[Federal Register Volume 61, Number 33 (Friday, February 16, 1996)]
[Proposed Rules]
[Pages 6212-6230]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3511]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 90
[PR Docket No. 93-144; PP Docket No. 93-253; FCC 95-501]
Future Development of SMR Systems in the 800 MHz Frequency Band
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this Second Further Notice of Proposed Rule Making (Second
Further Notice) in PR Docket No. 93-144, the Commission seeks comment
on disaggregation of channel blocks and partitioning on the upper 200
channels of 800 MHz Specialized Mobile Radio (SMR) spectrum, certain
aspects of mandatory relocation as adopted in the First Report and
Order (First R&O) in PR Docket No. 93-144, and eligibility of Basic
Exchange Telecommunications Radio Service (BETRS) operators for certain
upper 200 channels. In addition, we propose to adopt service and
competitive bidding rules for the lower 80 SMR channels and the General
Category channels in the 800 MHz band. Further, we have redesignated
the General Category channels for exclusive SMR use. The intended
effect of this action is to facilitate future development of SMR
systems in the 800 MHz band through implementation of streamlined
licensing procedures and the use of competitive bidding.
DATES: Comments are to be filed on or before February 15, 1996, and
Reply Comments are to be filed on or before March 1, 1996.
ADDRESSES: Federal Communications Commission, 1919 M Street NW.,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: David Furth, or David Kirschner at
(202) 418-0620.
SUPPLEMENTARY INFORMATION: This Second Further Notice, adopted December
15, 1995, and released December 15, 1995, is available for inspection
and copying during normal business hours in the FCC Dockets Branch,
Room 230, 1919 M Street N.W., Washington, D.C. 20037 (telephone: (202)
857-3800).
I. Disaggregation of Channel Blocks on the Upper 200 Channels of 800
MHz SMR Spectrum
1. Background. In the Further Notice of Proposed Rule Making in PR
Docket No. 93-144, 59 FR 60111 (November 22, 1994) (Further Notice), we
asked commenters to address whether licensees should be allowed to
sublicense portions of larger blocks instead of aggregating smaller
blocks.
2. Comments. Total Com, AMTA, AMI and Motorola contend that
licensees with service areas based on Economic Areas (EAs) established
by the United States Department of Commerce, Bureau of Economic
Analysis should be permitted to sublicense portions of their spectrum
blocks. Motorola argues that allowing sublicensing on a spectrum basis
would allow excess spectrum capacity to be made available for
alternative uses and provide small SMR licensees with the opportunity
to participate in the provision of wide-area service at levels
commensurate with their business and customer interests and their
financial resources. AMTA argues that such sublicensing should be
permitted as long as construction and coverage requirements are
satisfied, because such an approach would encourage development of
bidding consortia of smaller operators, which otherwise might be
incapable of participating in the competitive bidding process.
Parkinson, et al. express concern that, by allowing sublicensing, an
incumbent's operations unfairly and unreasonably would be restricted by
the EA licensee.
3. Discussion. Given the extensive incumbent presence in the upper
10 MHz block of the 800 MHz SMR spectrum, we tentatively conclude that
EA licensees should be permitted to disaggregate their spectrum blocks.
We believe that this additional tool will enable EA licensees to manage
their spectrum blocks more effectively and efficiently. We further
believe that disaggregation not only will facilitate the coexistence of
EA licensees and incumbents in the upper 200 channels, but also will
result in the most efficient use of the 800 MHz SMR spectrum. We seek
comment on this tentative conclusion.
4. As a general matter, we believe that any disaggregation
agreements must comply with the Commission's pro-competitive policies.
We propose that spectrum covered by an EA license may be sublicensed in
either of two ways: (1) a group of licensees or entities may form
bidding consortia to participate in auctions, and then disaggregate or
partition the EA license(s) won among consortia participants; and (2)
an EA licensee, through private negotiation and agreement before or
after the auction, may elect to disaggregate or partition its spectrum
block. We seek comment on this proposal.
5. Although we are interested in affording EA licensees optimal
flexibility for spectrum management, we nonetheless do not want to
undermine our goal to facilitate an effective and efficient wide-area
licensing scheme. We ask commenters to discuss the conditions under
which EA licensees should be permitted to disaggregate their spectrum
blocks. Should EA licensees be required to retain a specified portion
of their spectrum block, and if so, what is an appropriate amount? In
addition, should there be a minimum amount of spectrum that EA
licensees must disaggregate in order to utilize this spectrum
management tool? Should geographic area licensees be permitted to
disaggregate only after they have satisfied applicable construction and
coverage requirements? We also ask commenters to discuss any other type
of considerations applicable to disaggregation.
II. Partitioning on the Upper 200 Channels of 800 MHz SMR Spectrum
6. Background. In the Eighth Report and Order (Competitive Bidding
Eighth R&O) in PP Docket No. 93-253 we adopted a partitioning option
for rural telephone companies.
7. Comments. Nextel contends that smaller, local operators wishing
to participate in wide-area service could become involved through
arrangements with the EA licensee to partition its service area.
[[Page 6213]]
8. Proposal. We tentatively conclude that partitioning should be an
option not only for rural telephone companies but also for incumbents
and eligible SMR licensees generally. We tentatively conclude that
extending the partitioning option will further the goal of Section
309(j) in the dissemination of licenses to a variety of licensees
because small businesses will have additional flexibility and
opportunities to serve areas in which they already provide service,
while the remainder of the service area could be served by other
providers.
9. We propose that SMR licensees be permitted to acquire
partitioned EA licenses in either of two ways: (1) they may form
bidding consortia to participate in auctions, and then partition the
licenses won among consortia participants; or (2) they may acquire
partitioned 800 MHz SMR licenses from other licensees through private
negotiation and agreement either before or after the auction. Each
member of a consortium would be required to file a long-form
application, following the auction, for its respective mutually agreed-
upon geographic area. We propose that partitioned areas be required to
conform to established geo-political boundaries (such as county lines).
We further propose that these entities be subject to the same interim
coverage and channel use requirements as EA licensees with respect to
the geographic areas covered by their partitioned authorizations. We
seek comment on our proposals and tentative conclusions and any
alternatives.
10. As a general matter, we believe that any partitioning agreement
must comply with the Commission's pro-competitive policies. We ask
commenters to discuss the conditions under which EA licensees should be
permitted to partition their service areas to other SMR licensees.
Should EA licensees be required to retain a specified portion of their
service area, and if so, what is an appropriate amount? Should
geographic area licensees be permitted to partition only after they
have satisfied applicable construction and coverage requirements? We
also ask commenters to discuss any other type of considerations
applicable to partitioning.
III. Mandatory Relocation in the Upper 200 Channels
A. Distributing Relocation Costs Among EA Licensees
11. In the First R&O, we determined that EA licensees must notify
incumbents operating on the upper 200 channels of their intention to
relocate such incumbents within 90 days of the release of the Public
Notice commencing the voluntary negotiation period. We also determined
that any incumbent licensee who has been so notified may require all EA
licensees in whose spectrum blocks it operates to negotiate
collectively with the incumbent. Because an incumbent licensee can
compel simultaneous negotiations with all affected EA licensees, we
tentatively conclude that the elaborate cost-sharing plan proposed for
broadband PCS is unnecessary for the 800 MHz SMR service. Therefore, we
propose to require EA licensees to share the relocation costs on a pro
rata basis (based on the actual number of the incumbent's channels
located in the EA licensees' respective spectrum blocks), unless all
such licensees agree to a different cost-sharing arrangement. We
believe that this approach would enhance significantly the speed of
relocation given that incumbent licensees most likely will elect to
negotiate with EA licensees collectively rather than individually to
accommodate system-wide relocation agreements. This would in turn
result in faster delivery of wide-area SMR service to the public. We
seek comment on our tentative conclusions and on the advantages and
disadvantages of our cost-sharing proposal.
B. Relocation Costs
12. Compensable Costs. When relocation will benefit multiple
licensees, the issue arises as to what relocation costs should be
shared by the benefitting licensees. Relocation costs can be divided
roughly into two categories: (1) the actual cost of relocating an
incumbent licensee to comparable facilities, and (2) payments above the
cost of providing comparable facilities, also referred to as ``premium
payments.''
13. Comments. Louisville believes that relocation costs should
include expenses for: engineering, equipment, labor, construction,
testing, FCC application fees, local fees, additional recurring
operating costs, pay for lost time, cost analysis, frequency
coordination, and any other expenses incurred by the incumbent as long
as the expenses were caused by the new facilities not being comparable
with the old facilities and they occurred within one year after the
incumbent took control of the new facilities. Clarus argues that
expenses paid by the EA licensee should include administrative costs
and any loss of goodwill that the incumbent might suffer. Nextel
believes that all out-of-pocket costs associated with retuning should
be borne by the auction winner, such costs include those covered by the
Commission's Emerging Technologies relocation plan.
14. Proposal. We tentatively conclude that premium payments should
not be reimbursable, because such payments are likely to be paid by EA
licensees to accelerate relocation so that they can be the first
licensee in the market area to implement wide-area SMR service. Because
other EA licensees have not received the corresponding advantage of
being first to market and did not actively participate in the
relocation negotiations, we do not believe that such licensees should
be required to contribute to premium payments. We therefore propose to
limit the calculation of reimbursable costs for the 800 MHz SMR service
to actual relocation costs, unless the EA licensees involved mutually
and expressly agree to share any premium payments. We tentatively
conclude that ``actual relocation costs'' would include, but not be
limited to: SMR equipment; towers and/or modifications; back-up power
equipment; engineering costs; installation; system testing; FCC filing
costs; site acquisition and civil works; zoning costs; training;
disposal of old equipment; test equipment; spare equipment; project
management; and site lease negotiation. We request comment on this
proposal. We also ask commenters to address any additional costs they
believe should be reimbursable and a supporting rationale for such
treatment.
15. Creation of Reimbursement Rights. We tentatively conclude that
an EA licensee who negotiates a relocation agreement that benefits one
or more other EA licensees should obtain a right to reimbursement of a
share of the relocation costs. We seek comment on how such rights
should be created procedurally. We believe that some form of
reimbursement rights should be conferred on EA licensees so that it
will be possible to enforce the right to reimbursement and collect
reimbursement from other EA licensees. We seek comment on these
tentative conclusions and any alternatives.
16. Payment. We seek comment on when reimbursement payments should
be due. Specifically, we ask commenters to address whether such
payments should be due when the benefitting EA licensee begins to use
the particular frequency or when the EA licensee commences testing of
its wide-area system in the EA.
17. Dispute Resolution Issues. Comments. PCIA, AMI, and Motorola
all argue that the Commission should establish a mediation mechanism to
[[Page 6214]]
resolve disputes. PCIA believes that the EA winner should pay for the
mediation unless the mediator finds that the incumbent is not acting in
good faith. If mediation is not successful, Motorola and PCIA believe
that the Commission should resolve the dispute.
18. Proposal. We tentatively conclude that incumbents and EA
licensees should attempt to resolve disputes arising over the amount of
reimbursement required, in the first instance, amongst themselves. We
encourage parties to use expedited alternative dispute resolution
(``ADR'') procedures, such as binding arbitration or mediation. We seek
comment on this proposal and on any other mechanisms that would
expedite resolution of these disputes should they arise.
19. Similarly, to the extent that disputes arise between incumbents
and EA licensees over relocation negotiations (including disputes over
the comparability of facilities and the requirement to negotiate in
good faith), we also encourage parties to use alternative dispute
resolution techniques. We believe such techniques are an appropriate
first step during both the voluntary and mandatory negotiation periods.
We emphasize again that resolution of such disputes entirely by our
adjudication processes would be time consuming and costly to all
parties.
20. We also seek comment on whether either the industry trade
associations or the FCC's Compliance and Information Bureau should be
designated as arbiters for such disputes. We ask commenters to discuss
the advantages and disadvantages of such designations as well as
suggested dispute resolution procedures in the event that they were so
designated. In addition, we seek comment on whether failure to comply
with the relocation obligations or requirements should be taken into
consideration by the Commission when deciding on renewal or transfer of
control or assignment applications.
C. Comparable Facilities
21. Background. Under the mandatory relocation scheme we adopt in
the First R&O, we require EA licensees to provide incumbents with
``comparable facilities'' as a condition for involuntary relocation. In
the broadband PCS context, we also adopted a mandatory relocation
scheme in which PCS licensees are required to provide microwave
incumbents with comparable facilities as a condition for involuntary
relocation. Although we have not adopted a definition of comparable
facilities in the broadband PCS context, we have indicated that we
generally require that comparable facilities be equal to or superior to
existing facilities. We also indicated that we would consider, inter
alia, system reliability, speed, bandwidth, throughput, overall
efficiency, bands authorized for such services, and interference
protection in making a determination regarding comparability. In the
Further Notice, we asked commenters to discuss the meaning of
comparable facilities in the 800 MHz SMR context.
