 
channel sharing partner or enter into a post-auction CSA.
    15. In addition, post-auction CSAs must be executed and implemented 
(i.e., operations commenced on the shared channel) by the date on which 
the channel sharee otherwise would be required to relinquish its 
license. Pursuant to the IA R&O, a winning license relinquishment 
bidder must cease operations within three months after receiving its 
share of auction proceeds. We conclude that a post-auction CSA must be 
executed and implemented by the license relinquishment deadline. In 
this regard, we disagree with EOBC that licensees should have up to 
twelve months after that relinquishment deadline to enter into a CSA. 
EOBC's reliance on section 312(g) of the Communications Act, which 
provides that a broadcast license automatically expires if the station 
fails to broadcast for a consecutive 12-month period, is misplaced: A 
broadcaster holds a license during the statutory 12-month period, 
whereas a winning license relinquishment bidder will no longer hold a 
license after the license relinquishment deadline.
    16. This requirement addresses NCTA's concern that allowing auction 
participants to enter into post-auction CSAs would introduce additional 
uncertainty into the post-auction transition process. As NCTA notes, 
``[u]nder the current rules, sharing stations must notify the 
Commission of their intent to share prior to the auction and must file 
their application for license for the shared channel within three 
months after receiving auction proceeds.'' Under our ruling here, 
sharee stations likewise will have to execute and implement their post-
auction CSAs by the time they have to relinquish their licenses, and 
thus they will be on the same notification timeline as those stations 
that entered into pre-auction CSAs. We believe that this timeframe also 
will provide adequate time for parties to post-auction CSAs to comply 
with the consumer and MVPD notice requirements laid out in the IA R&O.
    17. Finally, we find that the reimbursement process set out in the 
IA R&O, coupled with the requirements we adopt herein, will enable 
MVPDs to obtain reimbursement for their reasonable costs associated 
with mandatory carriage of stations that enter into post-auction CSAs. 
NCTA argues that, if CSAs are not ``in sync'' with the deadline for 
submitting reimbursement estimates, MVPDs might not have notice of a 
carriage obligation by the deadline, impacting their ability to recover 
reasonable expenses related to carrying the sharee stations from their 
new locations. We direct the Media Bureau, in the Channel Reassignment 
PN to be released following the completion of the incentive auction, to 
identify those winning bidders that are eligible to channel share, 
either because they submitted an executed pre-auction CSA or expressed 
a present intent to enter into a post-auction CSA. Accordingly, the 
Channel Reassignment PN will provide MVPDs with notice of the identity 
of successful bidders who have executed pre-auction CSAs, as well as 
those who may enter post-auction CSAs, prior to the deadline for 
submitting estimated reimbursement costs, enabling MVPDs to account for 
these potential costs in their initial cost estimates. In addition, if 
necessary, MVPDs may update their estimates after the initial three-
month deadline if necessary in order to account for post-auction CSAs.

C. Term-Limited Channel Sharing Agreements

    18. Under the rules adopted in the IA R&O, CSAs are permanent in 
nature: CSAs may be amended, and rights under a CSA may be assigned or 
transferred subject to Commission approval, but ``shared channels 
permanently will be designated as shared in the Table of Allotments, 
absent a future rulemaking proceeding to redesignate the channel for 
non-shared use,'' and ``CSAs may not contain any provision that would 
seek to dissolve or modify the shared nature of the channel[.]'' EOBC 
argues that we should ``permit broadcasters to choose the length of 
their agreements.'' ``Once an agreement is terminated,'' suggests EOBC, 
``the host or sharer station could either find another channel sharing 
partner or notify the agency that it is no longer a shared station and 
that its license should be modified accordingly. The host station would 
then have the right to utilize the full capacity of its 6 MHz channel. 
The sharee station(s), meanwhile, could either relinquish their 
licenses or find a new partner, subject to the one-year time limit to 
resume transmissions under section 312(g) of the Communications Act.'' 
CTIA supports this approach, as do Fox, Ion Media, Tribune, and 
Univision. EOBC further argues that we should authorize ``second 
generation'' CSAs subject to the same rights and restrictions as CSAs 
entered into in connection with the incentive auction.
    19. We modify our rules to provide flexibility for broadcasters to 
determine the length of their CSAs. Specifically, we will permit 
broadcasters to choose the length of their channel sharing agreements. 
We agree that allowing term-limited CSAs will encourage channel sharing 
bids in the incentive auction by allowing parties to end the channel 
sharing relationship if they choose while still having the opportunity 
to continue operating. We also agree with EOBC that providing such 
flexibility is appropriate to meet broadcasters' individualized 
programming and economic needs. Consistent with our decision, as 
discussed below, we will not permanently designate channels as 
``shared'' in the Table of Allotments. Instead, a channel's shared 
status will be indicated on a sharing station's license.
    20. However, our decision to allow term-limited CSAs raises the 
question of whether to authorize CSAs by full power and Class A 
stations outside the incentive auction context. In the companion Notice 
of Proposed Rulemaking, we tentatively conclude that we should allow 
future CSAs outside the incentive auction context, and we invite 
comment on issues attendant to that proposal.

