[Federal Register Volume 64, Number 249 (Wednesday, December 29, 1999)]
[Rules and Regulations]
[Pages 72956-72959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33768]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 95
[WT Docket No. 98-169; FCC 99-372]
Rules to Provide Regulatory Flexibility in the 218-219 MHz
Service
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Commission modifies the restructuring plan adopted in the
218-219 MHz final rule document. The purpose of the modification is to
remove a provision whereby an eligible licensee participating in the
restructuring plan can obtain a seventy-percent credit on its down
payment and forego, for a period of two years, eligibility to acquire
the surrendered licenses. It was not the Commission's intent to adopt
the seventy-percent credit and the intended effect is to correct the
prior error.
DATES: Effective December 29, 1999.
FOR FURTHER INFORMATION CONTACT: Andrea Kelly, Wireless
Telecommunications Bureau, Auctions and Industry Analysis Division
(202) 418-0660.
SUPPLEMENTARY INFORMATION: 1. This Order on Reconsideration in WT
Docket 98-169 was adopted November 24, 1999 and released November 30,
1999. The document is available, in its entirety, for inspection and
copying during normal business hours in the FCC Reference Center, (Room
CY-A257), 445 12th Street, SW, Washington, DC 20554. It may also be
purchased from the Commission's copy contractor, International
Transcription Services, Inc. (ITS, Inc.), 1231 20th Street, NW,
Washington, DC 20036, (202) 857-3800. In addition, it is available on
the Commission's website at http://www.fcc.gov/Bureaus/Wireless/Orders.
Synopsis
I. Background
2. In the 218-219 MHz Report and Order 64 FR 59656 (November 3,
1999), the Commission adopted a restructuring plan for existing 218-219
MHz licensees. These licensees were current in installment payments
(i.e. less than ninety days delinquent) as of March 16, 1998, or those
licensees that had properly filed grace period requests
[[Page 72957]]
under the former installment payment rule. (``Eligible Licensees'').
The restructuring plan offered three options to provide specific relief
for licensees that wish to retain their license but are experiencing
financial hardship or that wish to return their licenses due to an
inability to assume their financial responsibilities. The three options
are: (a) Reamortization and Resumption of Payments; (b) Amnesty, and
(c) Prepayment, whereby an Eligible Licensee may prepay the principal
of any license it wishes to retain with cash and prepayment credits
generated from down payments on spectrum returned to the Commission and
any installment payments previously made. The Commission's order
allowed an Eligible Licensee electing the Amnesty option to choose
either to receive no credit for its down payment, but remain eligible
to bid on the surrendered licenses when they are subsequently offered
in auction, with no restriction on after-market acquisitions; or obtain
a credit for seventy percent of its down payment and forego for a
period of two years, from the start date of the next auction of the
218-219 MHz Service, eligibility to reacquire the surrendered licenses
through either auction or any secondary market transaction.
II. Discussion
3. It was not the Commission's original intent to adopt the seventy
percent credit proposed in the 218-219 MHz Flex NPRM, 63 FR 52215
(September 30, 1998) therefore, on its own motion, for the following
reasons, the Commission corrects the prior error. On review, it is
apparent that, under the Amnesty option, allowing an Eligible Licensee
to obtain credit for its down payment and forego reacquiring
surrendered licenses for a period of two years is inconsistent with our
responsibility to protect the integrity of the auction program and
promote new and innovative uses of spectrum. Giving a seventy percent
credit on down payments associated with returned spectrum, without an
adequate counterbalancing public interest benefit, would undermine the
integrity of the auction process by relieving participants of even the
most basic obligation of their participation.
4. However, the Commission recognizes that it allows for a credit
on down payments in other portions of the 218-219 MHz Report and Order.
Specifically, an Eligible Licensee who elects the Prepayment option is
eligible for an eighty-five percent credit on its down payment. It is
important to note that an Eligible Licensee who elects the prepayment
option is providing a public benefit through early payment of its
financial obligations. Nevertheless, under the Prepayment option, the
Commission retains an amount equal to the three-percent default
payment. (Fifteen percent of the twenty-percent down payment equals
three percent of the purchase price.) Thus, as an Eligible Licensee
electing the Amnesty option is not providing the same public benefit,
it would not be in the public interest to allow it a seventy-percent
credit on its down payment. Amendment of the Commission's Rules
Regarding Installment Payment Financing For Personal Communications
Services, (PCS), Order on Reconsideration of the Second Report and
Order, 63 FR 17111 (April 8, 1998) (``C Block Reconsideration Order'').
