[00:00:02] Speaker 00:
Case number 14-1039, Fiber Tire Spectrum Holdings LLC, Fiber Tire Corporation Appellant versus Federal Communications Commission.

[00:00:10] Speaker 00:
Mr. Shah for the appellant, Ms.

[00:00:12] Speaker 00:
Flood for the appellee.

[00:01:12] Speaker 06:
Good morning.

[00:01:13] Speaker 03:
Good morning.

[00:01:13] Speaker 03:
May it please the court, Pratik Shah, on behalf of Appellant Fiber Tower.

[00:01:18] Speaker 03:
This appeal involves the FCC's cancellation for lack of substantial service of 689 licenses owned by Fiber Tower in the previously undeveloped 39 gigahertz and 24 gigahertz bands.

[00:01:31] Speaker 03:
It is beyond disputes that fiber towers' extensive spectrum development activities, which typically represent about 90 percent of the ultimate cost of establishing transmission, included construction and operation of links on at least 42 of the licenses at issue.

[00:01:47] Speaker 07:
Is your argument on those 42 licenses should have been extended simply?

[00:01:58] Speaker 07:
Or is your argument that the progress on those 42

[00:02:02] Speaker 07:
should affect the Commission's view of the remaining licenses?

[00:02:08] Speaker 03:
Both, Your Honor.

[00:02:09] Speaker 03:
To take your first piece, the 42, we think that that is the most clearest form of error because the Commission itself, in its opinion, said that it did not intend to cancel any license on which Fiber Tower had reported construction.

[00:02:23] Speaker 03:
It says this on footnote 7, paragraph 3 of its order, JA-591.

[00:02:28] Speaker 03:
It says it again.

[00:02:29] Speaker 03:
On JA-606, paragraph 33 of its opinion, the commission is quite clear it does not want to take any action in this order against the license on which Fiber Towers report a construction.

[00:02:39] Speaker 07:
On the broader question, do you have any commission or press from the court indicating that in a

[00:02:48] Speaker 07:
question the issue of sort of mass license renewal, that a high level of performance on a, whatever it is, a little less than 10% I guess, of the licenses should flow over to the others with respect to which there's not, I understand you're arguing that there's progress, but a different kind of progress.

[00:03:11] Speaker 03:
Your Honor, I wouldn't make that argument as to the substantial service showing, which is a license by license showing.

[00:03:17] Speaker 03:
I admit that that is a tougher argument.

[00:03:19] Speaker 03:
I would make that argument, however, to the waiver and extension relief.

[00:03:23] Speaker 03:
What the Commission did here is it treated the waiver and extension analysis en masse.

[00:03:28] Speaker 03:
It was an omnibus rejection of waiver and extension relief.

[00:03:33] Speaker 03:
One of the important predicates

[00:03:35] Speaker 03:
for its denial of waiver and extension relief was its assumption that Fiber Tower had not built out at all on the 689 licenses at issue.

[00:03:47] Speaker 03:
And therefore, the commission essentially portrays, characterizes Fiber Tower as essentially sleeping on its rights.

[00:03:53] Speaker 03:
If the commission, however, had recognized the construction on the 42 licenses at issue, it would have fundamentally altered the way it characterized fiber towels.

[00:04:03] Speaker 04:
So can I ask a question about that, which is that there were 10, I think there were 10 licenses as to which there was construction.

[00:04:09] Speaker 04:
Yes, Your Honor.

[00:04:09] Speaker 04:
And everybody agrees on that.

[00:04:12] Speaker 03:
Yes, Your Honor, although the Commission has withdrawn three of those, even three of those in subsequent proceedings that are not an issue here.

[00:04:19] Speaker 04:
Okay, so I don't know that we know about those.

[00:04:23] Speaker 04:
Maybe we were made of wood or whatnot.

[00:04:24] Speaker 04:
I glossed over it.

[00:04:26] Speaker 04:
So at least as of the Bureau's ruling and then the Commission's affirmance of that, there were ten as to which everybody agrees that there was some construction and therefore both the Bureau and the Commission take those out of the field of vision and don't terminate as to those.

[00:04:38] Speaker 04:
So two questions about that.

[00:04:40] Speaker 04:
First is, was the showing that you made with respect to the additional 42 the same as the showing you made with respect to the 10 so that what appears to have happened is essentially just an oversight for some reason because they were looking at the same source of documents but didn't notice it?

[00:04:57] Speaker 04:
And then the second piece of it is, if on your waiver and extension argument,

[00:05:03] Speaker 04:
If we already know that there was 10 as to which there was construction, but then waiver and extension was denied anyways, then why do we think there's going to be something different as opposed to an additional 42?

[00:05:11] Speaker 04:
Because we're not at a Boolean variable where we go from none to some.

[00:05:14] Speaker 04:
Sure.

[00:05:15] Speaker 03:
Okay, so let me take your first piece first, which is, was there anything different?

[00:05:18] Speaker 03:
There was nothing different in the way that Fiber Tower described the construction, and if you turn to the JA, it's sort of easiest to see on the document.

[00:05:28] Speaker 03:
These construction notifications were listed in the same place on each of the 689 plus the 10 that you mentioned, so the 699 applications.

[00:05:38] Speaker 03:
They were listed in the same place of each renewal application, and there's samples of these in the JA.

[00:05:44] Speaker 03:
So JA87.

[00:05:46] Speaker 03:
is a representative of these.

[00:05:47] Speaker 03:
And then the next 40 pages of the JA you'll see have the exact same page for each of the licenses.

[00:05:54] Speaker 03:
So what you'll see is, if you read, it says, the substantial service showing has been met.

[00:05:59] Speaker 03:
That's in JA 87.

[00:06:01] Speaker 03:
And then the second sentence is, as of the date of this filing, Fiber Tower so far has one link built and operating at a school in Kansas City, Missouri, the geographic area of this license.

[00:06:11] Speaker 03:
And then it gives the population of that

[00:06:14] Speaker 03:
Metropolitan area in the next sentence.

[00:06:16] Speaker 03:
That is exactly the same sort of sentence it had, even in the 10 that were.

[00:06:23] Speaker 03:
So no difference in that.

[00:06:25] Speaker 03:
The only difference, I would say, is in those 10, there was a colorable argument that Fiber Tower had met the safe harbor, because there was enough links.

[00:06:35] Speaker 03:
There was a safe harbor of four links per million.

[00:06:38] Speaker 03:
And so if you did the math in those construction notifications, there was a plausible argument that Fiber Tower had met the safe harbor in those 10.

[00:06:48] Speaker 03:
Fiber Tower doesn't contend here in the 42 at issue.

[00:06:51] Speaker 04:
Oh, so did you make the contention in the other 10 that you did meet the safe harbor?

[00:06:54] Speaker 03:
Yes, there was a sentence that said,

[00:06:56] Speaker 03:
It was an extra sentence that said Fiber Tower is met.

[00:06:59] Speaker 04:
So that may be, we'll ask the commission, but that may be the explanation as to why the commission noticed the construction with respect to those ten, but not with respect to these four.

[00:07:06] Speaker 03:
That may be, but whether it's Safe Harbor or not, the commission clearly says in its opinion no construction whatsoever, and it says even in its appeal brief here, after we've pointed out and cited these sentences in the 42, it says no less than a half dozen times in its appeal brief that there was no construction, no service whatsoever, and that's just not accurate.

[00:07:24] Speaker 03:
based upon these identical filings, which are in each of these applications.

[00:07:29] Speaker 06:
Well, the commission takes the position that in your petition for review, you never told them what license you were talking about.

[00:07:37] Speaker 03:
Sure.

[00:07:37] Speaker 03:
So again, I think the easiest thing is to turn to the petition for review.

[00:07:41] Speaker 03:
I know.

[00:07:42] Speaker 06:
It says, the record shows that there has been construction.

[00:07:46] Speaker 03:
Exactly, Your Honor.

[00:07:48] Speaker 03:
So on page 23, I guess there are two parts of it.

[00:07:50] Speaker 03:
All right.

[00:07:51] Speaker 03:
One is, did we show the issue?

[00:07:52] Speaker 03:
And then the second is, how specific were we in doing it?

[00:07:55] Speaker 03:
So the first part is, was the issue presented?

[00:07:58] Speaker 03:
To that, I don't think that there is any doubt.

[00:08:00] Speaker 03:
And that's at J, page 560, which is page 23 of the application.

[00:08:04] Speaker 06:
You say the record shows.

[00:08:05] Speaker 03:
Right.

[00:08:06] Speaker 03:
So.

[00:08:06] Speaker 06:
Then they cite cases not quite

[00:08:09] Speaker 06:
Okay, so, right, so on page 23... And my question is, why didn't you just tell them which licenses you were talking about?

[00:08:16] Speaker 03:
Your Honor, if we would have done that, that would have made this a little bit simpler.

[00:08:21] Speaker 03:
But let me talk about what we did do to preserve this issue.

[00:08:23] Speaker 06:
First is... Was there any reason not to?

[00:08:27] Speaker 06:
And your answer to Judge Sreenivasan suggests maybe there was.

[00:08:30] Speaker 03:
Well, certainly, yes, your honor.

[00:08:32] Speaker 03:
So when these licenses are submitted, they're submitted sort of on the URL system, and they're submitted to the commission.

[00:08:38] Speaker 03:
The commission then has a statutory duty to make the renewal.

[00:08:42] Speaker 03:
So it looks at that specific page of each construction notification that I cited to in the appendix.

[00:08:49] Speaker 03:
It does that.

[00:08:49] Speaker 03:
That's how it found those other 10.

[00:08:52] Speaker 03:
So we know that the commission knows where to look to find the information.

[00:08:55] Speaker 03:
It's the expert agency in charge of doing this.

[00:08:58] Speaker 06:
Yeah, I get that.

[00:08:59] Speaker 06:
So just referencing the record is enough to force the agency to go back through the 600-odd licenses.

[00:09:08] Speaker 03:
Yes, Your Honor, but I would put a caveat on that.

[00:09:11] Speaker 03:
This is not just you state the issue and then leave the agency to comb through tens of thousands of pages.

[00:09:18] Speaker 03:
What we have here is we've stated the issue in an argument heading no less and then had an argument section about it.

[00:09:23] Speaker 03:
But the commission knew exactly where to go in those licenses.

[00:09:26] Speaker 03:
It didn't have to comb tens of thousands of pages.

[00:09:29] Speaker 03:
It had to look at the one sentence in each application which appears in the... But it had to do it 600 times.

[00:09:34] Speaker 03:
It had to do it 600 times.

[00:09:36] Speaker 03:
But if you look at page 87, it literally takes a few seconds to read each one of those sentences.

[00:09:41] Speaker 03:
It's in the same spot on each application.

[00:09:44] Speaker 06:
I just say, for the life of me, I couldn't understand why counsel just didn't identify it.

[00:09:49] Speaker 03:
Your Honor, I wasn't agency counsel.

[00:09:50] Speaker 03:
I don't know the specifics.

[00:09:51] Speaker 03:
I'm not criticizing.

[00:09:52] Speaker 06:
I assume you had a reason for not doing it, all right?

[00:09:55] Speaker 03:
Right.

[00:09:56] Speaker 03:
So the- Was there a word cap?

[00:09:58] Speaker 03:
I don't know, actually, in the application for review in front of the commission, what the word limitations were or whether they were rubbing up against it.