D. Termination of a Sharing Station's Spectrum Usage Rights

    21. Under the rules adopted in the IA R&O, if a channel sharing 
station's license is terminated due to voluntary relinquishment, 
revocation, failure to renew, or any other circumstance, the remaining 
channel sharing station or stations will continue to have rights to 
their portion(s) of the shared channel, and the rights to the 
terminated portion of the shared channel will revert to the Commission 
for reassignment. The Commission further stated that shared channels 
``permanently will be designated as shared in the Table of

[[Page 67340]]

Allotments, absent a future rulemaking proceeding to redesignate the 
channel for non-shared use.''
    22. EOBC argues that ``[e]ven the possibility that the FCC could 
appoint a successor sharing partner will be troublesome to most 
broadcasters considering the channel sharing option.'' Instead, EOBC 
argues that channel sharing parties should have ``the option to reclaim 
the spectrum rights (but not the licenses) previously held by the 
departing party . . . Thus, if a sharee station relinquishes its 
spectrum, the host station could either find a new channel sharing 
partner . . . or resume use of the full six megahertz channel. If the 
host station relinquishes its spectrum, meanwhile, the sharee 
station(s) would have the option to assume the previously shared 
channel, subject to the technical parameters of the existing 
allotment.'' CTIA agrees that, if a sharing station relinquishes its 
license, then the right to use the relinquished portion of the shared 
spectrum should return to the remaining sharing partner(s). Similarly, 
Fox, Ion Media, Tribute, and Univision agree that ``upon expiration or 
termination of a CSA sharing stations should have the flexibility 
either to utilize the full capacity of their shared channel or to enter 
into a channel sharing arrangement with a new partner (or partners).'' 
No parties opposed this request.
    23. We grant EOBC's request, and modify our rules to allow parties 
to develop CSA terms that address what happens in the event that a 
sharing party's license is terminated for any reason, rather than 
providing that the terminated spectrum usage rights revert to the 
Commission for reassignment. Our decisions here do not affect the right 
of a channel sharing party to assign or transfer its license consistent 
with the IA R&O.
    24. We agree with EOBC that, as business partners, channel sharers 
should ``have the ability to choose partners that satisfy their own 
criteria.'' The Commission will not select a sharing partner. To 
accommodate this flexibility, we will not permanently designate 
channels as ``shared'' in the Table of Allotments, and a channel's 
shared status will be indicated on the station license. In the event 
that a sharing partner relinquishes its license, its spectrum usage 
rights (but not its license) may revert to the remaining sharing 
partners if the partners so agree. Where only one sharing partner 
remains, it may apply to change its license to non-shared status using 
FCC Form 2100 Schedule B (formerly FCC Form 302) or F (formerly FCC 
Form 302-CA). If a full power station that is sharing with a Class A 
station relinquishes its license, then the Class A station would 
continue to operate under the rules governing Class A stations.

