[Federal Register Volume 64, Number 84 (Monday, May 3, 1999)]
[Proposed Rules]
[Pages 23571-23590]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10989]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 1, 22, 24, 26, 27, 73, 74, 80, 87, 90, 95, 97, and 101
[WT Docket No. 99-87, RM-9332; FCC 99-52]
Revised Competitive Bidding Authority
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rule making.
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SUMMARY: By this Notice of Proposed Rule Making (``NPRM''), the
Commission commences a proceeding to implement changes to its statutory
auction authority made by the Balanced Budget Act of 1997 (``Balanced
Budget Act''). The NPRM seeks comment on the scope of the Balanced
Budget Act's exemption from competitive bidding for public safety radio
services. The NPRM also seeks comment on how the Balanced Budget Act's
revision of the Commission's auction authority affects its
determinations of which wireless telecommunications services licenses
are potentially auctionable and its determinations of the appropriate
licensing scheme for new and existing services. The Commission also
seeks comment on how to implement competitive bidding for services that
it may determine are auctionable as a result of its revised authority.
The Commission also solicits comment on some additional issues relating
to the implementation of the Balanced Budget Act's amendments to its
auction authority.
DATES: Comments must be filed on or before July 2, 1999. Reply comments
must be filed on or before August 2, 1999.
ADDRESSES: Federal Communications Commission, 445 Twelfth Street, S.W.,
Room TW-A325, Washington, D.C. 20554. Alternatively, comments may be
filed by using the Commission's Electronic Comment Filing System
(ECFS). Comments filed through the ECFS can be sent as an electronic
file via the Internet to http://www.fcc.gov/e-file/ecfs.html.
FOR FURTHER INFORMATION CONTACT: Gary D. Michaels, Auctions & Industry
Analysis Division, Wireless Telecommunications Bureau, at (202) 418-
0660, or Scot Stone Public Safety & Private Wireless Division, Wireless
Telecommunications Bureau, at (202) 418-0680.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rule Making, WT Docket No. 99-87, RM-9332, FCC 99-52,
adopted March 19, 1999, and released March 25, 1999. The complete text
of this NPRM is available for inspection and copying during normal
business hours in the FCC Reference Information Center, Room CY-A257,
445 Twelfth Street, S.W., Washington, D.C. 20554. The complete text may
be purchased from the Commission's copy contractor, International
Transcription Service, Inc., 1231 20th Street, N.W., Washington, D.C.
20036, (202) 857-3800. The complete NPRM is also available on the
Internet at the Commission's web site: http://www.fcc.gov/wtb/.
Synopsis of Notice of Proposed Rule Making
I. Introduction
1. This Notice of Proposed Rule Making (``NPRM'') commences a
proceeding to implement Sections 309(j) and 337 of the Communications
Act of 1934 (``Communications Act''), as amended by the Balanced Budget
Act of 1997, Public Law No. 105-33, Title III, 111 Stat. 251 (1997)
(``Balanced Budget Act''). The Balanced Budget Act revised the
Commission's auction authority for wireless telecommunications
services. The purpose of this NPRM is to seek comment on changes to the
Commission's rules and policies to implement the revised auction
authority. This NPRM first reviews the Commission's auction authority
as provided by the Omnibus Budget Reconciliation Act of 1993, Public
Law 103-66, Title VI, Sec. 6002(a), 107 Stat. 312 (1993) (``1993 Budget
Act''), and how the Commission implemented that authority. The NPRM
next discusses the statutory changes to the Commission's auction
authority made by the Balanced Budget Act. The NPRM then seeks comment
on the following matters:
The scope of the Balanced Budget Act's exemption from
competitive bidding for public safety radio services and the regulatory
provisions that could be established to ensure that frequencies
assigned without auctions meet the statutory requirements for
exemption.
How the Balanced Budget Act's amendments to Section
309(j)(1) affect the categories of services that previously were
determined to be nonauctionable by the Commission.
The extent to which Section 337(c) of the Communications
Act, gives eligible providers of public safety services a means to
obtain unassigned spectrum not otherwise allocated for public safety
purposes.
A Petition for Rule Making filed by parties proposing that
the Commission establish a third radio service pool in the private land
mobile bands below 800 MHz for use by electric, gas, and water
utilities, petroleum and natural gas pipeline companies, and railroads,
and whether the Commission should adopt separate public safety radio
services eligibility standards for (1) public safety and (2) public
service entities.
Whether changes in the rules governing multiple-licensed
systems would be appropriate to avoid artificial distinctions between
such systems and commercial providers, which must obtain spectrum
through competitive bidding.
Whether the Balanced Budget Act requires the Commission to
revise its licensing schemes and license assignment methods to provide
for competitive bidding in services previously determined not to be
auctionable, and how such schemes and methods for new services might be
revised.
How the Commission might implement competitive bidding to
award licenses and permits for those services and frequency bands, if
any, that will be auctionable for the first time, including what
auction procedures would best promote the four public interest
objectives listed in 47 U.S.C. 309(j)(3)(A)-(D).
[[Page 23572]]
II. Background
A. Commission Implementation of the 1993 Auction Standard
2. The 1993 Budget Act added Section 309(j) to the Communications
Act, authorizing the Commission to award licenses for use of the
electromagnetic spectrum through competitive bidding where mutually
exclusive applications are filed. The 1993 Budget Act expressly
authorized, but did not require, the Commission to use competitive
bidding to choose among mutually exclusive applications for initial
licenses or construction permits. Following enactment of the 1993
Budget Act, the Commission instituted a rule making proceeding to
implement Section 309(j). See Implementation of Section 309(j) of the
Communications Act--Competitive Bidding, PP Docket No. 93-253, Notice
of Proposed Rule Making, 58 FR 53489, October 15, 1993 (``Competitive
Bidding Notice''). Based on the record in that proceeding and the
requirements of the statute, the Commission established rules governing
the types of services and licenses that may be subject to auctions in
the Competitive Bidding Second Report and Order, 59 FR 22980, May 4,
1994. See also Implementation of Section 309(j) of the Communications
Act--Competitive Bidding, PP Docket No. 93-253, Second Memorandum
Opinion and Order, 59 FR 44272, August 26, 1994 (``Competitive Bidding
Second M O & O''). The Commission also conducted several subsequent
proceedings in which it established, for specific services, rules and
procedures for the competitive bidding process that it believed would
best achieve Congress's objectives. See, e.g., Implementation of
Section 309(j) of the Communications Act--Competitive Bidding, PP
Docket No. 93-253, Fifth Report and Order, 59 FR 37566, July 22, 1994
(Broadband PCS); Amendment of Part 90 of the Commission's Rules to
Facilitate Future Development of SMR Systems in the 800 MHz Frequency
Band, PR Docket No. 93-144, First Report and Order and Eighth Report
and Order, 61 FR 6138, February 16, 1996; Amendment of Part 90 of the
Commission's Rules To Provide for the Use of the 220-222 MHz Band by
the Private Land Mobile Radio Service, PR Docket No. 89-552, Third
Report and Order, 62 FR 15978, April 3, 1997 (``220-222 MHz Third
Report and Order'').
3. Pursuant to the 1993 Budget Act, Section 309(j)(1), ``General
Authority,'' only permitted the Commission to use competitive bidding
if mutual exclusivity existed among applications that the Commission
has accepted for filing. Indeed, Section 309(j)(6)(E) made clear that
the Commission was not relieved of its obligation in the public
interest to continue to use engineering solutions, negotiation,
threshold qualifications, service regulations and other means to avoid
mutual exclusivity. The legislative history of the 1993 Budget Act,
which added Section 309(j)(6)(E), indicates that Congress intended the
Commission to use tools that avoid mutual exclusivity ``when feasible
and appropriate.'' See H.R. Rep. No. 103-111, 103d Cong., 1st. Sess.,
at 258-259 (1993). The Commission has determined that applications are
``mutually exclusive'' if the grant of one application would
effectively preclude the grant of one or more of the other
applications. Where the Commission receives only one application that
is acceptable for filing for a particular license that is otherwise
auctionable, there is no mutual exclusivity, and thus no auction.
Therefore, mutual exclusivity is established when competing
applications for a license are filed. For example, a request to provide
service on the same frequency in the same or overlapping service area
would trigger mutual exclusivity where both applicants could not offer
service without causing electromagnetic interference to one another.
4. Section 309(j)(1) also restricted the use of competitive bidding
to applications for ``initial'' licenses or permits. Renewal licenses
and permits were excluded from the auction process. As a result, the
Competitive Bidding Second Report and Order, made clear that
applications to modify existing licenses were generally not subject to
competitive bidding. The Commission recognized, however, that if a
modification is ``major,'' i.e., one that substantially alters a
licensee's currently authorized facilities, and if the modification
application is mutually exclusive with other applications, the
Commission would consider treating the ``major'' modification as an
initial application that would be subject to competitive bidding.
5. In addition, Section 309(j)(2), ``Uses to Which Bidding May
Apply,'' set forth conditions beyond mutual exclusivity that had to be
satisfied in order for spectrum to be auctionable. Specifically, it
required the Commission to determine that:
(A) the principal use of such spectrum will involve, or is
reasonably likely to involve, the licensee receiving compensation
from subscribers in return for which the licensee--
(i) Enables those subscribers to receive communications signals
that are transmitted utilizing frequencies on which the licensee is
licensed to operate; or
(ii) Enables those subscribers to transmit directly
communications signals utilizing frequencies on which the licensee
is licensed to operate.
In the Competitive Bidding Second Report and Order, the Commission
explained that, in making this assessment, it would evaluate classes of
licenses and permits, rather than make a principal use determination on
a license-by-license basis. The Commission concluded that it would
consider the principal use requirement to be met if, comparing the
amount of non-subscription use made by the licensees with the amount of
use rendered to subscribers for compensation, at least a majority of
the use of a service or class of service was operated for the benefit
of subscribers.
6. Section 309(j)(2) further directed the Commission--in evaluating
the ``uses to which bidding may apply''--to determine whether ``a
system of competitive bidding will promote the [public interest]
objectives described in [Section 309(j)(3)].'' Section 309(j)(3),
entitled ``Design of Systems of Competitive Bidding,'' directs that
these factors be addressed in both identifying classes of licenses to
be issued by competitive bidding, and designing particular
methodologies of competitive bidding. The objectives are listed as
follows:
(A) The development and rapid deployment of new technologies,
products, and services for the benefit of the public, including
those residing in rural areas, without administrative or judicial
delays;
(B) Promoting economic opportunity and competition and ensuring
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;
(C) Recovery for the public of a portion of the value of the
public spectrum resource made available for commercial use and
avoidance of unjust enrichment through the methods employed to award
uses of that resource; and
(D) Efficient and intensive use of the electromagnetic spectrum.
1. Services Determined to Be Auctionable
7. Employing the criteria outlined above, the Commission identified
a number of services and classes of services that were auctionable
under the 1993 Budget Act if mutually exclusive applications are
accepted for filing. Among the services the Commission found
auctionable under the 1993
[[Page 23573]]
Budget Act (all of which involve commercial use of the spectrum) were
narrowband and broadband Personal Communications Services (PCS), Public
Mobile Services, 218-219 MHz Service, Specialized Mobile Radio Services
(SMR), Private Carrier Paging (PCP) Services, Multipoint Distribution
Service (MDS), Multichannel Multipoint Distribution Service (MMDS),
General Wireless Communications Service (GWCS), Local Multipoint
Distribution Service (LMDS), Wireless Communications Service (WCS),
Digital Audio Radio Service (DARS), Direct Broadcast Satellite (DBS)
Service, 220-222 MHz radio service, Location and Monitoring Service
(LMS), and VHF Public Coast Stations. The Commission also adopted
competitive bidding for assignment of licenses in the 39 GHz band after
enactment of the Balanced Budget Act.
2. Services Determined To Be Nonauctionable
8. Based on the statutory criteria contained in the 1993 Budget
Act, the Commission also determined that a number of services were not
auctionable, including ``private services'' that were for ``internal
use,'' and thus not subscriber-based. The legislative history of the
1993 Budget Act refers to ``private services'' as services that do not
involve the receipt of compensation from subscribers, ``i.e., that were
for internal use.'' See H.R. Rep No. 103-111 at 253. Generally, private
radio services are used by government or business entities to meet
internal communications needs, or by individuals for personal
communications. Private radio services that the Commission decided were
not auctionable under the 1993 Budget Act include the Public Safety
Radio Services (subsequently combined with the Special Emergency Radio
Services to form the Public Safety Radio Pool), 220 MHz channels
reserved for private service, the Instructional Television Fixed
Service (ITFS), the Citizens Band Service, the Radio Control Service,
the General Mobile Radio Service, the Amateur Radio Service, Non-SMR
licensees above 800 MHz, Multiple Licensed Systems below 800 MHz, and
the Private Land Mobile Radio Service (PLMRS) below 470 MHz. See
Competitive Bidding Second Report and Order; Competitive Bidding
Notice.
9. The plain language of the 1993 Budget Act also excluded
traditional broadcast services from competitive bidding, because
broadcast licensees do not receive compensation from subscribers.
Consistent with the clear legislative intent, the Commission excluded
from the competitive bidding process broadcast television (VHF, UHF,
and LPTV), broadcast radio (AM and FM), and the Instructional
Television Fixed Service (ITFS).
10. Licensing in the Private Radio Services. The services deemed
nonauctionable under the 1993 statute were largely private and
noncommercial offerings operating on a variety of frequency bands. In
contrast to its extensive use of geographic area licensing for services
determined to be auctionable under the 1993 Budget Act, to date, the
Commission has employed a variety of alternative licensing approaches
for these private radio services.