[00:10:10] Speaker 03:
But what is clear is if the commission had done what it did with respect to the 10 that you mentioned, and in fact the commission's own order

[00:10:18] Speaker 03:
Paragraph 6, footnote 27, cites the very same page of the license application that I directed you to in the joint of appendix.

[00:10:27] Speaker 03:
The commission clearly knew where to look.

[00:10:29] Speaker 03:
And the commission's own touchstone of substantial service, even if we accept that it's a construction-only test, then the one thing that you would expect the commission to look at out of all of these documents is the one sentence in each application that specifies the degree of construction.

[00:10:47] Speaker 03:
Whether they did that or not, they clearly missed.

[00:10:49] Speaker 03:
And I don't think there's any dispute about that here.

[00:10:52] Speaker 03:
They made a manifest factual error.

[00:10:54] Speaker 03:
They missed, on 42 of the licenses at issue, they missed the construction that had been reported.

[00:11:01] Speaker 06:
So in the 10 they found, you actually said on this same document, we have met the safe harbor.

[00:11:08] Speaker 03:
Just in the sentence before it.

[00:11:11] Speaker 06:
That's right.

[00:11:11] Speaker 03:
That's right.

[00:11:12] Speaker 03:
So they looked for the word search.

[00:11:13] Speaker 03:
Otherwise, identical.

[00:11:14] Speaker 06:
They did a word search.

[00:11:16] Speaker 06:
The safe harbor.

[00:11:17] Speaker 03:
I don't know.

[00:11:18] Speaker 06:
No, I mean, I'm just trying to figure out what happened here.

[00:11:22] Speaker 03:
I don't know.

[00:11:22] Speaker 03:
Maybe the FCC might be in a better position to answer that.

[00:11:26] Speaker 03:
But whatever happened is the 42 were missed.

[00:11:28] Speaker 03:
Now, to connect that to the second part, why does that mean that you not only vacate as to the 42, but also you look further?

[00:11:35] Speaker 03:
And that goes back to the waiver extension analysis.

[00:11:38] Speaker 03:
If you read the waiver and extension, in fact, the commission's order,

[00:11:42] Speaker 03:
The overwhelming perception that they paint a fiber tower is, here is an entity sleeping on its rights.

[00:11:48] Speaker 03:
It's not building out on a meaningful number of its licenses.

[00:11:52] Speaker 03:
Now, I put the 10 aside in which they had made a safe harbor showing.

[00:11:55] Speaker 03:
I think it would have, it changed the way it portrayed fiber tower.

[00:12:00] Speaker 04:
If you had accounted for the 40... But with respect to the 10, you didn't make a safe harbor showing.

[00:12:05] Speaker 04:
Right, so with respect to those 10, they didn't find, they didn't decide not to terminate those based on the conclusion that you met the safe harbor requirement.

[00:12:14] Speaker 04:
I take it they decided not to terminate those because there was construction.

[00:12:17] Speaker 03:
Well, Your Honor, the Commission never issued an order.

[00:12:19] Speaker 03:
As to those, those are simply still valid.

[00:12:23] Speaker 03:
So we don't know the rationale as to why.

[00:12:26] Speaker 04:
Oh, so they may have accepted your argument that you met the safe harbor.

[00:12:29] Speaker 03:
Yeah, we don't know.

[00:12:30] Speaker 03:
The FCC may have other insight.

[00:12:32] Speaker 03:
But there isn't a published opinion about those 10.

[00:12:34] Speaker 03:
So I can't speculate as to what happened there.

[00:12:38] Speaker 03:
But what I can say is repeatedly, in the commission's order, it says Fiber Tower 2 is not to build.

[00:12:44] Speaker 03:
If it would have accounted for the 42 license at issue, that would account for almost 25% of the 24 gigahertz licenses.

[00:12:52] Speaker 03:
I don't think if the commission had known that on about 25% of the 24 gigahertz licenses that FiberTower had actually built out, that it would have said, even where market demand existed, FiberTower did not build at all.

[00:13:07] Speaker 03:
It fundamentally changes.

[00:13:08] Speaker 03:
See, the waiver and extension analysis is, in part, an equitable inquiry.

[00:13:12] Speaker 03:
The commission painted fiber tower is simply not acting.

[00:13:16] Speaker 03:
I think it fundamentally changes the equity if you had known that there were 42 other licenses in which the commission, which the fiber tower reported construction in 25% of the 24 gigahertz license.

[00:13:26] Speaker 04:
So you must be taking the position that there's a meaningful delta between 10 and 42 because they knew that as to 10 there was construction.

[00:13:32] Speaker 04:
In fact, it may have even been enough construction to satisfy the safe harbor.

[00:13:35] Speaker 03:
Yes, your honor, I do think there's a meaningful Delta because again, if you look at the way the court, the commission worded its waiver and extension else replete with this idea that even where demand existed, they didn't build out.

[00:13:47] Speaker 03:
I don't think the commission could have said that if they had seen that on a quarter.

[00:13:52] Speaker 03:
of the 24 gigahertz licenses, which they would have seen had they looked at the 42, that fiber tower had in fact built out when no other licensee had built out anything at all on the 24 gigahertz band.

[00:14:04] Speaker 04:
Were the 10 also on the 24 gigahertz band?

[00:14:07] Speaker 03:
They were primarily on the 39 gigahertz.

[00:14:10] Speaker 03:
bands, but I would have to go back and check if there were any of those 10 where I don't believe they were.

[00:14:16] Speaker 03:
I believe those were all 39 gigahertz, but I have to... They at least knew that there was construction as to those.

[00:14:23] Speaker 03:
They did know that there was construction as to those, but it simply put that out of its mind in terms of its order here.

[00:14:30] Speaker 03:
And I think, at the very least, one would think that we would want to give the commission a shot at doing the waiver and extension analysis on an accurate depiction of the record that took into account all of Fiber Tower's activities, including but not limited to construction.

[00:14:45] Speaker 06:
Well, let me ask you, because the argument to the commission was this 90% argument.

[00:14:51] Speaker 06:
And I'm just summarizing, but that, you know, we've done all this preliminary work and shows that, you know, we're not just warehousing, et cetera.

[00:15:03] Speaker 06:
So the commission says, well, you know, we told you back in 2008 that that wasn't going to do it, that we need actual construction.

[00:15:16] Speaker 06:
And it addressed your

[00:15:18] Speaker 06:
argument about its rule and its interpretation of the rule saying that no, we've always required construction.

[00:15:28] Speaker 06:
So then your argument to the Commission is it ought to look at its rule differently and it ought to change that interpretation.

[00:15:38] Speaker 03:
No, Your Honor, I guess it would be what you consider as the original point.

[00:15:41] Speaker 03:
We would consider the original relevant point is the promulgation of the rulemaking itself.

[00:15:47] Speaker 06:
And talking about flexibility.

[00:15:49] Speaker 03:
Talking about flexibility.

[00:15:50] Speaker 06:
And the commission tells you what it means back in 2008.

[00:15:54] Speaker 03:
commission then construes its substantial service requirement as requiring construction in 2008.

[00:16:01] Speaker 03:
We think that's in conflict with the commission's description of that requirement when it actually promulgated the rule.

[00:16:08] Speaker 03:
And then of course under established admin law presence you look at what they did at the time they promulgated the rule and they can't change their interpretation.

[00:16:16] Speaker 03:
But let me

[00:16:16] Speaker 03:
Let me add another point to that that you brought up, that the commission told them in 2008 that all that other stuff wasn't enough.

[00:16:25] Speaker 03:
There's one significant piece of that other stuff that wasn't around in 2008, but that was around in 2012, and that's the spectrum in a box program.

[00:16:34] Speaker 03:
And I think that that, I think it's easier to talk about this stuff more concretely rather than just construction and

[00:16:40] Speaker 03:
and a seed in activities, let's take Spectrum in a box, because I think that's a quintessential example of the type of innovation that FiberTower was doing.

[00:16:48] Speaker 03:
Now, to be sure, Spectrum in a box, just to refresh your memory, Spectrum in a box is essentially the equipment and technology that FiberTower developed with partners that allowed a customer to simply purchase a standalone system, including the equipment needed to set up a link,

[00:17:07] Speaker 03:
And it would come with the rights to use fiber tower spectrum.

[00:17:12] Speaker 03:
It was essentially a ready-to-deploy system.

[00:17:14] Speaker 03:
You bought it.

[00:17:14] Speaker 03:
It had the equipment.

[00:17:15] Speaker 03:
It had the spectrum.

[00:17:16] Speaker 03:
You hook it up, and you're ready to go.

[00:17:18] Speaker 03:
Now, to be sure, that does not fall under the traditional rubric of construction and transmission, which has you building up a network, building up links on different cell towers, for example, and then waiting for the customers to come.

[00:17:33] Speaker 03:
What this has is you've built up the system, it's ready to deploy, you wait for the customer to do it.

[00:17:39] Speaker 03:
Now the reason we think that's precisely the sort of service that the Commission had in mind when it promulgated the 39 GHz order is based upon the text of the 39 GHz order itself.

[00:17:51] Speaker 03:
If you look at paragraph

[00:17:53] Speaker 03:
42, what it says is the commission is moving to this more flexible regime precisely to allow services to develop in ways that the commission cannot predict.

[00:18:05] Speaker 03:
And then in paragraph, and we think Spectrum in a Box is exactly that sort of service that the commission could not have predicted and wanted to allow that sort of service to be recognized.

[00:18:15] Speaker 03:
If you look at paragraph 45 of the 39 gigahertz order, and we think this paragraph is absolutely crucial,

[00:18:22] Speaker 03:
Paragraph 45 says, look, these bands, the 39 gigahertz band in that order, are different than other traditional bands here.

[00:18:31] Speaker 03:
And one reason why they're different is you can't just go and build up links wherever and turn them on and expect them to work.

[00:18:39] Speaker 03:
It requires precise location of equipment based upon a customer demand.

[00:18:44] Speaker 03:
That is, often, the link won't be placed until a customer is placed in order.

[00:18:49] Speaker 03:
This is recognized in the text of the 39 gigahertz order in paragraph 45.

[00:18:53] Speaker 03:
Spectrum in a box is precisely an answer to the problem that the commission identified in 1997, but didn't have a solution to.

[00:19:01] Speaker 03:
So it said, we're going to allow this flexibility to allow service to develop in ways that we can't predict.

[00:19:07] Speaker 03:
Spectrum in a box is functionally identical to the traditional network, except first you have a customer actually place the order and then the system is turned up.

[00:19:17] Speaker 03:
It's equivalent, I don't see any functional difference, Your Honor, between putting up a link

[00:19:22] Speaker 03:
flipping it on, having the radio transmit and wait for a customer to come to that link, then simply having the system ready to deploy, have it ready to go, wait for a customer to purchase it, and then have it come up.

[00:19:34] Speaker 03:
In both circumstances, you're waiting for a customer to come to actually make use of the link.

[00:19:39] Speaker 03:
It's just that in these bands, in order to make full utilization of the technology, you need to know exactly where to put the equipment.

[00:19:48] Speaker 03:
And rather than just simply build up an extreme cost

[00:19:51] Speaker 03:
build up links in places where you hope customers might show up.

[00:19:56] Speaker 03:
And so Fiber Tower came up with this innovative technology in order to address that concern, providing service.

[00:20:03] Speaker 03:
And we think that the commission, in turning a blind eye to that, that said, if you don't have traditional construction and transmission, we're not even going to look.

[00:20:12] Speaker 03:
You could be the world's greatest innovator have come up with the most innovative ways of providing service.

[00:20:17] Speaker 03:
We're just not going to look at it unless you do it.

