95-6080. Pioneer's Preference Rules

[Federal Register Volume 60, Number 48 (Monday, March 13, 1995)]
[Proposed Rules]
[Pages 13396-13397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6080]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[ET Docket No. 93-266; FCC 95-80]


Pioneer's Preference Rules

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: By this Further Notice of Proposed Rule Making, the Commission 
proposes rules in response to the pioneer's preference directives 
contained in the legislation implementing domestically the General 
Agreement on Tariffs and Trade (GATT), as well as on its own motion. 
The objective of this proposal is to implement the GATT legislation's 
modifications to the Communications Act and to make additional changes 
to the pioneer's preference rules to increase their efficiency.

DATES: Comments are due March 29, 1995; reply comments are due April 
12, 1995.

FOR FURTHER INFORMATION CONTACT:
Rodney Small, Office of Engineering and Technology, [phone].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Notice of Proposed Rule Making, adopted February 28, 1995, and 
released March 1, 1995. The full text of this Commission decision is 
available for inspection and copying during regular business hours in 
the FCC Reference Center (Room 239), 1919 M Street NW., Washington, 
D.C. The complete text of this decision also may be purchased from the 
Commission's duplication contractor, International Transcription 
Service, Inc., [phone], 2100 M Street NW., Suite 140, 
Washington, D.C. 20037.

Summary of Further Notice of Proposed Rule Making

    1. In the Notice of Proposed Rule Making (Notice) in this 
proceeding, 58 FR 57578 (October 26, 1993), the Commission sought 
comment on whether and how the pioneer's preference rules could be 
amended to take into account competitive bidding and its experience 
administering them, or whether these rules should be repealed. In the 
First Report and Order, 59 FR 8413 (February 22, 1994), the Commission 
determined that it would not apply amendments to its rules to three 
proceedings in which tentative pioneer's preference decisions had been 
issued; and in the Second Report and Order, adopted simultaneously with 
the Further Notice of Proposed Rule Making, modified certain rules to 
increase the efficiency of the pioneer's preference program.
    2. The GATT legislation, enacted December 8, 1994, requires that 
the Commission complete by June 8, 1995, a rulemaking prescribing the 
procedures and criteria to be used in evaluating pioneer's preference 
requests accepted for filing after September 1, 1994. The legislation 
mandates that the Commission specify the procedures and criteria by 
which the significance of a pioneering contribution will be determined; 
that there be an opportunity for review and verification of the 
contribution by experts not employed by the Commission; and that the 
Commission use such other procedures as may be necessary to prevent 
unjust enrichment by ensuring that the value of a pioneering 
contribution justifies any reduction in the amounts paid for comparable 
licenses. The GATT legislation also requires pioneer's preference 
licensees whose preference requests were accepted for filing after 
September 1, 1994 to pay in a lump sum or in installment payments over 
a period of not more than five years 85 percent of the average price 
paid for comparable licenses. Finally, the GATT legislation sunsets the 
pioneer's preference program on September 30, 1998.
    3. In the Further Notice of Proposed Rule Making, the Commission 
proposes to establish a peer review process on a permanent basis under 
the direction of the Chief of its Office of Engineering and Technology. 
The Chief, OET, would select a panel of experts consisting of persons 
who are knowledgeable about the specific technology set forth in a 
pioneer's preference request and who are not employed by either the 
Commission or any applicant seeking a pioneer's preference in the same 
or similar communications service. The Commission's staff would 
evaluate on a case-by-case basis how much outside assistance is 
required.
    4. With respect to the unjust enrichment directive of the GATT 
legislation, the Commission stated that its concerns about unjust 
enrichment are lessened by the statutorily-mandated payment requirement 
for pioneer's preference grantees in auctionable services and the 
formula for calculating per capita bid amounts, but that it remains 
concerned about the effect of competitive bidding on the pioneer's 
preference program. It said that in services in which competitive 
bidding is used to assign licenses, the need to guarantee a license may 
not be as strong as in services in which another 
[[Page 13397]] assignment method is used, and noted that there may be 
circumstances in which the guarantee of a license at or close to the 
market price may stimulate research such that the innovator receives 
certainty in obtaining financing to perform the necessary research and 
to pay for the license.
    5. Accordingly, the Commission seeks comment on an additional 
showing that a pioneer's preference applicant would have to make to 
qualify for a preference in services in which licenses are awarded by 
competitive bidding. Specifically, it seeks comment on whether the 
applicant should have to demonstrate that the Commission's public 
rulemaking process inhibits the applicant from capturing the economic 
rewards of its innovation unless granted a pioneer's preference 
license; i.e., whether the applicant must show that it may lose its 
intellectual property protection because of this public process. If 
this requirement were to be adopted, the applicant would have to 
demonstrate that it would be able to capture the rewards from its 
innovation only by being granted a guaranteed license.
    6. With regard to determining which licenses are most reasonably 
comparable for purposes of the GATT legislation payment formula, the 
Commission proposes implementing this provision of the legislation on a 
case-by-case basis. However, it seeks comment on any standards for 
comparing licenses and excluding anomalous licenses, as well as comment 
on whether eligibility for installment payments should be limited to 
small businesses or other entities as has been done under the general 
auction rules.
    7. In accord with the GATT legislation, the Commission proposes to 
sunset the pioneer's preference program on September 30, 1998. It also 
proposes to modify the pioneer's preference rules by limiting the award 
of preferences to services in which a new allocation of spectrum is 
required. Finally, it proposes to apply any rules adopted in response 
to the Further Notice of Proposed Rule Making to all pioneer's 
preference requests granted after adoption of these rules, except in 
proceedings in which tentative decisions have been made. The Commission 
stated that it will not issue final decisions in pioneer's preference 
proceedings that have not reached the tentative decision stage until 
after it has issued a Third Report and Order regarding final rules that 
will apply to pending requests.

List of Subjects in 47 CFR Part 1

    Administrative practice and procedure.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 95-6080 Filed 3-10-95; 8:45 am]
BILLING CODE 6712-01-M