5. The 218-219 MHz Report and Order increased the flexibility of
the 218-219 MHz service and extended the license term in order to
encourage new and innovative uses in the marketplace and expedite
service to the public. In the 218-219 MHz Report and Order, the only
restriction on reacquisition applied to those Eligible Licensees opting
for the seventy percent credit. Thus, as the seventy percent credit is
no longer available, Eligible Licensees electing Amnesty will not be
precluded from reacquiring licenses at auction or in the secondary
market. This result is appropriate as Eligible Licensees electing
amnesty may still have viable business plans to implement based on
spectrum they may acquire in future auctions or in the secondary
market. A two-year restriction on the acquisition of certain spectrum
may negatively impact an otherwise viable business plan. The
Commission's action in this Order on Reconsideration moots the comments
of EON Corporation seeking to broaden the disqualification period to
exclude the future acquisition of any 218-219 MHz Service licenses to
be auctioned in the ensuing two-year period. As the Commission stated
in the 218-219 MHz Report and Order, limiting the reacquisition of
spectrum or acquisition of additional spectrum by Eligible Licensees
would not be in the public interest.
6. The Commission modifies the 218-219 MHz Report and Order.
Therefore, while the Commission will not give Eligible Licensees
electing amnesty a credit for down payments associated with spectrum
returned to the Commission, neither will it limit the reacquisition of
spectrum or the acquisition of additional spectrum.
III. Ordering Clauses
7. Accordingly, it is ordered that, pursuant to Sec. 1.108 of the
Commission's rules, 47 CFR 1.108, the Commission reconsiders on its own
motion the decision in Amendment of part 95 of the Commission's Rules
to Provide Regulatory Flexibility in the 218-219 MHz Service, Report
and Order and Memorandum Opinion and Order, WT Docket No. 98-169, FCC
99-239 regarding amnesty and resumption of payment in the 218-219 MHz
service, as detailed herein.
IV. Supplemental Final Regulatory Flexibility Analysis
8. As required by the Regulatory Flexibility Act (``RFA''),\1\ an
Initial Regulatory Flexibility Analysis (``IRFA'') was incorporated in
the Amendment of part 95 of the Commission's Rules to Provide
Regulatory Flexibility in the 218-219 MHz Service and Amendment of part
95 of the Commission's Rules to Allow Interactive Video and Data
Service Licensees to Provide Mobile Services, 218-219 MHz Flex NPRM.
The Commission sought written public comment on the proposals in the
218-219 MHz Flex NPRM, including comment on the IRFA. A Final
Regulatory Flexibility Analysis (``FRFA'') was included in the
Amendment of part 95 of the Commission's Rules to Provide Regulatory
Flexibility in the 218-219 MHz Service, 218-219 MHz Report and Order.
In this Order on Reconsideration, we issue this supplemental Final
Regulatory Flexibility Analysis (``supplemental FRFA'') which conforms
to the RFA.
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\1\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601 et. seq., has
been amended by the Contract With America Advancement Act of 1996,
Public Law 104-121, 110 Stat. 847 (1996) (``CWAAA''). Title II of
the CWAAA is the Small Business Regulatory Enforcement Fairness Act
of 1996 (``SBREFA'').
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V. Need for, and Objecties of, The Order on Reconsideration
9. In the 218-219 MHz Report and Order, among other things, we
adopted a restructuring plan for existing 218-219 MHz licensees that
were current in installment payments (i.e. less than ninety days
delinquent) as of March 16, 1998, or those licensees that had properly
filed grace period requests under the former installment payment rule.
(``Eligible Licensees''). The restructuring plan offered three options
to provide specific relief for licenses that wish to retain their
license, but are experiencing financial hardship, or that wish to
return their licenses due to an inability to assume their financial
responsibilities. Under one of these options, Amnesty, an Eligible
Licensee could choose either to receive no credit
[[Page 72958]]
for its down payment, but remain eligible to bid on the surrendered
licenses when they are subsequently offered in auction, with no
restriction on after-market acquisitions; or obtain a credit for
seventy percent of its down payment and forego for a period of two
years, from the start date of the next auction of the 218-219 MHz
Service, eligibility to reacquire the surrendered licenses through
either auction or any secondary market transaction.
10. On review, it is apparent that, under the Amnesty option,
allowing an Eligible Licensee to obtain credit for its down payment and
forego reacquiring surrendered licenses for a period of two years is
inconsistent with our responsibility to protect the integrity of the
auction program and promote new and innovative uses of spectrum. Giving
a seventy percent credit of the down payments associated with returned
spectrum would undermine the integrity of the auction process by
relieving participants of even the most basic obligation of their
participation. Further, a two-year restriction on the reacquisition of
the surrendered license unduly restricts the number of potential
licenses, and is inconsistent with a fair and equitable auction
process.
VI. Summary of Significant Issues Raised by Public Comments in Response
to the Initial Regulatory Flexibility Analysis
11. Previously, no petitions were filed in direct response to the
IRFA or the FRFA in this proceeding. Thus, on our own motion, we have
issued this 218-219 MHz Reconsideration Order.