[00:20:19] Speaker 03:
We think that conflicts with the 39 gigahertz order at the time of promulgation.

[00:20:24] Speaker 07:
Council, on the argument of whether what the commission wanted a fiber tower to do,

[00:20:31] Speaker 07:
It says, well, we had just this sort of thing going on by Fiber Tower in 2008.

[00:20:40] Speaker 07:
So the thing we're asking for, there's no reason to think that it would be a safe bill or it links to nowhere, et cetera.

[00:20:50] Speaker 07:
So you reply to that by saying not all licenses are the same, not all times are the same, which is undoubtedly true.

[00:21:00] Speaker 07:
Is your distinction of the links provided in 2008 precisely this spectrum in a box alternative, or what?

[00:21:14] Speaker 03:
If we needed to make a showing beyond what we made in 2008, then what I would point you to is yes, the spectrum in a box technology.

[00:21:22] Speaker 03:
That was not around in the 2008 showing.

[00:21:24] Speaker 03:
It was around by the time of the 2012 showing, and in fact,

[00:21:28] Speaker 07:
Several of them.

[00:21:30] Speaker 07:
So what might have been a logical investment in 2008 by 2012 that ceased to be a logical investment?

[00:21:46] Speaker 07:
Is that a fair characterization of it?

[00:21:48] Speaker 03:
Well, Your Honor, I think what may have been reasonable investments at the beginning of this spectrum

[00:21:54] Speaker 03:
People figured out that the market demand didn't materialize in the way that everyone thought, including the commission and including every industry participant that provided views in the commission confirmed this.

[00:22:06] Speaker 03:
And so then the question was, OK, well, how do you build up this network?

[00:22:10] Speaker 03:
If the market demand isn't materializing in the way that you can just go out and build up links,

[00:22:15] Speaker 03:
all over the place and wait for customers to come.

[00:22:17] Speaker 03:
How do you go about doing this?

[00:22:19] Speaker 03:
The one of the things that FiberTower came up with is the spectrum in a box technology.

[00:22:24] Speaker 03:
There are other things as well.

[00:22:25] Speaker 03:
Now, in the 42 licenses that were reported, that was a mix of sort of construction.

[00:22:30] Speaker 03:
It was the traditional sort of links that you just put up that had been put up before.

[00:22:34] Speaker 03:
It was the spectrum in a box.

[00:22:36] Speaker 03:
technology, those were more of the recently finalized leases.

[00:22:40] Speaker 03:
There were 111 links operating on those 42 licenses that the commission made no mention of in its waiver and extension analysis.

[00:22:48] Speaker 03:
On top of those 111 links, if you look at the same paragraph in the same place in every license application, there were at least 55 and counting more links that were going to be put up imminently pursuant to finalized leases.

[00:23:03] Speaker 03:
They just hadn't been built yet.

[00:23:05] Speaker 03:
The paperwork had been done.

[00:23:07] Speaker 04:
But your argument as to the 42 is independent of spectrum in a box.

[00:23:11] Speaker 03:
It's independent of spectrum in a box.

[00:23:13] Speaker 03:
This is the broader substantial service argument that they were also providing substantial service apart from actual construction.

[00:23:23] Speaker 03:
Even under the commissions test, accepting it full stop,

[00:23:27] Speaker 03:
The 42 would show construction.

[00:23:30] Speaker 04:
So can I ask you a question about the commission's test of actual construction?

[00:23:35] Speaker 03:
Yes.

[00:23:36] Speaker 04:
So on the question of whether it's consistent with the way the commission had been characterizing the inquiry in the past, there is this regulation, 47 CFR 101.3.

[00:23:49] Speaker 04:
Yes, Your Honor.

[00:23:49] Speaker 04:
And that's, it's in the addendum to the Commission's, now the Commission's addendum doesn't have pages for some reason, I'm not sure why, but, so I can't point you to a page, but it's, it's at 47 CFR 101.3 and the first definition is 24 gigahertz service.

[00:24:14] Speaker 03:
Yes.

[00:24:16] Speaker 04:
And then the way it goes on to describe 24 gigahertz service is a fixed point-to-point, point-to-multi-point, and multi-point-to-multi-point radio system dot, dot, dot, consisting of a fixed main nodal station and a number of fixed user terminals.

[00:24:31] Speaker 04:
This service may encompass any digital fixed service.

[00:24:35] Speaker 04:
And so I don't have the requisite technical expertise to understand every jot and tittle of that.

[00:24:42] Speaker 04:
It sounds like that's speaking about an actual link.

[00:24:48] Speaker 03:
Yes, Your Honor, Inspector Minna Box provides an actual link.

[00:24:51] Speaker 03:
It's also a point-to-point or point-to-multi-point system.

[00:24:55] Speaker 03:
It's just the only difference, Your Honor, is that what the Commission's construction and transmission requires is that you build the link first.

[00:25:03] Speaker 04:
Right, and this is consisting of a fixed main nodal station and a number of fixed user terminals.

[00:25:07] Speaker 03:
That's right.

[00:25:08] Speaker 03:
So you build the link first, and then you turn it on, and then customers come.

[00:25:12] Speaker 03:
That's kind of the only difference between that and Spectrum.

[00:25:15] Speaker 03:
Spectrum in a box is also a point-to-point system.

[00:25:18] Speaker 03:
It's a radio system.

[00:25:19] Speaker 03:
It satisfies all of those criteria.

[00:25:21] Speaker 03:
The only difference is... Well, does it have a number of fixed user terminals?

[00:25:24] Speaker 03:
Well, as soon as it's put up, it does.

[00:25:27] Speaker 04:
Right, but until it's put up, it doesn't.

[00:25:28] Speaker 03:
No, until it's put up, it's in a box.

[00:25:31] Speaker 03:
And then you buy it, and then you put it up, and it's ready to go.

[00:25:34] Speaker 03:
And then it is a point-to-point or point-to-multi-point system, radio system, that provides all of those things.

[00:25:41] Speaker 03:
So we think that functionally, it operates quite similarly.

[00:25:44] Speaker 03:
And when the commission said,

[00:25:46] Speaker 03:
this service is going to evolve in different ways.

[00:25:49] Speaker 03:
And when the commission said that, in fact, in this sort of spectrum, you may need to sometimes wait for a customer to place in order to figure out the right location, we think that's all of one piece with that.

[00:26:00] Speaker 03:
And that the commission should not, at the very least, the commission simply shouldn't disregard that sort of technology, shouldn't disregard all of the other forms of investment that FiberTower made

[00:26:10] Speaker 03:
until it shows one traditional link, construction link.

[00:26:15] Speaker 03:
And even if that's true, even if all that's true, here we have at least 42 different licenses.

[00:26:21] Speaker 03:
apart from the 10 that you mentioned at the beginning, which do show that very traditional notion of build it up a link.

[00:26:28] Speaker 04:
So put the 42 to one side, because I think the 42, you would say, I think, seems would satisfy this definition, because there are fixed user terminals in existence already.

[00:26:39] Speaker 04:
So one way to describe this semantically, and I take your policy argument that there's no reason to draw a distinction between service that's ready to be used in a box and service that's actually in existence.

[00:26:48] Speaker 04:
But there is at least a distinction.

[00:26:50] Speaker 04:
And so you could describe one as potential services and the other one as actual service.

[00:26:55] Speaker 04:
And then just accept that terminology for now, even though I take the point that you would say actually they're both actual services.

[00:27:02] Speaker 04:
So if that's true, then there at least is

[00:27:08] Speaker 04:
And if the commission had clearly stated at some point that we're drawing a distinction between potential service and actual service, and for actual service we mean working links, then you'd be out of luck as to everything but the 42.

[00:27:22] Speaker 03:
Yes, under the commission's test.

[00:27:23] Speaker 03:
That's right.

[00:27:23] Speaker 03:
But not on substantial service, but not on waiver and extension relief.

[00:27:27] Speaker 03:
And that goes back to my earlier argument.

[00:27:29] Speaker 03:
that the waiver and extension was predicated on the commission's equitable judgment that Fiber Tower is essentially sleeping on its rights.

[00:27:37] Speaker 03:
We think that would have been different.

[00:27:38] Speaker 03:
At the very least, we think the commission should have a chance to reevaluate its equitable analysis on a full and accurate record of what Fiber Tower had actually been doing, including construction on the 42 on a quarter of the 24 gigahertz license.

[00:27:52] Speaker 03:
The other part of the waiver and extension relief that doesn't have to do specifically with the 42 licenses, but I think if the court were to vacate on that basis, I think it would be helpful to also provide some guidance.

[00:28:03] Speaker 03:
There were two parts of the equation to the waiver and extension analysis.

[00:28:07] Speaker 03:
Was Fiber Tower sleeping on its rights, that is, or using the exact words of the commission, did Fiber Tower choose not to build?

[00:28:15] Speaker 03:
even when market demand existed.

[00:28:17] Speaker 03:
That's the first part of the equation, which we've already talked about.

[00:28:20] Speaker 03:
The other part of the equation in the waiver extension analysis is

[00:28:24] Speaker 03:
where market demand existed.

[00:28:25] Speaker 03:
That is, the commission takes the view that there was sufficient market demand to support this buildup of links in all of these different markets.

[00:28:37] Speaker 03:
We think that that is flawed on four bases.

[00:28:40] Speaker 03:
And we think if the court were to vacate, it should point this out to the commission so that when it redos its waiver extension analysis, it has this in mind.

[00:28:47] Speaker 03:
The first piece of evidence is you don't have to take Fiber Tower's word for it that there wasn't sufficient market demand.

[00:28:54] Speaker 03:
Every industry participant, that includes wireless carriers, industry groups, equipment vendors, that submitted views before a commission that took a position, supported relief for FiberTower on two bases.

[00:29:07] Speaker 03:
One, that FiberTower, some of them said FiberTower is the best position of any licensee to develop these vans, so looking at the perspective

[00:29:14] Speaker 03:
wavering worry that would satisfy that.

[00:29:16] Speaker 03:
But the other thing they said is that the market for the 39 and 24 gigahertz bands has not grown to the extent that they or the commission predicted.

[00:29:26] Speaker 03:
This is our opening brief pages 16, 19, and 48 cite all of the industry comments.

[00:29:31] Speaker 03:
They're all in the JA.

[00:29:32] Speaker 03:
You can look at them.

[00:29:33] Speaker 03:
The other material part of the industry comments is not a single competitor filed that says, hey, look, you should cancel these licenses because we can make better use of them.

[00:29:43] Speaker 03:
In how these commission proceedings work, if a third party actually wants to use the licenses, the time that they come in is at the renewal proceeding and they can make a competitive showing that say, we think it's telling of the market demand that there was not a single competitor that came in and said, no, actually, we can make better use

[00:30:03] Speaker 03:
of the spectrum that there was customer demand.

[00:30:05] Speaker 03:
The second piece of evidence I point to on that market demand side of the equation is that no other 24 gigahertz licensee at the time had constructed any operating links on the system.

[00:30:17] Speaker 03:
Fiber Tower was the only one and in fact did it on about 25 percent of its licenses.

[00:30:24] Speaker 04:
Can you just describe

[00:30:27] Speaker 04:
for those who don't have the technical expertise that you and the commission do.

[00:30:31] Speaker 04:
What exactly had to happen to turn the spectrum in a box into a working link?

[00:30:38] Speaker 04:
Somebody buys the box, you're charging for the box.

[00:30:41] Speaker 03:
They pay for the box.