22. Comments. Some commenters suggest, as a general matter, that a
comparable system is one that is as good as or superior to the
incumbent's existing system. The majority of commenters attempt to
define comparable facilities by specifying what would need to be
provided to the incumbent being relocated. These commenters argue that
comparable facilities would include: (1) the same number of channels as
are currently held by the incumbent; (2) the retuned frequencies being
compatible in a multi-channel system at the incumbent's current
location; (3) the retuned frequencies not having any co-channel
licensees within the EA; (4) incumbents having 70-mile co-channel
interference protection; (5) base station equipment being modified to
operate on the retuned frequencies; (6) all user units and user control
units being reprogrammed or recrystallized to the retuned frequencies
(or, if modification of the incumbent's equipment is not possible, the
EA licensee would be required to provide new equipment); (7) the
incumbent's ``retuned'' system providing the same, if not superior,
performance as the incumbent's existing system operating at the same
antenna height, and with the same power and interference protection;
and, (8) the same channel separation for the retuned frequencies.
23. Some commenters define ``comparable facilities'' on the basis
of operational characteristics. For example, commenters contend that
comparable facilities mean that the incumbent's retuned system should
have the same or superior coverage as its existing system. Nextel
argues that comparable facilities means having the same 40 dBu contour
as the incumbent's current system. Several commenters argue that only
other 800 MHz SMR channels could constitute comparable frequencies. In
this connection, Spectrum believes that incumbents should be relocated
elsewhere on the 800 MHz spectrum or to the 900 MHz spectrum, or the
auction winner should buy-out the incumbent's system.
24. PCIA, supported by other commenters, proposes that retuned
incumbents receive the following rights and privileges associated with
mandatory relocation: (1) The ability to obtain geographic area
licenses on retuned channels; (2) protection against being relocated
more than once; (3) the right to demand one unified retuning plan from
all EA license holders in whose spectrum blocks their frequencies are
located; (4) a requirement of ``seamless'' transition, such that the EA
holder would complete retuning before the incumbent moves; (5) no
obligation to cease operations on the original channels unless
alternative frequencies are identified and accepted; and, (6) the right
to timely notification by the EA licensee that incumbents will be
moved. PCIA also suggests that EA licensees be given one year in which
to complete retuning, so that incumbents can make future business
plans. Several commenters argue that there should be no selective
retuning of incumbent channels; rather, all of an incumbent's channels
within an EA spectrum block should be retuned. Moreover, several
commenters argue that in terms of an EA licensee's relocation
obligations, an incumbent system should be defined as all licenses
issued to an entity or multiple entities participating in an integrated
network. Nextel, on the other hand, contends that selective retuning
should be allowed, so long as the channels are ``comparable.''
25. Proposal. Although we wish to provide parties with sufficient
flexibility to negotiate mutually agreeable terms for determining
comparability, based on our experience in the broadband PCS context, we
tentatively conclude that comparable facilities, at a minimum, should
provide the same level of service as the incumbents' existing
facilities. We propose that by ``comparable facilities,'' a relocated
incumbent would: (a) Receive the same number of channels with the same
bandwidth; (b) have its entire system relocated, not just those
frequencies desired by a particular EA licensee; and, (c) once
relocated, have a 40 dBu service contour that encompasses all of the
territory covered by the 40 dBu contour of its original system. We
believe that this definition will ensure that incumbents' operations
will not be adversely affected. We further believe that such definition
would not preclude incumbents and EA licensees from negotiating to
trade-off any of these system parameters for premium payments or other
operational rights which are consistent with our rules. We believe that
this flexibility in
[[Page 6215]]
designing replacement facilities will expedite relocation, given the
many variables involved with the system design of each individual
system. We seek comment on our proposed definition of and tentative
conclusions regarding ``comparable facilities.'' We ask commenters to
discuss whether the ``comparable facilities'' definition should include
additional operational characteristics, if so, what characteristics
should be specified.
26. With respect to old and new SMR equipment, we tentatively
conclude that an EA licensee's relocation obligations to an incumbent
will not require the EA licensee to replace existing analog equipment
with digital equipment when there is an acceptable analog alternative
that satisfies the comparable facilities definition. In the event that
an incumbent still wishes to obtain digital equipment under these
circumstances, we believe that the incumbent should be required to bear
the additional costs associated with such an upgrade of its system.
Consequently, we propose that under these circumstances, the cost
obligation of the EA licensee would be the minimum cost the incumbent
would incur if it sought to replace, but not upgrade, its system.
However, if an analog alternative fails to meet any of the criteria
included in the comparable facilities definition, the incumbent would
not be required to accept such an alternative. In those instances in
which an incumbent licensee is operating with digital equipment prior
to relocation, we tentatively conclude that the incumbent's new system
also must be digital, unless the EA licensee and incumbent mutually
agree to different terms. We believe that the proposed definition of
comparability would facilitate negotiations between incumbents and EA
licensees during the voluntary period, because both parties would be
better informed about the EA licensees' minimum obligation under our
rules. We seek comment on our proposals and tentative conclusions and
any alternatives.
D. Relocation Guidelines--Good Faith Requirement During Mandatory
Negotiations
27. In the First R&O, we establish a mandatory relocation mechanism
for the upper 10 MHz block. Under this mechanism, incumbents and EA
licensees have a one-year voluntary negotiation period during which EA
licensees are free to offer incumbents a variety of incentives to
expedite relocation. If a relocation agreement is not reached during
this period, the EA licensee may initiate a mandatory negotiation
period during which the parties are required to negotiate in ``good
faith.''
28. We believe that additional clarification of the term ``good
faith'' will facilitate negotiations and help reduce the number of
disputes that may arise over varying interpretations of what
constitutes good faith. We tentatively conclude that, for purposes of
the mandatory negotiation period, an offer by an EA licensee to replace
an incumbent's system with comparable facilities constitutes a good
faith offer. Likewise, an incumbent that accepts such an offer
presumably would be acting in good faith; whereas, failure to accept an
offer of comparable facilities would create a rebuttable presumption
that the incumbent is not acting in good faith. Comparable facilities
would be limited to actual costs associated with providing a
replacement system and would exclude any expenses incurred by the
incumbent without securing the approval, in advance, of the EA
licensee. We believe that the time for expansive negotiation is during
the voluntary negotiation period and that, by the time the parties have
reached the mandatory negotiation period, only the bare essentials of
comparability should be required. We seek comment on our proposal. We
also seek comment on the appropriate penalty to impose on a licensee
that fails to act in good faith.
IV. BETRS Eligibility on the Upper 200 Channels of 800 MHz SMR Spectrum
29. Background. Under Section 90.621(h) of the Commission's rules,
Channel Numbers 401-410, 441-450, 481-490, 521-530, and 561-570 are
available on co-primary basis to stations in Basic Exchange
Telecommunications Radio Service (BETRS) as described in Part 22 of the
Commission's rules.
30. Proposal. According to our licensing records, there are few
BETRS facilities currently licensed on these frequencies. Based on the
limited BETRS licensing on these frequencies and the goals of the wide-
area licensing plan adopted in the First R&O (in which these channels
are included), we propose that BETRS stations no longer be authorized
on these frequencies. In addition, as of the adoption of this Second
Further Notice, we will no longer accept applications for BETRS
facilities on these channels.
V. Licensing of Lower 80 and General Category Channels
A. Geographic Area Licensing
31. Background. Under our current rules the lower 80 and General
Category channels are licensed on a site-specific basis. In the Further
Notice, we sought comment on whether to continue site-specific
licensing or to adopt a form of geographic area licensing on these
channels.
32. Comments. Several commenters advocate that we continue
licensing channels designated for local SMR use based on the geographic
separation and channelization criteria in our current SMR rules. These
commenters argue that continued site-specific licensing would: (1)
Allow local operators to define their own markets; (2) permit
construction of niche systems designed to meet unique and customized
needs; and, (3) minimize disruption to operations of existing
licensees.
33. Other commenters advocate discontinuing site-specific licensing
of the lower 80 and General Category channels and instead offering
licenses for individual channels or small channel blocks covering
defined geographic areas. Cumulous argues that market-area licensing
would allow local SMR operators to grow and develop into geographic
area licensees in the future. Dru Jenkinson, et al. contend that
market-area licensing would permit more efficient service area coverage
than site-specific authorizations. Total Com believes that market-area
licensing will be advantageous to market development, with minimal
regulation.
Some commenters expressly oppose market-area licensing on the basis
that: (1) There is no reason to license these channels on a market-
defined area basis given the scarcity of vacant channels; and, (2) it
could create an artificial shortage of local channels simply because a
licensee secures an authorization covering a particular geographic
area. Pittencrief contends that such an approach, if adopted, should be
used only in those areas where the spectrum currently is not being
used.
35. Although AMTA does not expressly support this licensing
approach, it notes that there are certain advantages associated with
geographic area licensing, including facilitation of future integration
of local systems into wide-area operations should additional spectrum
be desired. Pittencrief contends that even if site-specific licensing
is retained, geographic area licensing would not necessarily be
foreclosed in the future. In this regard, Pittencrief recommends that
in order to secure a market-based license, a local licensee would be
required to demonstrate either that: (a) No other co-channel systems
serve the geographic area; or, (b) it has secured the consent of all
affected co-channel licensees. In either case, Pittencrief suggests
that the local licensee should be required to
[[Page 6216]]
serve a certain percentage of the Commission-defined service area or
face loss of the wide-area authorization.
36. Proposal. We tentatively conclude that the lower 80 and General
Category channels should be converted to geographic area licensing. We
believe that this new licensing approach will afford smaller SMR
operators the flexibility to provide service to a defined geographic
area on the same basis as licensees in the upper 10 MHz block. We
further believe that geographic licensing would simplify system
expansion and substantially reduce the administrative burden on both
lower 80 and General Category licensees and the Commission. In fact, we
expect that in many instances, existing licensees will seek to obtain
market-area licenses for those areas in which they already operate,
which would enable them to consolidate and expand their operations
under a more flexible regulatory regime. We seek comment on our
tentative conclusion.
B. Service Areas
37. Background. In the Further Notice, we indicated our belief that
the Basic Trading Areas (BTAs), established by Rand McNally, could be
an appropriate service area for geographic area licensing on the lower
80 channels. In the First R&O, we adopt EAs as the service area for
licenses in the upper 10 MHz block.
38. Comments. AMTA recommends using EAs rather than BTAs, partly
because EAs appear to approximate more closely the coverage range of
existing systems. Pittencrief also supports use of EAs. DCL Associates
and Telecellular support use of BTA service areas, because they believe
that such licensing would permit substantially more operational
flexibility than the traditional 35-mile radius licensing areas. E.F.
Johnson believes use of BTAs is contrary to the public interest because
it potentially would require operators to construct facilities where
they did not anticipate providing service; and, it would limit the
possibility that a co-channel licensee legitimately could reuse those
channels to serve an adjacent area. CellCall favors licensing the lower
80 channels based on Rand McNally's Major Trading Areas (MTAs). Dru
Jenkinson, et al. believe that uniformity and efficiency of
administration suggest that the lower 80 channels be licensed on the
same geographic area as the upper 200 channels. Similarly, AMTA
contends that such uniformity will preserve the value of lower 80
channels.
39. Proposal. We tentatively conclude that EAs would be the most
appropriate service areas for a geographic area licensing approach on
the lower 80 and General Category channels. As discussed in the First
R&O, EAs are based on urban, suburban, and rural traffic patterns that
accurately reflect the coverage provided by most 800 MHz SMR operators
other than the largest wide-area systems. We therefore believe that
this is an appropriate service area definition for the smaller systems
that we anticipate will occupy the lower 80 and General Category
channels. We also believe that using the same service area definition
for licenses on these channels as for licenses on the upper 200
channels will result in greater administrative efficiency. We seek
comment on this tentative conclusion and on alternative area
definitions.
C. Channel Assignments
40. Background. In the Further Notice, we indicated that by
continuing to license the lower channels in five-channel blocks, as we
do currently, we would enable existing licensees to expand local
systems on the same channels they are using presently. We also
indicated that licensing fewer channels in each block might be an
option that would give SMR operators more flexibility in channel
configuration.
41. Comments. CellCall, Telecellular, AMI, Dru Jenkinson, et al.,
and Palmer support licensing the lower 80 channels in five-channel
blocks. Palmer believes that such an approach would limit spectrum
warehousing severely because channels would not be sitting idle while
reserved for future service areas within a larger defined geographic
region. Dru Jenkinson, et al. believes that a five-channel block is an
appropriate grouping which would permit limited service application on
a local basis, yet provide flexibility for system modification within
the designated area.
42. Proposal. The five-channel blocks, which proved to be
administratively convenient under a site-by-site licensing scheme, may
also continue to be feasible under a geographic area licensing approach
since incumbent licensees have established their systems based on such
channelization. We anticipate that licensees operating on the lower 80
channels increasingly may become more interested in expanding the
geographic areas served by their systems and preoccupied less with the
number of frequencies utilized by such systems. We tentatively conclude
that the lower 80 channels should be licensed in the same five-channel
blocks under a geographic licensing approach in order to allow SMR
operators to build upon the systems they have already established.
Thus, we propose to license the lower 80 channels in five-channel
blocks. We seek comment on this tentative conclusion and any
alternatives.