E. Commission Review of CSAs and Licensing of Channel Sharees

    25. In order to provide additional certainty to broadcasters 
interested in the channel sharing bid option, and in light of our 
decision to allow post-auction CSAs, we modify and clarify our 
procedures for submission and review of both pre-auction and post-
auction CSAs. At the outset, we emphasize that we will not question 
parties' business judgment in drafting CSAs.
    26. If a licensee submits an executed CSA before the auction along 
with its auction application, we will accept for purposes of 
determining eligibility to participate the applicant's certification 
that the CSA complies with our channel sharing operating rules. We will 
not review the CSA itself at the pre-auction stage for compliance with 
our operating rules. We will review the CSA at the pre-auction stage 
solely to confirm that the parties qualify for the channel sharing 
exception to the rule prohibiting certain communication adopted in the 
IA R&O.
    27. Post-auction, we will review CSAs submitted before or after the 
auction by successful bidders to determine whether the CSAs meet the 
requirements the Commission has adopted to ensure compliance with our 
CSA operating rules and policies. Although in the IA R&O we reserved 
the right to review the CSA and require modification of any CSAs that 
do not comply with our CSA operating rules and policies, we clarify 
that such review will occur after the auction. To allow time for such 
review, we modify our rules to require that, at least 60 days prior to 
the date by which it must implement the CSA, the channel sharee file a 
minor change application for a construction permit specifying the same 
technical facilities as the sharer station, and include a copy of the 
CSA with its application. This requirement will be the same regardless 
of whether the parties execute their CSA before or after the auction. 
Following grant of the construction permit and initiation of shared 
operations, both the sharee and sharer must file a license application. 
We emphasize again that the Commission does not involve itself in 
private contractual agreements, and we do not intend during our review 
of the CSA to substitute our judgment for that of the parties with 
respect to the terms of the agreement. Thus, we will limit our post-
auction review to confirming that the CSA contains the required 
provisions and that any terms beyond those related to sharing of 
bitstream and related technical facilities comport with our general 
rules and policies regarding licensee agreements. We also reiterate 
that any application for a construction permit or modified license 
filed in accordance with the requirements established here or in the IA 
R&O will not trigger the filing of competing applications.

F. Exception to Prohibited Communications for Parties to CSAs

    28. Under the rules adopted in the IA R&O, all parties to a CSA 
submitted with a reverse auction application may communicate with each 
other about their bids and bidding strategies. The Commission adopted 
this exception to the rule generally prohibiting such communications in 
order to encourage channel sharing relationships, allowing potential 
channel sharers to fully engage as various options are presented during 
the auction process. In light of the risk of agreements to reduce 
competition in response to auction conditions, however, the exception 
is limited to CSAs executed prior to the reverse auction application 
filing deadline and submitted with the reverse auction application. We 
note that a CSA may have more than two parties (if, for instance, three 
stations propose to share the same channel), and all parties to a pre-
auction CSA may communicate during the auction. Commenters have 
proposed that we also allow stations to enter into multiple contingent 
CSAs. We will address this issue in a forthcoming decision.

IV. Procedural Matters

A. Supplemental Final Regulatory Flexibility Act Analysis

    29. As required by the Regulatory Flexibility Act of 1980, as 
amended (``RFA''), an Initial Regulatory Flexibility Analysis 
(``IRFA'') was incorporated in the Notice of Proposed Rule Making 
(``Notice''). The Commission sought written public comment on the 
proposals in the Notice, including comment on the IRFA. The Commission 
subsequently incorporated a Final Regulatory Flexibility Analysis 
(``FRFA'') in the Report and Order. This Supplemental FRFA conforms to 
the RFA and incorporates by reference the FRFA in the IA R&O. It 
reflects changes to the Commission's rules arising from the First Order 
on Reconsideration prepared in response to the Petition for 
Reconsideration filed by the Expanding Opportunities for Broadcasters 
Coalition (``EOBC'').

[[Page 67341]]