11. PLMRS frequencies below 470 MHz represent the majority of the
frequencies allocated to the private radio services. Formerly, these
frequencies were divided into twenty separate and diverse radio
services, such as the Local Government, Telephone Maintenance, and
Motor Carrier Radio Services. In 1997, however, the Commission
consolidated these twenty services into two pools--the Public Safety
Radio Pool and the Industrial/Business Radio Pool--in order to increase
licensee flexibility to manage spectrum more efficiently by giving
users access to a larger set of frequencies. Eligibility in the
Industrial/Business pool is open to persons primarily engaged in the
operation of a commercial activity; the operation of educational,
philanthropic, or ecclesiastical institutions; clergy activities; or
the operation of hospitals, clinics, or medical associations. See 47
CFR 90.35(a). The majority of communications systems utilizing these
frequencies are used to support day-to-day business operations (such as
dispatching and diverting personnel or work vehicles, coordinating the
activities of workers and machines on location, or remotely monitoring
and controlling equipment), but many also are used for responding to
emergencies.
12. The private radio services also include PLMRS frequencies above
470 MHz, specifically, in the 806-821/851-866 MHz band (the 800 MHz
band) and the 896-901/935-940 MHz band (the 900 MHz band). The
Commission divided PLMRS frequencies above 800 MHz into three
categories--Public Safety, Business, and Industrial/Land
Transportation, each consisting of one or more of the radio services
consolidated into the two pools below 470 MHz, and a General category
open to entities eligible in the other three categories and the
Specialized Mobile Radio category. See 47 CFR 90.615, 90.617. The
Commission designated private radio spectrum in the 800 and 900 MHz
bands as shared, see 47 CFR 90.173(a), but concluded that a licensee
may obtain exclusive use of a frequency by showing that it will meet
certain loading requirements, i.e., that it will have a minimum number
of mobile units operating on the frequency. See 47 CFR 90.625(a),
90.631, 90.633.
13. In the Competitive Bidding Second Report and Order, the
Commission excluded from competitive bidding those services in which
mutual exclusivity between applications cannot exist because channels
are shared by multiple licensees. In the Competitive Bidding Second
Report and Order, the Commission also found that for services in which
licenses are assigned on a ``first-come, first-served'' basis, mutual
exclusivity among applications will not exist. Specifically, the
Commission concluded that use of ``first-come-first-served'' procedures
generally avoids mutual exclusivity because the Commission does not
consider competing applications. Rather, the applications are processed
in sequence based on filing date and the first acceptable application
is granted.
14. The traditional approach to the licensing of users of private
spectrum generally does not result in the filing of mutually exclusive
applications because the frequencies are intensively shared, assigned
on a first-come, first-served basis, and/or subject to frequency
coordination. For example, PLMRS spectrum is licensed on a site-by-site
basis. Thus, a prospective licensee applies for authority to construct
and operate transmission facilities at a specifically designated
location or locations using a particular antenna height and signal
strength. Historically, site-based licensing has met the needs of PLMRS
users like railroads or petroleum pipelines, which need to cover long
but narrow areas rather than the wider areas that ordinarily constitute
geographic licensing regions. Many other PLMRS users, such as
manufacturers seeking to link their raw material, processing, and
finishing operations, also have unique configuration requirements.
15. Within the PLMRS services, Industrial/Business frequencies are
licensed on a shared, non-exclusive basis, which allows multiple users
with different coverage and capacity requirements to use the same
frequencies effectively. Shared use increases the amount of frequency
reuse that is possible compared to exclusive use with set distance
separations, but requires that private system users must be able to
tolerate interference and manage potential blocked access to channels.
Such problems are
[[Page 23574]]
minimized, however, by the frequency coordination process, which
involves the use of certified coordinators who analyze applications
before they are submitted to the Commission to select a frequency that
will meet the applicant's needs while minimizing interference to
licensees already using the frequency band. Specifically, the frequency
coordinator makes a recommendation to the Commission regarding the best
available frequency for the applicant's proposed operations in the
relevant area, based on the nature, size, and purpose of the radio
systems already authorized on that frequency.
16. The Commission had certified one coordinator for each radio
service in the bands below 800 MHz, but now that those frequencies have
been consolidated, applicants for those PLMR frequencies generally may
use the services of any frequency coordinator certified in the pool.
This introduction of competition among coordinators was intended to
foster lower coordination costs and better service to the public.
However, applicants for those frequencies still sometimes contend that
receiving a coordinator's recommendation takes too long and costs too
much. Indeed, the Commission has acknowledged that the changes made to
date may not be sufficient to maximize the efficiency of its PLMR
licensing procedures.
17. Some private radio frequencies are available for shared use
without any frequency coordination. One example is private coast
station spectrum. Private coast stations serve the business and
operational needs of vessels and may not charge fees for the provision
of communications services. For example, a private coast station may be
used by a vessel towing company to communicate with potential
customers, or by a fishing company to maintain radio contact with its
fleet. Frequencies are available in the 2-27.5 MHz band for
communicating with vessels hundreds or thousands of miles away, and in
the 156-162 MHz band for communications in a port area. Users are
required to limit their communications to the minimum practicable
transmission time. General use of tools to maximize spectrum
efficiency, other than sharing of spectrum, have not been deemed
necessary for private coast spectrum because, except in certain areas,
the available spectrum generally has been sufficient to meet demand.
18. Another example of private radio frequencies available for
shared use without any frequency coordination are those services that
are ``licensed by rule,'' meaning that no licenses are issued, such as
the CB Radio Service. See 47 CFR 95.404. The CB Radio Service is a
private, two-way, short-distance voice communications service for
personal or business activities of the general public. Users may
transmit communications about their personal or business activities,
emergencies, and traveler assistance, but users must limit their
communications to the minimum practicable time. Licensing by rule must
be authorized by Congress, and is appropriate only for low-power,
short-distance services with multiple, shared channels, where users can
avoid congestion fairly easily.
B. The Balanced Budget Act of 1997
19. In the summer of 1997, Congress revised the Commission's
auction authority. Specifically, the Balanced Budget Act of 1997
amended Section 309(j)(1) to require the Commission to award mutually
exclusive applications for initial licenses or permits using
competitive bidding procedures, except as provided in Section
309(j)(2). Sections 309(j)(1) and 309(j)(2) now state:
(1) General Authority.--If, consistent with the obligations
described in paragraph (6)(E), mutually exclusive applications are
accepted for any initial license or construction permit, then,
except as provided in paragraph (2), the Commission shall grant the
license or permit to a qualified applicant through a system of
competitive bidding that meets the requirements of this subsection.
(2) Exemptions.--The competitive bidding authority granted by
this subsection shall not apply to licenses or construction permits
issued by the Commission--
(A) For public safety radio services, including private internal
radio services used by State and local governments and non-
government entities and including emergency road services provided
by not-for-profit organizations, that--
(i) Are used to protect the safety of life, health, or property;
and
(ii) Are not made commercially available to the public;
(B) For initial licenses or construction permits for digital
television service given to existing terrestrial broadcast licensees
to replace their analog television service licenses; or
(C) For stations described in section 397(6) of this title.
Section 397(6), defines the terms ``noncommercial educational broadcast
station'' and ``public broadcast station.'' See 47 U.S.C. 397(6).
20. Prior to the Balanced Budget Act of 1997, Sections 309(j)(1)
and 309(j)(2) granted the Commission the authority to use competitive
bidding to resolve mutually exclusive applications for initial licenses
or permits if the principal use of the spectrum was for subscription-
based services and competitive bidding would promote the objectives
described in Section 309(j)(3). As amended by the Balanced Budget Act
of 1997, Section 309(j)(1) states that the Commission shall use
competitive bidding to resolve mutually exclusive initial license or
permit applications, unless one of the three exemptions provided in the
statute applies.
21. As noted, the Balanced Budget Act of 1997 left unchanged the
restriction that competitive bidding may only be used to resolve
mutually exclusive applications. Moreover, the general auction
authority provision of Section 309(j)(1) now references the obligation
under Section 309(j)(6)(E) to use engineering solutions, negotiation,
threshold qualifications, service regulations, or other means to avoid
mutual exclusivity where to do so is in the public interest. In
addition, the portion of the Conference Report that accompanies this
section of the legislation emphasizes that notwithstanding the
Commission's expanded auction authority, its determinations regarding
mutual exclusivity must still be consistent with and not minimize its
obligations under Section 309(j)(6)(E). The conferees expressed concern
that the Commission not interpret its expanded auction authority in a
manner that overlooks engineering solutions or other tools that avoid
mutual exclusivity. The conferees emphasized that, notwithstanding its
expanded auction authority, the Commission must still ensure that its
determinations regarding mutual exclusivity are consistent with the
Commission's obligations under section 309(j)(6)(E). See H.R. Conf.
Rep. No. 105-217, 105th Cong., 1st Sess., at 572 (1997) (``Conference
Report'')
22. Section 309(j)(2), as amended by the Balanced Budget Act of
1997, exempts from auctions licenses and construction permits for
public safety radio services, digital television service licenses and
permits given to existing terrestial broadcast licensees to replace
their analog television service licenses, and licenses and construction
permits for noncommercial educational broadcast stations and public
broadcast stations. The Commission recently observed that the list of
exemptions from its general auction authority set forth in Section
309(j)(2) is exhaustive, rather than merely illustrative, of the types
of licenses or permits that may not be awarded through a system of
competitive bidding. See Implementation of Section 309(j) of the
Communications Act--Competitive Bidding for Commercial Broadcast and
Instructional Television Fixed Service Licenses, MM Docket No. 97-234,
First Report and Order, 63 FR 48615,
[[Page 23575]]
September 11, 1998 (``Commercial Broadcast Competitive Bidding First
Report & Order''). Although the reference to Section 309(j)(3) is now
deleted from Section 309(j)(2), it is worth noting that Section
309(j)(3), ``Design of Systems of Competitive Bidding,'' was not
amended by the Balanced Budget Act of 1997 and still directs the
Commission to consider the public interest objectives in identifying
classes of licenses and permits to be issued by competitive bidding.
23. The Conference Report for Section 3002(a) of the Balanced
Budget Act of 1997 states that the exemption for public safety radio
services includes ``private internal radio services'' used by
utilities, railroads, metropolitan transit systems, pipelines, private
ambulances, volunteer fire departments, and not-for-profit
organizations that offer emergency road services, such as the American
Automobile Association (AAA). The Conference Report also notes that the
exemption is ``much broader than the explicit definition for `public
safety services' '' included in Section 337(f)(1) of the Communications
Act, 47 U.S.C. 337(f)(1), for the purpose of determining eligibility
for licensing in the 24 MHz of spectrum reallocated for public safety
services.
24. The 1997 amendments also eliminate the Commission's authority
to issue licenses or permits by random selection after July 1, 1997,
with the exception of licenses or permits for noncommercial educational
radio and television stations. See 47 U.S.C. 309(i)(5).
III. Discussion
A. General Approach to Implementing Legislation
25. In this NPRM, the Commission seeks comment on which radio
services or classes of services Congress intended to exempt from
competitive bidding. The Commission also seeks comment on how the
Balanced Budget Act's modification of its statutory auction authority
affects its analysis of whether spectrum licenses for non-exempt
wireless services are auctionable. Specifically, the Commission
inquires about the scope and content of its obligation to continue to
avoid mutual exclusivity under Sections 309(j)(1) and 309(j)(6)(E). The
Commission also inquires whether alternative licensing schemes and
techniques would more readily give effect to the goals expressed in the
relevant Balanced Budget Act changes. In addition, in view of the
above-mentioned statutory changes, the Commission explores the criteria
to be used in establishing licensing schemes both for existing wireless
services and for wireless services as to which no licensing rules have
yet been adopted.
26. The Commission has concluded in other proceedings that the
revised statute does not require it to re-examine its determinations
that specific services or frequency bands were auctionable under the
1993 Budget Act's more restrictive definition of our auction authority.
See Amendment of the Commission's Rules Concerning Maritime
Communications, PR Docket No. 92-257, Third Report and Order and
Memorandum Opinion and Order, 63 FR 40059, July 27, 1998 (``Maritime
Third Report and Order''); Amendment of the Commission's Rules to Adopt
Regulations for Automatic Vehicle Monitoring Systems, PR Docket No. 93-
61, Second Report and Order, 63 FR 40659, July 30, 1998. Consistent
with its conclusions in those previous proceedings, this proceeding
will not re-examine the Commission's previous determinations that
specific services or frequency bands were auctionable under the 1993
Budget Act.
B. Principles for Determining Whether a License is Subject to Auction
27. By requiring the Commission to use auctions to resolve mutually
exclusive applications for all categories of spectrum licenses except
those that are expressly exempt, Congress established a new approach to
determining the auctionability of spectrum. Under the revised Section
309(j)(1), whether a particular service or class of frequencies is used
principally for subscriber-based services is no longer dispositive.
With the elimination of this criterion for determining auctionability
of mutually exclusive applications, unless a service is expressly
exempt from competitive bidding, the only remaining requirement for
auctionability is that, subject to the Commission's ``obligation in the
public interest * * * to avoid mutual exclusivity in application and
licensing proceedings,'' 47 U.S.C. 309(j)(6)(E), there be mutually
exclusive applications accepted for licenses in that service. Thus, in
enacting the Balanced Budget Act, Congress simplified the statute,
apparently expanding its potential scope, by requiring spectrum
auctions with certain limited exceptions. Accordingly, the Commission
seeks comment on how the Balanced Budget Act's amendments to Section
309(j)(1) affect its determinations of which services are potentially
auctionable and which are not.