43. For the General Category channels, we are not convinced that
five-channel blocks would be the best licensing alternative. Unlike the
lower 80 channels, the General Category channels are contiguous. As a
result, licensees may be interested in establishing multiple-channel
system networks. In addition, we are concerned that the competitive
bidding process for these frequencies may be administratively
unmanageable if they are licensed on a channel-by-channel basis, given
the large number of channels involved. Thus, we tentatively conclude
that the General Category channels should be licensed in channel
blocks. We seek comment on our tentative conclusion. We also ask
commenters to discuss what specific channel block size would be
appropriate. One alternative is to license channel blocks of different
sizes, e.g., a 120-channel block, a 20-channel block, and a 10-channel
block. Another alternative is to license channel blocks of the same
size, e.g., 25-channel or 10-channel blocks. We seek comment on these,
as well as other, alternatives.
D. Operational and Eligibility Restrictions
Background. In the Further Notice, we proposed to allow licensees
to use the lower 80 channels for any purpose that is technically
consistent with our rules. We also did not propose to restrict the
ability of licensees on the lower 80 channels to aggregate channels or
integrate local systems to provide service over a larger area.
45. Comments. The majority of commenters addressing this issue
endorse the Commission's proposal to allow licensees to use the lower
80 channels for any purpose that is technically consistent with our
rules. Cumulous believes that the Commission should pursue licensing
policies that allow the same use to be made of both the upper 10 MHz
block of 800 MHz SMR spectrum and the lower 80 channels. OneComm
believes that such a regime would make local channels more fungible in
relocation negotiations and preserve the value of the lower 80
channels.
46. Some commenters, on the other hand, oppose allowing EA
licensees to be able to obtain lower 80 channels. Ericsson believes
that such channels should be reserved as a safe haven for any local
licensees who currently operate in the upper 10 MHz block and
[[Page 6217]]
do not obtain the EA license if a mandatory relocation plan is adopted.
UTC believes that, in order to ensure the benefits of competition
within all geographic markets, an entity should be restricted from
holding EA licenses and authorizations for the lower 80 channels in the
same geographic area. Fisher urges the Commission to clarify that if an
EA licensee also holds licenses for systems made up of frequencies from
the lower 80 channels, it would be allowed to incorporate such
frequencies into its wide-area system. Fisher believes that such use
would further the Commission's goal of efficient and full utilization
of spectrum.
47. Proposal. We tentatively conclude that lower 80 and General
Category SMR licensees should be permitted to use these channels for
any purpose which is technically consistent with our rules. In light of
our designation of 10 MHz of 800 MHz spectrum for wide-area licensing,
however, we wish to ensure that our rules do not inadvertently allow
licensees in the upper 10 MHz to acquire large numbers of additional
SMR channels primarily intended for other use. As discussed infra, 2we
propose to adopt size restrictions on eligibility for the lower 80 and
General Category channels by designating these channels as an
entrepreneurs' block. As a result of the economic size limitations
associated with such designation, the largest licensees in the upper 10
MHz block would likely be ineligible for the lower 80 and General
Category channels. Aside from this proposed restriction, however, we
tentatively conclude that limiting the potential uses of lower 80 and
General Category licenses would not serve the public interest. We
believe that operational restrictions ultimately may restrict the
ability of smaller SMR operators to expand their service area and
service offerings by such means as integrating their frequencies into a
wide-area system or establishing a multiple-channel network. Thus, we
do not propose any additional restrictions for these channels.
E. Channel Aggregation Limit
48. Background. In the Further Notice, we tentatively concluded
that a limit should be placed on the number of lower 80 channels that
an applicant may obtain at one time in an area without constructing and
commencing operations on previously licensed channels in the same area.
We proposed to limit grants of the lower 80 channels to no more than
five channels at one time, which is the applicable limit under our
current rules.
49. Comments. All commenters addressing this issue agree that a
limit should be placed on the number of lower 80 channels that an
applicant may obtain at one time in an area without constructing and
commencing operations on previously licensed channels in the same area.
CellCall proposes a five-channel limit in a particular area for the
lower 80 frequencies. Russ Miller believes, however, that a five-
channel limit is too restrictive over a geographic area as large as a
BTA service area. It proposes a five-channel limit, per location, not
per area, for requested frequencies not licensed to the applicant
within its existing footprint. Russ Miller suggests that the limit
apply to any of the 800 MHz frequencies, not just SMR channels.
Telecellular believes that lower 80 licensees should be permitted to
apply for additional channels only after construction has been
completed for any frequencies covered by previously issued
authorizations in a given area, with ``area'' defined as any location
within 40 miles of the unbuilt site. Total Com suggests that any
licensee must have 90 percent of its channels constructed in each
market before additional channels are authorized.
50. Proposal. We propose not to limit the number of frequencies a
single applicant can request at one time. Under our site-specific 800
MHz SMR licensing rules, we generally have restricted the number of
channels for which an entity could apply in a particular area at one
time, to deter spectrum warehousing. We believe that the risk of
channel warehousing would be limited because these licenses will be
subject to competitive bidding and we anticipate that licensees will
not bid for more channels than they actually need or can use. We also
believe that lower 80 and General Category licensees should have the
flexibility to pursue plans to establish wide-area systems by
aggregating the lower 80 and General Category frequencies. We note,
however, that Commercial Mobile Radio Services (CMRS) spectrum holdings
by these licensees still would be subject to the CMRS spectrum
aggregation limit provided in Section 20.6 of our Rules. We seek
comment on these proposals and any alternatives.
F. Construction Requirements
1. Construction Period
51. Background. In the Third Report and Order in GN Docket No. 93-
252, 59 FR 59945 (November 21, 1994) (CMRS Third R&O), we established a
uniform 12-month period for constructing a standard base station in all
CMRS services that are licensed on a site specific basis. In the
Further Notice, we indicated that licensees of SMR systems
presumptively are subject to this 12-month construction period. In the
CMRS Third R&O, we also indicated that CMRS providers would be required
to commence service to subscribers by the end of their construction
period, with ``service to subscribers'' defined to mean the provision
of service to at least one party not affiliated with, controlled by, or
related to the CMRS provider.
52. Comments. All commenters addressing this issue endorse the
Commission's proposal of a 12-month construction period, coupled with a
commencement of service to subscribers requirement.
53. Proposal. Consistent with our conclusions in the CMRS Third
R&O, we propose that lower 80 and General Category licensees be subject
to a 12-month construction period. We further propose that these
licensees be required to construct their facilities and commence
``service to subscribers'' within twelve months from the grant of their
licenses. We seek comment on this proposal and any alternatives.
2. Coverage Requirements
54. We seek comment on whether geographic area SMR licensees
operating on the lower 80 and General Category frequencies should be
subject to minimum coverage requirements as a condition of licensing.
In the First R&O, we require EA licensees operating in the upper 200
channels to provide coverage to one-third of the population within
their EA within three years of initial license grant and to two-thirds
of the population by the end of their five-year construction period. We
propose to apply these same requirements to lower 80 and General
Category geographic area licensees. We believe that these coverage
requirements serve the public interest by deterring spectrum
warehousing and ensuring the speedy delivery of SMR service to the
public. We also propose that lower 80 and General Category licensees be
able to satisfy their coverage requirements by meeting a ``substantial
service'' standard, like that adopted in the broadband PCS 10 MHz
blocks and 900 MHz SMR services. We ask commenters to address the
advantages and disadvantages of imposing coverage requirements on lower
80 and General Category licensees, the specific coverage criteria
proposed, and any alternative criteria that could be used.
55. We also tentatively conclude that the geographic area lower 80
and General Category licensees should be
[[Page 6218]]
responsible for meeting their coverage requirements, regardless of the
extent to which their service areas are occupied by co-channel
incumbents. We believe that incumbents that already provide substantial
coverage in certain areas will have sufficient incentive to seek
geographic area licenses for these areas. Thus, we propose to require
the geographic area licensees for the lower 80 and General Category
channels to satisfy their coverage requirements directly. This proposal
is consistent with our approach for EA licensees on the upper 200
channels. We seek comment on these proposals and any alternatives,
including the impact, if any, on the construction period for the lower
80 and General Category channels. Assuming a twelve-month construction
period, we ask commenters to address whether the coverage requirements
should be imposed earlier in the license term. If so, we ask commenters
to discuss what would be the appropriate time frame.
56. If we adopt coverage requirements, we also must determine what
penalty should be imposed if the geographic area licensee fails to
comply with such requirements. We tentatively conclude that a
geographic area licensee's failure to meet the coverage requirements
should result in forfeiture of the market-area license. We also
tentatively conclude that in the event that a licensee loses its
geographic area license for failure to comply with coverage
requirements, any authorizations that such licensee held in that area
prior to the auction for facilities that are constructed and operating
would be reinstated. This approach is consistent with the sanctions
provided for in our rules for the upper 10 MHz block of 800 MHz SMR
spectrum, 900 MHz SMR, and broadband PCS. We seek comment on our
proposal and any alternatives.
G. Treatment of Incumbents
57. Given the extensive licensing of the 800 MHz SMR service, we
remain concerned about the ramifications of implementing a market-area
licensing approach where systems have been licensed already on a site-
specific basis. In the First R&O, we adopt a mandatory relocation
mechanism for the upper 10 MHz block. With respect to the lower 80 and
General Category channels, however, we believe that there are no
equitable means of relocating incumbents to alternative channels, and
that there are no identifiable alternative channels to accommodate all
such incumbents. We also believe that incumbent licensees relocated
from the upper 200 channels should not be subject to relocation a
second time. We therefore tentatively conclude that there should be no
mandatory relocation mechanism for SMR operators operating on the lower
80 and General Category channels. We propose that incumbent SMR
licensees on these frequencies be allowed to continue to operate under
their existing site-specific authorizations, and geographic area
licensees would be required to provide protection to all co-channel
systems that are constructed and operating within their service areas.
We further propose that no incumbent SMR licensee be allowed to expand
beyond its existing service area (as discussed in further detail,
infra) and into the geographic area licensee's territory without
obtaining the prior consent of the geographic area licensee (unless, of
course, the incumbent in question is itself the market-area licensee
for the relevant channel). We seek comment on this proposal. In
addition, we ask commenters to address how non-SMR licensees operating
on the lower 80 and General Category channels should be treated. Should
these licensees be relocated to non-SMR channels, and if so, under what
circumstances and pursuant to what type of relocation plan?
58. Because incumbent licensees' ability to expand their service
areas would be restricted as a result of our proposal, we believe that
it is imperative that they be given the optimum amount of operational
flexibility possible, without encroaching upon market-area licensees'
operations. Consistent with our approach on the upper 200 channels, we
propose that incumbent licensees on lower 80 and General Category
channels be able to modify or add transmitters in their existing
service area without prior notification to the Commission, so long as
their 22 dBu interference contour is not expanded. As we note in the
First R&O, we believe that by using the 22 dBu interference contour as
the benchmark for defining an incumbent's service area, incumbents will
be afforded significant operational flexibility without detracting from
the market-area licensee' operational capabilities. We seek comment on
this proposal. We ask commenters to address whether our proposal
strikes the appropriate balance between the competing interests of
market-area and incumbent licensees. We also ask commenters to discuss
whether a basis other than the 22 dBu interference contour should be
used to determine an incumbent's service area.
59. In addition, similar to our approach in the upper 200 channels
and the 900 MHz SMR service, we propose to allow SMR incumbents
operating on the lower 80 and General Category channels to have their
licenses reissued if they are not the successful bidder for the
geographic area license which includes the area in which they are
currently operating. Under this procedure, which will be granted post-
auction upon the request of the incumbent, an incumbent may convert its
current multiple site licenses to a single license, authorizing
operations throughout the contiguous and overlapping 22 dBu contours of
the incumbent's previously authorized sites. We propose that incumbents
seeking such reissued licenses be required to make a one-time filing
identifying each of their external base station sites to assist the
staff in updating the Commission's database after the close of the
auction for the lower 80 and General Category channels. We also propose
to require evidence that such facilities are constructed and placed in
operation and that, by operation of our rules, no other licensee would
be able to use these channels within this geographic area. We believe
that facilities added or modified within the 22 dBu contour without
prior approval or subsequent notification under this procedure will not
receive interference, because they will be protected by the presence of
surrounding stations of the same licensee on the same channel or
channel block. We seek comment on this proposal.
H. Co-Channel Interference Protection
60. Under our market-area licensing proposal for the lower 80 and
General Category channels, market-area licensees will be required to
provide interference protection both to incumbent co-channel facilities
and to co-channel licensees in neighboring market areas. With respect
to incumbent co-channel facilities, we propose to retain the level of
protection afforded under our existing rules. Thus, a market-area
licensee would be required either to locate its stations at least 113
km (70 mi) from the facilities of any incumbent or to comply with the
co-channel separation standards set forth in our short-spacing rule if
it seeks to operate stations located less than 113 km (70 mi) from an
incumbent licensee's facilities. With respect to adjacent market-area
licensees, we propose that market-area licensees provide interference
protection either by reducing the signal level at their service area
boundary, or negotiating some other mutually acceptable agreement with
all potentially affected adjacent licensees. We seek comment on these
[[Page 6219]]
proposals and we invite commenters to provide alternatives.