[00:30:43] Speaker 03:
It comes paired with the right to use the spectrum.

[00:30:45] Speaker 03:
So they have those rights.

[00:30:46] Speaker 03:
Then it has to be installed.

[00:30:48] Speaker 03:
Some of these, there were different systems within the spectrum in a box.

[00:30:53] Speaker 03:
Part of the spectrum in a box system were these small, you might recall from the briefs, the description of small cell equipment.

[00:30:59] Speaker 03:
This was kind of innovative equipment, especially for congested urban areas.

[00:31:03] Speaker 03:
It would simply allow you to connect this system up to something as skinny as a pole.

[00:31:09] Speaker 03:
So you could imagine if you had a link between, say, two buildings, a point-to-point link between two buildings, you could, and there are pictures of these on the record, but they're essentially a skinny pole, and you attach the unit to the skinny pole, and then of course this exceeds my

[00:31:25] Speaker 03:
technical expertise, I don't know what else has to exactly happen in terms of you probably need some line of sight and these other things have to be set up in a way that you can transmit the signal in a way.

[00:31:36] Speaker 03:
But that's it.

[00:31:37] Speaker 03:
You set the system up, it comes with the rights, it's a portable unit, it becomes mounted, and then it provides service.

[00:31:45] Speaker 07:
Is there a difference between it and standard provision of links?

[00:31:52] Speaker 07:
You build towers and things like that and market it.

[00:31:57] Speaker 07:
Presumably you've done some preliminary marketing.

[00:32:00] Speaker 07:
Here you build the boxes before anything goes out to anybody.

[00:32:07] Speaker 07:
Then it's marketed box by box.

[00:32:10] Speaker 03:
That's right, Your Honor.

[00:32:11] Speaker 03:
That's the difference.

[00:32:12] Speaker 03:
It's marketed box by box.

[00:32:14] Speaker 07:
If I'm hearing it correctly, you're saying that an inventory of boxes ready to market and marketing efforts is as much as one can do using this technology.

[00:32:27] Speaker 03:
Yes, Your Honor.

[00:32:28] Speaker 03:
We think that that was, and FiberTower is the market leader, that was the judgment that they made as to the best way to implement this technology.

[00:32:36] Speaker 03:
It's supported by the Commission's own 39 gigahertz order.

[00:32:39] Speaker 03:
It's supported by the industry comments.

[00:32:41] Speaker 03:
of every industry participant that provided comments to the Commission.

[00:32:45] Speaker 03:
Commission doesn't provide any countervailing industry comments that suggest that, no, this wasn't the right way to go about implementing the market.

[00:32:52] Speaker 07:
To go back to the Commission's reliance on construction by Fiber Tower in 2008, I asked you, I invited an answer to that on my last round.

[00:33:05] Speaker 07:
That was totally open-ended.

[00:33:08] Speaker 07:
What inspired the tower's distinction of those black constructions, too?

[00:33:15] Speaker 07:
Showing that that may have been fine, but today, 2012, what happened in 2008 would have been safe builds.

[00:33:30] Speaker 03:
Okay.

[00:33:30] Speaker 03:
So in 2008, there were a certain number of the licenses which the commission said you satisfied substantial service on.

[00:33:37] Speaker 03:
The majority of them, they said, we'll give you an extension or waiver until 2012.

[00:33:41] Speaker 03:
So the ones on which they had satisfied substantial service in 2008, they had actually built up links because in certain markets, there was sufficient demand.

[00:33:50] Speaker 03:
So this is a market by market sort of license.

[00:33:53] Speaker 03:
So in those markets where there was sufficient demand for the traditional type of infrastructure built, Fiber Tower did it.

[00:33:58] Speaker 03:
The commission said, fine, substantial service, those are off the table now.

[00:34:04] Speaker 03:
Those are fine.

[00:34:05] Speaker 03:
As to the other ones where you didn't build links, extension and waiver to 2012.

[00:34:09] Speaker 03:
Fiber Tower said in 2008, hey, look, we've done all these other things.

[00:34:13] Speaker 03:
We've invested in equipment development.

[00:34:15] Speaker 03:
We've set up the construction platforms.

[00:34:17] Speaker 03:
We've done all these things.

[00:34:18] Speaker 03:
But the commission says, as Judge Rogers has pointed out, look, you didn't actually operate, construct, and transmit the links.

[00:34:24] Speaker 03:
That's not good enough.

[00:34:26] Speaker 03:
Come back in 2012 with that showing.

[00:34:28] Speaker 03:
Fiber Tower comes back in 2012.

[00:34:29] Speaker 03:
Now, between 2008 and 2012, what didn't happen is what everyone expected, including FiberTower, including the commission, is that demand did not materialize.

[00:34:39] Speaker 03:
Everyone expected that wireless carriers would be rolling out 4G technology.

[00:34:44] Speaker 03:
That would create demand for the type of fixed wireless backhaul services that these bands are used to provide that simply did not materialize on a nation.

[00:34:53] Speaker 03:
There were certain markets where it did, and in those markets, FiberTower built.

[00:34:57] Speaker 03:
But as a nationwide matter, it didn't.

[00:34:59] Speaker 03:
And that's what I was talking about when I said the four pieces of evidence that show that the commission misjudged the other side of the equation between 2008, 2012.

[00:35:07] Speaker 03:
I already talked about two of them, the industry comments, the fact that no other 24 gigahertz licensee built out at all.

[00:35:15] Speaker 03:
The third is that most of the 39 gigahertz licensees did not build out at all either.

[00:35:21] Speaker 03:
In fact, about 2 thirds of the non-fiber tower licenses were returned to the commission.

[00:35:26] Speaker 03:
And there has not, even since that date, how many years have passed, the Commission has not reissued, our understanding is, the Commission has not reissued a single one of those licenses.

[00:35:37] Speaker 03:
Tellingly, just in October 2014, so after all of these orders were

[00:35:42] Speaker 03:
already rendered by the commission.

[00:35:44] Speaker 03:
The commission put out a notice of inquiry, and this is cited in our reply brief, proposing partial repurposing of the spectrum to allow for other sorts of service, including mobile wireless and those other things.

[00:35:56] Speaker 03:
We think that's at least an implicit, if not explicit, acknowledgement that the market had not evolved in the way that the commission and everyone else

[00:36:02] Speaker 03:
thought it would.

[00:36:04] Speaker 03:
The last piece of evidence I point out is of the 39 gigahertz licensees that did build, a good portion of those were saved builds.

[00:36:13] Speaker 03:
Now, we realize there's a dispute in the record about when those were brought to the commission's attention.

[00:36:18] Speaker 03:
At the very least, they were brought to the commission's attention at the reconsideration stage.

[00:36:23] Speaker 03:
Reply brief pages 24 to 26 of our reply brief, short of

[00:36:27] Speaker 03:
probably in more detail that you want to know, kind of point out why those builds were actually saved builds and not of the type that we're able to provide service.

[00:36:36] Speaker 03:
The commission, in its order, does not dispute that.

[00:36:40] Speaker 03:
It never says that, oh no, we've looked at these things and they were actually providing service to customers.

[00:36:46] Speaker 03:
These were meaningful builds.

[00:36:47] Speaker 03:
These were not antiquated radios.

[00:36:50] Speaker 03:
Our submission showed that those licenses, the construction notifications for those licenses, as a matter of physics,

[00:36:56] Speaker 03:
simply could not have provided the service that was claimed in those.

[00:37:00] Speaker 03:
And so we think those were saved builds.

[00:37:02] Speaker 03:
Those were saved builds on a level of detail.

[00:37:04] Speaker 03:
Those were saved builds by IDT.

[00:37:06] Speaker 03:
IDT had virtually all of the 39 gigahertz construction notifications at the relevant time.

[00:37:15] Speaker 03:
And again, no contrary evidence from the commission finding that those were in fact viable service builds rather than saved builds.

[00:37:25] Speaker 06:
So when the commission focuses on service to the public, I understand your arguments about why it's a short-sighted view, but until people buy these boxes and hook them to a pole, there is no service.

[00:37:47] Speaker 06:
That's why the commission has drawn that line.

[00:37:50] Speaker 03:
Your Honor, that is the line the Commission has drawn, but we think that line, as I've said, conflicts with the line that the Commission had contemplated in its 39 gigahertz order.

[00:37:59] Speaker 06:
In the order itself.

[00:38:00] Speaker 03:
In the order itself.

[00:38:02] Speaker 03:
And so that would be the basis for our substantial service argument.

[00:38:07] Speaker 03:
Of course, our other argument on waiver and extension analysis doesn't fall on that line.

[00:38:12] Speaker 03:
It just shows that the Commission should do what they're doing.

[00:38:14] Speaker 06:
Is the box a lot more expensive?

[00:38:16] Speaker 03:
This is outside of the record, but I did ask how much one of these boxes cost.

[00:38:23] Speaker 03:
My understanding, it varies.

[00:38:25] Speaker 03:
I want to say $20,000 sticks out in my head, but I might be misstating that.

[00:38:33] Speaker 06:
I'm just trying to think if there was some barrier to use of these boxes.

[00:38:38] Speaker 06:
That's all.

[00:38:39] Speaker 06:
You know, it was $15 billion per box.

[00:38:42] Speaker 03:
No, no, no, no, no, no, no, no.

[00:38:43] Speaker 03:
These are meant to be, these can be, there are varying types of services that are provided in these boxes, but these can be bought by, for example, a university that wants to beam service in between different buildings.

[00:38:55] Speaker 04:
So it's not $15 billion?

[00:38:57] Speaker 03:
It is not $15 billion, Your Honor, and there is no Eighth Amendment claim.

[00:39:02] Speaker 07:
Contrary to ordinary building of links, it's inherently customer specific?

[00:39:09] Speaker 03:
It is, Your Honor, because a particular customer buys the Spectrum in a box of equipment and then it's mounted according to their needs and specifications.

[00:39:17] Speaker 07:
In the conventional area, the actual getting of service is customer specific, but the construction is not.

[00:39:25] Speaker 03:
That's right.

[00:39:25] Speaker 03:
You would, for example, put up a link on a cell tower to provide.

[00:39:30] Speaker 03:
But if it happens to be that the customers in demand aren't, they don't need service from that cell tower, you may have built in a link in a place where it's not being used.

[00:39:38] Speaker 03:
So you want to put them in places where they're used.

[00:39:41] Speaker 04:
Let me just, before we sit down,

[00:39:47] Speaker 04:
whether the commission's interpretation is consistent with what the commission did before.

[00:39:50] Speaker 04:
So you've identified the portions of the orders that you think give rise to the best argument that there's an inconsistency.

[00:39:57] Speaker 04:
Then we also have the regulations, which we should look to as well, I take it.

[00:40:01] Speaker 04:
And on the regulations, so I identified the one already about the definition of 24 gigahertz service.

[00:40:07] Speaker 04:
And then there's also 101.527.

[00:40:09] Speaker 04:
And 101.527B1.

[00:40:16] Speaker 04:
in discussing substantial service and what the applicant needs to submit, says each licensee must at a minimum file a report maps and other supporting documents describing its current service, so we take this to be current service, in terms of geographic coverage and population served to the commission.

[00:40:33] Speaker 04:
Right.

[00:40:33] Speaker 04:
So when it speaks in terms of population served and geographic coverage,

[00:40:37] Speaker 04:
that seems to indicate population that's actually being served, not population that might buy a box that could then result in service.

