01-6386. Paging Services; Competitive Bidding

AGENCY:

Federal Communications Commission.

ACTION:

Clarification of final rule.

SUMMARY:

The Federal Communications Commission (“Commission”) answers petitions for reconsideration and/or clarification concerning various aspects of the Third Report and Order previously issued in this proceeding. The Commission grants one petition to the extent to clarify that a licensee who achieved exclusivity prior to the adoption of the Second Report and Order previously issued in this proceeding did not lose its exclusivity as a result of failing to maintain the previously-required minimum number of transmitters after the adoption of the Second Report and Order. The Commission also denies a petition requesting that an additional tier of small businesses eligible for an auctions bidding credit be established or, in the alternative, that the current gross revenues threshold to qualify for a 25 percent bidding credit be raised. Further, the Commission denies a petition requesting that it amend its rules either to eliminate the ability of paging licensees to partition along the “boundaries of an FCC-recognized service area” or to specify that the use of Major Trading Area or Basic Trading Area listings is not permitted for partitioning.

DATES:

Effective March 15, 2001.

FOR FURTHER INFORMATION CONTACT:

G. William Stafford, Wireless Telecommunications Bureau, Commercial Wireless Division at [phone].

SUPPLEMENTARY INFORMATION:

This is a summary of the Federal Communications Commission's Memorandum Opinion and Order on Reconsideration, FCC 01-66, in WT Docket No. 96-18 and PR Docket No. 93-253, adopted on February 15, 2001, and released on February 27, 2001. The full text of this Memorandum Opinion and Order on Reconsideration is available for inspection and copying during normal business hours in the FCC Reference Center, Room CY-A257, 445 12th Street, S.W., Washington, DC 20554. The complete text may be purchased from the Commission's copy contractor, International Transcription Service, Inc., 1231 20th Street, N.W., Washington, DC 20037. The full text may also be downloaded at: www.fcc.gov. Alternative formats are available to persons with disabilities by contacting Martha Contee at [phone] or TTY [phone].

Synopsis of the Memorandum Opinion and Order on Reconsideration

1. In this Memorandum Opinion and Order on Reconsideration, the Commission considers petitions for reconsideration and/or clarification of various parts of the Third Report and Order issued in this proceeding. See Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging Systems, Memorandum Opinion and Order on Reconsideration and Third Report and Order, 14 FCC Rcd 10030 (1999) (“Third Report and Order”), 64 FR 33762, June 24, 1999. The Commission clarifies one aspect of the Third Report and Order concerning interference protection given certain incumbent licensees, and denies the other petitions.

2. Channel Exclusivity. In 1993, the Commission established a mechanism for exclusive licensing on thirty-five of the forty 929-930 MHz channels. The 929 MHz Paging Exclusivity Order, Amendment of the Commission's Rules to Provide Channel Exclusivity to Qualified Private Paging Systems at 929-930 MHz, Report and Order, 8 FCC Rcd 8318 (1993) (“929 MHz Paging Exclusivity Order”), 58 FR 62289, November 26, 1993, allowed licensees whose systems operated on these channels to earn exclusivity on a local, regional or nationwide basis by constructing multi-transmitter systems that met certain minimum criteria. For example, an applicant for paging stations in the 929-930 MHz band was eligible for local channel exclusivity if, among other requirements, the applicant constructed and operated a local paging system that consisted of at least six contiguous transmitters. In the Second Report and Order, Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging Systems, Second Report and Order and Further Notice of Proposed Rulemaking, 12 FCC Rcd 2732 (1997) (“Second Report and Order”), 62 FR 11616, March 12, 1997, the Commission provided that geographic area licensees must provide co-channel protection to all incumbent licensees. In the Third Report and Order, the Commission clarified that non-exclusive incumbent licensees on the thirty-five exclusive 929 MHz channels will continue to operate under the same arrangements established with the exclusive incumbent licensees and other non-exclusive incumbent licensees prior to the adoption of the Second Report and Order. The Commission further clarified that nationwide and geographic area licensees have the right to share with non-exclusive incumbent licensees on a non-interfering basis. Section 22.503(i) of the Commission's rules, 47 CFR 22.503(i), was amended to reflect those clarifications.

3. Blooston, Mordkofsky, Jackson and Dickens (“Blooston”) now asks the Commission to clarify that a non-geographic area licensee that achieved exclusivity prior to the adoption of the paging auction rules but, after the adoption of those rules, failed to maintain the minimum number of transmitters that had been required to achieve exclusivity does not thereby lose its exclusive status. Blooston further asks the Commission to clarify that such licensee accordingly would not be considered a non-exclusive incumbent licensee and would not be required to share with nationwide and geographic area licensees on a non-interfering basis. In its Reply filed on September 9, 1999, to the Personal Communications Industry Association Opposition to Petition for Clarification and/or Reconsideration, Blooston clarified and narrowed the scope of its request. In this Memorandum Opinion and Order on Reconsideration, the Commission addresses Blooston's arguments only to the extent that they relate to Blooston's request as clarified and narrowed by its Reply.