C. Public Safety Radio Services Exemption
28. Of particular importance to determining the auctionability of
wireless services is the express exemption from the Commission's
auction authority for ``public safety radio services,'' added by the
Balanced Budget Act's amendment to Section 309(j)(2). The exemption is
provided for certain public safety radio services meeting the
conditions contained in the statutory language, rather than for a
certain class of public safety licensees (i.e., police, fire, etc.).
Thus the Commission seeks comment on how to apply this exemption.
29. This NPRM does not seek comment on the exemptions from
competitive bidding for digital television or noncommercial educational
broadcast stations and public broadcast stations. The Commission has
addressed the competitive bidding exemption for noncommercial
educational broadcasters and sought further comment in another rule
making proceeding. See Reexamination of the Comparative Standards for
New Noncommercial Educational Applicants, Further Notice of Proposed
Rule Making, MM Docket No. 95-31, FCC 98-269, 63 FR 58358, October 30,
1998. To the extent the Commission determines that it is necessary to
clarify the exemption for digital television or adopt implementing
regulations for that exemption, it intends to do so in a proceeding
specifically addressing broadcast services.
30. The Balanced Budget Act defines ``public safety radio
services'' to include private internal radio services used by State and
local governments and non-government entities, and including emergency
road services provided by not-for-profit organizations, that (i) are
used to protect the safety of life, health, or property, and (ii) are
not made commercially available to the public. The relevant legislative
history states that ``public safety radio services'' is much broader
than the explicit definition of ``public safety services'' contained in
Section 337 of the Communications Act, which determines eligibility for
licensing in the 24 MHz of spectrum reallocated for public safety
services. In view of the express statutory language and legislative
history, the Commission tentatively concludes that ``public safety
radio services'' should include, at a minimum, all of the Private Land
Mobile Radio Services that are currently assigned to the Public Safety
Radio Pool, which is comprised of those services formerly housed in the
Public
[[Page 23576]]
Safety Radio Services and the Special Emergency Radio Service. See 47
CFR 90.16. The Public Safety Radio Services included the Local
Government, Police, Fire, Highway Maintenance, Forestry-Conservation,
and Emergency Medical Radio Services. The Special Emergency Radio
Service covered the licensing of radio communications of hospitals and
clinics, ambulance and rescue services, veterinarians, persons with
disabilities, disaster relief organizations, school buses, beach
patrols, persons or organizations in isolated areas, and emergency
standby and repair facilities for telephone and telegraph systems.
Thus, the Commission proposes to include the spectrum allocated to the
Public Safety Radio Pool in our definition of ``public safety radio
services,'' because such spectrum is used for communications directly
related to the safety of life, health, or property and is not made
commercially available to the public.
31. The Commission also tentatively concludes that its definition
of ``public safety radio services'' should include the 24 MHz of newly
allocated public safety spectrum at 764-776 MHz and 794-806 MHz (``the
700 MHz band''). See 47 U.S.C. 337(a). Licensing in the 700 MHz band is
restricted to a more narrow class than licensing in the public safety
radio services, which does not appear to be limited to particular
entities. Moreover, the 700 MHz band, like public safety radio services
spectrum, must be used to protect the safety of life, health, or
property, and may not be made commercially available to the public. See
47 U.S.C. 337(f)(1)(A),(C). The Commission therefore seeks comment on
its tentative conclusion that spectrum in the 700 MHz band should be
included within the public safety radio services spectrum that is
exempt from competitive bidding.
32. Further, in the 220-222 MHz Third Report and Order, the
Commission concluded that it would be in the public interest to
allocate ten 220 MHz non-nationwide channel pairs for the exclusive use
of public safety eligibles. Therefore, consistent with this decision,
the Commission tentatively concludes that its definition of public
safety radio services should include the ten 220 MHz channel pairs.
Similarly, in the Maritime Third Report and Order, the Commission
concluded that it would be in the public interest to set aside two
contiguous channel pairs in each of the thirty-three inland VHF Public
Coast areas (VPC) for public safety users. Although the Commission
stated that the ultimate use for these reserved frequencies would be
decided as part of its pending public safety proceeding, the Commission
concluded that these inland VPC channel pairs were a part of the public
safety radio services that the Balanced Budget Act expressly exempted
from competitive bidding. The Commission tentatively concludes that it
should continue to include the VPC spectrum that it has set aside for
public safety uses in its definition of public safety radio services.
The Commission seeks comment on these tentative conclusions.
33. In light of the exemption's focus on public safety radio
services rather than certain classes of public safety licensees, the
Commission also seeks comment on whether it should interpret the
exemption to apply only to spectrum that the Commission specifically
allocates to public safety radio services. Should the Commission
designate certain radio services or classes of frequencies within
certain services as ``public safety radio services'' for which licenses
will be assigned without competitive bidding? And, if such designations
are warranted, upon what basis should the Commission make such
designations? Should, for example, such designations be based on the
``principal use of the spectrum'' as determined by the Commission, or
would other bases be more appropriate? Additionally, the Commission
seeks comment on whether there are any other private radio services or
frequency bands that satisfy the criteria of the public safety radio
services exemption, i.e., that are used to protect the safety of life,
health or property and that are not made commercially available to the
public. For example, it appears that frequencies used by medical
telemetry equipment may fall within this exemption.
1. Private Internal Radio Services
34. Private internal systems are traditionally operated by
licensees that require highly customized mobile radio facilities for
the conduct of the licensee's underlying business. In the Competitive
Bidding Second Report and Order, the Commission concluded that the term
``private services'' refers to services ``that were for internal use.''
However, private internal services are a subclassification of private
services, because some private services, such as the Amateur Radio
Service and the Aviation Services, are not used for internal
communications. The Commission's Part 90 rules governing private land
mobile radio services currently define an ``internal system'' as a
system in which ``all messages are transmitted between the fixed
operating positions located on the premises controlled by the licensee
and the associated mobile stations or paging receivers of the
licensee.'' 47 CFR 90.7.
35. Because the Balanced Budget Act's exemption for public safety
radio services includes ``private internal radio services used by State
and local governments and non-government entities,'' the Commission
seeks comment on the definition of ``private internal radio services.''
The Commission recognizes, for example, that for the purpose of
implementing the public safety radio services exemption, its definition
of ``private internal radio services'' will need to cover private fixed
as well as private mobile radio services. The Commision therefore
proposes to define private internal radio services by incorporating its
definition of ``private services'' with its definition of internal
systems in its Part 90 rules, and expanding the definition to include
both fixed and mobile services. Accordingly, the Commission seeks
comment on whether it should define a private internal radio service as
a service in which the licensee does not receive compensation, and all
messages are transmitted between fixed operating positions located on
premises controlled by the licensee and the associated fixed or mobile
stations or other transmitting or receiving devices of the licensee.
36. Additionally, the Commission seeks comment on whether its
definition of private internal radio services should include services
in which private internal systems operate on a cooperative or multiple-
license basis. The term ``private mobile service'' as defined in
Section 332(d)(3) of the Communications Act, includes mobile service
that may be licensed on an ``individual, cooperative, or multiple
basis.'' See 47 U.S.C. 153(27). In Implementation of Sections 3(n) and
332 of the Communications Act--Regulatory Treatment of Mobile Services,
GN Docket No. 93-252, Second Report and Order, 59 FR 18493 (1994)
(``CMRS Second Report and Order''), the Commission observed that
shared-use arrangements are beneficial because they allow radio users
to combine resources to meet compatible needs for specialized internal
communications facilities, and it decided that such arrangements would
be deemed to be not-for-profit and presumptively classified as PMRS.
Private internal radio systems operating on a cooperative basis or as
multiple-licensed systems would fall outside a definition of private
internal radio services that was strictly based on the absence of
compensation to the licensee, because such arrangements may involve
[[Page 23577]]
cost reimbursements that could be considered compensation.
Nevertheless, systems operated on a cooperative basis and multiple-
licensed systems possess one of the most common characteristics of
private internal radio systems: the systems are not operated as a
direct source of revenue, but rather as a means of internal
communications to support the day-to-day needs of the licensees'
business operations or to protect the safety of their employees,
customers, or the general public. Accordingly, the Commission seeks
comment on whether licensees operating systems on a not-for-profit
basis and under a cost-sharing agreement, on a cooperative basis, or as
a multiple licensed system for internal communications to support their
own operations should be classified as private internal radio services,
and considered exempt, even though the licensee receives compensation.
a. Emergency Road Services
37. Section 309(j)(2)(A) stipulates that licenses issued for
private internal radio services used by providers of emergency road
services will be awarded without competitive bidding only if the
service provider is a not-for-profit organization. The Conference
Report that accompanied the legislation states that Congress did not
intend this exemption to include internal radio services used by
automobile manufacturers and oil companies to support emergency road
services provided by those parties as part of the competitive marketing
of their products. See Conference Report at 572. This distinction
between for-profit and not-for-profit entities is not required for any
other user of public safety radio services.
38. The Commission invites comment on how it should carry out
Congress's intent regarding treatment of providers of emergency road
services. Should the Commission limit licensee eligibility in the
public safety radio services by excluding emergency road service
providers that are not organized as not-for-profit entities under the
laws of the state in which they reside and/or provide such services?
Alternatively, should the Commission use the categories that are found
in its regulations governing eligibility to hold authorizations in the
Automobile Emergency Radio Service? Although both categories are
eligible licensees under those regulations, the Commission
distinguishes between operation of a private emergency road service for
disabled vehicles by associations of owners of private automobiles and
the business of providing to the general public an emergency road
service for disabled vehicles. See 47 CFR 90.95(a)(1), (2). The
Commission seeks comment on whether it should use similar definitions
to distinguish between emergency road service providers that are
eligible and noneligible to obtain auction-exempt licenses or permits
for public safety radio spectrum.
b. State and Local Governments
39. In establishing eligibility for licensing in the newly-
allocated public safety spectrum in the 700 MHz band, the Commission
concluded that all state and local government entities would be
presumed eligible without further showing as to eligibility. See The
Development of Operational, Technical and Spectrum Requirements For
Meeting Federal, State and Local Public Safety Agency Communication
Requirements through the Year 2010, WT Docket No. 96-86, First Report
and Order, FCC 98-191, 63 FR 58645, November 2, 1998 (``Public Safety
First Report and Order''). The Conference Report accompanying the
Balanced Budget Act makes clear that Congress intended the public
safety radio services exemption to be broader than the definition of
``public safety services'' eligible for licensing in the 700 MHz band.
The Commission therefore tentatively concludes that it would be
consistent with legislative intent for the Commission to presume that
all state and local government entities are eligible for licensing in
the auction-exempt public safety radio services without further showing
as to eligibility, subject to the statutory requirement that this
spectrum be used to protect the safety of life, health or property and
not made commercially available to the public. The Commission seeks
comment on this tentative conclusion.
c. Non-government Entities
40. In establishing the eligibility of non-governmental
organizations (NGOs) for licensing in the 700 MHz band, the Commission
concluded in the Public Safety First Report and Order that NGOs must
obtain written governmental approval to be eligible for licensing.
However, as observed above, Congress intended the public safety radio
services exemption to be much broader than the definition of ``public
safety services'' eligible for licensing in the 700 MHz band and
eligible to invoke Section 337. Unlike the definition of ``public
safety services,'' which requires NGOs to be authorized by a
governmental entity whose primary mission is the provision of such
services to be eligible for public safety spectrum in the 700 MHz band,
the public safety radio services exemption in Section 309(j)(2) is not
restricted to NGOs that are ``authorized by a governmental entity.'' In
light of this distinction, the Commission seeks comment on whether it
should establish any eligibility criteria for non government entities
to ensure that public safety radio services spectrum licensed to non-
government entities is used to protect the safety of life, health, or
property and not made commercially available to the public. Does the
absence of this restriction on ``non-government entities'' in Section
309(j)(2)(A) suggest that non-government entities should not be
required to obtain written governmental approval of their public safety
radio service licenses, as they are required to do for licenses in the
700 MHz band?
41. The Commision notes that Section 309(j)(2)(A) exempts public
safety radio services from auctions, but does not appear to restrict
the entities that may apply for public safety radio services spectrum.
The Commission recognizes that in some cases public safety entities may
wish to obtain communications services on a contract basis from a
commercial service provider. Comments are invited on whether it may be
appropriate to permit commercial providers or other non-government
entities that intend to provide public safety radio services on a
contract basis to apply directly for auction-exempt spectrum, subject
to the statutory requirement that this spectrum be used to protect the
safety of life, health or property and not made commercially available
to the public. If this were permitted, how might the Commission ensure
that this spectrum is used only to protect the safety of life, health,
or property and not to provide non-qualifying services to the public?
2. Frequency Pools
42. The Commission provides a pool of frequencies for public safety
radio services (i.e., the Public Safety Pool). The Commission
recognizes that the exemption for public safety radio services provided
in Section 309(j)(2)(A) is broader than the criteria the Commission has
applied in determining eligibility for frequencies in the Public Safety
Pool. The Commission invites comment on the ramifications of the
revised Section 309(j)(2)(A) on its assignment of frequencies for
public safety radio services. The Commission believes that it would be
imprudent and potentially disruptive to current public safety
communications to overhaul the existing frequency assignment approach
for public safety pool spectrum. Therefore, the Commission seeks
alternatives, such as establishing categories or frequency pools for
various
[[Page 23578]]
types of users of public safety radio services spectrum and allocating
specific frequencies within the public safety radio services to each
category or frequency pool.