    30. This First Order on Reconsideration affirms the Commission's 
commitment to making the channel sharing reverse auction bid option 
attractive to television broadcasters. In the Channel Sharing R&O, the 
Commission established rules authorizing channel sharing in connection 
with the incentive auction. The Commission addressed a variety of 
further issues related to channel sharing in the IA R&O in order to 
complete the framework for incentive auction-related channel sharing. 
In this First Order on Reconsideration, the Commission generally grants 
the EOBC Petition, finding that modifying its original determination 
will increase broadcasters' flexibility to use the channel sharing bid 
option, will make the option more attractive and will provide an 
improved ability of the Commission to monitor compliance of CSAs with 
our rules.
    31. Specifically, in the First Order on Reconsideration, the 
Commission grants in part the EOBC petition for reconsideration by: 
Clarifying that the reversionary interest rule does not apply to CSAs; 
allowing parties the flexibility to enter into term-limited CSAs and to 
execute a CSAs post-auction; and modifying the rules to allow the 
spectrum usage rights of a sharing party whose license is terminated to 
revert to the remaining sharing parties rather than having the rights 
revert to the Commission for reassignment. The Order also clarifies 
that at the pre- auction stage Commission staff will only review CSAs 
to determine whether the bidder qualifies for the anti-collusion rule 
exception. To allow review for compliance with Commission rules, the 
Order requires that a channel sharee file a construction permit 
application, including a copy of the CSA, after the auction. Most 
notably, the flexibility granted herein will make it easier for 
entities such as small businesses and non-commercial education stations 
to avail themselves of the opportunity to channel share as part of the 
incentive auction.
    32. No commenters directly responded to the IRFA in the Notice. 
Because a number of commenters raised concerns about the impact on 
small businesses of various auction design issues, the FRFA in the IA 
R&O addressed those concerns. The EOBC Petition addressed herein, and 
associated pleadings, did not raise any concerns with the FRFA.
    33. Pursuant to the Small Business Jobs Act of 2010, the Commission 
is required to respond to any comments filed by the Chief Counsel for 
Advocacy of the Small Business Administration (SBA), and to provide a 
detailed statement of any change made to the proposed rules as a result 
of those comments. The Chief Counsel did not file any comments in 
response to the rules adopted in this proceeding.
    34. The RFA directs the Commission to provide a description of and, 
where feasible, an estimate of the number of small entities that will 
be affected by the adopted rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' small organization,'' and ``small government 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A small business concern is one which: (1) Is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the SBA.
    35. As noted, we incorporated a FRFA into the IA R&O. In that 
analysis, the Commission described in detail the various small business 
entities that may be affected by the final rules, including television 
broadcast entities. This First Order on Reconsideration amends the 
final rules adopted in the IA R&O affecting television broadcasting. 
This Supplemental FRFA incorporates by reference the description and 
estimate of the number of television broadcasting small entities from 
the IRFA in the Notice of Proposed Rulemaking accompanying this First 
Order on Reconsideration.
    36. In section D of the FRFA incorporated into the IA R&O, the 
Commission described in detail the projected recording, recordkeeping, 
reporting and other compliance requirements for small entities arising 
from the rules adopted in the IA R&O. This Supplemental FRFA 
incorporates by reference the requirements described in section D of 
the FRFA. In this First Order on Reconsideration, however, the 
Commission adds and modifies rules adopted in the IA R&O. It adds the 
requirement that in order to take advantage of the flexibility adopted 
in this First Order on Reconsideration to enter into a channel sharing 
agreement post-auction, a license relinquishment bidder must indicate 
its intent to enter a post auction channel sharing agreement on its 
pre-auction application. The First Order on Reconsideration also 
requires channel sharee stations to file an application for 
construction permit, including a copy of the executed channel sharing 
agreement. Commercial stations must pay the fee associated with this 
filing. (Non-commercial entities are fee exempt.) In addition, it 
require CSAs to include a provision regarding the reversion of spectrum 
usage rights to remaining channel sharing partners in the event that 
one party has its license terminated. Finally, to take advantage of the 
new rule allowing the last remaining licensee to a channel sharing 
agreement to have its license revert to non-shared status, that last 
remaining licensee must file a license application requesting this 
reversion.
    37. The RFA requires an agency to describe any significant 
alternatives that it has considered in developing its approach, which 
may include the following four alternatives (among others): ``(1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance and reporting requirements under the rule for such small 
entities; (3) the use of performance rather than design standards; and 
(4) an exemption from coverage of the rule, or any part thereof, for 
such small entities.''
    38. The reporting, recordkeeping, and other compliance requirements 
resulting from the First Order on Reconsideration will apply to all 
entities in the same manner. The Commission believes that applying the 
same rules equally to all entities in this context promotes fairness. 
The Commission does not believe that the costs and/or administrative 
burdens associated with the rules, including the payment of a 
construction permit filing fee by commercial broadcasters who are 
reverse auction winners and who will channel share, will unduly burden 
small entities. (Non-commercial broadcasters are exempt from such 
filing fees.) The construction permit itself will contain the same 
information included in the construction permit and license information 
of the channel sharer station and therefore can be copied without 
additional engineering work. The submission of the executed channel 
sharing agreement does not add cost as the rules already require 
execution of a channel sharing agreement between sharing parties.
    39. While these new rules require additional filings for those 
reverse auction winning bidders that channel share, they give bidders, 
including broadcast television entities meeting the definition of small 
businesses, the increased flexibility to enter into post auction CSAs, 
to limit the term of their CSAs rather than make them permanent, and to 
request reversion of spectrum usage rights in the event of the 
termination of the license of a