4. Section 22.503(i) of the Commission's rules, 47 CFR 22.503(i), provides that all facilities constructed and operated pursuant to a paging geographic area authorization must provide co-channel interference protection to all authorized co-channel facilities of exclusive licensees within the paging geographic area. The rule further provides that non-exclusive licensees on the thirty-five exclusive 929 MHz channels are not entitled to exclusive status and that geographic area licensees have the right to share with these non-exclusive licensees on a non-interfering basis. In establishing these provisions, it was the Commission's intent to recognize the continued exclusivity of licensees who were exclusive incumbents prior to the adoption of the Second Report and Order. It is the Commission's view that the public interest would not be served by withdrawing exclusivity rights that had been earned by these licensees. Moreover, maintaining the exclusive status of incumbents that previously earned exclusivity is consistent with the clarification in the Third Report and Order that maintained the non-exclusive status of non-exclusive incumbents with respect to sharing with geographic area licensees. Therefore, the Commission clarifies in this Memorandum Opinion and Order on Reconsideration that a licensee who achieved exclusivity prior to the adoption of the Second Report and Order did not lose its exclusivity as a result of failing to maintain the previously required minimum number of transmitters after the adoption of the Second Report and Order. Such a licensee will not be subject to sharing with nationwide and geographic area licensees as a non-exclusive incumbent.

5. The Commission notes, however, that the retained exclusivity rights, as clarified above, remain subject to the determination in the Third Report and Order that where an incumbent permanently discontinues operations at a given site, the area no longer served automatically reverts to the geographic area licensee.

6. Bidding Credits. In the Second Report and Order, the Commission adopted bidding credits for two tiers of small businesses in connection with paging auctions. In the Third Report and Order, the Commission retained its two-tiered small business definition and increased the bidding credits. As a result, an entity that, together with its affiliates and controlling interests, has average gross revenues for the preceding three years not exceeding $3 million qualifies for a 35 percent bidding credit. An entity that, together with its affiliates and controlling interests, has average gross revenues for the preceding three years not exceeding $15 million qualifies for a 25 percent bidding credit. Morris Communications, Inc. (“Morris”) requests that the Commission establish a third tier of small businesses eligible for a bidding credit, to permit an entity with average gross revenues for the preceding three years not in excess of $40 million to be eligible for a 15 percent bidding credit. In the alternative, Morris requests that the current gross revenues threshold to qualify for a 25 percent bidding credit be raised from $15 million to $40 million.

7. The Commission declines to change the small business definitions or bidding credits established for the paging services in its previous orders. In doing so, the Commission notes that it has previously found that the bidding credits adopted in this proceeding achieve a reasonable balance between the positions of those supporting bidding credits in larger amounts and those opposing the use of any bidding credits, and that it has considered the particular nature of the paging industry in establishing its definitions of small businesses eligible for bidding credits. Moreover, the Commission finds that there is no need to alter the small business definitions or bidding credits for paging, even if they differ from the bidding credits for other services such as broadband and narrowband Personal Communications Services, because it has conducted a paging auction within the past year in which it used the bidding credits adopted in the Third Report and Order and small businesses were very successful in that auction. Indeed, bidders claiming small business status won 440 of 985 licenses in the 929 and 931 MHz paging auction that closed on March 2, 2000 (Auction No. 26). The successful performance of small businesses in Auction 26 supports the conclusion that the Commission's current small business definitions and bidding credits are appropriate for future paging auctions. Further, as Morris is the only party to raise this issue, there does not appear to be a widespread belief in the paging industry that the existing small business definitions need to be changed as Morris requests. In sum, the Commission is not persuaded that its small business definitions or bidding credits for paging should be adjusted, and it therefore denies Morris's petition for partial reconsideration.

8. Partitioning Boundaries in Section 22.513(b) of the Commission's Rules. In the Third Report and Order, the Commission replaced the Rand McNally Major Trading Areas (MTAs) with Major Economic Areas (MEAs) for geographic licensing of the 929-931 MHz band, and affirmed its decision to award licenses for Economic Areas (EAs), as opposed to the Rand McNally Basic Trading Areas (BTAs), for paging systems operating in the lower paging bands. The Commission provided that geographic paging licenses may be partitioned based on any boundaries defined by the parties. Section 22.513(b) of the Commission's rules, 47 CFR 22.513(b), was amended to provide, in pertinent part, that:

[t]he partitioned service area shall be defined by 120 sets of geographic coordinates at points at every 3 degrees azimuth from a point within the partitioned service area along the partitioned service area boundary unless either an FCC-recognized service area is used (e.g., MEA or EA) or county lines are followed.

9. In a petition for reconsideration, Rand McNally & Company (“Rand McNally”) requests that the Commission either amend § 22.513(b) to eliminate the ability of paging licensees to partition along the “boundaries of an FCC-recognized service area” or to specify that the use of MTA or BTA listings is not permitted for partitioning in the absence of an express license agreement with Rand McNally permitting such use. Rand McNally asserts that even though the rule does not specify MTA or BTA listings, it continues to encourage Commission licensees to employ MTA or BTA listings. Rand McNally further claims that the Commission would be obligated under the rule to grant a license with an MTA-defined boundary, which would infringe upon Rand McNally's copyright interests.

