	Background

Radio frequency spectrum is used to provide an array of commercial and  governmental services, like mobile voice and data, air-traffic control,  broadcast television and radio, and public safety activities. FCC Establishes Buildout Requirements for Most Wireless Services

FCC has established buildout requirements for most wireless services,  including paging, cellular, land mobile radio, and wireless  communications services (see appendix II). Type of requirement. A population or geographic coverage requirement sets the  percentage of the license’s population or geographic area,  respectively, that must be covered by service. Lastly, a “substantial service” requirement describes the  level of service that must be provided in narrative terms rather  than in absolute, numeric benchmarks, such as with a coverage  requirement. FCC Enforces Buildout Requirements through Automated Processes and Staff Reviews and Followed Its Process for Selected Wireless Services

		FCC Enforces Buildout Requirements Primarily in Response to Licensee Actions

To enforce buildout requirements for wireless services, FCC requires  licensees to self certify that they met buildout requirements and  automatically terminates licenses that fail to do so, in line with FCC rules. Unless a licensee has other pending applications, an  application to cancel a license is automatically approved. In general, the regulation states  that FCC may grant an extension request if the licensee shows  that its failure to meet a buildout deadline is due to causes beyond  its control. For example, extension requests can be granted for  issues such as a lack of available equipment for a band or  interference problems with other spectrum users. Across the five services, we  found that buildout requirements were met for 75 percent of licenses  (19,582 of 26,217). As discussed above, FCC’s enforcement of buildout requirements also  involves granting or dismissing extension requests. FCC officials  said that the Commission seeks to be aggressive but pragmatic in its  enforcement of buildout requirements and is flexible on deadlines when it  needs to be. Many experts, licensees, and industry associations we interviewed said  that extensions can be beneficial, but some concerns were raised. Some  licensees and industry associations we interviewed said that extensions  of buildout requirements can provide needed flexibility and be in the  public interest. Stakeholders Generally Support Buildout Requirements but Identified Changes and Alternative Tools That They Thought Could Better Meet Goals

		Most Selected Stakeholders Supported Buildout Requirements but Thought the Requirements More Effectively Met Some Goals Than Others

Nearly all licensees and industry associations we interviewed said that  they support FCC’s having buildout requirements for wireless services  because the requirements help ensure that spectrum will be put to use. Five experts said that they were ambivalent about  the requirements for several reasons, including that the requirements are  set too weak or undermined by FCC’s granting extensions; as previously  mentioned, extensions were requested for 9 percent of licenses we  examined, and FCC granted 74 percent of these extension requests. Of  four goals commonly cited for buildout requirements, stakeholders tended  to report that buildout requirements are effective in meeting two of these  goals: encouraging licensees to provide service in a timely manner and  preventing warehousing of spectrum. The stakeholders had mixed views  on the effectiveness of buildout requirements in meeting the other two  goals: promoting innovative services and promoting services to rural  areas. Preventing the warehousing of spectrum. However, licensees and experts we  interviewed generally said they did not believe that spectrum  warehousing is a major problem, in their experience. Stakeholders Identified a Variety of Changes and Alternative Tools That They Thought Could Better Meet Commonly Cited Goals for Buildout Requirements Changes to Buildout

			Requirements

While buildout requirements are generally supported, some stakeholders  we spoke with said that the requirements were not effective in meeting  some of the commonly cited goals, in particular promoting innovative  services and services to rural areas, as discussed above. For example, one licensee said that having a  spectrum-sharing policy would be a good supplement to buildout  requirements; specifically, if a licensee does not meet its buildout  requirements, FCC could require that the licensee negotiate  sharing or leasing for the unused part of the license to help put it  to use in timely manner. Subsidies. Agency Comments

We provided a draft of this report to FCC for review and comment. FCC  provided technical comments that we incorporated throughout the report  as appropriate. Appendix I: Objectives, Scope, and Methodology