[[Page 67342]]

broadcaster with whom they share spectrum. Lastly, the requirement that 
a channel sharee file a construction permit including a copy of the 
channel sharing agreement will streamline the pre-auction application 
process.
Federal Rules That Might Duplicate, Overlap, or Conflict With the Rules
    40. None.
Report to Congress
    41. The Commission will send a copy of this First Order on 
Reconsideration in a report to be sent to Congress and the Government 
Accountability Office pursuant to the Congressional Review Act, see 5 
U.S.C. 801(a)(1)(A).
Report to Small Business Administration
    42. The Commission will send a copy of this First Order on 
Reconsideration, including this Supplemental FRFA, to the Chief Counsel 
for Advocacy of the Small Business Administration.

B. Final Paperwork Reduction Act Analysis

    43. This document contains new or modified information collection 
requirements subject to the Paperwork Reduction Act of 1995 (``PRA''), 
Public Law 104-13. It will be submitted to the Office of Management and 
Budget (``OMB'') for review under section 3507(d) of the PRA. OMB, the 
general public, and other Federal agencies will be invited to comment 
on the new or modified information collection requirements contained in 
this proceeding in a separate published Federal Register notice. In 
addition, we note that pursuant to the Small Business Paperwork Relief 
Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we 
previously sought specific comment on how the Commission might further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees.
    44. We have assessed the effects of the policies adopted in this 
First Order on Reconsideration with regard to information collection 
burdens on small business concerns, and find that these policies will 
benefit many companies with fewer than 25 employees by providing them 
with options for voluntarily relinquishing broadcast spectrum usage 
rights and by streamlining the pre-auction application process. In 
addition, we have described impacts that might affect small businesses, 
which includes most businesses with fewer than 25 employees, in the 
Supplemental FRFA in Appendix B.

V. Ordering Clauses

    45. Accordingly, IT IS ORDERED that, pursuant to the authority 
contained in sections 1, 4, 301, 303, 307, 308, 309, 310, 316, 319, and 
405 of the Communications Act of 1934, as amended, and sections 6402 
and 6403 of Middle Class Tax Relief and Job Creation Act of 2012, Pub. 
L. 112-96, 126 Stat. 156, 47 U.S.C. 151, 154, 301, 303, 307, 308, 309, 
310, 316, 319, 405, 1404, and 1452, this FIRST ORDER ON RECONSIDERATION 
is ADOPTED and parts 1 and 73 of Commission's rules are AMENDED as set 
forth in the Appendix A of the First Order on Reconsideration.
    46. IT IS FURTHER ORDERED that the rules adopted herein will become 
effective December 2, 2015, except for sections 1.2204(c)(4) and 
73.3700(b)(1), which contain new or modified information collection 
requirements that require approval by the OMB under the PRA and WILL 
BECOME EFFECTIVE after the Commission publishes a notice in the Federal 
Register announcing such approval and the relevant effective date.
    47. IT IS FURTHER ORDERED that, that pursuant to sections 4(i), and 
405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i) and 
405, and section 1.429 of the Commission's rules, 47 CFR 1.429, the 
Petition for Reconsideration filed by the Expanding Opportunities for 
Broadcasters Coalition IS HEREBY GRANTED IN PART AND IS OTHERWISE 
DISMISSED AS MOOT.
    48. IT IS FURTHER ORDERED that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, SHALL SEND a 
copy of this First Order on Reconsideration, including the Supplemental 
Final Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.
    49. IT IS FURTHER ORDERED that the Commission SHALL SEND a copy of 
this First Order on Reconsideration in a report to be sent to Congress 
and the Government Accountability Office pursuant to the Congressional 
Review Act, see 5 U.S.C. 801(a)(1)(A).

List of Subjects

47 CFR Part 1

    Administrative practice and procedure, Television.

47 CFR Part 73

    Television, Reporting and recordkeeping requirements.