[00:40:43] Speaker 03:
So we think that regulation is crafted towards a traditional construction and transmission paradigm, in particular to allow a licensee, for example, to make the safe harbor showing, right?

[00:40:53] Speaker 03:
You can make the safe harbor showing you provided four links per service.

[00:40:58] Speaker 03:
But the regulation also includes language not limited to that information.

[00:41:04] Speaker 03:
That is, you can show other things

[00:41:07] Speaker 03:
that would allow a commission to make a determination of substantial service.

[00:41:11] Speaker 03:
You're not limited to just showing the actual operation of service.

[00:41:17] Speaker 03:
It doesn't limit you to that information.

[00:41:19] Speaker 03:
You're certainly invited, in fact, required to show other things

[00:41:23] Speaker 03:
that would give that indication of service.

[00:41:26] Speaker 03:
And so we think while the same harbor.

[00:41:28] Speaker 04:
So one way to read that is to say that this tell, the first sentence that I quoted from tells you what current service means.

[00:41:34] Speaker 04:
Yes.

[00:41:35] Speaker 04:
And then you're right.

[00:41:35] Speaker 04:
It goes on to say the report must also contain a description of the licensee's investments in its operations, which I think is what you're referring to.

[00:41:41] Speaker 04:
So it might be that you have to have some service, current service, and then if you have

[00:41:50] Speaker 04:
If you can show sufficient investments, then you'll satisfy substantial service.

[00:41:55] Speaker 04:
But it's not in derogation of the requirement to have current service to begin with.

[00:42:00] Speaker 04:
In other words, it seems to be drawing a distinction between what's service and what is other stuff that could go into an assessment of substantial service.

[00:42:09] Speaker 02:
Your Honor, I'm just looking at the actual text of the language here.

[00:42:17] Speaker 04:
So I was looking at B1.

[00:42:21] Speaker 04:
describing its current service in terms of geographic coverage and population served.

[00:42:25] Speaker 03:
Yes, Your Honor.

[00:42:25] Speaker 03:
So if our view is, if a licensee satisfied that, for example, it could make a Safe Harbor showing just based upon on that.

[00:42:32] Speaker 03:
But we don't think that that is an exclusive way to show substantial service.

[00:42:36] Speaker 03:
In fact, if you look again back to the 24 gigahertz order at the time they complicated the rule, they said, yes, Safe Harbor is a way to show substantial service.

[00:42:45] Speaker 03:
You make the types of showings here.

[00:42:47] Speaker 03:
but you can prove substantial service in other ways.

[00:42:50] Speaker 03:
That's what the regulation verbatim says, or the order verbatim says.

[00:42:54] Speaker 03:
Now the commission has read into the in other ways, in other ways that also show construction.

[00:43:01] Speaker 03:
But we don't think that that is supported by the reason for those regulations, that if you read those orders at the whole, what they're trying to do is move away from construction to allow for more flexibility.

[00:43:15] Speaker 04:
But it doesn't seem inconsistent with what the commission's saying to say that... Yeah, I take your point.

[00:43:21] Speaker 04:
That's one interpretation, is that you don't need any current service or construction.

[00:43:25] Speaker 04:
I'm equating current service and construction.

[00:43:28] Speaker 04:
You don't need any current service or construction at all.

[00:43:30] Speaker 04:
You can get home all the way based on investments and potential service.

[00:43:36] Speaker 04:
And you can also get home all the way if you have the requisite baseline level for substantial service under the safe hardware, so you need four per million.

[00:43:43] Speaker 04:
But if you're less than four per million, you still have to have some current service.

[00:43:49] Speaker 04:
then you can also, so you have a little bit of concurrent service that's less than four per million, but then you show investments that get you to substantial service.

[00:43:55] Speaker 03:
That is the Commission's view that you don't look at anything, you don't look at any investment, you don't look at any innovation until you have that construction, and we think that's an overly narrow interpretation of the orders.

[00:44:09] Speaker 06:
Let us hear from the Commission.

[00:44:13] Speaker 06:
We'll give you some time.

[00:44:22] Speaker 01:
May it please the Court?

[00:44:23] Speaker 01:
My name is Maureen Flann.

[00:44:24] Speaker 01:
I'm here this morning on behalf of the Federal Communications Commission.

[00:44:28] Speaker 01:
I'd like to start with the 42 licenses.

[00:44:30] Speaker 01:
It's our view that the 42 licenses are not before the Court.

[00:44:33] Speaker 01:
FiberTower identified those 42 licenses for the first time in its opening brief in this Court.

[00:44:39] Speaker 01:
It did not identify those 42 licenses in the proceedings before the agency.

[00:44:43] Speaker 01:
I'd like to read the text of FiberTower's application for review.

[00:44:47] Speaker 01:
which you can find cited at page 16 of Fiber Tower's reply brief.

[00:44:51] Speaker 01:
Fiber Tower argues that it preserved its argument with respect to the 42 licenses based on this language.

[00:44:57] Speaker 01:
The Bureau aired as a matter of fact when it found that no facilities had been built out in Fiber Tower's license areas.

[00:45:03] Speaker 01:
The record demonstrates that as of June 1, 2012, a significant amount of construction had occurred in many of Fiber Tower's license areas that the Bureau identified for termination.

[00:45:13] Speaker 01:
That language does not identify any particular license, nor does it describe the facilities that were allegedly constructed.

[00:45:21] Speaker 01:
As Fiber Tower fully concedes, substantial service determinations are made on a license-by-license basis.

[00:45:27] Speaker 01:
So, for purposes of Section 405 of the Act, if Fiber Tower is to identify an error

[00:45:32] Speaker 01:
made by the Bureau with respect to any subset of those 680 line licenses, it was Fiber Tower's obligation to identify those licenses in its application.

[00:45:43] Speaker 04:
So can I ask you this, when you read that sentence, does it at least indicate to you that there may well be some individual license as to which there was construction?

[00:45:52] Speaker 01:
It does indicate that, Your Honor, but as the Commission pointed out in footnote 133 of the order on review, it was unable to grapple with this argument because Fiber Tower, again, did not identify any specific license where the Bureau allegedly erred with respect to the substantial service showing.

[00:46:09] Speaker 07:
How many minutes would it have taken to...

[00:46:11] Speaker 07:
I don't know how many minutes, Your Honor.

[00:46:20] Speaker 01:
There were 689 substantial service showings.

[00:46:23] Speaker 01:
Each one was 20 pages in length.

[00:46:26] Speaker 01:
It's searchable, Your Honor, yes, but this court and Bartolade Hebel held that the Commission need not sift through pleadings to identify arguments that are not specifically made by petitioners.

[00:46:35] Speaker 07:
The argument is made.

[00:46:36] Speaker 07:
That's not a matter of sifting from pleadings to find the argument.

[00:46:40] Speaker 07:
The argument made in the argument's application

[00:46:43] Speaker 07:
is certainly less clear than one would like.

[00:46:47] Speaker 01:
Arguably, Your Honor, we would have to sift through cleanings because there were 689 substantial service showings.

[00:46:52] Speaker 01:
Fiber Tower doesn't even tell the Commission that this argument affects 42 licenses, 10 licenses, 15 licenses.

[00:47:00] Speaker 01:
It would have required the Commission to go through each and every one of those 689 substantial service showings again.

[00:47:07] Speaker 01:
Now Judge Rogers, you asked the question and I think this is a very good one.

[00:47:10] Speaker 01:
If FiberTower thought that the Bureau aired with respect to those 42 licenses, why didn't FiberTower identify those licenses in its application for review?

[00:47:20] Speaker 01:
Moreover, if FiberTower thought that the Commission erred in affirming the Bureau in the order on review, why didn't FiberTower identify those 42 licenses in its petition for reconsideration for the agency?

[00:47:33] Speaker 04:
Well, there's no doubt that it would have been much, much better if they would have identified the 42.

[00:47:37] Speaker 04:
I think we would all be looking at a different equation.

[00:47:39] Speaker 04:
I think the question is,

[00:47:42] Speaker 04:
What else could they, are you suggesting that they weren't talking about the 42 when they have this sentence in there?

[00:47:47] Speaker 01:
Well, I'm suggesting, Your Honor, is that before the agency and before this court, Fiber Towers view is that it has to, it doesn't have to demonstrate any construction or any service to meet the substantial services.

[00:47:58] Speaker 01:
No, no, I think that's argument.

[00:48:00] Speaker 04:
I think this argument is that they're saying that even if you assume that you do have to meet a construction requirement, they did do that as to 42.

[00:48:07] Speaker 04:
And then the sole question is whether they adequately apprised, it's a very fair question, but whether they adequately apprised you of the licenses as to which, even under your test, there was construction so that your test would be satisfied.

[00:48:19] Speaker 01:
In our view, Your Honor, our view, Your Honor, is that they didn't adequately apprise us under our rules, specifically section 115B1, which holds that

[00:48:28] Speaker 01:
a licensee or any party for that matter seeking relief from the commission has to identify the error of law or the error of fact made by the subordinate bureau with some degree of specificity.

[00:48:40] Speaker 01:
Here, because again, substantial service is determined on the license by license basis.

[00:48:44] Speaker 04:
Is with some degree of specificity, is that your, is the financial say that?

[00:48:47] Speaker 01:
The regulations of, I think it's particularity, it's.

[00:48:51] Speaker 07:
I'm sorry, 111 what?

[00:48:55] Speaker 01:
It's section 115B1.

[00:48:58] Speaker 01:
The application for review shall concisely and plainly state the questions presented for review with reference, where appropriate, to the findings of fact or conclusions of law.

[00:49:07] Speaker 01:
So here, again, the Commission's analysis of substantial service... It doesn't refer to particularity.

[00:49:12] Speaker 01:
No, but it has to cite to the findings of fact or conclusions of law.

[00:49:17] Speaker 07:
And remember, the commission made... The finding of fact isn't obscure here.

[00:49:21] Speaker 07:
The commission said there's no construction at all, period, flat, end of matter.

[00:49:26] Speaker 01:
That's right, Your Honor, but you have to understand that substantial service is determined on a license-specific basis.

[00:49:31] Speaker 06:
Now, if... Could you have just made a search for the word construction?

[00:49:37] Speaker 01:
Your Honor...

[00:49:38] Speaker 01:
I know, but I'm just trying to understand why this is... Your Honor, we could have done a search for the word construction, but we would still be sifting through pleadings because we'd have to do that word search through 689 documents.

[00:49:49] Speaker 01:
I mean, Fiber Tower is taking advantage of the fact that the Bureau did not issue 689 separate orders.

[00:50:01] Speaker 01:
addressing each one of those substantial service showings.

[00:50:04] Speaker 01:
Instead, for purposes of administrative ease, they rolled them up into one order and dealt with them all together.

[00:50:09] Speaker 01:
Fiber Tower is essentially arguing, and they're conceding, that the Commission has to make a substantial service determination on a license-by-license basis, but that Fiber Tower in its application for review is not required to identify any error committed by the Bureau on a license-by-license basis.

[00:50:26] Speaker 01:
And that makes no sense.

[00:50:28] Speaker 01:
I mean, yes, Your Honor, the Commission could have done a word search through the 689 pleadings, but I would argue that that's still sifting through pleadings under the Bartholdi Cable Standards, almost like if the Commission issues an order and cites various provisions of the Communications Act, and a petitioner files an application for review saying, you know what, you violated the Communications Act without identifying a specific provision.

[00:50:49] Speaker 01:
Now, I'd like to talk about the substantial service showings themselves, if you reach them.