I. Licensing in Mexican and Canadian Border Areas
61. We recognize that a limited number of lower 80 channels are
available for SMR licensing in the Mexican and Canadian border areas.
In the First R&O, we have decided not to distinguish between border
areas and non-border areas for licensing purposes. We propose the same
approach for the lower 80 channels in the border areas, i.e., all
market areas should be licensed on a uniform basis without
distinguishing border from non-border areas, even if some spectrum is
unusable. We believe that lower 80 and General Category applicants,
like those in the upper 10 MHz block and other services, will be able
to assess the impact of more limited spectrum availability when valuing
those market areas for competitive bidding purposes. Moreover, we
believe that altering the size of particular market areas because they
are located near an international border is likely to be
administratively unworkable. Thus, we propose that market-area
licensees be entitled to use any available border-area channels,
subject to the relevant rules regarding international assignment and
coordination of such channels. We seek comment on this proposal.
VI. Regulatory Classification of Lower 80 and General Category Channels
62. Background. In the CMRS Third R&O, we determined that SMR
licensees would be classified as CMRS if they offered interconnected
service and as Private Mobile Radio Service (PMRS) if they did not
offer such service. In the Further Notice, we sought comment on whether
the presumption of CMRS status should apply to licensees authorized for
the lower 80 channels.
63. Comments. All of the commenters addressing this issue believe
that there should not be a CMRS presumption for the lower 80 channels
or any other channels designated primarily for local service. E.F.
Johnson and Genesee opine that there is a significant difference
between the type of services provided by local SMR systems and wide-
area systems. AMTA opines that it is not persuaded that Congress
intended to adopt a definition of CMRS so sweeping as to encompass even
the smallest, most rural SMR system, irrespective of its practical
ability to provide a service substantially similar to cellular or other
CMRS systems.
64. Proposal. Based on our geographic area licensing proposal for
the lower 80 and General Category channels, we believe that it is not
evident that the operations of the licensees on these frequencies will
be local in nature. In fact, some licensees may desire to establish
regional networks on these frequencies. Furthermore, contrary to the
suggestion by some commenters, the CMRS definition provided in the
Communications Act does not distinguish mobile service providers based
on their economic size. Instead, a service provider's regulatory
classification is determined based on factors associated with the
nature of its operations. In this connection, we believe that the
operational opportunities for the lower 80 and General Category
channels are not significantly different. Thus, we tentatively conclude
that most if not all geographic area licensees on these channels will
be classified as CMRS, because they are likely to provide
interconnected service as part of their service offering. We therefore
propose to classify all geographic area licensees on the lower 80 and
General Category channels presumptively as CMRS. We also propose that
market-area applicants or licensees who do not intend to provide CMRS
service may overcome this presumption by demonstrating that their
service does not fall within the CMRS definition. We also propose not
to apply this presumption prior to August 10, 1996 in the case of any
geographic area licensee who previously was licensed in the SMR service
as of August 10, 1993. We seek comment on our tentative conclusion and
proposals.
VII. Competitive Bidding Issues for Lower 80 and General Category
Channels
A. Auctionability of Lower 80 and General Category Channels
65. In the Competitive Bidding Eighth R&O, we affirmed our previous
determination that the 800 MHz SMR service is auctionable. In addition,
we concluded that use of competitive bidding in the upper 200 channels
of 800 MHz SMR spectrum is fully consistent with Section 309(j) of the
Communications Act. Because the lower 80 frequencies are SMR channels,
and thus a subset of the 800 MHz SMR service, we believe that they also
are auctionable. Consistent with our approach regarding the upper 200
channels, we propose to employ competitive bidding as a licensing tool
to select among mutually exclusive applicants on the lower 80 channels.
We seek comment on this proposal.
66. We also seek comment on whether to adopt equivalent auction
procedures for competing applications for General Category channels. In
the Competitive Bidding Eighth R&O, we determine that in the future the
General Category Channels will be licensed exclusively for SMR use.
Consistent with our approach for other 800 MHz SMR spectrum, we
tentatively conclude that if two or more entities file mutually
exclusive initial applications, we intend to use competitive bidding to
select from among competing applications.
67. We anticipate that a large number of applicants will file
mutually exclusive geographic area applications for SMR operations on
General Category frequencies. Competitive bidding will ensure that the
qualified applicants who place the highest value on the available
spectrum, and who will provide valuable services rapidly to the public,
will prevail in the selection process. Thus, we tentatively conclude
that all potential conflicts among General Category applicants will not
be eliminated by our proposed geographic area licensing scheme.
Competitive bidding procedures will be necessary to select from among
competing applicants for these channels. We seek comment on this
tentative conclusion.
B. Competitive Bidding Design
1. Bidding Methodology
68. Background. In the Second Report and Order in PP Docket No. 93-
253, 59 FR 22980 (May 4, 1994) (Competitive Bidding Second R&O) we
established criteria to be used in selecting which auction design to
use for particular auctionable services. Generally, we concluded that
awarding licenses to parties who value them most highly will foster
Congress's policy objectives of stimulating economic growth and
enhancing access to telecommunications services. We further noted that,
because a bidder's ability to introduce valuable new services and to
deploy them quickly, intensively, and efficiently increases the value
of a license to that bidder, an auction design that awards licenses to
those bidders with the highest willingness to pay tends to promote the
development and rapid deployment of new services and the efficient and
intensive use of the spectrum. In determining how best to promote this
objective, we identified several auction design elements which, in
combination, produce many different auction types. The two most
important design elements are: (1) the number of auction rounds (single
or multiple), and (2) the order in which licenses are auctioned
(sequentially or simultaneously). These two elements can be combined to
create four basic auction designs: sequential
[[Page 6220]]
single round, simultaneous single round, sequential multiple round, and
simultaneous multiple round.
69. In the Further Notice, we noted that because of the non-
contiguous nature of the lower 80 channels, there did not appear to be
a high degree of interdependency among them. We further noted that the
limited geographic scope of the licenses is likely to make them less
valuable than the licenses for the spectrum blocks for the upper 200
channels.
70. Comments. SBA supports use of single round sealed bidding.
Genesee disagrees that one single round of auctions in sealed bidding
would be fair, and suggests that at least two rounds be done with 30
day intervals. AMTA does not dispute the Commission's tentative
conclusion regarding the appropriate competitive bidding methodology
for local licenses. AMTA notes that it is reluctant to suggest an
approach that might further complicate what would be an unjustifiably
costly and complex process for those entities. AMTA contends that some
grouping of frequency blocks and geographic areas might be necessary
for this purpose, if the Commission determines to issue local licenses
on a geographic, rather than site-specific basis. Morris proposes the
use of multiple round auctions for local area licenses, limited to five
rounds. Nextel proposes that after relocation is completed, the lower
80 channels and any other spectrum reallocated to exclusive SMR use, be
auctioned on a single channel basis.
71. Proposal. We seek comment on which of the above auction
methodologies should be used for the auction of the lower 80 and
General Category licenses. In the Competitive Bidding Second R&O, we
stated that simultaneous multiple round auctions would be the preferred
method where licenses have strong value interdependencies. Accordingly,
we have used this method in broadband and narrowband PCS services and
the 900 MHz SMR service, and we will use the same methodology for the
upper 200 channels in the 800 MHz SMR service.
72. Given our successful experience in conducting simultaneous
multiple round auctions, we propose to use this competitive bidding
methodology for the lower 80 and General Category channels as well. We
seek comment on this proposal. We also note, however, that there is
less interdependency between licenses for the lower 80 and General
Category channels, both because channel aggregation is not required to
provide SMR service and because channel selection may be largely
dictated by which channels currently are licensed to incumbents in each
license area. We therefore seek comment on alternatives to simultaneous
multiple round bidding for these channels. One alternative would be to
use the oral outcry method, i.e., sequential multiple round bidding.
This method may allow us to conduct auctions expeditiously and in a
manner that is not burdensome to applicants.
2. License Grouping
73. Background. Depending upon the auction methodology chosen,
several alternatives exist for grouping the lower 80 and General
Category licenses. For example, the Commission determined in the
Competitive Bidding Second R&O that in a multiple round auction, highly
interdependent licenses should be grouped together and put up for bid
at the same time, because such grouping provides bidders with the most
information about the prices of complementary and substitutable
licenses during the course of an auction. We also determined that the
greater the degree of interdependence among the licenses, the greater
the benefit of auctioning a group of licenses together in a
simultaneous multiple round auction.
74. Proposal. We seek comment on how lower 80 and General Category
licenses should be grouped for competitive bidding purposes. As noted
above, it does not appear that licenses on these channels are likely to
be highly interdependent. We therefore propose that lower 80 licenses
be grouped in 16 five-channel blocks for each license area. We seek
comment on this proposal. We also ask commenters to indicate if there
are instances in which licenses on multiple channels should be grouped
together for competitive bidding purposes.
75. Assuming that we group lower 80 licenses by 16 five-channel
blocks, the issue remains whether all geographic area licenses for
specific channel blocks should be grouped together for competitive
bidding purposes. Given the large number of licenses, we believe that
it would be administratively feasible to employ an additional means of
grouping the five-channel blocks. We believe that some licensees may
elect to pursue regional service plans. Thus, we propose to group the
five-channel blocks on a regional basis. We seek comment on this
proposal. We recognize that there are other sets of interdependencies
which could form a basis for license grouping. In a simultaneous
multiple round auction, for example, we could auction all of the market
areas for a five-channel block simultaneously. Alternatively, we could
begin with the largest (i.e., most populated) markets and then move to
smaller markets. We seek comment on these alternatives as well.
Assuming that we group, the licenses on a regional basis, we ask
commenters to discuss how the regions should be defined. For example,
should the regions be defined by sequential groupings of EAs or some
other basis? We also ask commenters to address whether there is a
particular order in which the regions should be auctioned.
76. With respect to the General Category channels, which we propose
to license in a 120-channel block, 20-channel block and 10-channel
block, we believe that these licenses will be significantly
interdependent, primarily due to their contiguity. Thus, we propose to
auction the General Category geographic area licenses simultaneously.
We seek comment on this proposal and any alternatives.
3. Bidding Procedures
77. Background. In the Competitive Bidding Second R&O, the
Commission established general procedures for simultaneous multiple
round auctions, including bid increments, duration of bidding rounds,
stopping rules, and activity rules. We further noted that these
procedures could be modified on a service-specific basis. We seek
comment on the bidding procedures that should be used for licensing of
the lower 80 and General Category channels.
78. Bid Increments. If we use a multiple round auction, we propose
to establish minimum bid increments for bidding in each round of the
auction, based on the same considerations in the Competitive Bidding
Eighth R&O. The bid increment is the amount or percentage by which the
bid must be raised above the previous round's high bid in order to be
accepted as a valid bid in the current bidding round. The application
of a minimum bid increment speeds the progress of the auction and,
along with activity and stopping rules, helps to ensure that the
auction closes within a reasonable period of time. Establishing an
appropriate minimum bid increment is especially important in a
simultaneous auction with a simultaneous closing rule, because all
markets remain open until there is no bidding on any license and a
delay in closing one market will delay the closing of all markets. We
seek comment on the appropriate minimum bid increments for the lower 80
and General Category channels.
79. For example, if simultaneous multiple round auctions are
employed
[[Page 6221]]
for the lower 80 and General Category licenses, we believe that we
should start such auctions with relatively large bid increments, and
reduce the increments as the number of active bidders declines. We also
propose to adopt a minimum bid increment of five percent of the high
bid in the previous round or $0.01 per activity unit, whichever is
greater. We believe that applying a $0.01 per activity unit minimum bid
increment in addition to the percentage calculation is appropriate to
provide flexibility for a wide range of different license values, and
to ensure timely closure of auctions. In addition, we propose to retain
the discretion to vary the minimum bid increments for individual
licenses or groups of licenses at any time before or during the course
of the auction, based on the number of bidders, bidding activity, and
the aggregate high bid amounts. We also propose to retain the
discretion to keep an auction open if there is a round in which no bids
or proactive waivers are submitted. We seek comment on these proposals.
80. Stopping Rules. If multiple round auctions are used, a stopping
rule must be established for determining when the auction is over.
Three types of stopping rules exist that could be employed in
simultaneous multiple round auctions: markets may close individually,
simultaneously, or a hybrid approach may be used. We believe a market-
by-market stopping rule is most appropriate for the lower 80 channels
given the lack of strong interdependencies among these licenses. We
also believe that a market-by-market stopping rule would be the least
complex approach from an administrative perspective. Under a market-by-
market approach, bidding closes on each license after three rounds pass
in which no new acceptable bids are submitted for that particular
license. We tentatively conclude that a simultaneous stopping rule is
not appropriate for these licenses, because market-by-market closure
will provide bidders with sufficient flexibility to bid on the license
of their choice. In addition, the complexity of implementation and the
vulnerability to strategic delay by bidders seeking to impede closure
of the auction outweigh the benefits of a simultaneous stopping rule
given the nature of these SMR licenses. With a simultaneous stopping
rule, bidding remains open on all licenses until there is no bidding on
any license. Under this approach, all markets will close if three
rounds pass in which no new acceptable bids are submitted for any
license. We seek comment on our tentative conclusions. We also ask
commenters to address the advantages and disadvantages of using a
hybrid stopping rule. Under a hybrid approach, a simultaneous stopping
rule, coupled with an activity rule designed to bring the markets to
close within a reasonable period of time, could be used to close
auctions with high value licenses. For lower value licenses, the
simpler market-by-market closing could be employed. For the General
Category licenses, we tentatively conclude that a simultaneous stopping
rule is most appropriate, given the significant interdependencies
between these licenses. We seek comment on this tentative conclusion.