43. The Commission also seeks comment on how such spectrum
categories or pools should be defined if it were to decide to establish
such categories or pools. Should a separate pool be established for
state and local government licensees or for nonprofit organizations
providing emergency road services? Based on past experience, frequency
pools can sometimes lead to inefficiencies where spectrum is exhausted
in one pool but not another. If the Commission were to establish such a
separate frequency pool, how should frequencies be apportioned with
eligibles in the existing Public Safety Pool so that the Commission can
minimize inefficiencies?
44. UTC, The Telecommunications Association, the American Petroleum
Institute, and the Association of American Railroads have submitted a
rulemaking petition that includes a proposal to create a third radio
pool, in addition to the Public Safety and Industrial/Business Radio
Pools already used for private radio frequencies below 470 MHz, to be
known as the Public Service Radio Pool and open to entities that do not
qualify for Public Safety Radio Pool spectrum, but are eligible to use
the public safety radio services that the Balanced Budget Act exempted
from the Commission's auction authority. See UTC, The
Telecommunications Association, American Petroleum Institute, and
Association of American Railroads Petition for Rulemaking (filed Aug.
14, 1998). The Commission notes that this approach may be feasible for
other frequency bands, including PLMR frequencies above 470 MHz. The
Commission seeks comment on this proposal.
45. Alternative proposals on ways to categorize public safety radio
service spectrum and other PLMR spectrum also are welcome. Commenters
discussing the creation of a third pool or any other means of
separating auctionable from non-auctionable spectrum should consider
the use of frequency coordination, the resolution of mutually exclusive
applications, eligibility requirements, and the appropriate treatment
of public safety radio service eligibles operating on frequencies not
reallocated to the new pool, and of non-eligibles operating on
frequencies that are reallocated. In addition, commenters are
encouraged to submit specific quantitative information regarding the
spectrum needs of public safety and non-public safety PLMR users.
Necessary amendments to the Commission's Rules should also be noted.
3. Restrictions On Use
46. The Commission also seeks comment on what regulatory provisions
should be established to ensure that the licensee's assigned
frequencies continue to be utilized only for purposes that meet the
requirements of the Balanced Budget Act's exemption from competitive
bidding. For example, private wireless licensees using their systems
noncommercially to protect the safety of their employees in the course
of conducting routine business operations also would have the
capability to use those systems for communications of a routine
business nature. Section 309(j)(2)(A) requires that spectrum exempt
from auctions under the public safety radio services exemption be used
to protect the safety of life, health, or property and not be made
commercially available to the public. In contrast, Section 337(f)(1)(A)
requires spectrum in the 700 MHz band to be used for services ``the
sole or principal purpose'' of which is to protect the safety of life,
health, or property. 47 U.S.C. 337(f)(1)(A) (emphasis added).
47. The Commission seeks comment on the scope of permissible uses
for auction-exempt services. Does the absence of the words ``or
principal purpose'' in Section 309(j)(2) signify that licensees in
these services may use their frequencies only for safety-related
purposes? Alternatively, should the Commission permit licensees of
auction-exempt spectrum to use their frequencies for ineligible as well
as eligible purposes? If the Commission were to allow public safety
radio services to be used incidentally for purposes other than safety
protection, what standard should it adopt to ensure that licensees that
obtain these frequencies do not circumvent the statutory mandate that
spectrum be licensed without competitive bidding only for the limited
purposes expressed in Section 309(j)(2)?
4. Noncommercial Proviso
48. In addition to being used to protect the safety of life,
health, or property, the public safety radio services exemption to our
general auction authority requires that the radio services not be
``made commercially available to the public.'' 47 U.S.C.
309(j)(2)(A)(ii). Thus, private internal radio services that are made
``commercially available to the public'' would be required to be
licensed through auctions. The Commission sought comment above on
whether commercial providers should be eligible for licenses in the
public safety radio services, provided that they do not make the radio
services commercially available to the public. The Commission now
addresses how the term ``not made commercially available to the
public'' should be defined.
49. In determining what Congress meant by radio services ``not made
commercially available,'' the Commission is presented with some of the
same considerations raised in its discussion of how to interpret
``private internal radio services.'' One of the criteria Congress has
used to distinguish commercial mobile radio services from private
mobile radio services is whether service is provided for a profit. See
47 U.S.C. 332(d). However, the Commission has found that the
distinction between CMRS and PMRS is not relevant for purposes of
determining the meaning of ``private services'' in the context of
Section 309(j). Similarly, the Commission believes that the distinction
between CMRS and PMRS need not be determinative of how it defines ``not
made commercially available'' for purposes of the auction exemption in
Section 309(j)(2). Accordingly, the Commission seeks comment on how it
should interpret the prohibition against public safety radio services
being made commercially available. Should ``not made commercially
available'' be defiined to have the same meaning as ``private
internal,'' i.e., that the radio services are not made available for
compensation? If the Commission adopts such a definition, should it
also adopt an exception that would consider services to be not
commercially available even though the licensee receives compensation,
if the compensation is received under a nonprofit cost-sharing or
cooperative agreement, or as a multiple licensed system?
50. In addition to seeking comment regarding shared use and
multiple licensing with respect to the meaning of ``not made
commercially available,'' the Commission also seeks more general
comment regarding multiple licensing. A ``multiple-licensed'' system,
also known as a ``community repeater,'' is a system for which the same
transmitting equipment and spectrum is licensed to and used by more
than one entity, each of whom is eligible in the same service. If the
station is interconnected with the public switched network, the
telephone service must be provided on a cost-shared, non-profit basis,
and detailed records must be maintained. No consideration is paid,
either directly or indirectly, by any participant to any
[[Page 23579]]
other participant for or in connection with the use of the multiple-
licensed facilities.
51. In 1992, the Commission proposed eliminating multiple
licensing, on the grounds that, from a user's standpoint, such
facilities were indistinguishable from SMR facilities, and that users'
needs could adequately be met by SMR and private carrier licensees.
When the Commission implemented the 1993 Budget Act, however, it
concluded that Congress recognized the benefits of allowing private
radio users to enter into legitimate cost-sharing arrangements, and did
not intend such arrangements to be classified as a ``for-profit'' CMRS
service. See CMRS Second Report and Order. This conclusion was based
upon the definition of ``mobile service'' adopted in the 1993 Budget
Act, which defines ``private'' communications systems as systems that
may be licensed on an ``individual, cooperative, or multiple basis.''
The Commission discerned that the legislative intent was to provide for
shared-use and multiple-licensed ``private'' communications systems,
exempt from the competitive bidding process.
52. Thus, despite concern that these systems are often
indistinguishable from commercial systems, the Commission deemed it
appropriate to retain multiple licensing. To ensure that only
legitimate cost-sharing arrangements were treated as not-for-profit,
the Commission continued to impose on licensees disclosure requirements
to prevent PMRS licensees from providing de facto for-profit service in
competition with CMRS providers. Nevertheless, the current licensing
rules have sometimes resulted in de facto commercial mobile service
operations by the managers of multiple licensed stations, who were
permitted, after the implementation of the 1993 Budget Act, to continue
to assist in the operation of multiple-licensed systems.
53. A not-for-profit system structured to give an unlicensed
manager sufficient operational control to provide for-profit service to
customers without Commission approval is a violation of Section 310(d)
of the Communications Act and the Commission's rules, for which the
system license can be revoked. In addition, the licensee could be
subject to reclassification as CMRS. De facto for-profit operations, on
frequencies on which for-profit activities are prohibited, offends
concepts of regulatory symmetry and interferes with the establishment
of a level economic playing field. Such sham not-for-profit operations
compete with CMRS licensees who are required to obtain their licenses
through competitive bidding. With the potential expansion of our
auction authority to include private radio services, the Commission
thinks it is appropriate to revisit this issue. Accordingly, the
Commission seeks comment on whether eliminating or modifying the
multiple licensing rules would be appropriate.
54. In addition to seeking comment on the meaning of ``not made
commercially available,'' the Commission also invites comment on how it
should define radio services ``not made commercially available to the
public.'' In the CMRS Second Report and Order, the Commission
determined the meaning of ``available to the public'' in the context of
defining commercial mobile radio service. The Commission found in the
CMRS proceeding that a service is available ``to the public'' if it is
offered to the public without restriction on who may receive it.
However, because in that rule making the Commission was determining the
meaning of commercial mobile service, as defined in Section 332(d) of
the Communications Act, it was required to include in its definition
those services that are ``effectively available to a substantial
portion of the public.'' See 47 U.S.C. 332(d)(1)(B). The Commission
found that if service is provided exclusively for internal use or is
offered only to a significantly restricted class of eligible users, it
is made available only on a limited basis to insubstantial portions of
the public. Examples of services cited as being available only to
insubstantial portions of the public were the Public Safety Radio
Services, Special Emergency Radio Service, Radiolocation Services, most
of the Industrial Radio Services, Maritime Service Stations, and
Aviation Service Stations. The Commission seeks comment on whether it
should interpret the requirement that public safety radio services not
be made commercially available to the public to mean that such services
may be made available only to an insubstantial portion of the public.
Under such a definition, a public safety radio service could not be
made available to the public without restriction or to any substantial
portion of the public.
5. Resolution of Mutually Exclusive Applications for Services Exempt
From Competitive Bidding
55. If applications for auction-exempt public safety radio services
were to continue to be frequency coordinated prior to their filing with
the Commission, the Commission would expect that under either site-
based or geographic area licensing, incidents of mutual exclusivity in
these services would be rare. However, because it is possible for
mutual exclusivity to arise, the Commission seeks comment below on how
it should avoid or resolve mutual exclusivity between applications for
spectrum exempt from competitive bidding.
56. The Commission seeks comment on whether engineering solutions,
negotiation, threshold qualifications, service regulations, or other
means should be used to resolve mutual exclusivity in cases where
frequency coordination is unsuccessful in avoiding mutually exclusive
applications. As noted previously, the Balanced Budget Act terminated
the Commission's authority to use lotteries to choose among mutually
exclusive applications. Therefore, the Commission is foreclosed from
using random selection in the event it receives mutually exclusive
applications for licenses to use channels in a public safety radio
service. Two of the remaining methods by which such applications could
be resolved are comparative hearings and licensing on a first-come-
first-served basis. The Commission seeks comment on these and other
possible alternatives to resolving such applications in public safety
radio services.
6. Application of Section 337
57. In addition to the statutory exemption for public safety radio
services, providers of public safety services may obtain spectrum
without engaging in competitive bidding if they are granted the use of
a frequency under Section 337. Section 337, among other things, gives
eligible providers of public safety services a means to obtain
unassigned spectrum not otherwise allocated for public safety purposes.
See 47 U.S.C. 337(c)(1).
58. In considering applications under Section 337, the Commission
must make an initial determination as to whether the applicant is an
``entity seeking to provide public safety services,'' which the statute
defines as ``services--
(A) The sole or principal purpose of which is to protect the
safety of life, health, or property;
(B) That are provided--
(i) By State or local government entities; or
(ii) By nongovernmental organizations that are authorized by a
governmental entity whose primary mission is the provision of such
services; and
(C) That are not made commercially available to the public by
the provider.''
47 U.S.C. 337(f)(1).
59. The Commission must grant applications filed pursuant to
Section 337 if an eligible applicant demonstrates that (a) no other
spectrum allocated to public safety services is immediately
[[Page 23580]]
available to satisfy the requested use, (b) the requested use will not
cause harmful interference to other spectrum users entitled to
protection from such interference, (c) the use of the unassigned
frequency for the provision of public safety services is consistent
with other allocations for the provision of such services in that
geographic area, (d) the unassigned frequency has been allocated for
its present use for at least two years, and (e) granting the
application is in the public interest. 47 U.S.C. 337(c)(1). If an
applicant's showing fulfills these criteria, the Commission must then
waive any requirement of its regulations or the Communications Act
(other than regulations regarding harmful interference) to the extent
necessary to permit the requested use. After analysis and consideration
of these criteria, the Commission must either disapprove the request or
assign the specifically requested spectrum to the applicant. The
statutory criteria indicate that an eligible applicant must request
specific unassigned frequencies. Thus, the Commission tentatively
concludes that an eligible entity must specify the spectrum it seeks to
use, and cannot simply apply for the assignment of any unassigned
spectrum and require the Commission to locate and select an appropriate
frequency. If any one of the five criteria is unfulfilled, the
application will not be granted.
60. The Commission seeks comment on its application of the
statutory criteria. The Commission particularly seeks comment regarding
the showing necessary to demonstrate that the grant of the application
would be in the public interest, and the requirement that the frequency
applied for be ``unassigned.'' Specifically, the Commission requests
comment on whether it would be in the public interest for applicants
seeking to provide public safety services to apply for frequencies
that, while not yet licensed to another entity, have already been
identified and designated by the Commission as frequencies to be
licensed by auction.
D. Establishing the Appropriate Licensing Scheme
1. Obligation to Avoid Mutual Exclusivity
61. The Commission inquires about how the revisions to Sections
309(j)(1) and 309(j)(2) affect its licensing obligations and
methodologies. As discussed above, the Balanced Budget Act makes the
acceptance of mutually exclusive license applications the only
criterion for auctionability, subject to the obligation to avoid mutual
exclusivity. Because services previously determined to be
nonauctionable are generally licensed by processes that do not result
in the filing of mutually exclusive license applications, unless the
Commission alters these licensing schemes, licenses in these services
will not be auctionable under the Balanced Budget Act.
62. The Balanced Budget Act of 1997 simplified the Commission's
determinations of which services are auctionable under Section 309(j).
Section 309(j)(2) no longer requires the Commission to base its
determinations on whether the service is used principally for
subscriber-based services. Unless a service is expressly exempted,
subject to its obligation under Section 309(j)(6)(E) avoid mutual
exclusivity in the public interest, the Commission is required to
assign initial licenses by auctions when it has accepted mutually
exclusive applications for such licenses. Thus, if not exempted by the
statute, a service will be auctionable if the Commission implements a
licensing process that permits the filing and acceptance of mutually
exclusive applications.