[00:50:53] Speaker 01:
The substantial service showings themselves don't demonstrate the fiber tower actually providing substantial service.

[00:50:59] Speaker 01:
Each of those substantial service showings merely argues that fiber tower constructed some links, some operational links.

[00:51:06] Speaker 01:
Now, remember, the substantial service standard requires substantial service, not substantial investment.

[00:51:13] Speaker 01:
And so an operational link, in and of itself, doesn't demonstrate service, much less substantial service.

[00:51:19] Speaker 01:
To use an analogy.

[00:51:21] Speaker 04:
But don't you agree that your own opinion says that they didn't do what with respect to the 42 they did do?

[00:51:31] Speaker 04:
Putting to one side whether it was adequately flagged for you.

[00:51:35] Speaker 04:
But your own decision says they just didn't do that, and it turns out they did.

[00:51:39] Speaker 01:
I agree with that, Your Honor.

[00:51:40] Speaker 01:
And had Fiber Tower flagged those 42 licenses, probably what would have happened is the Commission would have directed the Bureau to take another look at those 42 licenses, and we would have dealt with this in administrative proceedings before the agency.

[00:51:52] Speaker 01:
If FiberTower flagged those licenses in its petition for reconsideration, we would have looked at those licenses, but it decided not to.

[00:51:59] Speaker 01:
Instead, it decided to swing for the fences and advance its argument, rely on its argument, that it could demonstrate substantial service without constructing any facilities, providing any service whatsoever.

[00:52:09] Speaker 01:
And apparently, when it got to the Court of Appeals, it had some degree of virus remorse.

[00:52:13] Speaker 07:
Now it's acting as if... No, I guess what I... The sentences in question appeared in the application for a unit of commission, so...

[00:52:19] Speaker 07:
It wasn't just in the Court of Appeals that there was a large remorse.

[00:52:24] Speaker 01:
Well, but, Your Honor, they decided not to identify those 42 licenses.

[00:52:28] Speaker 01:
I think the reason they didn't identify the 42 licenses is because they felt that they didn't have to.

[00:52:32] Speaker 01:
They were relying on the argument that they don't have to.

[00:52:35] Speaker 01:
There was no need.

[00:52:35] Speaker 07:
If Fiber Tower's right, if Fiber Tower's right, and the provision... If you're argument correct, then you don't need to mention it, right?

[00:52:42] Speaker 07:
If they decided that

[00:52:43] Speaker 07:
I actually think that they were trying to just sort of optically demonstrate.

[00:52:55] Speaker 01:
This goes to Mr. Shaw's other argument.

[00:52:57] Speaker 01:
I'll get to that in a second.

[00:52:59] Speaker 01:
that it just sort of goes, I think they mentioned that there was some construction because in their view, the commission was supposed to look at the totality of their investment irrespective of whether that investment actually led to service.

[00:53:09] Speaker 01:
I think if Fiber Tower wanted to keep those 42 licenses, it would have identified those licenses.

[00:53:14] Speaker 01:
The reason we have exhaustion requirements like Section 405 of the Communications Act or Section 1.115B, one of our rules, is to avoid this situation.

[00:53:24] Speaker 01:
The commission's fallible.

[00:53:26] Speaker 01:
The commission will make mistakes.

[00:53:28] Speaker 01:
And that's why parties have to exhaust their administrative remedies before they go to the court of appeals.

[00:53:34] Speaker 04:
So I'm not following your substantial service argument, though, with the subject of v.

[00:53:37] Speaker 04:
42.

[00:53:38] Speaker 04:
So if you indulge the assumption that there was adequate flagging, and I take your point that you're contesting that vigorously,

[00:53:45] Speaker 04:
But your even if argument was that even if there was adequate flagging, then they don't get all the way home because they have to show substantial service, just some service is not enough.

[00:53:57] Speaker 01:
That's correct, Your Honor.

[00:53:58] Speaker 04:
But if that, and my question about that is,

[00:54:01] Speaker 04:
under the terms of your own order, and as I understood your argument, if they had flagged the 42 and you had looked at it, you would have sent it back to the Bureau.

[00:54:10] Speaker 01:
Yes, I would, Your Honor.

[00:54:11] Speaker 01:
And if you don't agree with me, I will put it out there.

[00:54:13] Speaker 01:
If you do not agree with us on the 405 argument, the proper remedy would be to remand to the Commission with respect to those 42 licenses.

[00:54:21] Speaker 01:
Because it is, I will concede, it is Commission practice

[00:54:23] Speaker 01:
when a substantial service showing is filed and there's some question where the showing doesn't demonstrate that the party has actually satisfied the substantial service standard, but they've done something.

[00:54:33] Speaker 01:
It is our practice to request additional information.

[00:54:35] Speaker 07:
Now that said, I want to... What about the relevance to waiver and extension?

[00:54:39] Speaker 01:
Thank you, Your Honor.

[00:54:39] Speaker 01:
That's where I was going.

[00:54:40] Speaker 01:
It's not relevant.

[00:54:41] Speaker 01:
And the reason for that is, is the Commission in its waiver and extension analysis did not rely on the fact

[00:54:46] Speaker 01:
The Fiber Tower had constructed too few licenses.

[00:54:51] Speaker 01:
Our waiver and extension analysis focused on the 689 licenses.

[00:54:55] Speaker 01:
689 licenses, which we assumed, perhaps incorrectly, that there was no construction or service provided.

[00:55:03] Speaker 01:
The 10 licenses, Your Honor, aren't even mentioned in the order.

[00:55:07] Speaker 01:
So here's what would happen.

[00:55:09] Speaker 01:
If Fiber Tower had flagged those 42 licenses, and the Bureau...

[00:55:17] Speaker 07:
Colloquy, we're assuming that it did.

[00:55:20] Speaker 01:
Okay, so if the Commission had determined that Fiber Tower, let's just say for the sake of argument, the Commission determined that Fiber Tower satisfied the Substantial Service Standard with respect to those 42 licenses, what it would have done is it would have just taken them out of the waiver and extension analysis.

[00:55:39] Speaker 01:
The waiver and extension analysis in the order was based on the Commission's assumption

[00:55:43] Speaker 01:
right?

[00:55:44] Speaker 01:
That there was no construction and no service with respect to those licenses because FiberTower failed to satisfy the substantial service task with respect to those licenses.

[00:55:53] Speaker 07:
In the waiver and extension analysis, it gets very mushy in terms of what's within the control of the licensee and so forth.

[00:56:03] Speaker 07:
And it's hard for me to see how the commission would logically disregard

[00:56:11] Speaker 07:
service on 42 licenses when it was evaluating the equities for and against Fiber Tower for the remainder.

[00:56:20] Speaker 01:
Your Honor, the 42 licenses wouldn't have been part of the analysis.

[00:56:22] Speaker 01:
Our analysis with respect to waiver would have been for, I apologize in the math, it would be 689 minus 42, so that would be like 650.

[00:56:31] Speaker 00:
647.

[00:56:31] Speaker 01:
647.

[00:56:32] Speaker 01:
So our analysis for waiver and extension would be with respect to the remaining 647 licenses.

[00:56:40] Speaker 01:
The 10 licenses

[00:56:41] Speaker 01:
that fiber tower discussed where it allegedly met substantial service, although my counsel, Mr. Shaw, is correct, the commission eventually found that it didn't provide substantial service on three of those, weren't even part of the analysis here.

[00:56:54] Speaker 01:
Those 10 licenses were sort of put off to the side, and the commissioner's waiver and extension analysis

[00:57:00] Speaker 01:
only centered on the 689, where we found that fiber tower failed to satisfy the substantial service requirement.

[00:57:08] Speaker 01:
So Mr. Shah gets no mileage, even if you disagree with on the section 405 argument, even if you think we might have erred with respect to the 42,

[00:57:17] Speaker 01:
The 42, in no way, shape, or form, it affects our analysis of waiver extension.

[00:57:20] Speaker 01:
I'm sorry.

[00:57:21] Speaker 04:
Suppose there were 400 as to which they were constructed.

[00:57:23] Speaker 04:
I mean, I guess you could make the same argument that with respect to 400 of them, there was construction, but those of them put off to one side.

[00:57:28] Speaker 04:
And so for waiver purposes and extension purposes, we don't need those.

[00:57:31] Speaker 01:
That's absolutely right, Your Honor, because again, I cannot reiterate this enough.

[00:57:34] Speaker 01:
And this is set forth in footnote 155, if you order.

[00:57:36] Speaker 01:
It's also in our rules.

[00:57:38] Speaker 01:
Substantial service is determined on a license-specific basis.

[00:57:41] Speaker 01:
So the Commission's frame of analysis is to start by determining whether or not FiberTower met the substantial service requirement on a license.

[00:57:50] Speaker 01:
If they did, they get to keep the license.

[00:57:53] Speaker 07:
But the waiver and extension analysis is much broader.

[00:57:56] Speaker 01:
Your Honor, the waiver and extension analysis is broader with respect to the licenses where FiberTower failed to meet the substantial service requirement.

[00:58:04] Speaker 01:
So again, it's on a license-specific basis.

[00:58:07] Speaker 01:
The universe of licenses that are eligible for waiver extension are those for which FiberTower failed to demonstrate substantial service.

[00:58:15] Speaker 04:
But don't you take into account the public equities, and if it's shown that

[00:58:22] Speaker 04:
To use my example, if it's shown that as to 400 of them, there in fact there was construction, then that seems like that would be taken into account in determining whether to grant a waiver with respect to... It's not taken into account, Your Honor.

[00:58:33] Speaker 01:
We would take into account, we would look at... Our rules, our substantial service rule, requires substantial service, not substantial investment.

[00:58:42] Speaker 01:
So we didn't look at the universe of 689 licenses and look at Fiber Tower's investment in the aggregate to support those 689 licenses.

[00:58:51] Speaker 01:
What we did as a first cut is determine whether or not Fiber Tower was providing substantial service on a license-specific basis.

[00:59:00] Speaker 01:
If Fiber Tower is able to demonstrate that I'm at the safe harbor of four lengths per million population,

[00:59:06] Speaker 01:
They get to keep their license.

[00:59:07] Speaker 01:
We don't worry about that one.

[00:59:09] Speaker 01:
The waiver and extension analysis only goes to the licenses where FiberTower failed to demonstrate substantial service.

[00:59:15] Speaker 01:
And there, any investment that does not lead to the construction of transmission lengths and the provision of service to the public by the end of the 10-year license term, or in FiberTower's case, 11 to 15 years given the prior extension,

[00:59:27] Speaker 01:
That's insufficient to meet the standard.

[00:59:30] Speaker 07:
That goes to the question of spectrum in a box.

[00:59:35] Speaker 07:
Suppose that private tower has constructed these devices, which are costly and sufficient to meet all

[00:59:49] Speaker 07:
demand that they could possibly be expected to pump up through heavy advertising and so forth, heavy marketing, in the next three years.

[01:00:02] Speaker 07:
You're saying that the commission would, notwithstanding, I think it's paragraph 45 of the order, would say, no, that doesn't count at all.

[01:00:14] Speaker 07:
whereas constructing a lot of towers and so forth even though they were radically underused would.

[01:00:26] Speaker 01:
There is no evidence in the record that if FiberTower built out its licenses, they would be radically underused.

[01:00:32] Speaker 07:
Remember, there was evidence in the record, the Commission's own data showed... It is the case that no other licensee built, is that correct, in the 2 GHz fan?

[01:00:41] Speaker 01:
In the 24 GHz fan?

