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FiberTower Spectrum Holdings, LLC v. Federak Communication Commission

United States Court of Appeals, District of Columbia Circuit

April 3, 2015


Argued: January 20, 2015.

On Appeal of Orders of the Federal Communications Commission.

Pratik A. Shah argued the cause for appellant. With him on the briefs were Tom W. Davidson, Douglas I. Brandon, Hyland Hunt, Z.W. Julius Chen, Matthew A. Scarola, and Joseph M. Sandri.

Maureen K. Flood, Counsel, Federal Communications Commission, argued the cause for appellee. With her on the brief were Jonathan B. Sallet, General Counsel, David M. Gossett, Acting Deputy General Counsel, and Jacob M. Lewis, Associate General Counsel. Richard K. Welch, Deputy Associate General Counsel, entered an appearance.

Before: ROGERS and SRINIVASAN, Circuit Judges, and WILLIAMS, Senior Circuit Judge. OPINION filed by Circuit Judge ROGERS.


Page 693

Rogers, Circuit Judge.

This appeal challenges orders of the Federal Communications Commission denying applications to renew 689 wireless spectrum licenses in the 24 gigahertz (" GHz" ) and 39 GHz bands for failure to meet the " substantial service" performance standard during the license term. It succeeds only in part. FiberTower Spectrum Holdings, LLC, and FiberTower Corporation (hereinafter " FiberTower" ) contend that the Commission's interpretation of the performance standard as requiring some actual construction in each license area conflicts with the Commission's statutory mandate in 47 U.S.C. § 309(j)(4)(B). Because this argument was not presented to the Commission, see 47 U.S.C. § 405(a), it is not properly before the court and we do not address it. FiberTower also contends that the Commission's interpretation of

Page 694

" substantial service" is inconsistent with that standard as originally promulgated by the Commission. Review of the text of the regulations and the rulemaking record demonstrates this argument is not well founded. FiberTower, however, further contends that the Commission erred in applying its " substantial service" interpretation to forty-two licenses because their renewal applications stated construction had occurred. This error requires a remand, and we vacate the orders denying renewal of those forty-two licenses. As a result, we also vacate the orders denying extension and waiver, so the Commission can rule on those requests based on an accurate understanding of the record.


The Communications Act of 1934, as amended, establishes a system for licensing the use of radio spectrum, and vests in the Commission the exclusive authority to grant radio licenses. See 47 U.S.C. § 301. The licenses do not " create any right, beyond the terms, conditions, and periods of the license." Id. The Commission is authorized to prescribe restrictions and conditions necessary to carry out its duties, see id. § 303(r), and for licenses awarded by auction, see id. § 309(j)(1), it must adopt

performance requirements, such as appropriate deadlines and penalties for performance failures, to ensure prompt delivery of service to rural areas, to prevent stockpiling or warehousing of spectrum by licensees or permittees, and to promote investment in and rapid deployment of new technologies and services.

Id. § 309(j)(4)(B).

Under Commission rules, licenses in the 24 and 39 GHz bands, at issue here, are awarded for ten years, and the licensee must demonstrate " substantial service" in the area covered by the license by the time of renewal. See 47 C.F.R. § § 101.67, 101.17, 101.527; In the Matter of Amendment of the Comm'n's Rules Regarding the 37.0-38.6 GHz and 38.6-40.0 GHz Bands, 12 FCC Rcd. 18600, ¶ 46 (1997) (" 39 GHz Order " ). The Commission has defined " substantial service" as " service which is sound, favorable, and substantially above a level of mediocre service which just might minimally warrant renewal." 47 C.F.R. § § 22.940(a)(1)(i), 24.203(d), 101.527(a); see In the Matter of Amendments to Parts 1, 2, 87 and 101 of the Comm'n's Rules to License Fixed Services at 24 GHz, 15 FCC Rcd. 16934, ¶ 38 (2000) (" 24 GHz Order " ). One way a licensee can show " substantial service" is by complying with one of several " safe harbors," which include " a showing of [construction and operation of] four [microwave] links per million population within a service area or service to an area that has very limited access to either wireless or wireline telecommunications services." 24 GHz Order, ¶ 38; see 39 GHz Order, ¶ 46.

A failure to demonstrate substantial service by the renewal deadline " will result in forfeiture of the license." 47 C.F.R. § 101.527(c); see id. § 101.17(b). The Commission may grant an extension of the deadline for showing substantial service if the licensee shows that its failure to provide substantial service " is due to involuntary loss of site or other causes beyond its control." Id. ยง 1.946(e)(1). The Commission may also waive the substantial service requirement entirely when " [t]he underlying purpose of the rule(s) would not be served or would be frustrated . . . [and] a grant of the requested waiver would be in the public interest," or when " application of the rule(s) would ...

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