63. In revising the Commission's auction authority, Congress
retained and highlighted its obligation under Section 309(j)(6)(E) to
continue to use various means to avoid mutual exclusivity.'' The
Commission seeks comment on whether the express reference to its
obligation under Section 309(j)(6)(E) in the general auction authority
provision changes the scope or content of that obligation. In addition,
the Comission notes that the Balanced Budget Act has not altered the
criteria in Section 309(j)(3) that it must use to determine that a
particular licensing scheme is in the public interest. In establishing
licensing schemes or methodologies under the Balanced Budget Act (for
both new and existing, commercial and private services), how should the
Commission apply the public interest factors in Section 309(j)(3)? With
respect to services currently using licensing schemes in which mutually
exclusive applications are not filed, did Congress, in emphasizing the
Commission's obligation to avoid mutual exclusivity, intend that it
give greater weight to that obligation and less to other public
interest objectives?
64. The Commission has previously interpreted Section 309(j)(6)(E)
to impose an obligation to avoid mutual exclusivity in defining
licensing schemes for commercial services only when it would further
the public interest goals of Section 309(j)(3). For example, in the 800
MHz Specialized Mobile Radio (``SMR'') service, after considering the
appropriateness of other license assignment methods, the Commission
concluded that those other methods were not in the public interest and
that competitive bidding was the most appropriate method of assigning
licenses because it would allow the most expeditious access to the
spectrum. The Commission formerly used site-by-site licensing and a
``first-come, first-served'' license assignment method in the 800 MHz
SMR service for channels that were primarily used to provide dispatch
radio service. In recent years, however, a number of SMR licensees have
expanded the geographic scope of their services, aggregated channels,
and developed digital networks to enable them to provide a type of
service comparable to that provided by cellular and PCS operators. The
Commission found site-by-site licensing procedures cumbersome for
systems comprised of several hundred sites, and was concerned that
site-by-site licensing impaired an SMR licensee's ability to respond to
changing market conditions and consumer demand. The Commission
therefore replaced site-specific licensing with geographic area
licensing and adopted competitive bidding procedures for the upper 200
channels in the 800 MHz SMR band. On reconsideration of its decision,
the Commission rejected arguments by petitioners contending that
Section 309(j)(6)(E) prohibits it from conducting an auction unless it
first attempts alternative licensing mechanisms to avoid mutual
exclusivity. See also Fresno Mobile Radio, Inc. v. FCC, No. 97-1459
(D.C. Cir. Feb. 5, 1999) (Commission's decision to award geographic
area licenses in the 800 MHz SMR band by auction was within its
discretion).
65. In licensing direct broadcast satellite (``DBS'') channels, the
Commission similarly determined that it would best serve the public
interest to reassign reclaimed DBS channels by auction. This decision
was based on a conclusion that the pro rata distribution of reclaimed
channels among existing permittees would result in too few channels to
provide any single permittee sufficient capacity for a viable system.
The Commission therefore decided that even if reassigning channels on a
pro rata basis could avoid mutual exclusivity, it would be more
consistent with the public interest to award the channels by auction,
in a block large enough to provide competitive DBS service. The U.S.
Court of Appeals upheld this decision, ruling that Section 309(j)(6)(E)
does not require
[[Page 23581]]
that the Commission adhere to a particular licensing scheme or
methodology that is not found to serve the public interest in order to
avoid mutual exclusivity in licensing proceedings. See DIRECTV, Inc. v.
FCC, 110 F.3d 816, 828 (D.C. Cir. 1997). The court of appeals held that
the statutory obligation to avoid mutual exclusivity requires the
Commission to do so within the framework of its existing policy of
promoting competition and prompt provision of DBS service.
66. The Commission notes that its decisions to establish geographic
licensing have affected its balancing of its Section 309(j)(6)(E)
obligation with the public interest objectives in Section 309(j)(3).
Under the 1993 Budget Act, the Commission implemented its auction
authority by establishing geographic licensing for particular
auctionable services, finding in each case that such a licensing scheme
furthered the public interest objectives of efficient spectrum use,
expeditious licensing, and rapid delivery to the public of new
technologies and services as expressed in Section 309(j)(3). In
particular, the Commission found that pre-defined geographic service
areas for many services have significant advantages over site-by-site
licensing. The Commission has also found that licensing by geographic
area facilitates aggregation by licensees of smaller service areas into
seamless regional and national service areas and allows development of
strategic regional and national business plans. In addition, the
Commission has found that geographic area licensing provides licensees
with greater buildout flexibility and is easier for the Commission to
administer. For a number of services, these changes represent dramatic
reductions in the regulatory burdens on both licensees and the
Commission. The Commission made these findings even though geographic
licensing could lead to the filing of mutually exclusive applications,
which, under Section 309(j)(6)(E), the Commission has an obligation to
attempt to avoid.
67. Against this historical backdrop, the Commission seeks comment
on whether its previous analysis of its obligation under Section
309(j)(6)(E) is still appropriate in view of the revisions to Section
309(j)(1) and 309(j)(2). When choosing a licensing scheme for new
services and in deciding whether to change the licensing scheme for
existing services, should the Commission continue to evaluate its
obligation to avoid mutual exclusivity by weighing the public interest
objectives of Section 309(j)(3)? Alternatively, does the specific
incorporation in Section 309(j)(1) of the Commission's obligation under
Section 309(j)(6)(E) suggest an independent obligation to pursue
strategies that avoid mutual exclusivity?
2. Exclusion of Satellite Services
68. The Commission specifically notes that the authorization of
satellite services, due to international concerns, may justify the use
of licensing procedures that provide a means to continue to avoid
mutual exclusivity. In the Direct Broadcast Satellite Service and the
Digital Audio Radio Satellite Service, the Commission has found that
auctions of satellite licenses would serve the public interest. In both
cases, the spectrum in question had been identified in international
treaties as uniquely within the regulatory authority of the United
States. Most other satellite systems, however, operate in frequency
bands not similarly identified, which are allocated for mobile
satellite services on a world-wide basis. As a consequence, how much
money entities might bid and even their willingness to bid at all will
be affected by the degree of their interest in providing global service
and by their expectations concerning licensing requirements and costs
in other countries. For example, a satellite system operator proposing
to serve only the United States may be willing to bid higher for a U.S.
license than a satellite system operator proposing to serve multiple
regions, because the U.S.-only system would face considerably fewer
contingencies. Thus, auctions might prevent entry by satellite systems
interested in providing global service, even though these systems may
provide services valued more highly by consumers. Coordinated
multinational auctions might properly address the interdependency
between national licensing decisions and international provision of
service. However, international arrangements for transnational use of
such frequency bands currently are premised on coordination--using
engineering solutions and other methods to avoid harmful interference--
among systems. A coordinated multilateral auction is likely to demand
substantial time and resources by multiple administrations, could raise
national sovereignty and other spectrum access issues, and thus, could
substantially delay service to the public. Thus, bearing in mind the
goals of Sections 309(j)(3) (A), (B) and (D), the Commission has
undertaken considerable efforts to develop solutions that would avoid
mutual exclusivity among satellite systems. For these reasons, the
Commission is not seeking comment in this proceeding on satellite
services. Nor are any conclusions the Commission reaches in this
proceeding intended to constrain its discretion under Section
309(j)(6)(E) as it relates to satellite services, or to specify any
particular process for resolution of potential mutual exclusivity among
satellite service applications.
3. Considerations of License Scope
69. The Commission also seeks comment on several issues that may
influence its choice of a licensing scheme in some of the frequency
bands currently being licensed in ways that do not allow the filing of
mutually exclusive applications. The Commission asks whether the use of
geographic area licensing in these bands would be feasible and whether
geographic area licensing or another licensing scheme would better
serve its public interest goals. In services or classes of frequencies
for which the Commission may ultimately adopt geographic area
licensing, it seeks comment on how to convert existing licensing to
geographic licensing and on the size of the licensing area that would
be desirable.
70. In light of Congress's mandate to use competitive bidding to
promote rapid provision of new services to the public without
administrative delay, the Commission seeks comment on whether
resolution of mutually exclusive applications on a ``per station''
basis is feasible. Would the use of geographic area licensing speed
assignment of new channels and facilitate further build-out of wide-
area systems? Specifically, the Commission seeks comment on the costs
and benefits of geographic licensing in the frequency bands discussed
above. What are the likely effects on incumbent systems and potential
new entrants for such services if geographic area licensing is
utilized? The Commission also seeks comment on whether any of the
shared bands are so heavily used that adopting a geographic area
licensing scheme would serve no purpose, because so little ``white
space'' would be available to geographic area licensees that there
would be no interest in applying for the geographic area licenses.
71. The Commission seeks comment in particular on the PLMRS
frequencies below 470 MHz that are licensed on a shared basis and are
heavily used by many smaller PLMRS licensees. The Commission recently
completed a complex multi-year proceeding to maximize spectrum
efficiency in these bands through engineering solutions. In light of
the extensive modifications to its regulatory and technical framework
adopted to further the efficient use of these bands, the Commission
seeks comment on whether the public interest
[[Page 23582]]
would best be served by retaining the current licensing scheme rather
than adopting geographic licensing and competitive bidding.
72. The Commision notes that some of the spectrum currently
allocated for private internal use is also used to provide subscriber-
based services, pursuant to intercategory sharing or rule waiver.
Similarly, for some frequencies licensed on a shared basis, a licensee
can nonetheless obtain exclusive use of a frequency by meeting certain
loading requirements. Thus, the Commission seeks comment on whether, in
deciding if geographic area licensing would be appropriate for a given
radio service or class of frequencies, it should consider the actual
purpose for which the spectrum is used or proposed to be used, as well
as the purpose for which the spectrum is currently allocated.
73. For services in which the Commission decides to adopt
competitive bidding, is there a licensing scheme that it could use as
an alternative to geographic area licensing? Are there any services in
which the Commission presently uses site-specific licensing that it
should continue to license on a site-by-site basis? The Commission
notes, in particular, that some private users have argued that their
unique geographic coverage requirements make it difficult for these
needs to be met through geographic area licensing schemes. The
Commission also seeks comment on how, assuming geographic area
licensing is used, its implementation could affect the private land
mobile radio frequency coordination process. In its 39 GHz Report and
Order, ET Docket No. 95-183, FCC 97-391, 63 FR 6079, February 6, 1998,
the Commission observed that frequency coordination techniques for
emerging point-to-point technologies are no longer adequate. When
geographic area licenses are to be awarded through competitive bidding,
what role, if any, should the frequency coordinators serve? In which
services and frequency bands, and on what conditions would frequency
coordination continue to serve the public interest?
74. The Commission also seeks comment on ways in which it might
convert existing licensing to geographic licensing. A Petition for
Rulemaking filed by the American Mobile Telecommunications Association,
Inc., (AMTA) proposes to require most Part 90 licensees in the bands
between 222 MHz and 896 MHz, excluding Public Safety licensees, to use
technology that achieves the equivalent of one voice path per 12.5 kHz
of spectrum, using a 25 kHz frequency, and to involuntarily modify to
secondary status the licenses of licensees that fail to meet this
requirement after a transition period. See AMTA Petition for
Rulemaking, RM-9332, Public Notice, Report No. 2288 (rel. July 31,
1998). Alternatively, the Commission could deal with licensees that
fail to migrate to more efficient equipment by relocating them to
shared frequency bands, which would be more compatible with the
incumbents' present use because it would prevent inefficient users from
benefiting from the capacity created by other, more spectrum-efficient,
licensees. Relocating incumbents to shared spectrum might also be
appropriate for site-based incumbents in bands that are converted to
geographic area licensing, for similar reasons of compatibility. The
Commission seeks comment on the use of relocation to facilitate the
conversion of spectrum to geographic licensing.
75. Because the Commission believes that the geographic definition
used should correspond as much as possible to the geographic area that
licensees seek to serve, it proposes to establish the size of
geographic licensing areas in service-specific proceedings, as it has
done in the past. However, the Commission seeks comment on whether
smaller geographic areas would be desirable for private internal radio
services, because they would best approximate the service area desired
by the small businesses and other users that typically characterize the
private radio services. The Commission also seeks comment on whether in
any of the services that will be subject to competitive bidding for the
first time, it would be beneficial to establish geographic licensing
areas smaller than EAs. Are there any other geographic boundaries that
could be used to establish smaller geographic licensing areas, such as
the boundaries of existing counties or boundaries established by the
U.S. Postal Service to assign zip codes?
76. The Commission has found the short-form application process
used in conjunction with its auctions to be the most efficient means of
determining if mutual exclusivity exists. The Commission seeks comment
on whether, in those services or classes of services, if any, for which
it will be required to assign licenses by competitive bidding, it
should continue to use a short-form application process to determine
which license applications are mutually exclusive. The Commission seeks
comment on whether there is a cost-effective alternative to use of the
short-form application process as a means of determining when
applications are mutually exclusive. The Commission also seeks comment
on whether there are any other auction designs or procedures, or
service regulations that could be used to limit the occurrence of
mutual exclusivity in services that have become auctionable under its
expanded authority.