Federal Communications Commission.
Gloria J. Miles,
Federal Register Liaison.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends Parts 1 and 73 of Title 47 of the Code 
of Federal Regulations as follows:

PART 1--PRACTICE AND PROCEDURE

0
1. The authority citation for part 1 continues to read as follows:

    Authority: 15 U.S.C. 79, et seq.; 47 U.S.C. 151, 154(i), 154(j), 
155, 157, 160, 201, 225, 227, 303, 309, 332, 1403, 1404, 1451, 1452, 
and 1455.


0
2. Section 1.2200 is amended by revising paragraph (d) to read as 
follows:


Sec.  1.2200  Definitions.

* * * * *
    (d) Channel sharing bid. The term channel sharing bid means a bid 
to relinquish all spectrum usage rights with respect to a particular 
television channel in order to share a television channel with another 
broadcast television licensee by an applicant that submits an executed 
channel sharing agreement with its application.
* * * * *

0
3. Section 1.2204 is amended by redesignating paragraphs (c)(4)(i) 
through (iii) as (c)(4)(ii) through (iv), and adding new paragraph 
(c)(4)(i) to read as follows:


Sec.  1.2204  Applications to participate in competitive bidding.

* * * * *
    (c) * * *
    (4) * * *
    (i) Whether it intends to enter into a channel sharing agreement if 
it becomes a winning bidder;
* * * * *

PART 73--RADIO BROADCAST SERVICES

0
4. The authority citation for part 73 continues to read as follows:

    Authority: 47 U.S.C. 154, 303, 334, 336, and 339.


0
5. Section 73.3700 is amended by revising paragraph (a)(3); revising 
paragraph (b)(1)(i); adding paragraph (b)(1)(vii); revising paragraphs 
(b)(2)(i) introductory text, (b)(2)(ii), and (b)(3); and revising 
paragraphs (h)(2) through (5) to read as follows:

[[Page 67343]]

Sec.  73.3700  Post-incentive auction licensing and operation.