10. The Commission previously has recognized in this proceeding that Rand McNally is the copyright owner of the MTA/BTA Listings. In the Third Report and Order, the Commission acknowledged that economic benefits will accrue from licensing based on a designation that is in the public domain, and replaced Rand McNally's MTA listings with MEAs for geographic area licensing. Consistent with these determinations, § 22.513(b) of the Commission's rules contains no reference to partitioning on the basis of MTAs or BTAs. The Commission disagrees with Rand McNally's contention that even in the absence of such a reference, the rule somehow encourages licensees to employ MTA or BTA listings. To the contrary, the Commission already has stated in this proceeding that a paging authorization grantee who does not obtain a copyright license (either through a blanket license agreement or some other arrangement) from Rand McNally for use of the copyrighted material may not rely on the grant of a Commission authorization as a defense to any claim of copyright infringement brought by Rand McNally against such a grantee. Furthermore, the Commission need not use the MTA or BTA designations in granting partitioned licenses in this service, regardless of whether the applicant uses them, but may instead reference county line boundaries, as allowed by the rules. In light of these considerations, the Commission sees no need to amend § 22.513(b) of its rules, and therefore denies Rand McNally's petition for reconsideration.

Procedural Matters

A. Regulatory Flexibility Act

11. As required by the Regulatory Flexibility Act (“RFA”),^[1] the Commission issued a Supplemental Final Regulatory Flexibility Analysis (“Supplemental FRFA”) and a Final Regulatory Flexibility Analysis (“FRFA”) in the Third Report and Order. The Commission received no petitions for reconsideration in direct response to those analyses. In this Memorandum Opinion and Order on Reconsideration, the Commission is not promulgating new rules or revising existing rules, and its action does not affect the previous analyses.

12. Although no RFA analysis or certification is required in this Memorandum Opinion and Order on Reconsideration, the Commission takes this opportunity to discuss its disposition of a reconsideration petition concerning small business size standards. In the Third Report and Order, the Commission determined that an entity that, together with its affiliates and controlling interests, has average gross revenues for the preceding three years not exceeding $3 million would qualify for a 35 percent bidding credit in the Commission's paging auctions. In addition, an entity that, together with its affiliates and controlling interests, has average gross revenues for the preceding three years not exceeding $15 million will qualify for a 25 percent bidding credit. In December 1998, the Small Business Administration approved the Commission's two-tiered small business size standards. In this Memorandum Opinion and Order on Reconsideration, the Commission denies a petition for reconsideration requesting that it establish a third tier of small businesses eligible for a bidding credit, to permit an entity with average gross revenues for the preceding three years not in excess of $40 million to be eligible for a 15 percent credit. The Commission also denies the petitioner's alternative request that the threshold to qualify for a 25 percent bidding credit be raised from $15 million to $40 million. In denying both requests, the Commission explains that it has considered the particular nature of the paging industry in establishing its definitions of small businesses eligible for bidding credits. The Commission also finds that there is no need to alter the small business definitions or bidding credits for paging because it has conducted a paging auction within the past year in which the Commission used the bidding credits adopted in the Third Report and Order and small businesses were very successful in that auction. The Commission finds that the successful performance of small businesses in Auction 26 supports the conclusion that the current small business definitions and bidding credits are appropriate for future paging auctions. Finally, the Commission notes that, as this petitioner is the only party to raise this issue, there does not appear to be a widespread belief in the paging industry that the existing small business definitions need to be changed in the manner requested.

B. Paperwork Reduction Act

13. This Memorandum Opinion and Order on Reconsideration contains no new or modified information collections that are subject to the Paperwork Reduction Act of 1995, Public Law 104-13.

Ordering Clauses

14. Accordingly, It Is Ordered, pursuant to sections 4(i) and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 405, and § 1.106 of the Commission's rules, 47 CFR 1.106, that the Petition for Clarification and/or Reconsideration filed July 26, 1999 by Blooston, Mordkofsky, Jackson and Dickens, as clarified by its Reply filed September 9, 1999, Is Granted to the extent provided herein.

15. It Is Further Ordered, pursuant to sections 4(i) and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i) and 405, and § 1.106 of the Commission's rules, 47 CFR 1.106, that the Morris Communications Petition for Partial Reconsideration filed July 26, 1999 and the Petition for Reconsideration of Rand McNally & Company filed July 23, 1999 Are Denied.

16. It Is Further Ordered, pursuant to section 4(i) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), that this proceeding Is Terminated.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

Appendix A

Petitions for Reconsideration

Morris Communications, Inc.

Rand McNally & Company

Blooston, Mordkofsky, Jackson and Dickens

Oppositions to Petitions

Personal Communications Industry Association

Replies to Oppositions

Blooston, Mordkofsky, Jackson and Dickens

Ex Parte Filings

The Rural Telecommunications Group

Organization for the Promotion and Advancement of Small Telecommunications Companies

Footnotes

1.  See 5 U.S.C. 604. The RFA, see 5 U.S.C. 601, et seq., has been amended by the Contract with America Advancement Act of 1996, Public Law No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996.