77. Finally, the Commission notes that it traditionally has
established licensing on a service-specific basis, taking into account
the particular characteristics of the service, including its purposes
and the technology to be used. Similarly, although the Commission
adopted a uniform set of competitive bidding rules in the Part 1 Third
Report and Order, to provide for a more consistent and efficient
licensing process for all auctionable services, it also indicated that
it would continue to adopt service-specific auction procedures where it
finds that its general competitive bidding procedures are
inappropriate. Thus, although the Commission seeks comment in this NPRM
on the licensing schemes and various aspects of auction design and
methodology that should be applied to services newly auctionable under
the revised statute, it recognizes that many issues are more
appropriately addressed on a service-specific basis. The Commission may
therefore use service-specific proceedings to tailor licensing,
service, and auction rules of specific services or classes of services
to implement decisions ultimately taken in this and any subsequent
dockets.
IV. Auction Design
A. Competitive Bidding Methodology and Design
78. As explained in paragraph 23, supra, even though a reference to
the public interest objectives outlined in Section 309(j)(3) is no
longer included in Section 309(j)(2), the objectives of the
Commission's competitive bidding system remain unchanged. In designing
competitive bidding methodologies, Section 309(j)(3) requires that the
Commission promote development and rapid deployment of new technologies
and services; promote economic opportunity and competition, and ensure
that new and innovative technologies are readily accessible to
Americans; recover for the public a portion of the value of the
spectrum; and promote efficient and intensive use of the
electromagnetic spectrum. For those services that the Commission
determines are potentially auctionable as a result of the Balanced
Budget Act redefining its auction authority, the Commision seeks
comment below on how to implement competitive bidding
[[Page 23583]]
in a manner that will further those objectives.
79. The Commission has previously observed that the use of
competitive bidding to assign geographic overlay licenses in private
radio services would promote spectrum efficiency. This approach would
promote competition among licensees, which, in turn, would provide
market-based incentives for efficient spectrum use. In particular,
incumbents would be able to continue existing operations without
harmful interference, and overlay licensees would be able to negotiate
voluntary mergers, buyouts, frequency swaps, or similar arrangements
with incumbents. Thus, the overlay licensee would incur an opportunity
cost if spectrum is not used as efficiently as possible and would have
incentives to promote spectrum efficiency. Another method for
introducing market-based incentives and encouraging greater spectrum
efficiency in the private radio service bands is to implement market-
based user fees as an alternative to, or in conjunction with,
competitive bidding. The Commission has previously sought comment on
the implementation of user fees and it continues to believe that
market-based user fees are a desirable means for encouraging greater
spectrum efficiency. However, the Commission does not currently have
statutory authority to impose spectrum user fees.
80. The Commission is cognizant of private wireless operators'
concerns about their ability to compete for spectrum in the open market
with commercial wireless service providers operating their systems as a
direct source of revenue. The Commission realizes that some private
wireless licensees may be concerned that auctioning licenses for
private internal radio services will lead to a concentration of
licenses in the hands of a few operators in each market to the
detriment of small businesses. With these concerns in mind, the
Commission seeks to develop a competitive bidding process that is
tailored to the specific characteristics of the private radio services,
the various purposes for which spectrum in those services is used, and
the needs of the various types of entities holding licenses in those
services.
81. In many of its previous auctions, the Commission has used the
simultaneous multiple-round competitive bidding design. In a
simultaneous multiple-round auction, bidding is open on all licenses or
permits at once, and may remain open on all licenses until no more bids
are received on any license. By contrast, in a sequential auction,
licenses or permits are auctioned one at a time, and bidding ends on
one license before bids are accepted for another license. Simultaneous
multiple-round bidding has the advantage of affording bidders more
information during the auction concerning the value that competing
bidders place on what is being auctioned than is the case with single-
round or sequential bidding. For this reason, simultaneous multiple-
round bidding is more likely to result in the party that values the
spectrum the most acquiring the license. Section 1.2103(a) of the
Commission's rules, 47 CFR 1.2103(a), sets out the various types of
auction designs from which the Commission may choose to award licenses
for services or classes of services subject to competitive bidding.
However, under Section 309(j) the Commission also has authority to
design and test other auction methodologies. For example, in Section
3002(a) of the Balanced Budget Act, Congress directed that the
Commission design and test competitive bidding using a contingent
combinatorial bidding system. Combinatorial bidding, also known as
package bidding, allows bidders to place single bids for groups of
licenses.
82. The Commission seeks comment on whether alternate competitive
bidding designs and methodologies should be considered for any private
radio services that may be determined to be auctionable as a result of
the Balanced Budget Act. Would the same auction methodology be
appropriate for all newly auctionable services or are different
methodologies warranted? Should the type of auction vary depending on
the type of private service involved, the number of licenses at stake,
the number of bidders that are likely to participate, and the degree to
which interdependence may be important to those likely to bid on a
license in a particular service or band?
83. The Commission also recognizes that private internal radio
service licensees using spectrum to conduct their day-to-day business
operations may not be able to wait a significant amount of time to
obtain authorizations for the frequencies they need to conduct their
businesses. The Commission therefore seeks comment on the frequency
with which it should conduct auctions of private radio services
spectrum that it determines is auctionable, and whether it should
conduct such auctions at regularly scheduled intervals.
B. Eligibility Requirements
84. Because private radio services are dedicated to use by a
defined group of eligible users, the Commission's service regulations
set forth specific limitations on who is eligible to use each service.
For private services that may be subject to competitive bidding for the
first time, the Commission seeks comment below on whether such
eligibility restrictions should limit who is eligible to participate in
the auctions of spectrum in those services. The Commission also seeks
comment on other means by which it can tailor a competitive bidding
system to ensure that private wireless users have a reasonable
opportunity to obtain sufficient spectrum to meet the needs of their
day-to-day business operations.
85. With respect to private radio services that may be licensed
using competitive bidding, the Commission seeks comment on whether it
should conduct limited-eligibility auctions by establishing eligibility
criteria that restrict the types of entities that may bid on such
auctionable spectrum. If the Commission decides to conduct limited-
eligibility auctions, how should it define the class of eligible
bidders? For services that may be auctionable for the first time,
should the Commission define eligibility to bid in the same manner as
it has previously defined eligibility to hold an authorization in that
service? For each auctionable service, should the Commission establish
multiple classes of eligible applicants and assign priority status to
certain classes, so that applicants with higher priority
classifications would be allowed to bid on licenses before applicants
with lower priority classifications?
86. Should the class or classes of entities eligible to bid in a
spectrum auction for private radio services be based only on the
purpose for which the spectrum will be used, or should the Commission
also establish eligibility criteria based on the size of the applicant?
What other standards could the Commission use to establish eligibility
to bid on auctionable private radio services spectrum? If the
Commission establishes size standards for eligibility, should it adopt
the Small Business Administration's (SBA) size standards under the
Standard Industrial Classifications (``SIC''), see 13 CFR 121.201, or
should it establish size standards on a service-specific basis, taking
into account the characteristics and capital requirements of particular
private services?
87. If the Commission decides to establish size standards on a
service-specific basis, should it measure an applicant's size by gross
revenues, total assets, or some other standard? In the Part 1 Third
Report and Order, the Commission decided that its service-
[[Page 23584]]
specific small business definitions will be expressed in terms of
average gross revenues over the preceding three years ``not to exceed''
particular amounts, because it believes that average gross revenues
provide an accurate, equitable, and easily ascertainable measure of
business size. Should the Commission similarly adopt average gross
revenues as a measure of business size for the purpose of determining
eligibility for auctionable private radio services spectrum? If the
Commission decides to use average gross revenues as its measure of
applicant size, should it use the uniform definition of gross revenues
that it adopted for all auctionable services in its Part 1 rules? See
47 C.F.R. 1.2110(m). If applicant eligibility is to be based on gross
revenues or total assets, what dollar amounts should be set as the
eligibility thresholds?
88. The Commission seeks comment on whether entities eligible for
licenses in the public safety radio services should also be eligible to
bid competitively with other applicants for frequencies allocated for
private internal or commercial use. Applicants seeking spectrum for
public safety radio services without bidding competitively are able to
apply for spectrum that the Commission has specifically allocated for
that purpose or file a waiver request for unassigned spectrum pursuant
to Section 337(c). However, the Commission could allow those same
entities to participate in auctions of other spectrum that it has
designated for private or commercial radio services. The Commission
seeks comment on this proposal.
89. The Commission also requests comment on whether providers of
commercial wireless telecommunications services should be included in
one or more of the classes of entities eligible to bid on auctionable
private radio service spectrum. The Commission seeks comment on the
criteria that should be used to distinguish between applicants seeking
spectrum for use in conducting their underlying businesses and those
seeking to use spectrum as providers of commercial wireless
telecommunications services. Should commercial telecommunications
service providers be allowed to bid on spectrum allocated for private
radio services, only if they commit to using the spectrum to meet the
private communications needs of other entities eligible to hold
licenses in the private radio services?
90. Another approach to auctioning spectrum for private radio
services would be to permit any qualified entity to bid on such
spectrum, but to establish rules that either set aside specific
licenses or confer certain financial benefits, such as bidding credits,
on applicants that meet certain criteria. The Commission seeks comment
on what eligibility criteria it should employ if it decides to
establish a special class of licensee for the private internal radio
services. As an alternative to business size standards, should the
Commission establish spectrum caps that, if exceeded, would preclude
eligibility for such spectrum set-asides or favorable financial
treatment?
C. Band Manager Licenses
91. Today, applicants for PLMRS licenses must obtain a frequency
recommendation from a certified coordinator in order to prosecute a
license application before the Commission. The certified coordinators
base their frequency recommendations on detailed operational and
technical requirements set forth in Part 90 of our Rules. In
considering how private radio services should be licensed to meet
current and projected needs for internal communications capacity, the
Commission seeks comment on whether the public interest would be served
by establishing a new class of licensee called a ``Band Manager.''
92. As considered here, a Band Manager would be eligible to apply
for a private radio license, with mutually exclusive applications
subject to resolution through competitive bidding. The Commission's
principal role would be to allocate spectrum for private services,
establish the size and scope of the Band Manager license, and conduct
auctions if mutually exclusive applications are received. As a
condition of the Band Manager license, the Band Manager would be
required to restrict its operations to the offering of internal
communications services and/or capacity to an identified class of
private radio eligibles. A Band Manager would be authorized to
sublicense portions of its license to specific eligible users for a
length of time not to exceed the expiration of the initial license
term. Under this approach, the Band Manager would remain a Commission
licensee, and would be held solely responsible for its sublicensor's
compliance with the Commission's rules. The Commission notes that the
Band Manager may be akin to a commercial licensee that offers capacity
on its system, via resale, for example, to an end user that is not
directly licensed by the Commission. Band Manager sublicense
arrangements would be accomplished through private contractual
arrangements between the Band Manager and eligible users, in a manner
similar to agreements reached between commercial licensees and
resellers.
93. At the outset, the Commission seeks comment on how the concept
of a Band Manager fits within its overall spectrum management
responsibilities. For example, would the creation of a Band Manager be
consistent with the Commission's spectrum management obligations under
various sections of the Communications Act? See, e.g., 47 U.S.C. 1,
301, 303(c), (d). The Commission also seeks comment on whether this
concept is consistent with its obligation to determine whether the
public interest, convenience and necessity will be served by the grant
of each application filed with the Commission for use of the radio
spectrum. See 47 U.S.C. 309(a). In this regard, the Commission seeks
comment on whether Band Managers, as described above, would effectively
be allocating spectrum or assuming the Commission's spectrum management
responsibilities, or simply acting as licensees with various types of
end user customers.
94. The Commission notes that private radio systems serve a wide
variety of specialized communications needs that historically have not
been fulfilled by commercial service providers. Because market forces
have not, to date, played a role in the availability and licensing of
private spectrum, the Commission lacks a reliable method for
objectively gauging current and future demand for private spectrum.
Making a Band Manager license available at auction for the sole purpose
of making spectrum available for private radio service users may enable
the Commission to use market forces to determine private spectrum
requirements.
95. Creation of the Band Manager license could further privatize
the Commission's licensing of private radio spectrum. Competition among
Band Managers would serve to regulate price, quality, and availability
of services. Private radio users could generally benefit through
assured availability of the types of quality, customized services that
may not be readily available from cellular, paging, PCS or SMR service
providers. Competition among Band Managers would ensure that the
available spectrum is used in the most economically efficient manner to
meet the varied and assorted needs of the private user community. The
Commission seeks comment on the costs and benefits of Band Manager
licenses relative to alternative methods of providing internal
communications services. To what extent can licensees such as PCS
providers currently meet
[[Page 23585]]
the requirements of private users with commercial services? Can such
licensees already exercise some, or all, of the functions of a Band
Manager licensee by sublicensing spectrum to private users? If so, to
what extent are they doing so? Are they likely to expand such
sublicensing arrangements in the future as the demand for private uses
increases? Would restrictions on eligible users and uses attached to
Band Manager licenses be an appropriate response to a market failure
that discourages current licensees from acting as Band Managers? To
what extent can partitioning and disaggregation of current licenses
meet the demand for internal communications capacity? Compared to the
current system of frequency coordination and direct licensing of
private users, would Band Managers ensure that spectrum is used more
efficiently? Would allowing Band Managers to charge private users for
spectrum use tend to discourage spectrally wasteful and low value uses?
Would Band Managers have a greater incentive than frequency
coordinators to consider future spectrum requirements when making
spectrum available for current uses because their profit is more
closely tied to maximizing the value of the spectrum over the entire
expected license term?
96. In addition to comment on the general concept of the Band
Manager license, the Commission asks for comment on the full range of
implementation issues. If adopted, where might Band Manager licenses
best be applied? Should they be limited to any newly available spectrum
for private radio services or should they be created as overlay
licenses on certain bands already allocated for private radio services?