Regardless of which stopping rule we ultimately apply, we further
propose to retain the discretion to declare when the auction will end,
whether it be after one additional round or some other specified number
of rounds. This proposal will ensure ultimate Commission control over
the duration of the auction. We seek comment on this proposal.
81. Activity Rules. Based on our proposal to employ a market-by-
market stopping rule for the lower 80 licenses, we tentatively conclude
that it is unnecessary to implement an activity rule. We believe that
an activity rule is less important when markets close one-by-one,
because failure to participate in any given round may result in losing
the opportunity to bid at all, if that round turns out to be the last.
We seek comment on this tentative conclusion. We also ask commenters to
address what activity rules, if any, would be appropriate if an
alternative stopping rule is adopted. For example, in order to ensure
that simultaneous auctions with simultaneous stopping rules close
within a reasonable period, we believe that it may be necessary to
impose an activity rule to prevent bidders from waiting until the end
of the auction before participating. Because simultaneous stopping
rules generally keep all markets open as long as anyone wishes to bid,
they also create incentives for bidders to hold back, until prices
approach equilibrium, before making a bid and risking payment of a
monetary assessment for withdrawing. We believe that this could lead to
very long auctions.
82. Thus, in the Competitive Bidding Second R&O, we adopted the
Milgrom-Wilson activity rule as our preferred activity rule where a
simultaneous stopping rule is used. We subsequently have adopted or
proposed the Milgrom-Wilson rule in each of our simultaneous multiple
round auctions. The Milgrom-Wilson approach encourages bidders to
participate in early rounds by limiting their maximum participation to
some multiple of their minimum participation level. Bidders are
required to declare their maximum eligibility in terms of activity
units, and make the required upfront payment. That is, bidders will be
limited to bidding on licenses encompassing no more than the number of
activity units covered by their upfront payment. Licenses on which a
bidder is the high bidder from the previous round, as well as licenses
on which a new valid bid is placed, count toward this activity unit
limit. Under this approach, bidders have the flexibility to shift their
bids among any licenses for which they have applied, so long as the
total activity units encompassed by those licenses does not exceed the
number for which they made an upfront payment. Moreover, bidders have
the freedom to participate at whatever level they deem appropriate by
making a sufficient upfront payment. To preserve their maximum
eligibility, however, bidders are required to maintain some minimum
activity level during each round of the auction. Accordingly, we
propose to employ the Milgrom-Wilson activity rule for the General
Category licenses. We seek comment on this proposal and any
alternatives.
83. Under the Milgrom-Wilson approach, the minimum activity level,
measured as a fraction of the self-declared maximum eligibility, will
increase during the course of the auction. For this purpose, Milgrom
and Wilson divide the auction into three stages. During the first stage
of the auction, a bidder is required to be active on licenses
encompassing one-third of the activity units for which it is eligible.
The penalty for falling below that activity level is a reduction in
eligibility. At this stage, bidder would lose three activity units in
maximum eligibility for each activity unit below the minimum required
activity level. In other words, each bidder would retain eligibility
for three times the activity units for which it is an active bidder, up
to the activity units covered by the bidder's upfront payment. In the
second stage, bidders are required to be active on two-thirds of the
activity units for which they are eligible. The penalty for falling
below that activity level would be a loss of 1.5 activity units in
eligibility for each activity unit below the minimum required activity
level. In the third stage, bidders are required to be active on
licenses encompassing all of the activity units for which they are
eligible. The penalty for falling below that activity level is a loss
of one activity unit in eligibility for each
[[Page 6222]]
activity unit below the minimum required activity. Each bidder thus
retains eligibility equal to its current activity level (1 times the
activity units for which it is an active bidder). We seek comment on
this alternative.
84. Duration of Bidding Rounds. We propose to retain the discretion
to vary the duration of bidding rounds or the interval at which bids
are accepted (e.g., run two or more rounds per day rather than one), in
order to close the auction more quickly. If this mechanism is used, we
most likely would shorten the duration and/or intervals between bidding
rounds where there are relatively few licenses to be auctioned, where
the value of the licenses is relatively low, or in early rounds to
speed the auction process. Where license values are expected to be high
or where large numbers of licenses are being auctioned, we propose to
increase the duration and/or intervals between bidding rounds. We would
announce by Public Notice, and may vary by announcement during an
auction, the duration and intervals between bidding rounds. We also
propose to announce by Public Notice, before each auction, the stopping
rule we adopt. We seek comment on these proposals.
4. Rules Prohibiting Collusion
85. Background. In the Competitive Bidding Second R&O, as modified
on reconsideration, we adopted special rules prohibiting collusive
conduct in the context of competitive bidding. In the Further Notice,
we proposed to apply these rules prohibiting collusion to the 800 MHz
SMR service. We want to prevent parties, especially large entities,
from agreeing in advance to bidding strategies that divide the market
according to their strategic interests and/or disadvantage other
bidders. Bidders will be required to (i) reveal all parties with whom
they have entered into any agreement that relates to the competitive
bidding process, and (ii) certify they have not entered into any
explicit or implicit agreements, arrangements, or understandings with
any parties, other than those identified, regarding the amount of their
bid, bidding strategies, particular properties on which they will or
will not bid or any similar agreement.
86. Proposals. We tentatively conclude that we should subject the
lower 80 and General Category licenses to the reporting requirements
and rules prohibiting collusion embodied in Sections 1.2105 and 1.2107
of the Commission's rules. Specifically, we propose to implement
Section 1.2105(a) to require bidders to identify on their short-form
applications all parties with whom they have entered into any
consortium arrangements, joint ventures, partnerships or other
agreements or understandings which relate to the competitive bidding
process. We propose to apply Section 1.2105(c) of our rules, which
prohibits bidders from communicating with one another (if they have
applied for any of the same markets) regarding the substance of their
bids or bidding strategies after short-form applications (FCC Form 175)
have been filed. Section 1.2105(c) also prohibits bidders from entering
into consortium arrangements or joint bidding agreements after the
deadline for short-form applications has passed. Prohibited
communications between such bidders cannot take place directly or
indirectly.
87. Further, in the Fourth Memorandum Opinion and Order in PP
Docket No. 93-253, 59 FR 53364 (October 24, 1994), we noted that
communications among bidders concerning matters unrelated to the
license auction would be permitted. In making this proposal, it is not
our intent to discourage potential applicants from entering into
consortia, joint ventures, or similar joint bidding arrangements for
geographic area licenses prior to the short form filing deadline. To
the contrary, we intend to provide parties with time to negotiate such
arrangements before the start of the application process. To avoid
compromising the auction process, however, such negotiations must end
at the point that short forms are filed. As in other services, we also
propose to require winning bidders to submit with their long-form
application a detailed explanation of the terms, conditions and parties
involved in any auction-related consortium, joint venture, partnership,
or other agreement entered into prior to the close of bidding. We seek
comment on these proposals.
C. Procedural and Payment Issues
1. Pre-Auction Application Procedures
88. Background. In the Competitive Bidding Second R&O, the
Commission established general competitive bidding rules and
procedures, which we noted may be modified on a service-specific basis.
We also determined that we should require only a short-form application
(FCC Form 175) prior to auction, and that only winning bidders should
be required to submit a long-form license application (FCC Form 600)
after the auction. In this connection, we determined that such a
procedure would fulfill the statutory requirements and objectives and
adequately protect the public interest.
89. As discussed below, we propose to follow generally the
processing and procedural rules established in the Competitive Bidding
Second R&O, with certain modifications designed to address the
particular characteristics of the lower 80 and General Category
licenses. These proposed rules are structured to ensure that bidders
and licensees are qualified and will be able to construct systems
quickly and offer service to the public. By ensuring that bidders and
license winners are serious, qualified applicants, these proposed rules
will minimize the need to re-auction licenses and prevent delays in the
provision of SMR services to the public.
90. Section 309(j)(5) of the Communications Act provides that no
party may participate in an auction ``unless such bidder submits such
information and assurances as the Commission may require to demonstrate
that such bidder's application is acceptable for filing.'' Moreover,
``[n]o license shall be granted to an applicant selected pursuant to
this subsection unless the Commission determines that the applicant is
qualified pursuant to Section 309(a) and Section 308(b) and 310'' of
the Communications Act. As the legislative history of Section 309(j)
makes clear, the Commission may require that bidders' applications
contain all information and documentation sufficient to demonstrate
that the application is not in violation of Commission rules, and we
propose to dismiss applications not meeting those requirements prior to
the competitive bidding.
91. Under this proposal, before the auction for the lower 80 and
General Category channels, the Bureau would release an initial Public
Notice announcing the auction. The initial Public Notice would specify
the licenses to be auctioned and the time and place of the auction in
the event that mutually exclusive applications are filed. The Public
Notice would specify the method of competitive bidding to be used,
applicable bid submission procedures, stopping rules, activity rules,
and the deadline by which short-form applications must be filed and the
amounts and deadlines for submitting the upfront payment. We would not
accept applications filed before or after the dates specified in the
Public Notice. Applications submitted before the release of the Public
Notice would be returned as premature. Likewise, applications submitted
after the deadline specified by the Public Notice would be dismissed,
with prejudice, as untimely. We seek comment on these proposals.
[[Page 6223]]
92. Soon after the release of the initial Public Notice, a Bidder's
Information Package will be made available to prospective bidders. The
Bidder's Information Package will contain information on the incumbents
occupying blocks on which bidding will be available. Incumbents will be
expected to update information on file with the Commission, such as
current address and phone number, so that such information will be of
use to prospective bidders.
93. Under this proposal, all bidders would be required to submit
short-form applications on FCC Form 175 (and FCC Form 175-S, if
applicable), by the date specified in the initial Public Notice.
Applicants would be encouraged to file Form 175 electronically.
Detailed instructions regarding electronic filing would be contained in
the Bidder Information Package. Those applicants filing manually would
be required to submit one paper original and one microfiche original of
their application, as well as two microfiche copies. The short form
applications would require applicants to provide the information
required by Section 1.2105(a)(2) of the Commission's rules.
Specifically, each applicant would be required to specify on its Form
175 application certain identifying information, including its status
as a designated entity (if applicable), its classification (i.e.,
individual, corporation, partnership, trust, or other), the license
areas and frequency blocks for which it is applying, and assuming that
the licenses will be auctioned, the names of persons authorized to
place or withdraw a bid on its behalf.
94. As we indicated in the Competitive Bidding Second R&O, if we
receive only one application that is acceptable for filing for a
particular license, and thus there is no mutual exclusivity, we propose
to issue a Public Notice cancelling the auction for this license and
establishing a date for the filing of a long-form application, the
acceptance of which would trigger the procedures permitting petitions
to deny. If no petitions to deny are filed, the application would be
grantable after 30 days. We seek comment on the proposals discussed
above.
2. Amendments and Modifications
95. Background. To encourage maximum bidder participation, we
proposed in the Competitive Bidding Second R&O to provide applicants
with an opportunity to correct minor defects in their short-form
applications prior to the auction. We stated that applicants whose
short-form applications are substantially complete, but contain minor
errors or defects, would be provided an opportunity to correct their
applications prior to the auction. In the broadband PCS context, we
modified our rules to permit ownership changes that result when
consortium investors drop out of bidding consortia, even if control of
the consortium changes due to this restructuring. In the CMRS Third
R&O, we decided to adopt the same or similar definitions for initial
applications and major and minor amendments and modifications for all
CMRS in Part 22 and Part 90, in order to facilitate similar system
proposals and modifications for equal treatment of substantially
similar services.
96. On the date set for submission of corrected applications,
applicants that discover minor errors in their own applications (e.g.,
typographical errors, incorrect license designations, etc.) also would
be permitted to file corrected applications. Recently, the Commission
waived the ex parte rules as they applied to the submission of amended
short-form applications for the A and B blocks of the broadband PCS
auctions, to maximize applicants' opportunities to seek Commission
staff advice on making such amendments. We propose to apply the same
principles to the SMR auctions. Under this proposal, applicants would
not be permitted to make any major modifications to their applications,
including changes in license areas and changes in control of the
applicant, or additions of other bidders into the bidding consortia,
until after the auction. Applicants could modify their short-form
applications to reflect formation of consortia or changes in ownership
at any time before or during an auction, provided such changes would
not result in a change in control of the applicant, and provided that
the parties forming consortia or entering into ownership agreements
have not applied for licenses in any of the same geographic license
areas. In addition, applications that are not signed would be dismissed
as unacceptable.