This report examines Federal Communications Commission (FCC)  buildout requirements for wireless services and the efficient use of  spectrum. In particular, this report provides information on (1) the  buildout requirements established by FCC for spectrum licenses for  wireless services, (2) the extent that FCC follows its process to enforce  buildout requirements for wireless services, and (3) stakeholder opinions  on the extent that goals for buildout requirements have been met. To describe FCC buildout requirements for wireless services, we  reviewed FCC regulations and guidance on buildout requirements for  services that use spectrum. We also  considered recommendations from FCC officials and other interviewees  when selecting among wireless services. With respect to the outcomes for licenses that had buildout requirements,  we examined the number of licenses in each wireless service that: met the requirement, including whether it met the requirement on did not meet the requirement and was terminated; did not meet the requirement and remained active after the did not reach the buildout deadline, meaning that the license was  (1) canceled on or before the buildout deadline, (2) otherwise  terminated before the buildout deadline, or (3) expired on or  before the buildout deadline.
Why GAO Did This Study

Radio frequency spectrum is a natural resource used to provide a variety of communication services, such as mobile voice and data. The popularity of smart phones, tablets, and other wireless devices among consumers, businesses, and government users has increased the demand for spectrum. FCC takes a number of steps to promote efficient and effective use of spectrum. One such step is to establish buildout requirements, which specify that an entity granted a license must begin using the assigned spectrum within a specified amount of time or face penalties, such as loss of the license.
GAO was asked to review buildout requirements and the efficient use of spectrum. This report (1) describes the buildout requirements FCC established for wireless services, (2) assesses the extent to which FCC follows its process to enforce buildout requirements, and (3) examines stakeholder opinions on the extent that commonly cited goals for buildout requirements have been met. GAO reviewed FCC regulations and guidance on buildout requirements and examined FCC license data on outcomes of buildout requirements for 5 out of about 45 wireless services selected to ensure variety in type of use and buildout requirement, among other criteria. GAO also interviewed FCC officials, commercial spectrum licensees, industry associations, and spectrum policy experts.
GAO is making no recommendations in this report. FCC reviewed a draft of this report and provided technical comments that GAO incorporated as appropriate.

What GAO Found

The Federal Communications Commission (FCC) has established buildout requirements—which require a licensee to build the necessary infrastructure and put the assigned spectrum to use within a set amount of time—for most wireless services, including cellular and personal communication services. FCC tailors the buildout requirements it sets for a wireless service based on the physical characteristics of the relevant spectrum and comments of stakeholders, among other factors. Therefore, buildout requirements vary across wireless services. For example, a buildout requirement can set the percentage of a license's population or geographic area that must be covered by service or can describe the required level of service in narrative terms rather than numeric benchmarks. Buildout requirements also vary by how much time a licensee has to meet a requirement and whether it has to meet one requirement or multiple requirements in stages.
FCC's enforcement process for wireless-service licenses with buildout requirements primarily relies on information provided by licensees, and FCC followed its process for the five wireless services GAO reviewed. Specifically, FCC requires licensees to self-certify that they have met buildout requirements. If a licensee does not do so, FCC automatically terminates the license. Some stakeholders GAO interviewed said that self-certification is an effective way for FCC to enforce buildout requirements because it is public and transparent. GAO examined FCC license data for five wireless services and found that buildout requirements were met for 75 percent of those licenses, and FCC generally terminated those that did not. As part of enforcement, FCC also grants or dismisses licensees' requests to extend the deadline for meeting a requirement. FCC may grant an extension if the licensee shows that it cannot meet a deadline due to causes beyond its control, like a lack of available equipment. For the five wireless services examined, GAO found that extensions were requested for 9 percent of licenses, and FCC granted 74 percent of these requests. FCC officials said that the Commission seeks to be aggressive but pragmatic when enforcing buildout requirements, including being flexible on deadlines when needed. Some licensees and industry associations GAO interviewed said that extensions can provide needed flexibility when unexpected problems occur. Some concerns were raised, however, that granting extensions can undermine buildout requirements by creating an impression that they will not be strictly enforced.
Stakeholders GAO interviewed generally said that buildout requirements are effective in meeting two of four goals commonly cited in FCC documents and statute—encouraging licensees to provide services in a timely manner and preventing the warehousing of spectrum. Stakeholders had mixed views on the effectiveness of buildout requirements in meeting two other goals—promoting innovative services and promoting services to rural areas—largely because they believed that other tools could better address these goals. Other tools stakeholders mentioned include greater use of spectrum licenses that allow a wider array of uses and providing licensees with subsidies to serve rural areas. Nearly all the licensees and industry associations GAO interviewed said they support FCC having buildout requirements, while spectrum policy experts GAO interviewed were mixed in their support of the requirements. Experts who did not support buildout requirements said that the requirements are set too weak or that other tools could better meet FCC goals, among other reasons.