Should the Commission establish any additional eligibility or use
restrictions in connection with the Band Manager license, and if so,
what are the public interest benefits that would result from such
additional restrictions? In this respect, the Commission seeks comment
on how it can ensure fair and nondiscriminatory access by private radio
users to spectrum licensed to a Band Manager in the user's geographic
area. Additionally, should the Commission adopt rules that limit to
private uses spectrum that is licensed to Band Managers and/or
sublicensed to eligible users? The Commission asks for comment on
whether the Band Manager should be authorized to partition and
disaggregate its license, and if so, should there be any limitations on
this authority, or should the Band Manager be required to retain some
portion of its license? The Commission also seeks comment on whether it
should impose buildout or use requirements on Band Managers to ensure
that spectrum assigned to Band Managers is used efficiently. The
Commission seeks comment on other requirements that it could adopt to
ensure that spectrum licensed to Band Managers would be used to meet
the varied needs of the private user community. Finally, the Commission
seeks comment on the enforcement measures, including license
cancellation, to which a Band Manager licensee should be subject if it
administers its spectrum in a manner that is inconsistent with the
requirements of the Commission's service rules.
97. The Commission also seeks comment on whether an applicant for a
Band Manager license should receive priority over other competing
bidders through use of some level of bidding credit. Commenters should
also address whether the Commission should conduct auctions that are
limited to the grant of Band Manager licenses, or whether it should
hold auctions for particular blocks of spectrum, with the Band Manager
licenses being one of many potential uses.
98. As noted, it would be essential that each geographic area have
several competing Band Managers so that market forces would substitute
for regulation of rates and services. The Commission therefore seeks
comment on whether it should grant more than one Band Manager license
in a geographic area to allow for competition among Band Managers. The
Commission also asks for comment on what types of limitations on
ownership and control of Band Manager licenses should be imposed to
preserve competition and market-based incentives. Commenters should
address both the amount of spectrum contained in each Band Manager
license, as well as the geographic area that each such license might
encompass. In addition, commenters should provide recommendations for
attribution of ownership and control of Band Manager licenses.
D. Processing of New Applications
99. In services where the Commission has transitioned to geographic
area licensing and auction rules, it has suspended acceptance of new
license applications until such time as it adopts final rules and
begins accepting applications to participate in the auction for
spectrum in those services. The Commission has stated that the purpose
of such an application freeze is to deter speculative applications and
ensure that the goals of the rule making are not compromised.
100. For services in which licenses will be assigned by auction for
the first time, the Commission seeks comment on the measures it should
take to prevent applicants from using the current application and
licensing processes to engage in speculative activity prior to its
adoption of auction rules, thus limiting the effectiveness of the
decisions made in this proceeding. One approach would be to temporarily
suspend acceptance of applications for new licenses, amendments, or
major modifications in frequency bands for which the Commission
proposes to adopt competitive bidding in the future. Alternatively, the
Commission could adopt interim rules imposing shorter time periods for
construction or build-out. For example, the Commission could impose a
construction deadline as short as five months from licensing, which
might be an effective means of ensuring that applicants seek only those
licenses for which they have an immediate need. The Commission seeks
comment on this proposal and on whether there are any other measures
that would deter speculative applications in services where it proposes
to assign licenses by auction.
V. Procedural Matters
A. Ex Parte Rules--Permit-But-Disclose Proceeding
101. This is a permit-but-disclose notice and comment rule making
proceeding. Ex parte presentations are permitted, except during the
Sunshine Agenda period, provided they are disclosed as provided in
Commission rules. See generally 47 CFR 1.1202, 1.1203, and 1.1206.
B. Initial Regulatory Flexibility Analysis
102. As required by the Regulatory Flexibility Act, see 5 U.S.C.
603, the Commission has prepared an Initial Regulatory Flexibility
Analysis (``IRFA'') of the possible impact on small entities of the
proposals suggested in the Notice of Proposed Rule Making. The IRFA is
set forth below and in Appendix A of the NPRM. Written public comments
are requested on the IRFA. These comments must be filed in accordance
with the same filing deadlines as comments on the NPRM, and they must
have a separate and distinct heading designating them as responses to
the Initial Regulatory Flexibility Analysis. The Commission's Office of
Public Affairs, Reference Operations Division, will send a copy of this
NPRM, including the IRFA, to the
[[Page 23586]]
Chief Counsel for Advocacy of the Small Business Administration, in
accordance with the Regulatory Flexibility Act, see 5 U.S.C. 603(a).
C. Initial Paperwork Reduction Act of 1995 Analysis
103. This NPRM contains neither a new nor a modified information
collection.
D. Comment Dates
104. Pursuant to Sections 1.415 and 1.419 of the Commission's
Rules, 47 CFR 1.415, 1.419, interested parties may file comments on or
before July 2, 1999, and reply comments on or before August 2, 1999.
Comments may be filed using the Commission's Electronic Comment Filing
System (ECFS) or by filing paper copies. See Electronic Filing of
Documents in Rulemaking Proceedings, 63 Fed. Reg. 24121, May 1, 1998.
105. Comments filed through the ECFS can be sent as an electronic
file via the Internet to http://www.fcc.gov/e-file/ecfs.html>.
Generally, only one copy of an electronic submission must be filed. If
multiple docket or rulemaking numbers appear in the caption of this
proceeding, however, commenters must transmit one electronic copy of
the comments to each docket or rulemaking number referenced in the
caption. In completing the transmittal screen, commenters should
include their full name, Postal Service mailing address, and the
applicable docket or rulemaking number. Parties may also submit an
electronic comment by Internet e-mail. To get filing instructions for
e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, and
should include the following words in the body of the message, ``get
form .'' A sample form and directions will be sent
in reply.
106. Parties who choose to file by paper must file an original and
four copies of each filing. If participants want each Commissioner to
receive a personal copy of their comments, an original plus nine copies
must be filed. If more than one docket or rulemaking number appear in
the caption of this proceeding, commenters must submit two additional
copies for each additional docket or rulemaking number. All filings
must be sent to the Commission's Secretary, Magalie Roman Salas, Office
of the Secretary, Federal Communications Commission, The Portals, 445
Twelfth Street, SW, Room TW-A325, Washington, DC 20554. In addition, a
courtesy copy should be delivered to Gary D. Michaels, Auctions and
Industry Analysis Division, Wireless Telecommunications Bureau, Federal
Communications Commission, The Portals, 445 Twelfth Street, SW,
Washington, DC 20554.
107. All relevant and timely comments will be considered by the
Commission before final action is taken in this proceeding. Comments
and reply comments will be available for public inspection during
regular business hours in the FCC Reference Information Center, 445
Twelfth Street, SW, Room CY-A257, Washington, DC 20554.
E. Further Information
108. For further information concerning this Notice of Proposed
Rule Making, contact Gary D. Michaels, Auctions and Industry Analysis
Division, (202) 418-0660, or Scot Stone, Public Safety and Private
Wireless Division, (202) 418-0680, Wireless Telecommunications Bureau,
Federal Communications Commission, Washington, DC 20554.
F. Ordering Clauses
109. Accordingly, it is ordered that, pursuant to Sections 4(i),
303(r), and 309(j) of the Communications Act of 1934, as amended, 47
U.S.C.154(i), 303(r), and 309(j), this Notice of Proposed Rule Making
is hereby adopted.
110. It is further ordered that the Office of Public Affairs,
Reference Operations Division, shall send a copy of this Notice of
Proposed Rule Making, including the Initial Regulatory Flexibility
Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
Initial Regulatory Flexibility Analysis
111. As required by the Regulatory Flexibility Act (RFA), see 5
U.S.C. 603, the Commission has prepared this Initial Regulatory
Flexibility Analysis (IRFA) of the possible significant economic impact
on small entities by the policies and rules proposed in this Notice of
Proposed Rule Making (NPRM). Written public comments are requested on
this IRFA. Comments must be identified as responses to the IRFA and
must be filed by the deadlines for comments on the NPRM provided above
in paragraph 104. The Commission will send a copy of the NPRM,
including this IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration. See 5 U.S.C. 603(a).
A. Need for and Objectives of the Proposed Rules
112. This rule making proceeding is initiated to evaluate the
impact of the Balanced Budget Act of 1997 on the Commission's auction
authority for wireless telecommunications services. The Balanced Budget
Act revised the original auction standard established under the Omnibus
Budget Reconciliation Act of 1993. The NPRM seeks comment on how the
Balanced Budget Act's amendments to Section 309(j) affect the
Commission's determinations of what services are auctionable. The NPRM
also seeks comment on the scope of the Balanced Budget Act's exemption
from competitive bidding for licenses and permits issued for public
safety radio services. The NPRM also seeks comment on a Petition for
Rule Making that proposes the establishment of a new radio service pool
for use by electric, gas, and water utilities, petroleum and natural
gas pipeline companies, and railroads, and on implementation of Section
337(c), which provides for the licensing of unassigned frequencies
under certain circumstances to entities seeking to provide public
safety services. In addition, the NPRM seeks comment on whether the
Balanced Budget Act's amendments to Section 309(j) require the
Commission to revise its licensing schemes and license assignment
methods to provide for competitive bidding in services that it
previously determined were not auctionable, and on how such schemes for
new services might be established. Additionally, the NPRM seeks comment
on how the Commission might implement competitive bidding to award
licenses in services that will be auctionable for the first time.
B. Legal Basis
113. This action is authorized under Sections 4(i), 303(r), and
309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i),
303(r), and 309(j).
C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
114. The RFA directs agencies to provide a description of and,
where feasible, an estimate of the number of small entities that will
be affected by the proposed rules, if adopted. The RFA generally
defines the term ``small entity'' as having the same meaning as the
terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' 5 U.S.C. 601(6). In addition, the term
``small business'' has the same meaning as the term ``small business
concern'' under the Small Business Act, unless the Commission has
developed one or more definitions that are appropriate for its
activities. See 5 U.S.C. 601(3). Under the Small Business Act, a
``small business
[[Page 23587]]
concern'' is one which: (1) is independently owned and operated; (2) is
not dominant in its field of operation; and (3) meets any additional
criteria established by the Small Business Administration (SBA). 15
U.S.C. 632. A small organization is generally ``any not-for-profit
enterprise which is independently owned and operated and is not
dominant in its field.'' 5 U.S.C. 601(4). Nationwide, as of 1992, there
were approximately 275,801 small organizations. ``Small governmental
jurisdiction'' generally means ``governments of cities, counties,
towns, townships, villages, school districts, or special districts,
with a population of less than 50,000.'' 5 U.S.C. 601(5). As of 1992,
there were approximately 85,006 such jurisdictions in the United
States. This number includes 38,978 counties, cities, and towns; of
these, 37,566, or 96 percent, have populations of fewer than 50,000.
The U.S. Bureau of the Census estimates that this ratio is
approximately accurate for all governmental entities. Thus, of the
85,006 governmental entities, the Commission estimates that 81,600 (91
percent) are small entities. The policies and rules proposed in the
NPRM would affect a number of small entities who are either licensees
or who may choose to become applicants for licenses in wireless
services. Below, the Commission further describes and estimates the
number of small entity licensees and regulatees that may be affected by
the proposed policies and rules, if adopted.
a. Cellular Radiotelephone Service
115. The Commission has not developed a definition of small
entities applicable to cellular licensees. Therefore, the applicable
definition of small entity is the definition under the SBA rules
applicable to radiotelephone (wireless) companies. This definition
provides that a small entity is a radiotelephone company employing no
more than 1,500 persons. See 13 CFR 121.201 (Standard Industrial
Classification (SIC) Code 4812). The size data provided by the SBA does
not enable us to make a meaningful estimate of the number of cellular
providers which are small entities because it combines all
radiotelephone companies with 1000 or more employees. The 1992 Census
of Transportation, Communications, and Utilities, conducted by the
Bureau of the Census, is the most recent information available. This
document shows that only twelve radiotelephone firms out of a total of
1,178 such firms which operated during 1992 had 1,000 or more
employees. Therefore, even if all twelve of these firms were cellular
telephone companies, nearly all cellular carriers were small businesses
under the SBA's definition. The Commission assumes, for purposes of
this IRFA that nearly all of the current cellular licensees are small
entities, as that term is defined by the SBA.
116. The most reliable source of information regarding the number
of cellular service providers nationwide appears to be data the
Commission publishes annually in its Telecommunications Industry
Revenue report, regarding the Telecommunications Relay Service (TRS).
The report places cellular licensees and Personal Communications
Service (PCS) licensees in one group. According to the data released in
November, 1997, there are 804 companies reporting that they engage in
cellular or PCS service. It seems certain that some of these carriers
are not independently owned and operated, or have more than 1,500
employees; however, the Commission is unable at this time to estimate
with greater precision the number of cellular service carriers
qualifying as small business concerns under the SBA's definition. For
purposes of this IRFA, the Commission estimates that there are fewer
than 804 small cellular service carriers.
b. Broadband and Narrowband PCS
117. Broadband PCS. The broadband PCS spectrum is divided into six
frequency blocks designated A through F, and the Commission has
auctioned licenses in each block. Frequency blocks C and F have been
designated by the Commission as ``entrepreneurs' blocks,'' and
participation in auctions of C and F block licenses is limited to
entities qualifying under the Commission's rules as entrepreneurs. The
Commission's rules define an entrepreneur for purposes of C and F block
auctions as an entity, together with affiliates, having gross revenues
of less than $125 million and total assets of less than $500 million at
the time the FCC Form 175 application is filed. For blocks C and F, the
Commission has defined ``small business'' as a firm that had average
gross revenues of less than $40 million in the three previous calendar
years, and ``very small business'' has been defined as an entity that,
together with its affiliates, has average gross revenues of not more
than $15 million for the preceding three calendar years. See 47 CFR
24.720(b)(1), (2). These definitions of ``small business'' and ``very
small business'' in the context of broadband PCS auctions have been
approved by the SBA. No small businesses within the SBA-approved
definitions bid successfully for licenses in blocks A and B. In the
first two C block auctions, there were 90 bidders that qualified as
small entities and won licenses in block C. In the first auction of D,
E, and F block licenses, a total of 93 small and very small business
bidders won approximately 40% of the 1,479 licenses. Based on this
information, the Commission concludes that the number of small
broadband PCS licensees will include the 90 winning C block bidders and
the 93 winning bidders in the D, E, and F blocks, for a total of 183
small entity PCS providers as defined by the SBA and the Commission's
auction rules.