97. Upon our review of the short-form applications, we propose to
issue a Public Notice listing all defective applications, and
applicants with minor defects would be given an opportunity to cure
errors and resubmit a corrected version. After reviewing the corrected
applications, the Commission would release a second Public Notice
announcing the names of all applicants whose applications have been
accepted for filing. These applicants would be required to submit an
upfront payment to the Commission, as discussed below, to the
Commission's lock-box by the date specified in the Public Notice, which
generally would be no later than 14 days before the scheduled auction.
After the Commission receives from its lock-box bank the names of all
applicants who have submitted timely upfront payments, the Commission
would issue a third Public Notice announcing the names of all
applicants that are determined qualified to bid. An applicant who fails
to submit a sufficient upfront payment to qualify it to bid on any
license being auctioned would not be identified on this Public Notice
as a qualified bidder. Each applicant listed on this Public Notice
would be issued a bidder identification number and further information
and instructions regarding auction procedures. We seek comment on the
proposals discussed above.
3. Upfront Payments
98. Background. In the Competitive Bidding Second R&O, we
established a minimum upfront payment of $2,500 and stated that this
amount could be modified on a service-specific basis. In the Further
Notice, we proposed to require 800 MHz SMR auction participants to
tender in advance to the Commission a substantial upfront payment,
$0.02 per activity unit for the largest combination of activity units a
bidder anticipates bidding on in any round, as a condition of bidding
in order to ensure that only serious, qualified bidders participate in
auctions and to ensure payment of the penalty (discussed infra) in the
event of bid withdrawal or default. We also sought comment on the
upfront payment formula and minimum upfront payment most appropriate
for the 800 MHz SMR service.
99. Proposals. As in the case of other auctionable services, we
propose to require participants for the lower 80 and General Category
auction to tender in advance to the Commission a substantial upfront
payment as a condition of bidding, in order to ensure that only
serious, qualified bidders participate in auctions and to ensure
payment of the additional monetary assessments in the event of bid
withdrawal or default. For services that are licensed by simultaneous
multiple round auction, we have established a standard upfront payment
formula of $0.02 per activity unit for the largest combination of
activity units a bidder anticipates bidding on in any single round of
bidding. We tentatively conclude that a minimum $2,500 upfront payment
should be required, regardless of the bidding methodology we employ. We
seek comment on our proposal regarding the appropriate minimum upfront
payment for
[[Page 6224]]
applications for the lower 80 or General Category channels. In
particular, we seek comment on whether a minimum upfront payment of
$2,500 is sufficient to discourage frivolous or speculative bidders in
the auction process.
100. We tentatively conclude that upfront payments should be due no
later than 14 days before a scheduled auction. This period should be
sufficient to allow the Commission to process upfront payment data and
release a Public Notice listing all qualified bidders. The specific
procedures to be followed in the tendering and processing of upfront
payments are set forth in Section 1.2106 of the Commission's rules.
4. Down Payment and Full Payment
101. Background. In the Competitive Bidding Second R&O, we
generally required successful bidders to tender a 20 percent down
payment on their bids to discourage default between the auction and
licensing and to ensure payment of the penalty if such default occurs.
We concluded that this requirement was appropriate to ensure that
auction winners have the necessary financial capabilities to complete
payment for the license and to pay for the costs of constructing a
system, while not being so onerous as to hinder growth or diminish
access. In the Further Notice, we proposed to require the winning
bidders for 800 MHz SMR licenses to supplement their upfront payments
with down payments sufficient to bring their total deposits up to 20
percent of their winning bid(s).
102. Proposals. We propose to apply the 20 percent down payment
requirement to winning bidders for lower 80 and General Category
licenses. Such a down payment would be due within five business days
following the Public Notice announcing the winning bidders. We further
propose that auction winners be required to pay the full balance of
their winning bids within five business days following Public Notice
that the Commission is prepared to award the license. We seek comment
on this proposal.
103. To the extent that an auction winner is eligible to make
payments through an installment plan (small businesses, as proposed
infra), we propose to apply different down payment requirements. Such
an entity would be required to bring its deposit with the Commission up
to five percent of its winning bid after the bidding closes (this
amount would include the upfront payment), and would have to pay an
additional five percent of its winning bid to the Commission within
five business days following Public Notice that the Commission is
prepared to award the license. We seek comment on this proposal.
5. Bid Withdrawal, Default, and Disqualification
104. Background. In the Further Notice, we proposed to adopt bid
withdrawal, default, and disqualification rules for the 800 MHz SMR
service based on the procedures established in our general competitive
bidding rules. In the Competitive Bidding Second R&O, we noted that it
is critically important to the success of our competitive bidding
process that potential bidders understand that there will be a
substantial penalty assessed if they withdraw a high bid, are found not
to be qualified to hold licenses, or default on payment of a balance
due. If a bidder withdraws a high bid before the Commission closes
bidding or defaults by failing to timely remit the required down
payment, it would be required to reimburse the Commission for any
differences between its high bid and the amount of the winning bid, if
the winning bid is lower. A defaulting auction winner also would be
assessed three percent of either the subsequent winning bid or the
amount of the defaulting bid, whichever is less.
105. Proposal. We propose to adopt bid withdrawal, default, and
disqualification rules for the lower 80 and General Category licenses
based on the procedures in our general competitive bidding rules. Under
these procedures, any bidder who withdraws a high bid during an auction
before the Commission declares bidding closed, or defaults by failing
to remit the required down payment within the prescribed time, would be
required to reimburse the Commission. The bidder would be required to
pay the difference between its high bid and the amount of the winning
bid the next time the license is offered by the Commission, if the
subsequent winning bid is lower. A defaulting auction winner would be
assessed an additional payment of three percent of the subsequent
winning bid or three percent of the amount of the defaulting bid,
whichever is less. The monetary assessment would be offset by the
upfront payment. In the event that an auction winner defaults or is
otherwise disqualified, we propose to re-auction the license either to
existing or new applicants. The Commission would retain discretion,
however, to offer the license to the next highest bidder at its final
bid level if the default occurs within five business days of the close
of bidding. We seek comment on these proposed procedures.
6. Long-Form Applications
106. Background. In the Competitive Bidding Second R&O, we
established rules that require a winning bidder to submit a long-form
application. The long-form application is required to be filed by a
specific date, generally within ten business days after the close of
the auction. We stated that after we received the high bidder's down
payment and the long-form application, we would review the long-form
application to determine if it is acceptable for filing. Once the long-
form application is accepted for filing, we stated that we would
release a Public Notice announcing this fact, triggering the filing
window for petitions to deny. We also stated that if, pursuant to
Section 309(d), we deny or dismiss all petitions to deny, if any are
filed, and we otherwise are satisfied that the applicant is qualified,
we would grant the license(s) to the auction winner. In the Further
Notice, we proposed to use application procedures similar to those used
for licensing PCS. Consistent with our approach in PCS, we proposed to
require only the winning bidder to file a long-form application (FCC
Form 600).
107. Proposal. If the winning bidder makes the down payment in a
timely manner, we propose the following procedures: A long-form
application filed on FCC Form 600 must be filed by a date specified by
Public Notice, generally within ten (10) business days after the close
of bidding. After the Commission receives the winning bidder's down
payment and long-form application, we will review the long-form
application to determine if it is acceptable for filing. In addition to
the information required in the Form 600, designated entities will be
required to submit evidence to support their claim to any special
provision available for designated entities described in this Order.
This information may be included in an exhibit to FCC Form 600. This
information will enable the Commission, and other interested parties,
to ensure the validity of the applicant's certification of eligibility
for bidding credits, installment payment options, and other special
provisions. Upon acceptance for filing of the long-form application,
the Commission will issue a Public Notice announcing this fact,
triggering the filing window for petitions to deny. If the Commission
denies all petitions to deny, and is otherwise satisfied that the
applicant is qualified, the license(s) will be granted to the auction
winner. We seek comment on this proposal.
[[Page 6225]]
7. Petitions to Deny and Limitations on Settlements
108. Background. We determined in the Competitive Bidding Second
R&O that the procedures concerning petitions to deny found in Section
309(j)(2) of the Communications Act, should apply to competitive
bidding. We determined that we would adopt expedited procedures to
resolve substantial and material issues of fact concerning
qualifications. We stated that we would entertain petitions to deny the
application of the auction winner if the petitions to deny otherwise
are provided for under the Communications Act or our rules. We then
determined that we would not conduct a hearing before denial if we
determined that an applicant is not qualified and no substantial and
material issue of fact exists concerning that determination. We also
stated that if we identified substantial and material issues of fact in
need of resolution, Sections 309(j)(5) and 309(j)(2) of the
Communications Act permit submission of all or part of evidence in
written form, and also allow employees other than administrative law
judges to preside at the taking of written evidence. Additionally, we
previously have stated that our anti-collusion and settlement
procedures were designed to avoid the problem of entities filing
applications solely for the purpose of demanding payment from other
bidders in exchange for settlement or withdrawal.
109. As we have determined, the petition to deny procedures in
Section 90.163 of the Commission's rules, adopted in the CMRS Third
R&O, will apply to the processing of applications for the 800 MHz SMR
service. Thus, a party filing a petition to deny against an application
for the lower 80 and General Category channels will be required to
demonstrate standing and meet all other applicable filing requirements.
We also have adopted restrictions in Section 90.162 to prevent the
filing of applications and pleading (or threats of the same) designed
to extract money from SMR applicants. Thus, we will limit the
consideration that an applicant or petitioner is permitted to receive
for agreeing to withdraw an application or a petition to deny to the
legitimate and prudent expenses of the withdrawing applicant or
petitioner.
110. With respect to petitions to deny, the Commission need not
conduct a hearing before denying an application, if it determines that
an applicant is not qualified and no substantial issue of fact exists
concerning that determination. In the event the Commission identifies
substantial and material issues of fact, Section 309(i)(2) of the
Communications Act permits the submission of all or part of evidence in
written form in any hearing and allows employees other than
administrative law judges to preside over the taking of written
evidence. We seek comment on these proposals.
8. Transfer Disclosure Requirements
111. In Section 309(j) of the Communications Act, Congress directed
the Commission to ``require such transfer disclosures and anti-
trafficking restrictions and payment schedules as may be necessary to
prevent unjust enrichment as a result of the methods employed to issue
licenses and permits.'' In the Competitive Bidding Second R&O, the
Commission adopted safeguards designed to ensure that the requirements
of Section 309(j)(4)(E) are satisfied. We decided that it was important
to monitor transfers of licenses awarded by competitive bidding to
accumulate the necessary data to evaluate our auction designs and to
judge whether ``licenses [have been] issued for bids that fall short of
the true market value of the license.'' Therefore, we imposed a
transfer disclosure requirement on licenses obtained through the
competitive bidding process, whether by a designated entity or not.
112. We tentatively conclude that the transfer disclosure
requirements of Section 1.2111(a) should apply to all lower 80 and
General Category licenses obtained through the competitive bidding
process. Generally, licensees transferring their licenses within three
years after the initial license grant would be required to file,
together with their transfer applications, the associated contracts for
sale, option agreements, management agreements, and all other documents
disclosing the total consideration received in return for the transfer
of their license. As we indicated in the Competitive Bidding Second
R&O, we would give particular scrutiny to auction winners who have not
yet begun commercial service and who seek approval for a transfer of
control or assignment of their licenses within three years after the
initial license grant, so that we may determine if any unforeseen
problems relating to unjust enrichment have arisen outside the
designated entity context. We seek comment on these proposals.
9. Performance Requirements
113. Section 309(j)(4)(B) of the Communications Act requires the
Commission to establish rules for auctionable services that ``include
performance requirements, such as appropriate deadlines and penalties
for performance failures, to ensure prompt delivery of service to rural
areas, to prevent stockpiling or warehousing of spectrum by licensees
or permittees, and to promote investment in and rapid deployment of new
technologies and services.'' In the Competitive Bidding Second R&O, we
decided that in most auctionable services, existing construction and
coverage requirements provided in our service rules would be sufficient
to meet this standard, and that it was unnecessary to impose additional
performance requirements. We have proposed service rules for SMR that
would require market-area licensees to meet minimum population coverage
requirements in their licensing areas. We tentatively conclude that
these proposed coverage requirements are sufficient to meet the
requirements of Section 309(j)(4)(B). As discussed supra, we propose
that failure to meet these requirements would result in automatic
license cancellation. Accordingly, we do not propose to adopt
additional performance requirements for the lower 80 and General
Category licenses. We seek comment on this proposal.
D. Treatment of Designated Entities
1. Overview and Objectives
114. Section 309(j)(3)(B) of the Communications Act provides that
in establishing auction eligibility criteria and bidding methodologies,
the Commission shall ``promot[e] economic opportunity and competition
and ensur[e] that new and innovative technologies are readily
accessible to the American people by avoiding excessive concentration
of licenses and by disseminating licenses among a wide variety of
applicants, including small businesses, rural telephone companies, and
businesses owned by members of minority groups and women.'' Section
309(j)(4)(A) provides that to promote the statute's objectives the
Commission shall ``consider alternative payment schedules and methods
of calculation, including lump sums or guaranteed installment payments,
with or without royalty payments, or other schedules or methods * * *
and combinations of such schedules and methods.''