    (a) * * *
    (3) Channel sharee station. For purposes of this section, channel 
sharee station means a broadcast television station for which a winning 
channel sharing bid, as defined in Sec.  1.2200(d) of this chapter, was 
submitted, or a broadcast television station for which a winning 
license relinquishment bid, as defined in Sec.  1.2200(g) of this 
chapter, was submitted where the station licensee executes and 
implements a post-auction channel sharing agreement.
* * * * *
    (b) * * *
    (1) * * *
    (i) Licensees of reassigned stations, UHF-to-VHF stations, and 
High-VHF-to-Low-VHF stations must file a minor change application for a 
construction permit for the channel specified in the Channel 
Reassignment Public Notice using FCC Form 2100 Schedule A (for a full 
power station) or E (for a Class A station) within three months of the 
release date of the Channel Reassignment Public Notice. Licensees that 
are unable to meet this filing deadline may request a waiver of the 
deadline no later than 30 days prior to the deadline.
* * * * *
    (vii) Channel sharee stations must file a minor change application 
for a construction permit for the channel on which the channel sharer 
operates at least sixty (60) days prior to the date by which it must 
terminate operations on its pre-auction channel pursuant to paragraphs 
(b)(4)(i) and (ii) of this section. The application must include a copy 
of the executed channel sharing agreement.
* * * * *
    (2) * * *
    (i) Alternate channels. The licensee of a reassigned station, a 
UHF-to-VHF station, or a High-VHF-to-Low-VHF station, or a broadcast 
television station described in paragraph (b)(1)(iv)(B) of this section 
will be permitted to file a major change application for a construction 
permit for an alternate channel on FCC Form 2100 Schedules A (for a 
full power station) and E (for a Class A station) during a filing 
window to be announced by the Media Bureau by public notice, provided 
that:
* * * * *
    (ii) Expanded facilities. The licensee of a reassigned station, a 
UHF-to-VHF station, or a High-VHF-to-Low-VHF station, or a broadcast 
television station described in paragraph (b)(1)(iv)(B) of this section 
will be permitted to file a minor change application for a construction 
permit on FCC Form 2100 Schedules A (for a full power station) and E 
(for a Class A station) during a filing window to be announced by the 
Media Bureau by public notice, in order to request a change in the 
technical parameters specified in the Channel Reassignment Public 
Notice (or, in the case of a broadcast television station described in 
paragraph (b)(1)(iv)(B) of this section that is not reassigned to a new 
channel, a change in its authorized technical parameters) with respect 
to height above average terrain (HAAT), effective radiated power (ERP), 
or transmitter location that would be considered a minor change under 
Sec.  73.3572(a)(1) and (2) or Sec.  74.787(b) of this chapter.
* * * * *
    (3) License applications for channel sharing stations. The licensee 
of each channel sharee station and channel sharer station must file an 
application for a license for the shared channel using FCC Form 2100 
Schedule B (for a full power station) or F (for a Class A station) 
within three months of the date that the channel sharee station 
licensee receives its incentive payment pursuant to section 6403(a)(1) 
of the Spectrum Act.
* * * * *
    (h) * * *
    (2) Upon termination of the license of a party to a CSA, the 
spectrum usage rights covered by that license may revert to the 
remaining parties to the CSA. Such reversion shall be governed by the 
terms of the CSA in accordance with paragraph (h)(5)(i)(E) of this 
section. If upon termination of the license of a party to a CSA only 
one party to the CSA remains, the remaining licensee may file an 
application to change its license to non-shared status using FCC Form 
2100, Schedule B (for a full power licensee) or F (for a Class A 
licensee).
    (3) Channel sharing between full power television and Class A 
television stations. (i) A CSA may be executed between licensees of 
full power television stations, between licensees of Class A television 
stations, and between licensees of full power and Class A television 
stations.
    (ii) A Class A channel sharee station licensee that is a party to a 
CSA with a full power channel sharer station licensee must comply with 
the rules of part 73 governing power levels and interference, and must 
comply in all other respects with the rules and policies applicable to 
Class A television stations, as set forth in Sec. Sec.  73.6000 et seq.
    (iii) A full power channel sharee station licensee that is a party 
to a CSA with a Class A channel sharer station licensee must comply 
with the rules of part 74 of this chapter governing power levels and 
interference.
    (iv) A Class A channel sharee station may qualify only for the 
cable carriage rights afforded to ``qualified low power television 
stations'' in Sec.  76.56(b)(3) of this chapter.
    (4) Channel sharing between commercial and noncommercial 
educational television stations. (i) A CSA may be executed between 
commercial and NCE broadcast television station licensees.
    (ii) The licensee of an NCE station operating on a reserved channel 
under Sec.  73.621 that becomes a party to a CSA, either as a channel 
sharee station or as a channel sharer station, will retain its NCE 
status and must continue to comply with Sec.  73.621.
    (iii) If the licensee of an NCE station operating on a reserved 
channel under Sec.  73.621 becomes a party to a CSA, either as a 
channel sharee station or as a channel sharer station, the portion of 
the shared television channel on which the NCE station operates shall 
be reserved for NCE-only use.
    (iv) The licensee of an NCE station operating on a reserved channel 
under Sec.  73.621 that becomes a party to a CSA may assign or transfer 
its shared license only to an entity qualified under Sec.  73.621 as an 
NCE television licensee.
    (5) Required CSA provisions. (i) CSAs must contain provisions 
outlining each licensee's rights and responsibilities regarding:
    (A) Access to facilities, including whether each licensee will have 
unrestrained access to the shared transmission facilities;
    (B) Allocation of bandwidth within the shared channel;
    (C) Operation, maintenance, repair, and modification of facilities, 
including a list of all relevant equipment, a description of each 
party's financial obligations, and any relevant notice provisions;
    (D) Transfer/assignment of a shared license, including the ability 
of a new licensee to assume the existing CSA; and
    (E) Termination of the license of a party to the CSA, including 
reversion of spectrum usage rights to the remaining parties to the CSA.
    (ii) CSAs must include provisions:
    (A) Affirming compliance with the requirements in paragraph (h)(5) 
of this section and all relevant Commission rules and policies; and
    (B) Requiring that each channel sharing licensee shall retain 
spectrum usage rights adequate to ensure a sufficient amount of the 
shared channel capacity to allow it to provide at least

[[Page 67344]]

one Standard Definition (SD) program stream at all times.
* * * * *
[FR Doc. 2015-27738 Filed 10-30-15; 8:45 am]
BILLING CODE 6712-01-P