118. Narrowband PCS. The Commission has auctioned nationwide and
regional licenses for narrowband PCS. There are 11 nationwide and 30
regional licensees for narrowband PCS. The Commission does not have
sufficient information to determine whether any of these licensees are
small businesses within the SBA-approved definition for radiotelephone
companies. At present, there have been no auctions held for the major
trading area (MTA) and basic trading area (BTA) narrowband PCS
licenses. The Commission anticipates a total of 561 MTA licenses and
2,958 BTA licenses will be awarded in the auctions. Given that nearly
all radiotelephone companies have no more than 1,500 employees, and
that no reliable estimate of the number of prospective MTA and BTA
narrowband licensees can be made, the Commission assumes, for purposes
of this IRFA, that all of the licenses will be awarded to small
entities, as that term is defined by the SBA.
c. 220 MHz Radio Services
119. The Commission recently auctioned licenses in the 220-222 MHz
band. The license blocks include five licenses in each of the 172
Economic Areas (EAs) and three EA-like areas; five licenses in six
Economic Area groupings (EAGs); and three Nationwide licenses,
comprising the same territory as all of the EAGs combined. For this
auction, a small business was defined as an entity with average annual
gross revenues of not more than $15 million for the preceding three
years; and very small business was defined as a firm with average
annual gross revenues of not more than $3 million for the preceding
three years. See 47 CFR 90.1021. A total of 373 licenses were won by 39
small business bidders and 320 licenses were won by five other bidders.
Given that nearly all radiotelephone companies employ no more than
1,500 employees, for purposes of this IRFA, the
[[Page 23588]]
Commission will consider the approximately 3,800 incumbent licensees as
small businesses under the SBA definition.
d. Paging
120. The Commission has adopted a two-tier definition of small
businesses in the context of auctioning geographic area paging licenses
in the Common Carrier Paging and exclusive Private Carrier Paging
services. This definition has been approved by the SBA. Under the
definition, a very small business is an entity that, together with its
affiliates and controlling principals, has average gross revenues for
the three preceding years of not more than $3 million. A small business
is defined as an entity that, together with affiliates and controlling
principals, has average gross revenues for the three preceding calendar
years of not more than $15 million. At present, there are approximately
24,000 Private Paging licenses and 74,000 Common Carrier Paging
licenses. According to Telecommunications Industry Revenue data, there
were 172 ``paging and other mobile'' carriers reporting that they
engage in these services. Consequently, the Commission estimates that
there are fewer than 172 small paging carriers. The Commission
estimates that the majority of private and common carrier paging
providers would qualify as small entities under the SBA definition.
e. Air-Ground Radiotelephone Service
121. The Commission has not adopted a definition of small business
specific to the Air-Ground radiotelephone service. See 47 CFR 22.99.
Accordingly, the Commission will use the SBA definition applicable to
radiotelephone companies, i.e., an entity employing no more than 1,500
persons. There are approximately 100 licensees in the Air-Ground
radiotelephone service, and the Commission estimates that almost all of
them qualify as small entities under the SBA definition.
f. Specialized Mobile Radio (SMR)
122. The Commission has adopted a two-tier bidding credit in
auctions for geographic area 800 MHz and 900 MHz SMR licenses. A very
small business is defined as an entity that, together with its
affiliates and controlling principals, has average gross revenues for
the three preceding years of not more than $3 million. A small business
is defined as an entity that, together with affiliates and controlling
principals, has average gross revenues for the three preceding calendar
years of not more than $15 million. The definitions of ``small
business'' and ``very small business'' in the context of 800 MHz and
900 MHz SMR have been approved by the SBA. The Commission does not know
how many firms provide 800 MHz or 900 MHz geographic area SMR service
pursuant to extended implementation authorizations, nor how many of
these providers have annual revenues of no more than $15 million. One
firm has over $15 million in revenues. The Commission assumes for
purposes of this IRFA that all of the remaining existing extended
implementation authorizations are held by small entities, as that term
is defined by the SBA. The Commission has held auctions for geographic
area licenses in the 900 MHz SMR band and 800 MHz SMR band. There were
60 winning bidders who qualified as small entities in the 900 MHz
auction. In the 800 MHz SMR auction there were 524 licenses won by
winning bidders, of which 38 licenses were won by small or very small
entities.
g. Private Land Mobile Radio Services (PLMR)
123. PLMR systems serve an essential role in a range of industrial,
business, land transportation, and public safety activities. The
Commission has not developed a definition of small entities
specifically applicable to PLMR licensees due to the vast array of PLMR
users. Therefore, the applicable definition of small entity is the
definition under the SBA rules applicable to radiotelephone companies.
This definition provides that a small entity is a radiotelephone
company employing no more than 1,500 persons. For the purpose of
determining whether a licensee is a small business as defined by the
SBA, each licensee would need to be evaluated within its own business
area. The Commission is unable at this time to estimate the number of
small businesses which could be impacted by the rules. The Commission's
1994 Annual Report on PLMRs indicates that at the end of fiscal year
1994 there were 1,087,267 licensees operating 12,481,989 transmitters
in the PLMR bands below 512 MHz. Because any entity engaged in a
commercial activity is eligible to hold a PLMR license, the proposed
rules could potentially impact every small business in the United
States.
h. Aviation and Marine Radio Service
124. Small entities in the aviation and marine radio services use a
marine very high frequency (VHF) radio, any type of emergency position
indicating radio beacon (EPIRB) and/or radar, a VHF aircraft radio,
and/or any type of emergency locator transmitter (ELT). The Commission
has not developed a definition of small entities specifically
applicable to these small businesses. Therefore, the applicable
definition of small entity is the definition under the SBA rules. Most
applicants for individual recreational licenses are individuals.
Approximately 581,000 ship station licensees and 131,000 aircraft
station licensees operate domestically and are not subject to the radio
carriage requirements of any statute or treaty. Therefore, for purposes
of the evaluations and conclusions in this IRFA, the Commission
estimates that there may be at least 712,000 potential licensees that
are individuals or are small entities, as that term is defined by the
SBA.
i. Offshore Radiotelephone Service
125. This service operates on several ultra high frequency (UHF) TV
broadcast channels that are not used for TV broadcasting in the coastal
area of the states bordering the Gulf of Mexico. See 47 CFR 22.1001-
22.1037. At present, there are approximately 55 licensees in this
service. The Commission is unable at this time to estimate the number
of licensees that would qualify as small entities under the SBA
definition for radiotelephone communications. The Commission assumes,
for purposes of this IRFA, that all of the 55 licensees are small
entities, as that term is defined by the SBA.
j. General Wireless Communication Service (GWCS)
126. This service was created by the Commission on July 31, 1995 by
transferring 25 MHz of spectrum in the 4660-4685 MHz band from the
federal government to private sector use. The Commission sought and
obtained SBA approval of a refined definition of ``small business'' for
GWCS. According to this definition, a small business is any entity,
together with its affiliates and entities holding controlling interests
in the entity, that has average annual gross revenues over the three
preceding years that are not more than $40 million. See 47 CFR 26.4.
The Commission will offer 875 geographic area licenses, based on
Economic Areas, for GWCS. In estimating the number of small entities
that may participate in the GWCS auction, the Commission anticipates
that the makeup of current wireless services licensees is
representative of future auction winning bidders.
k. Fixed Microwave Services
127. Microwave services includes common carrier fixed, see 47 CFR
101 et seq., private operational fixed, see 47
[[Page 23589]]
CFR 80.1 et seq., 90.1 et seq., and broadcast auxiliary radio services,
see 47 CFR 74.1 et seq. At present, there are 22,015 common carrier
fixed licensees and approximately 61,670 private operational fixed
licensees and broadcast auxiliary radio licensees in the microwave
services. The Commission has not yet defined a small business with
respect to microwave services. For purposes of this IRFA, the
Commission will utilize the SBA definition applicable to radiotelephone
companies, i.e., an entity with less than 1,500 persons. The Commission
estimates that for purposes of this IRFA all of the Fixed Microwave
licensees (excluding Multiple Address Systems broadcast auxiliary radio
licensees) would qualify as small entities under the SBA definition for
radiotelephone communications.
l. Amateur Radio Service
128. The Commission estimates that 10,000 applicants applied for
vanity call signs in FY 1998. All are presumed to be individuals.
Amateur Radio service licensees are coordinated by Volunteer Examiner
Coordinators (VECs). The Commission has not developed a definition for
a small business or small organization that is applicable for VECs. The
RFA defines the term ``small organization'' as meaning ``any not-for-
profit enterprise which is independently owned and operated and is not
dominant in its field . * * *'' 5 U.S.C. 601(4). The Commission's rules
do not specify the nature of the entity that may act as a VEC. All of
the sixteen VEC organizations would appear to meet the RFA definition
for small organizations.
m. Personal Radio Services
129. Personal radio services provide short-range, low power radio
for personal communications, radio signaling, and business
communications not provided for in other services. These services
include citizen band (CB) radio service, general mobile radio service
(GMRS), radio control radio service, and family radio service (FRS).
See 47 CFR Part 95. Inasmuch as the CB, GMRS, and FRS licensees are
individuals, no small business definition applies for these services.
To the extent any of these licensees may be small entities under the
SBA definition, the Commission is unable at this time to estimate the
exact number.
n. Rural Radiotelephone Service
130. The Commission has not adopted a definition of small entity
specific to the Rural Radiotelephone Service. See 47 CFR 22.99. A
significant subset of the Rural Radiotelephone Service is the Basic
Exchange Telephone Radio Systems (BETRS). See 47 CFR 22.757, 22.729.
The Commission will use the SBA definition applicable to radiotelephone
companies; i.e., an entity employing no more than 1,500 persons. There
are approximately 1,000 licensees in the Rural Radiotelephone Service,
and the Commission estimates that almost all of them qualify as small
entities under the SBA definition.
o. Marine Coast Service
130. The Commission recently concluded its auction of Public Coast
licenses in the 157.1875-157.4500 MHz (ship transmit) and 161.775-
162.0125 MHz (coast transmit) bands. For purposes of this auction, the
Commission defined a ``small'' business as an entity that, together
with controlling interests and affiliates, has average gross revenues
for the preceding three years not to exceed $15 million. A ``very
small'' business is one that, together with controlling interests and
affiliates, has average gross revenues for the preceding three years
not to exceed $3 million. There are approximately 10,672 licensees in
the Marine Coast Service, and the Commission estimates that almost all
of them qualify as small under the SBA definition.
p. Wireless Communications Services (WCS)
132. This service can be used for fixed, mobile, radiolocation, and
digital audio broadcasting satellite uses. The Commission defined
``small business'' for the WCS auction as an entity with average gross
revenues of $40 million for each of the three preceding years. The
Commission auctioned geographic area licenses in the WCS service. In
the auction, there were seven winning bidders that qualified as very
small business entities, and one that qualified as a small business
entity. Based on this information, the Commission concludes that the
number of geographic area WCS licensees affected includes these eight
entities.
q. Public Safety Radio Services and Governmental Entities
133. Public Safety radio services include police, fire, local
governments, forestry conservation, highway maintenance, and emergency
medical services. See 47 CFR 90.15-90.27, 90.33-90.55. There are a
total of approximately 127,540 licensees within these services.
Governmental entities as well as private businesses comprise the
licensees for these services. As noted, governmental entities with
populations of less than 50,000 fall within the SBA definition of a
small entity. There are 85,006 governmental entities in the nation, as
of the last census. This number includes such entities as states,
counties, cities, utility districts, and school districts. There are no
figures available on what portion of this number has populations of
fewer than 50,000; however, this number includes 38,978 counties,
cities, and towns and of those, 37,566 or 96 percent, have populations
of fewer than 50,000. The Census Bureau estimates that this ratio is
approximately accurate for all governmental entities. Thus, of the
85,006 governmental entities, the Commission estimates that 96 percent
or 81,600 are small entities that may be affected by its rules.
D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
134. At this time, the Commission does not anticipate the
imposition of new reporting, recordkeeping, or other compliance
requirements as a result of this NPRM. The Commission seeks comment on
this tentative conclusion.
E. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
135. Section 309(j) of the Communications Act directs the
Commission to disseminate licenses among a wide variety of applicants,
including small businesses and other designated entities. Section
309(j) also requires that the Commission ensure the development and
rapid deployment of new technologies, products, and services for the
benefit of the public, and recover for the public a portion of the
value of the public spectrum resource made available for commercial
use. In addition, Section 337 gives eligible providers of public safety
services a means to obtain unassigned spectrum not otherwise allocated
for public safety purposes. The Commission believes the policies and
rules proposed in this NPRM help meet those goals and promote efficient
competition while maintaining the fair and efficient execution of the
auctions program. The Commission seeks comment, therefore, on all
proposals and alternatives described in the NPRM, and the impact that
such proposals and alternatives might have on small entities.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
136. None.
[[Page 23590]]
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 99-10989 Filed 4-30-99; 8:45 am]
BILLING CODE 6712-01-U