[01:00:42] Speaker 01:
Yes, Your Honor, and there's a good reason for that.

[01:00:44] Speaker 01:
FiberTower held all the licenses.

[01:00:46] Speaker 01:
Between 2007 and 2012, Fiber Tower held but all but two licenses in the 24 GHz band.

[01:00:52] Speaker 01:
The other licensee was Puerto Rico Telephone Company, and Puerto Rico Telephone Company demonstrated substantial service for those licenses in 2011.

[01:00:59] Speaker 01:
As I understand it, there are three other licensees in the 24 GHz band now.

[01:01:03] Speaker 01:
They hold a handful of licenses.

[01:01:05] Speaker 01:
One of those licensees, a company called M&M Brothers, recently filed substantial service showings.

[01:01:11] Speaker 01:
One of their lessees is providing wireless backhaul in the 24 GHz band.

[01:01:15] Speaker 01:
Moreover, let's talk about FiberTower for a second.

[01:01:18] Speaker 01:
FiberTower argues that there was no demand for service in the 24 gigahertz band.

[01:01:22] Speaker 01:
That is undercut by data in the record.

[01:01:25] Speaker 01:
The record evidence showed national demand for wireless backhaul.

[01:01:28] Speaker 01:
And FiberTower, while they come in and argue that demand is on a market-by-market basis or differs by product market, they didn't put any evidence in the record to demonstrate that.

[01:01:39] Speaker 01:
Moreover, as footnote 49 of the order on reconsideration explains, FiberTower had built and was providing service on 100 links in the 24 gigahertz band in Washington, D.C.

[01:01:51] Speaker 01:
It also had 27 links built in the 24 gigahertz band in Baltimore, Maryland.

[01:01:56] Speaker 01:
Fiber Tower had 400 commercial grade systems sitting in its warehouse.

[01:02:01] Speaker 01:
The commission looked at Fiber Tower's evidence concerning the lack of demand and concluded that it didn't withstand scrutiny.

[01:02:09] Speaker 01:
Fiber Tower told a bankruptcy court in Texas in 2011 that it was foregoing capital expenditures because it had a cash flow problem.

[01:02:17] Speaker 01:
It lost two of its biggest customers and it decided to service its debt

[01:02:21] Speaker 01:
rather than deploy facilities to the field.

[01:02:23] Speaker 01:
Now on the spectrum of the box issue, I go back to the fact that the Commission's rules, the 24 and 39 gigahertz orders, in no way eschewed construction and service requirements.

[01:02:32] Speaker 01:
Our rules require a licensee at a minimum to demonstrate in its substantial service showing that it's providing some service

[01:02:41] Speaker 01:
the public and to describe the populations and the geographic areas served, as well as the operational status of the facilities that's constructed.

[01:02:47] Speaker 01:
We allow licensees to submit other information, but at a minimum they have to make that showing.

[01:02:52] Speaker 04:
Fiber Tower can... So it doesn't... I mean, that's the way you characterize it, and that seems to be a rational way to construct a scheme, but the rules just don't say that.

[01:03:01] Speaker 04:
They don't say at a minimum.

[01:03:03] Speaker 04:
It would have been very easy to construct a rule that says everybody has to show a link or everybody has to show construction.

[01:03:11] Speaker 04:
Period.

[01:03:12] Speaker 04:
That's a minimum.

[01:03:13] Speaker 04:
But they just don't say that as far as I can tell.

[01:03:15] Speaker 01:
Your Honor, I'm looking at rule 101.17 concerning the 39 GHz band, and it says, a licensee's substantial service showing should include but not be limited to.

[01:03:24] Speaker 01:
So it's not at a minimum, but it should include.

[01:03:26] Speaker 01:
It should include this information.

[01:03:27] Speaker 01:
The Commission is telling you that

[01:03:29] Speaker 01:
You should tell us the facilities you constructed and the service you provided.

[01:03:33] Speaker 04:
Of course, of course the Commission would want to know that and of course any applicant would have to submit that because that's going to be their best argument.

[01:03:39] Speaker 01:
Your Honor, as you well know, the Commission's reasonable interpretation is entitled to substantial deference from this Court.

[01:03:46] Speaker 01:
And Fiber Tower's argument really boils down to the Commission's rule is stupid.

[01:03:52] Speaker 01:
It doesn't work for our business plan, okay?

[01:03:55] Speaker 01:
That was out of date.

[01:03:56] Speaker 01:
Pardon me?

[01:03:56] Speaker 01:
It's out of date.

[01:03:57] Speaker 01:
It's out of date.

[01:03:59] Speaker 07:
Except it was anticipated in the original orders on the 34 and 34.

[01:04:04] Speaker 01:
And that might be well and good, but the Commission has consistently, consistently, through its orders, its rules, its precedent interpreting its rules, we cite in our brief another decision from the Commission.

[01:04:16] Speaker 01:
applying the substantial service requirement in different spectrum band.

[01:04:20] Speaker 01:
This is at pages 33 and 34 of our brief.

[01:04:22] Speaker 01:
And as that decision makes clear, to demonstrate substantial service, there has to be the construction of some facilities, perhaps construction less than the benchmark articulated by the rule, coupled with the actual provision of service to the public.

[01:04:33] Speaker 04:
So I asked about this definition of 24 gigahertz service in 101.3, and you all didn't cite that, and it may just be that it's not germane.

[01:04:45] Speaker 04:
But is there a reason it's not germane if it talks about it defines 24 gigahertz service?

[01:04:51] Speaker 04:
And I take it to part of your argument is to have substantial service, you have to have service.

[01:04:55] Speaker 04:
And it seems to speak in terms of a completed link.

[01:05:01] Speaker 01:
It is germane, Your Honor.

[01:05:02] Speaker 01:
And it's entirely consistent.

[01:05:03] Speaker 01:
I mean, this is sort of my point.

[01:05:05] Speaker 01:
The commission, it is germane.

[01:05:08] Speaker 04:
Is there a reason you all didn't rely on it?

[01:05:10] Speaker 04:
Because it just seems, unless I'm misreading it, it seems

[01:05:14] Speaker 04:
to be maybe the best textual indication that service contemplates actual working links?

[01:05:21] Speaker 01:
That's a failure by appellate counsel, Your Honor.

[01:05:23] Speaker 01:
There's no reason other than that that we did not rely on it.

[01:05:26] Speaker 01:
I didn't think of it.

[01:05:28] Speaker 01:
But going back to this, Fiber Tower is making this argument that the commission's interpretation of the substantial service requirement in our rules is inconsistent with the rules promulgated.

[01:05:37] Speaker 01:
The Fiber Tower cannot point to a single instance where the commission and the 24 or 39 gigahertz bands

[01:05:43] Speaker 01:
or any other spectrum ban for that matter, has found that a licensee that constructed no facilities and provided no service to the public provide a substantial service.

[01:05:51] Speaker 01:
Now, let's talk about the Spectrum in the Box program for a second.

[01:05:54] Speaker 01:
Fiber Tower is essentially arguing luck.

[01:05:58] Speaker 01:
Your rule is dated.

[01:05:59] Speaker 01:
It doesn't make sense given our business plan.

[01:06:02] Speaker 01:
We're ready to go.

[01:06:03] Speaker 01:
We're ready to go.

[01:06:04] Speaker 01:
And it makes no sense whatsoever to require us to construct links simply to meet the requirements of your outdated rule.

[01:06:12] Speaker 01:
You should allow us to keep the spectrum to deploy our spectrum in the box facilities when a customer comes along.

[01:06:19] Speaker 01:
That's actually inconsistent with the substantial service requirement when you read the 24 and 39 gigahertz orders, which were promulgated

[01:06:27] Speaker 01:
to effectuate Section 309J4B of the Act.

[01:06:33] Speaker 01:
There's a clear anti-spectrum warehousing bent in there.

[01:06:37] Speaker 01:
Section 309J4B directs the Commission to adopt performance requirements, like the substantial service requirement, to prevent spectrum warehousing.

[01:06:46] Speaker 01:
If we allow licensees like FiberTower to hold their licenses indefinitely until a customer came along, that spectrum could lie fallow.

[01:06:54] Speaker 07:
Suppose that the firm is investing both

[01:06:59] Speaker 07:
in the hardware necessary for Spectrum in the Box, and in the marketing of Spectrum in the Box.

[01:07:07] Speaker 07:
And I suppose its investments in those areas are, let's say, quantitatively, as much as would have been involved

[01:07:22] Speaker 07:
conventional situation to refute any notion of their warehousing.

[01:07:38] Speaker 07:
Why would the principle not extend to spectrum in a box?

[01:07:43] Speaker 01:
Your Honor, I think we disagree about what spectrum warehousing means.

[01:07:46] Speaker 01:
From the Commission's view, when spectrum is lying follow, when it's not being placed into productive use, that's spectrum warehousing.

[01:07:52] Speaker 01:
So a fiber tower is sitting there, and it's making every effort, right?

[01:07:57] Speaker 01:
It's developed this innovative spectrum in a box product, and it's marketing its service really, really well.

[01:08:02] Speaker 01:
And nobody comes along

[01:08:03] Speaker 01:
and takes that product, nobody buys it, the spectrum isn't being placed into use.

[01:08:08] Speaker 07:
That spectrum warehousing is... That doesn't sound like warehousing to me.

[01:08:12] Speaker 07:
Your Honor, the problem... It may show lack of market, but I don't see how it shows warehousing.

[01:08:18] Speaker 01:
Your Honor, what if FiberTower is providing a service that just isn't very good?

[01:08:22] Speaker 01:
What if customers don't want FiberTower service?

[01:08:24] Speaker 07:
The reason that we have... I didn't see that attention being made.

[01:08:28] Speaker 01:
You know, I know that contention isn't being made, but the reason that we have the service rule is because we don't, it's impossible for the commission to determine.

[01:08:35] Speaker 01:
We don't run a beauty contest among licensees' business plans.

[01:08:39] Speaker 01:
The substantial service requirement is embodied, it's sort of adopted in the 24 and 39 gigahertz orders.

[01:08:47] Speaker 01:
is a balancing.

[01:08:49] Speaker 01:
What we did is we eschewed specific construction requirements, and we eschewed construction milestones, and instead allowed licensees to demonstrate substantial service at the end of the 10 year license.

[01:08:59] Speaker 01:
So licensees like Fiber Tower can develop Spectrum in a box, and they can market their services, and they can develop customers, and they can develop a billing system and do all of those things.

[01:09:09] Speaker 01:
But at the end of the 10 years, they should be able to do that, and if they can't,

[01:09:13] Speaker 01:
If they can't, it might be just that nobody wants to take their service.

[01:09:17] Speaker 04:
So it sounds like what you're saying is, and this also seems rational that, at least conceptually, that you're using actual links used by customers as a proxy for an effective use of the spectrum.

[01:09:31] Speaker 04:
And that, if that's your objective, then if somebody

[01:09:37] Speaker 04:
If one of the entities does one save build link, I'm maybe getting the terminology completely wrong, but I think you know what I'm getting at.

[01:09:44] Speaker 04:
If somebody does one save build link and that's enough to forestall termination of the license, then what have you really gotten?

[01:09:56] Speaker 01:
Your Honor, there was no evidence in the record that these in fact were save-filled links.

[01:10:00] Speaker 01:
Our rules.

[01:10:01] Speaker 04:
No, but it seems, but I think the way that the Bureau approached it and the way that you all affirmed it, the Commission affirmed it, excuse me, it seemed like as long as there would have been that, that would have been enough and then the license would not have been terminated.