115. In the Competitive Bidding Second R&O, we established
eligibility criteria and general rules regarding special measures for
small businesses, rural telephone companies, and businesses owned by
women and minorities (sometimes referred to collectively as
``designated entities''). We also identified several measures,
including installment payments, spectrum set-asides, and bidding
[[Page 6226]]
credits, from which we could choose when establishing rules for
auctionable services. We stated that we would decide whether and how to
use these special provisions, or others, when we developed specific
competitive bidding rules for particular services. In addition, we set
forth rules designed to prevent unjust enrichment by designated
entities who transfer ownership in licenses obtained through the use of
these special measures or who otherwise lose their designated entity
status.
116. When deciding which provisions to adopt to encourage
designated entity participation in particular services, we have closely
examined the specific characteristics of the service and determined
whether any particular barriers to accessing capital have stood in the
way of designated entity opportunities. In accordance with our
statutory directive, we have adopted measures designed both to enhance
the ability of designated entities to acquire licenses and to increase
the likelihood that designated entity licensees will become strong
competitors in the provision of wireless services. In narrowband PCS,
for instance, we provided installment payments for small businesses and
bidding credits for minority-owned and women-owned businesses. In
broadband PCS, we designated certain spectrum blocks as entrepreneurs'
blocks, allowed entrepreneurs' block licensees to make installment
payments, and provided bidding credits for designated entities. In 900
MHz SMR, we adopted bidding credits and installment payments for small
businesses. In the 800 MHz SMR service, we did not adopt special
provisions for designated entities, with respect to the upper 200
channels. We nonetheless indicated that such approach would meet the
statutory objectives of promoting economic opportunity and competition,
avoiding excessive concentration of licenses, and ensuring access to
new and innovative technologies by designated entities. As discussed in
greater detail below, we seek comment on the type of designated entity
provisions that should be incorporated into our competitive bidding
procedures for the lower 80 and General Category channels.
2. Eligibility for Designated Entity Provisions
a. Small Businesses. i. Special Provisions. 117. Proposal. We
tentatively conclude that it is appropriate to establish special
provisions for small businesses in our competitive bidding rules for
the lower 80 and General Category channels. We note that Congress
specifically cited the needs of small businesses in enacting auction
legislation. The House Report states that the statutory provisions
related to installment payments were enacted to ``ensure that all small
businesses will be covered by the Commission's regulations, including
those owned by members of minority groups and women.'' It also states
that the provisions in Section 309(j)(4)(A) relating to installment
payments were intended to promote economic opportunity by ensuring that
competitive bidding inadvertently does not favor incumbents with ``deep
pockets'' over new companies or start-ups.
118. In addition, Congress made specific findings with regard to
access to capital in the Small Business Credit and Business Opportunity
Enhancement Act of 1992: that ``small business concerns, which
represent higher degrees of risk in financial markets than do large
businesses, are experiencing increased difficulties in obtaining
credit.'' As a result of these difficulties, Congress resolved to
consider carefully legislation and regulations ``to ensure that small
business concerns are not negatively impacted'' and to give priority to
passage of ``legislation and regulations that enhance the viability of
small business concerns.'' For these reasons, and as discussed in
greater detail below, we tentatively conclude that small businesses
applying for these licenses should be entitled to some form of bidding
credit and should be allowed to pay their bids in installments. This is
consistent with our approach in the 900 MHz SMR service. We seek
comment on this tentative conclusion.
ii. Definition. 119. Comments. DCL Associates and Dru Jenkinson, et
al. suggest that we adopt the SBA definition of small business
initially adopted in the Competitive Bidding Second Report and Order.
Under that definition, a ``small business'' is one which has a net
worth not in excess of $6 million with average net income for the two
preceding years not in excess of $2 million. Morris recommends using
the small business definition utilized by the Internal Revenue Service.
The SBA opines that a revenue test remains the best and least
problematic guideline for determining whether a business is small. AMTA
suggests that the better approach for the 800 MHz SMR service would be
to incorporate preferential provisions for existing operators.
120. Several commenters offer other small business definitions. AMI
suggests that small businesses be defined to have 30 channels licensed
or managed and/or less than $540,000 in current system revenues.
Genesee suggests using the U.S. Chamber of Commerce standard for
retail/service companies of less than $5.5 million annually. Genesee
and the SBA believe that the PCS small business definition, with a $40
million maximum would be inappropriate for the 800 MHz SMR service. The
SBA believes that a smaller revenue figure, such as $15 million, would
be more appropriate.
121. Proposal. We seek comment on the appropriate definition of
``small business'' to be applied for purposes of the bidding credits
proposed above. We have stated previously that we would define
eligibility requirements for small businesses on a service-specific
basis, taking into account the capital requirements and other
characteristics of each particular service in establishing the
appropriate threshold. In broadband PCS and regional narrowband PCS, we
defined small businesses based on a $40 million annual revenue
threshold. In the 220 MHz service, we have proposed two small business
definitions: (1) for purposes of bidding on a nationwide or regional
license, small businesses would be defined as entities with $15 million
in average gross revenues for the preceding three years; and (2) for
purposes of bidding on EA licenses, small businesses be would be
defined as entities with $6 million in average gross revenues for the
preceding three years. After considering the record in the 900 MHz
proceeding, we concluded that both $15 million and $3 million small
business definitions were warranted, which would entitle applicants for
MTA licenses to 10 percent and 15 percent bidding credits respectively.
122. In conjunction with our proposal to provide two levels of
bidding credits, we propose to establish two small business
definitions: to obtain the 10 percent bidding credit, an applicant
would be limited to $15 million in average gross revenues for the
previous three years; to obtain the 15 percent credit, the applicant
would be limited to $3 million in gross revenues for the previous three
years. In both cases, we would require the applicant to aggregate the
gross and revenues of its affiliates and investors for the preceding
three years for purposes of determining eligibility. These proposed
thresholds are comparable to what we have adopted in 900 MHz SMR, and
they reflect our tentative view of the capital requirements and
potential barriers to entry in the 800 MHz SMR service. We seek comment
on whether these thresholds, and the proposed bidding credit amounts
associated with them, are sufficient for the lower 80 and General
Category Channels in light of the build-out costs associated with
[[Page 6227]]
constructing an SMR system throughout a market area, or whether
alternative definitions would be more suitable. We also seek comment on
whether our proposed small business definitions are sufficiently
restrictive to protect against businesses receiving bidding credits
which in fact do not need them.
b. Minority- and Women-Owned Businesses. 123. Background. Prior to
the Supreme Court's decision in Adarand Constructors, Inc. v. Pena, we
concluded that in the licensing of broadband and narrowband PCS,
minority and women-owned businesses might have difficulty accessing
sufficient capital to be viable auction participants or service
providers, in the absence of special provisions in our auction rules.
We therefore adopted special provisions for minorities and women in
these services. We further determined that such provisions were
constitutional under the ``intermediate scrutiny'' standard used in
Metro Broadcasting, Inc. v. FCC.
124. In Adarand, however, the Supreme Court ruled that racial
classifications imposed by the federal government are subject to strict
scrutiny. This holding will apply to any proposal to incorporate race-
based measures into our rules; thus, it introduces an additional level
of complexity to implementing Congress' mandate to ensure that
businesses owned by minorities and women are provided ``the opportunity
to participate in the provisions of spectrum-based services.'' We
emphasize that we have not concluded that race or gender-based measures
are unconstitutional or otherwise inappropriate for spectrum auctions
we will hold in the future. At a minimum, however, we believe that
Adarand requires us to build a thorough factual record concerning the
participation of minorities and women in spectrum-based services to
support race- and gender-based measures.
125. Comments. DCL Associates and Dru Jenkinson, et al., the only
commenters addressing this specific issue, propose that the PCS
definitions of minority- and/or female-controlled firms should be
utilized in the 800 MHz SMR service. Dru Jenkinson, et al. further
suggest that there should be no difference in eligibility requirements
for the wide-area and local licenses.
126. Proposal. We propose to adopt special provisions in the lower
80 and General Category competitive bidding rules for small businesses.
We believe that such provisions can be structured in a way that would
increase the likelihood of participation by women- and minority-owned
businesses. In adopting designated entity measures for PCS, for
example, we noted that such targeted provisions might not be necessary
in services that are less capital intensive. We consider 800 MHz SMR to
be significantly less capital-intensive than PCS and some other
wireless services. In addition, we anticipate that our proposal to
license each channel separately on an EA basis will mean lower entry
costs for applicants. We also expect that the vast majority of minority
and women-owned businesses will be able to qualify as small businesses
under any definition we adopt. For example, U.S. Census Data shows that
approximately 99 percent of all women-owned businesses and 99 percent
of all minority-owned businesses generated net receipts of $1 million
or less. Finally, in light of the statute's instruction to ``design and
test multiple alternative methodologies'' we believe that it would be
suitable to use more uniform measures for the lower 80 and General
Category channels, because capital entry requirements are expected to
be comparatively lower than other CMRS services. We seek comment on
this proposal.
127. We also request comment on the possibility that in addition to
small business provisions, separate provisions for women- and minority-
owned entities should be adopted for the lower 80 and General Category
channels. To comply with the Supreme Court's ruling in Adarand, any
race-based classification must be a narrowly tailored measure that
furthers a compelling governmental interest. We also believe that
gender-based provisions, although not addressed in Adarand, should be
subject to the broadest possible comment. We therefore ask that
commenters discuss whether the capital requirements of the 800 MHz SMR
service pose a barrier to entry by minorities and women, and whether
assisting women and minorities to overcome such a barrier, if it
exists, would constitute a compelling government interest. In
particular, we seek comment on the actual costs associated with
acquisition, construction, and operation of an 800 MHz SMR system with
a service area based on a pre-defined geographic area and the
proportion of existing 800 MHz SMR businesses that are owned by women
and minorities. We also seek comment on the analytical framework for
establishing a history of past discrimination in the 800 MHz SMR
industry and urge parties to submit evidence (statistical, documentary,
anecdotal or otherwise) about patterns or actual cases of
discrimination in this and related communications services. Assuming
that a compelling government interest is established, we seek comment
on whether separate provisions for women and minorities are necessary
to further this interest, and whether such provisions can be narrowly
tailored to satisfy the strict scrutiny standard.
c. Reduced Down Payment. 128. Background. In the Competitive
Bidding Second R&O, we noted that reduced upfront payments particularly
may be appropriate for auctions of spectrum specifically set aside for
designated entities as a means of encouraging participation in the
auction, particularly by all eligible designated entities. For
broadband PCS, we reduced the upfront payment requirement for
designated entities in the entrepreneurs--blocks, observing that
requiring full compliance with the upfront payment could discourage
auction participation by designated entities.
129. Comments. Several commenters support offering a reduced
upfront payment option to designated entities. DCL Associates strongly
supports availability of reduced upfront payments for minority- and/or
women-owned businesses. Dru Jenkinson, Inc., et al., on the other hand,
support offering the reduced upfront payment option to all designated
entities. To encourage the participation of designated entities in an
auction for a geographic area licenses, Pittencrief does not oppose a
reduced upfront payment. Southern opines, however, that if the
Commission imposes a higher than usual upfront payment, as other
commenters suggest, then a reduced upfront payment option will not do
much to facilitate participation by designated entities in the auctions
for wide-area licenses.
130. Proposal. We propose to adopt reduced upfront payments for
small businesses for geographic licenses on the lower 80 and General
Category channels. We believe that this special provision will
encourage participation in the auction by eligible designated entities.
We seek comment on this proposal and tentative conclusion.
3. Bidding Credits
131. Background. Bidding credits allow eligible designated entities
to receive a payment discount (or credit) for their winning bid in an
auction. In the Competitive Bidding Second R&O, we determined that
competitive bidding rules applicable to individual services would
specify the entities eligible for bidding credits and the bidding
credit amounts for each particular service. As a result, we have
adopted a variety of bidding credit provisions for small businesses and
other designated entities
[[Page 6228]]
in auctionable services. In the nationwide narrowband PCS auction, for
example, we established a 25 percent bidding credit for minority and
women-controlled businesses, while a 40 percent credit was used in the
regional narrowband PCS auction. In broadband PCS, our pre-Adarand
entrepreneurs' block rules included a 10 percent bidding credit for
small businesses, a 15 percent credit for businesses owned by
minorities or women, and an aggregated 25 percent credit for small
businesses owned by women and/or minorities. In the Multipoint
Distribution Service (MDS), we allowed small businesses a 15 percent
bidding credit. In the 900 MHz SMR service, we adopted a 15 percent
bidding credit for small businesses with gross revenues that are not
more than $3 million for the preceding three years and a 10 percent
bidding credit for small businesses with gross revenues that are more
than $3 million but not more than $15 million for the preceding three
years. Finally, in the 220 MHz service, we proposed a 40 percent small
business bidding credit for nationwide and regional licenses and a 10
percent bidding credit for smaller EA licenses.
132. Comments. Few commenters addressed whether special provisions
should be provided for businesses owned by minorities and/or women in
the 800 MHz SMR auctions. With respect to bidding credits, Morris,
Pittencrief, DCL Associates, Dru Jenkinson, et al. and the SBA support
the Commission's proposal to provide bidding credits for such entities.
