Audio Division raises regulatory eyebrow at efforts to prolong construction permits beyond their expiration

Spectrum warehousing – the practice of acquiring spectrum and then sitting on it, unused. Maybe because you don’t want your competitor(s) to have it, maybe because you can’t afford to do anything with it just now, maybe for other reasons. Whatever may be the case, the FCC has historically frowned on the practice. The Commission figures that once authority to use spectrum has been issued, that spectrum should be used.

The trouble is, while the Commission talks a good game, its willingness to throw the flag on apparent warehousing practices has been more muted – and occasionally, at least in the eyes of some, misdirected. (For instance, the trial balloons floated by some FCC reps in connection with the National Broadband Plan – the suggestion being that TV licensees are somehow wastefully sitting on spectrum that could be better used for broadband.  But it’s been less than a year since the TV industry completed its forced march out of Analog Land and into Digital Paradise, so even if they’re not taking full advantage of the spectrum – and it’s not at all clear that they’re not – it’s a bit early in the game to declare them malingerers and take their spectrum away because of that. Oh yeah, and has the FCC analyzed how much broadband-suitable non-broadcast spectrum is sitting fallow? – some Senators don’t think so. But I digress.)

In any event, we can report that the FCC’s Audio Division recently flexed more than its vocal cords when it comes to spectrum warehousing. And in doing so, it alerted licensees involved in channel reallotments that they had better be on their toes or risk losing the authority to operate at all.

The case involved a little corner north of Dallas, Texas. Back in the late 1990s the licensee of KIKT in beautiful Greenville, TX, asked to have its channel moved over to (apparently more beautiful) Cooper, TX. In early 2002 the Commission granted that request and promptly modified the FM Table of Allotments to reflect the change. Once the Table had been changed, the station’s continued operation in Greenville was technically inconsistent with the rules – but the Commission sensibly sidesteps that problem by conjuring up an “implied” special temporary authorization (STA). That implied STA permits the licensee to continue operation in its former community while taking care of the follow-up chores necessary to effectuate the move.

One of those chores, obviously, was obtaining a construction permit to cover the move to Cooper. The FCC gave the licensee 90 days to file its CP application. After six months’ worth of extensions, the licensee filed that application, and eventually a construction permit to move over to Cooper was granted in 2003 – with an expiration date in 2006.

When that expiration date rolled around, however, the new facilities still hadn’t been built, and the CP expired. But wait! The same day, the licensee filed another application for the same Cooper facilities. That application was granted, with an expiration date of 2009.

That’s when things started getting interesting.

During the second CP period (2006-2009), the licensee of a station in Krum, TX, filed an application to improve its facilities. The Krum application was based on the amended Table of Allotments as of 2002 – that is, it assumed that KIKT’s channel was in Cooper, even though KIKT was still operating in Greenville pursuant to its implied STA. The Commission granted the Krum application, but with a condition preventing it from cranking up its modified facilities until KIKT moved over to Cooper.

The Krum licensee wasn’t tickled pink about that condition, and asked the FCC to remove the condition and force KIKT to move to Cooper. That request – which KIKT opposed – rested undisturbed at the Commission until the end of 2009, when KIKT’s second permit expired. And on the same day, KIKT filed a third application for the same Cooper facilities. At that point the Krum licensee renewed its request to remove the condition and terminate KIKT’s implied STA, pointing out that KIKT had already had more than six (count ’em, six) years in which to construct. KIKT countered that it was “not subject to any order that requires construction . . . by any specific date” and, oh yeah, the Bureau doesn’t have the authority to cancel KIKT’s implied STA in any event.

The Audio Division was not impressed with KIKT’s arguments. It concluded that KIKT had lost “all protection rights” relative to its Greenville facilities back in 2002, when the initial reallotment order moving KIKT’s channel to Cooper became final. As a result, the condition on the Krum CP could be deleted, even though the modified Krum facilities would interfere with KIKT’s implied STA operation in Greenville. And as to the claim that KIKT wasn’t really required to get its modified facilities by any specific date, well, the Division disagreed with that, too: KIKT’s outstanding permit (that would be Permit No. 3) requires completion by its expiration date.

And finally, perhaps the most chilling news. In the Division’s view, an implied STA is “subject to summary cancellation if such action is necessary to accommodate the operation of any FM station pursuant to its authorization.” Yikes! That means that, if your channel has been modified in such a way as to put you on an implied STA pending completion of the modifications, your ability to continue to operate in that mode could be summarily whacked. While the Division stopped just short of doing that to KIKT here, the thrust of the decision was loud and clear: get the Cooper facilities built now or risk losing authority to continue to operate at all with the Greenville facilities.

The sternness of the Division’s reaction may be a function of the facts before it. The Division appears to have concluded that KIKT was involved in spectrum warehousing and may not have been acting in good faith – a conclusion apparently arising from KIKT’s practice of getting CPs, letting them expire, and reapplying for them. And KIKT’s somewhat in-your-face arguments – that it was under no obligation to construct and that the Division couldn’t shut it down anyway – probably didn’t sit all that well, either.

But whatever may be the case, all licensees are now on notice of a couple of important things: (a) implied STAs are fragile things; and (b) the Audio Division, at least, is prepared to step in and act when it determines that an implied STA is being used for warehousing purposes. This should provide considerable incentive to anyone in the middle of a move involving a reallotment (and, thus, an implied STA). The Division’s clear message: Get ’er done.

But the Commission itself is not entirely without blame here. It was the Commission, after all, which granted one CP, and then another when the first one expired, and then appeared open to granting a third. More than a decade ago the Commission tried to put a stop to the practice of repeated CP extensions by simply declaring that it would no longer grant any extensions. The practice of apply-let expire-reapply arguably serves the same purpose as extensions. Still, in order to produce the supposedly desired result (i.e., extra time to build), that practice requires the agency’s cooperation: reapplying for a CP doesn’t work if the FCC doesn’t grant the reapplication.

Of course, there may be strong and valid reasons for letting a CP expire and then reapplying for it. Indeed, it’s possible that KIKT itself had such reasons. But that approach can still have negative consequences, including undue delay in the introduction of new service. It will be interesting to see whether, in the wake of this decision, the Division becomes more hesitant to grant serial CP applications.