VII. Description and Estimate of the Number of Small Entities to Which
the Rules Apply
12. Previously, in the FRFA, pursuant to the RFA, we provided a
detailed description and estimate of the number of small entities that
may be affected by the proposed rules, if adopted. We noted that the
218-219 MHz Report and Order affects a number of small entities who are
either licensees, or who may choose to become applicants for licenses,
in the 218-219 MHz Service. Such entities fall into two categories. The
first category consists of those using the 218-219 MHz Service for
providing interactivity capabilities in conjunction with broadcast
services. In the FRFA, with respect to the first category, we estimated
that the number of small business entities operating in the 218-219 MHz
band for interactivity capabilities with television viewers in the 218-
219 MHz Service which will be subject to the rules will be less than
612. The second category consists of those using the 218-219 MHz
Service to operate other types of wireless communications services with
a wide variety of uses, such as commercial data applications and two-
way telemetry services. In the FRFA, with respect to the second
category, we estimated that the number of small entities that would
provide wireless communications services other than that described
herein would be 247 or less.
13. On January 6, 1998, the SBA approved of the small business size
standards established in the Competitive Bidding Tenth Report and
Order.\2\ As we described in the FRFA, the first auction of 218-219 MHz
spectrum resulted in 170 entities winning licenses for 594 Metropolitan
Statistical Area (``MSA'') licenses. Of the 594 licenses, 557 were won
by entities qualifying as a small business.
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\2\ See Letter to Daniel B. Phythyon, Chief, WTB, from Aida
Alverez, Administrator, SBA, Dated Jan. 6, 1998.
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VIII. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
14. Previously, in the FRFA to the 218-219 MHz Report and Order, we
adopted rules altering the reporting and recordkeeping requirements for
a number of small business entities. The rules changed the obligations
of 218-219 MHz Service licensees with respect to license renewal,
construction reports, and acquisitions by partitioning or
disaggregation. As we noted in the FRFA, the 218-219 MHz Report and
Order contained three options relevant to some small businesses that
will alter their reporting and recordkeeping requirements. Our
reconsideration order is relevant only to the second option.
Specifically, non-defaulting 218-219 MHz Service licensees currently
participating in the installment payment plan may elect one of three
restructuring plans concerning their outstanding payments. However, our
reconsideration order does not alter any reporting, recordkeeping, or
other compliance requirements contained in the 218-219 MHz Report and
Order.
IX. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
15. As we described in detail in the FRFA to the 218-219 MHz Report
and Order, we adopted final rules designed to maximize opportunities
for participation by, and growth of, small businesses in providing
wireless services. We noted that we expected that the extension of
license terms from five to ten years and allowing partitioning and
disaggregation of licenses will specifically assist small businesses.
We also noted that the 218-219 MHz Report and Order contained
provisions, such as liberalization of construction requirements and
technical restrictions, and elimination of the cross-ownership
restriction, that will assist all licenses, including small business
licensees.
16. In this Order on Reconsideration, we change the options
available to those small businesses electing the Amnesty option in the
restructuring plan. The 218-219 MHz Report and Order allowed an
Eligible Licensee electing the Amnesty option to choose either to
receive no credit for its down payment, but remain eligible to bid on
the surrendered licenses when they are subsequently offered in auction,
with no restriction on after-market acquisitions; or obtain a credit
for seventy percent of its down payment and forego for a period of two
years, from the start date of the next auction of the 218-219 MHz
Service, eligibility to reacquire the surrendered licenses through
either auction or any secondary market transaction. We recognize that
some commentators proposed a more liberal amnesty option. However, we
believe that eliminating all adverse financial consequences of a
licensee's decision to participate in the auction would be contrary to
a fair and equitable auction process. Further, it might encourage
future licensees to participate in an auction under the assumption that
the Commission will relieve it of the most basic obligations of
participation in an auction, if, in the future, its business plans do
not prove profitable. Thus, we will not provide the licensees with a
seventy percent down payment credit. However, to the extent that a
licensee believes that it can create a valuable business with the same
license, if its debt burden were smaller, it will not be precluded from
acquiring the license at auction, or in any secondary market
transaction. For these reasons, we did not consider any significant
alternatives to our proposals to minimize significant economic impact
on small entities.
17. Report to Congress: The Commission will send a copy of the
Order on Reconsideration, including this FRFA, in a report to be sent
to Congress pursuant to the Small Business Regulatory Enforcement
Fairness Act of 1996, see 5 U.S.C. 801(a)(1)(A). In addition, the
Commission will send a copy of the Order on Reconsideration, including
FRFA, to the Chief Counsel for Advocacy of the Small Business
Administration.
[[Page 72959]]
List of Subjects in 47 CFR Part 95
Communications equipment, Penalties, Radio, Reporting and
recordkeeping requirements.
Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 99-33768 Filed 12-28-99; 8:45 am]
BILLING CODE 6712-01-P