DCL Associates, Dru Jenkinson, et al., and the SBA support a forty
percent bidding credit for minority-and women-owned entities for wide-
area licenses. The SBA further supports affording minority- and women-
owned entities a twenty-five percent bidding credit for local SMR
licenses. Other commenters, however, oppose giving such entities any
type of bidding credit. AMI opines that a bidding credit would be
inappropriate, based on the uncertainty of the value of wide-area
licenses at auction. Dial Call opposes bidding credits, contending the
questionable constitutionality of such provisions only would serve to
delay the ultimate resolution of the proceeding.
133. Proposal. We seek comment on the appropriate level of bidding
credit for the lower 80 and General Category channels, in comparison to
the services discussed above. We also seek comment on the possibility
of offering ``tiered'' bidding credits for different classes of small
businesses. We note that small businesses may vary in their ability to
raise capital, depending on their size and gross revenues. By offering
levels of bidding credits which depend on the size of the small
business, we could increase the likelihood that the full range of small
businesses would be able to participate in an auction and potentially
provide service. We therefore propose to establish two levels of
bidding credits: a 10 percent bidding credit for all small businesses,
and a 15 percent credit for small businesses that meet a more
restrictive gross revenue threshold. We believe that tiered bidding
credits can help achieve our statutory objective under Section
309(j)(3)(B), by providing varying sizes of small businesses with a
meaningful opportunity to obtain SMR licenses. We seek comment on this
proposal.
134. We also seek comment on the degree to which the revenues of
affiliates and major investors should be considered in determining
small business eligibility. For example, in determining whether a PCS
applicant qualifies as a small business, we include the gross revenues
of the applicant's affiliates and investors with ownership interests of
twenty-five percent or more in the applicant, but we do not attribute
the gross revenues of investors who hold less than a twenty-five
percent interest in the applicant unless they are members of the
applicant's control group. We seek comment on what attribution standard
should be applied to 800 MHz SMR applicants seeking to qualify as small
businesses. Would a smaller attribution standard be more appropriate?
135. We propose to make the small business bidding credit available
on all lower 80 and General Category Channels that are licensed on a
market-area basis. We recognize that this would be a departure from our
900 MHz SMR rules, in which we offered bidding credits to small
businesses on any available channel block. Our proposal is consistent,
however, with our PCS rules in which bidding credits are available only
on designated channels. We seek comment on this proposal. We also seek
comment on whether there is a reasonable basis for providing credits on
some channels and not others.
4. Installment Payments
136. Background. We previously have indicated that in the future we
would not necessarily limit the availability of installment payments to
small businesses, but would consider offering the installment option
(with varying rates and payment schedules) to other classes of
designated entities.
137. Comments. AMI, CellCall, DCL Associates, Genesee, Pittencrief,
and the SBA support the proposal that small businesses be eligible for
installment payments. AMI opines that the availability of installment
payments may prove useful in facilitating the participation of small
operators in the 800 MHz SMR auctions. In addition, CellCall, DCL
Associates, and Morris advocate that the Commission afford small
businesses reduced upfront payments. Telecellular believes that the
Commission should maximize the opportunities for small businesses by
granting them bidding credits. Telecellular suggests adoption of the
bidding credits provided under the Commission's broadband PCS
designated entity provisions.
138. DCL Associates strongly supports the availability of
installment payments for minority and/or women-owned businesses.
Pittencrief does not object to offering installment payments as a means
to encourage participation of designated entities in the auctions for
wide-area licenses.
139. Proposal. We propose to adopt an installment payment option
for small businesses that successfully bid for lower 80 and General
Category licenses. As we noted in the Competitive Bidding Second R&O,
allowing installment payments reduces the amount of private financing
needed by prospective small business licensees and therefore mitigates
the effect of limited access to capital by small businesses. Under this
proposal, licensees who qualify for installment payments would be
entitled to pay their winning bid amount in quarterly installments over
the ten-year license term, with interest charges to be fixed at the
time of licensing at a rate equal to the rate for ten-year U.S.
Treasury obligations plus 2.5 percent. In addition, we propose to
tailor installment payments to reflect the needs of different size
entities. Under our proposal, small businesses with $3 million or less
in gross revenues would make interest-only payments for the first five
years of the license term, while small businesses with $15 million or
less in gross revenues would make interest-only payments during the
first two years. We believe that this installment payment structure,
which is consistent with our approach in 900 MHz SMR and the upper 200
channels, will enable entities with less immediate access to capital to
increase their chances of obtaining licenses. Timely payment of all
installments would be a condition of the license grant and failure to
make timely payment would be grounds for revocation of the license. We
seek comment on this proposal.
[[Page 6229]]
5. Set-Aside Spectrum
140. Background. In the Competitive Bidding Eighth R&O, we
determined that designation of an entrepreneur's block for the upper
200 channels was not feasible. In the Further Notice, we indicated that
an entrepreneurs' block could be feasible for the lower 80 channels
which we contemplated would be used primarily by smaller SMR operators.
141. Proposal. We tentatively conclude that the lower 80 and the
General Category Channels should be designated as an entrepreneurs'
block. Such a designation would ensure that smaller SMR operators would
have opportunities to maintain competitive and viable systems and also
to pursue wide-area licensing strategies should they desire to do so.
In our broadband PCS rules where we have authorized entrepreneurs'
block licenses, we have required entrepreneurs to comply with financial
caps based on gross revenues and total assets over a certain period of
time. Because the 800 MHz SMR service is less capital-intensive than
PCS, we believe that the entrepreneurs' block financial caps in the 800
MHz SMR service should be set at a lower level than those in broadband
PCS. We seek comment on the feasibility of designating the lower 80 and
General Category channels as an entrepreneurs' block. We also ask
commenters to discuss what would be appropriate financial caps for such
entrepreneurs' block.
6. Unjust Enrichment Provisions
142. Background. In the Competitive Bidding Second R&O, we
indicated that licensees that received bidding credits and installment
payments and also chose to transfer their licenses to entities not
eligible for these benefit, were required to repay the amount of the
bidding credit on a graduated basis. No repayment would be required six
years after the license grant. In addition, the ineligible transferee
would not have the benefit of installment payments, and principal and
accrued interest would come due. For the 900 MHz SMR service, we
adopted unjust enrichment provisions which required reimbursement of
the benefit received by a small business through bidding credits and
installment payments in the event that such small business transferred
its license to an entity not qualifying as a small business. We
previously adopted restrictions on the transfer or assignment of
broadband PCS entrepreneurs' block licenses to ensure that designated
entities do not take advantage of special provisions by immediately
assigning or transferring control of their licenses.
143. Proposal. Permitting an immediate transfer of a discounted
license to an entity that is not a small business could undermine our
basis for offering special provisions to small businesses, but we note
that in services with no entrepreneurs' block, we have limited unjust
enrichment to repayment of bidding credits or installment payments. We
therefore seek comment on whether we should use an approach similar to
that adopted for the 900 MHz SMR service or that adopted for broadband
PCS entrepreneurs' block licenses.
7. Partitioning
144. The Communications Act directs the Commission to ensure that
rural telephone companies have the opportunity to participate in the
provision of spectrum-based services. Rural areas, because of their
more dispersed populations, tend to be less profitable to serve than
more densely populated urban areas. Rural telephone companies, however,
are well positioned because of their existing infrastructure to serve
these areas. In other services, such as broadband PCS and 900 MHz SMR,
we have acknowledged this fact by allowing rural telephone companies to
partition their licenses on a geographic basis, thereby increasing the
likelihood of rapid introduction of service into rural areas. We also
afforded rural telephone companies this opportunity under our rules for
the upper 200 channels of 800 MHz SMR spectrum. We seek comment on
whether we should incorporate similar provisions into our rules for the
lower 80 and General Category channels.
145. If we adopt geographic partitioning for rural telephone
companies, geographic partitioning should be made available to them on
the same basis as in PCS and the upper 200 channels. Such a
partitioning scheme would provide rural telephone companies with the
flexibility to serve areas in which they already provide service, while
the remainder of the service area could be served by other providers.
Under this proposal, rural telephone companies would be permitted to
acquire partitioned SMR licenses in one of two ways: (1) By forming
bidding consortia consisting entirely of rural telephone companies to
participate in auctions, and then partitioning the licenses won among
consortia participants, or (2) by acquiring partitioned paging licenses
from other licensees through private negotiation and agreement either
before or after the auction. We also would require that partitioned
areas conform to established geo-political boundaries, include all
portions of the wireline service area of the rural telephone company
applicant, and be reasonably related to the rural telephone company's
wireline service area. We also propose to use the definition for rural
telephone companies implemented in broadband PCS. Rural telephone
companies would be defined as local exchange carriers having 100,000 or
fewer access lines, including all affiliates. We seek comment on this
proposal. We also seek comment on whether we should extend partitioning
options to entities other than rural telephone companies, as we did in
MDS and as we proposed for the upper 200 channels in this service.
VIII. Procedural Matters
A. Regulatory Flexibility Analysis
With respect to this Second Further Notice, pursuant to the
Regulatory Flexibility Act of 1980, an Initial Regulatory Flexibility
Analysis (IRFA) was incorporated in the Further Notice of Proposed Rule
Making in PR Docket No. 93-144. Written comments on the IRFA were
requested. The Commission's final analysis is as follows
147. Need for and purpose of the action. The rule making proceeding
has implemented Sections 332 and 3(n), respectively, of the
Communications Act of 1934, as amended. The rules adopted herein will
carry out Congress's intent to establish a consistent framework for all
commercial mobile radio services (CMRS).
148. Issues raised in response to the IRFA. No comments were
submitted in response to the IRFA.
149. Significant alternatives considered and rejected. All
significant alternatives have been addressed in the First Report and
Order in PR Docket No 93-144, the Third Report and Order in GN Docket
No. 93-252, and the Eighth Report and Order in PP Docket No. 93-253.
B. Paperwork Reduction Act
150. Summary: The Federal Communications Commission, as part of its
continuing effort to reduce paperwork burden, invites the general
public and other Federal agencies to take this opportunity to comment
on the following proposed and/or continuing information collections, as
required by the Paperwork Reduction Act of 1995, Public Law 104-13.
Comments are requested concerning (a) Whether the proposed collection
of information is necessary for the proper performance of the functions
of the Commission,
[[Page 6230]]
including whether the information shall have practical utility; (b) the
accuracy of the Commission's burden estimates; (c) ways to enhance the
quality, utility, and clarity of the information collected; and (d)
ways to minimize the burden of the collection of information on the
respondents, including the use of automated collection techniques or
other forms of information technology.
DATES: Written comments should be submitted on or before April 16,
1996. If you anticipate that you will be submitting comments but find
it difficult to do so within the period of time allowed by this notice,
you should advise the contact listed below as soon as possible.
ADDRESSES: Direct all comments to Dorothy Conway, Federal
Communications Commission, Room 234, 1919 M St., NW., Washington, DC
20554, or via Internet to dconway@fcc.gov; and Timothy Fain, OMB Desk
Officer, 10236 NEOB, 725 17th St., NW., Washington, DC 20503, or via
Internet to fain____t@al.eop.gov.
FOR FURTHER INFORMATION CONTACT: Dorothy Conway, (202) 418-0217, or via
Internet at dconway@fcc.gov.
SUPPLEMENTARY INFORMATION:
Title: Amendment to the Commission's Rules to Facilitate Future
Development of SMR Systems in the 800 MHz Frequency Band.
Type of Review: Revised collection.
Respondents: Individuals or households; Business or other for-
profit; Not-for-profit institutions; State, Local or Tribal Government.
Number of Respondents: 12,195.
Estimated Time Per Response: Approximately 1 to 5 hours.
Total Annual Burden: Approximately 17,254 hours.
Total Annual Cost: $6,468,260 this includes the costs for filing
the information electronically or mailing submissions and hiring
consultants that may be necessary to respond the requests.
Needs and Uses: The information will be used by the Commission for
the following purposes: (a) To determine if the grant or retention of
an extended implementation schedule is warranted; (b) to update the
Commission's licensing database and thereby facilitate the successful
coexistence of EA licensees and incumbents in the upper 10 MHz block of
800 MHz SMR spectrum; (c) to ensure that incumbents are timely notified
of possible relocation thus allowing relocation to occur in an orderly,
efficient, and expedient manner; and (d) to determine whether an
applicant is eligible for special provisions for small businesses
provided for applicants in the 800 MHz SMR service.
C. Ex Parte Rules--Non-Restricted Proceeding.
151. This is a non-restricted notice and comment rulemaking
proceeding. Ex parte presentations are permitted except during the
Sunshine Agenda period, provided they are disclosed as provided in the
Commission's rules, 47 CFR Secs. 1.1202, 1.1203, 1.1206(a).
D. Authority.
152. The legal authority for this proposed information collection
includes 47 U.S.C. Sections 154(i), 303(c), 303(f), 303(g), 303(r),
309(j), and 332, as amended. The information collection would not
affect any FCC forms. The proposed collection would increase minimally
the burden on 800 MHz SMR service applicants.
List of Subjects in 47 CFR Part 90
Radio.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-3511 Filed 2-13-96; 5:07 pm]
BILLING CODE 6712-01-P