[01:10:13] Speaker 01:
That's correct because, you know, Fiber Tower is disparaging what other licensees provided.

[01:10:18] Speaker 01:
They're saying it's a save-filled, it's waste-filled, it's antiquated, etc.

[01:10:21] Speaker 01:
The difference is that those licensees constructed facilities and are providing service to the public and the spectrum covered by their license is being placed into productive use.

[01:10:30] Speaker 01:
Fiber tower spectrum is not.

[01:10:33] Speaker 01:
And that's the balancing that the commission made.

[01:10:35] Speaker 01:
The commission provided FiberTower a great deal of flexibility with respect to the milestones and the construction required.

[01:10:42] Speaker 01:
But at the end of 10 years, or in FiberTower's case, at the end of 11 or 15 years, at some point, FiberTower's business plan has to materialize.

[01:10:51] Speaker 01:
And if it doesn't, there's nothing unreasonable with the commission enforcing the build-out requirements and its rules.

[01:10:57] Speaker 01:
Also, with respect to this demand issue,

[01:11:00] Speaker 01:
There was no evidence in the record that demand was lacking for wireless backhaul.

[01:11:04] Speaker 01:
I go back to the fact that the Commission's own data showed that there had been a significant increase in demand for wireless backhaul.

[01:11:12] Speaker 01:
There argument is where.

[01:11:15] Speaker 06:
Where is the demand?

[01:11:17] Speaker 06:
Just because there's demand in one place doesn't mean there's demand.

[01:11:19] Speaker 01:
Well, Your Honor, presumably if FiberTower felt that there wasn't demand in Tulsa, they could have identified that market to the Commission, right?

[01:11:27] Speaker 01:
FiberTower came in and argued that national demand was lacking.

[01:11:31] Speaker 01:
It's only when FiberTower got to the appellate stage did FiberTower make this unsubstantiated argument that demand was lacking in specific geographic markets or that there was a difference in the technologies provided by

[01:11:44] Speaker 01:
difference in demand for wireless backhaul provided in different spectrum bands.

[01:11:49] Speaker 01:
I've looked at fiber towers brief and other than just sort of conclusory statements filed by their equipment vendors and other companies that were serving fiber tower, the only thing I could find

[01:11:59] Speaker 01:
was an untimely supplement to FiberTower's application for review.

[01:12:04] Speaker 01:
I believe it's at 568 and 567 through 569 of the Joint Appendix.

[01:12:11] Speaker 01:
And all it does is describe FiberTower's business plan and how it was migrating from macro cell wireless backhaul

[01:12:19] Speaker 01:
and the 11, 18, and 23 gigahertz bands to this new small cell network and the 24 and 39 gigahertz bands.

[01:12:25] Speaker 01:
But FiberTower never undercut the Commission's finding, based on its own data, that there was sufficient demand for wireless backhaul in all spectrum bands in all markets.

[01:12:38] Speaker 06:
Anything further?

[01:12:40] Speaker 01:
No, Your Honor.

[01:12:41] Speaker 06:
Thank you very much.

[01:12:42] Speaker 06:
Thank you.

[01:12:45] Speaker 06:
All right.

[01:12:46] Speaker 06:
Council, do you want a few minutes, a couple of minutes?

[01:12:49] Speaker 03:
Thank you, your honor.

[01:12:49] Speaker 03:
If I could make just one quick factual point and then two legal points.

[01:12:54] Speaker 03:
As to the factual point about the 24 gigahertz licensees, I'm reading from the commission's own October 2014 notice of inquiry.

[01:13:05] Speaker 03:
And in 2004, this is what happened in the 24 gigahertz ban.

[01:13:09] Speaker 03:
Fiber Tower was the holder of the majority of licenses.

[01:13:12] Speaker 03:
There were two other licensees in the 24 gigahertz band, which held six other licenses.

[01:13:18] Speaker 03:
No build out during the relevant time on the six licenses.

[01:13:22] Speaker 03:
And here I'm gonna just quote from the commission's own 2014.

[01:13:24] Speaker 03:
In 2004, the commission held auction 56 in which it made 890 24 gigahertz licenses available.

[01:13:33] Speaker 03:
Only seven of the 890 licenses were sold.

[01:13:37] Speaker 03:
Fiber Tower bought one of them, in addition to the ones it already had.

[01:13:40] Speaker 03:
Two licensees bought the six other.

[01:13:43] Speaker 03:
None of them built out.

[01:13:44] Speaker 03:
The other 883 licenses went un-auctioned, and if you look in the secondary literature, it's viewed as one of the biggest failures in commission history in terms of an auction.

[01:13:55] Speaker 03:
The reason?

[01:13:55] Speaker 03:
There wasn't demand.

[01:13:57] Speaker 03:
Nobody wanted to buy these licenses because there wasn't a demand in the market to build these out.

[01:14:02] Speaker 03:
Now, on to the two.

[01:14:04] Speaker 03:
So when the Commission says its own data showed there was plenty of demand in the 24 gigahertz spectrum, they don't have a single build out in that spectrum to point to, and they have 883 of these licenses sitting in the Commission's own hands.

[01:14:18] Speaker 03:
I don't know what data they're speaking of that there was sufficient demand in the 24 gigahertz band for wireless back-off.

[01:14:25] Speaker 03:
Now, onto the two legal points.

[01:14:26] Speaker 04:
Is their math correct that, put aside the $883, as to which there was no forward-looking auction that was successful?

[01:14:34] Speaker 04:
With respect to what existed beforehand, are they right that you owned all the license sixes except, so you own $600?

[01:14:40] Speaker 03:
We own, there are 94 issue here.

[01:14:45] Speaker 03:
We own a total of 102, 24 gigahertz licenses.

[01:14:48] Speaker 04:
And then the other licensees total on 6.

[01:14:50] Speaker 04:
So you have 102 out of 108.

[01:14:52] Speaker 04:
That's right.

[01:14:54] Speaker 03:
That are in the market.

[01:14:55] Speaker 03:
Of course there are many more that are available that no one wants to buy.

[01:14:58] Speaker 03:
Now as to the two legal points, the first one, the preservation point.

[01:15:02] Speaker 03:
I'm going to cite the four authorities that the commission cites in their brief for why it was waived despite the fact that we have an argument heading in our application for review that points out the fact that they disregarded the construction on the licenses at issue.

[01:15:19] Speaker 03:
They cite three of this court's cases, Bartoldi, Environmental LLC, and Quest.

[01:15:25] Speaker 03:
All three of those cases are about presenting arguments to the Commission.

[01:15:29] Speaker 03:
When she says they don't have to sift through pleadings, all three of those cases were referring to arguments that were made to the Bureau.

[01:15:36] Speaker 03:
in which the party then did not make the argument to the Commission, but simply cited the record writ large.

[01:15:43] Speaker 03:
And what the Court said in all three of those cases, you don't preserve an argument before the Commission simply by attaching or citing other pleadings.

[01:15:50] Speaker 03:
We're not going to force the Commission to go find arguments by reading other pleadings.

[01:15:53] Speaker 03:
That's completely inapposite to what we have here, where the argument was clearly presented and the question is, the support for that argument, does the Commission have to find it?

[01:16:02] Speaker 03:
When the Commission knows exactly where to look for it,

[01:16:04] Speaker 03:
and it's in the same spot in each of those licenses.

[01:16:07] Speaker 03:
And the other thing they cite is regulation 115B1, which says you have to clearly present, concisely present, the application review shall concisely and plainly state the questions presented for review.

[01:16:20] Speaker 03:
The question was clearly presented for review.

[01:16:23] Speaker 03:
Now, the fact that they did this in an en masse 689 mass cancellation of licenses,

[01:16:29] Speaker 03:
for administrative ease, which is the words that Ms.

[01:16:32] Speaker 03:
Flood used.

[01:16:33] Speaker 03:
The fact that they did that for administrative ease does not excuse the fact that this is a license by license showing.

[01:16:39] Speaker 03:
Now, as to the waiver, that's the preservation issue, as to whether it affects the waiver and extension analysis,

[01:16:47] Speaker 03:
first of all, it's not accurate to say that the commission order did not look at the fact that Fiber Tower did not build out on the licenses.

[01:16:55] Speaker 03:
If you look at that order, page, paragraph 23 of the order on J61, first sentence, in this regard, we note that the Bureau concluded,

[01:17:04] Speaker 03:
Fiber Tower chose not to build facilities in advance of the deadline because it did not want to squander its financial resources.

[01:17:11] Speaker 03:
If you look on paragraph, that's in the extension analysis.

[01:17:14] Speaker 03:
If you look at paragraph 35, JA607 in the waiver analysis, quote, Fiber Tower made the decision not to build out its licenses when it would have only cost them X and Y. Now, the reason why I think it does affect the analysis, waiver and extension is a much broader inquiry than substantial service.

[01:17:33] Speaker 03:
It is an equitable entry.

[01:17:34] Speaker 03:
inquiry, looks at the public interest, Judge Srinivasan's hypothetical is directly on point.

[01:17:39] Speaker 03:
If there were, say, 400 licenses at issue in which FiberTower had construction, there's no way the Commission could have written the extension and waiver analysis that it wrote, even as to the remaining 200-odd licenses, because that waiver and extension analysis was predicated on the fact that FiberTower was simply sitting on its rights and not building where market demand existed.

[01:18:02] Speaker 03:
At some point, there's a tipping point as to the number of licenses that they have built out shows that in fact, FiberTower was doing productive things.

[01:18:11] Speaker 03:
Whether that tipping point is 40 or 400 is not for, I don't think, this court or for commission's appellate council to decide.

[01:18:18] Speaker 03:
It's for the commission to decide.

[01:18:20] Speaker 03:
The commission has to look at the waiver and extension analysis on an accurate record.

[01:18:24] Speaker 03:
It should be vacated.

[01:18:25] Speaker 03:
for a new analysis on all of those.

[01:18:27] Speaker 03:
And the last point I'll make is Ms.

[01:18:29] Speaker 03:
Spludd says, well, the commission doesn't look at any licenses on which the party has already demonstrated substantial service.

[01:18:37] Speaker 03:
It only has tunnel vision on the number of licenses that there was no construction on.

[01:18:42] Speaker 03:
So it's only going to look at the remaining licenses.

[01:18:45] Speaker 03:
That conflicts with the commission's own brief, appeal brief here, when it's distinguishing the two light speed case.

[01:18:51] Speaker 03:
Page 54 of the commission's brief says,

[01:18:54] Speaker 03:
And it's distinguishing light speed, why that a waiver was justified in the two light speed case and not this case.

[01:19:02] Speaker 03:
Here's what the commission says on page 54.

[01:19:04] Speaker 03:
Two light speed had built out the majority of its licenses.

[01:19:08] Speaker 03:
And so an extension was warranted on the remaining licenses.

[01:19:11] Speaker 03:
So its distinction of that decision is based on the very predicate of Judge Srinivasan's question.

[01:19:17] Speaker 03:
That is, if they build on other licenses, isn't that relevant to the waiver and extension theory?

[01:19:22] Speaker 03:
I think it has to be.

[01:19:23] Speaker 03:
It only makes sense, and it contradicts the commission's own order.

[01:19:26] Speaker 03:
So we think it has to be vacated not only to the 42 licenses at issue, but as to the group as a whole.

[01:19:33] Speaker 06:
Thank you.

[01:19:34] Speaker 03:
Thank you, Your Honor.

[01:19:35] Speaker 06:
We'll take the case under advisement.