Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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**ORDER ON RECONSIDERATION OF THE THIRD REPORT AND ORDER,**

**FIFTH REPORT AND ORDER,**

**AND FOURTH FURTHER NOTICE OF PROPOSED RULE MAKING**

**Adopted:** July 27, 2000 **Released:** August 14, 2000

**Comment Date:** 45 days after publication in the Federal Register

**Reply Comment Date:** 66 days after publication in the Federal
Register

By the Commission:

**TABLE OF CONTENTS**

**Paragraph**

I. Overview 1

II\. Executive Summary 3

III\. Order on Reconsideration of the Third Report and Order 6

A. Introduction 6

B. Clarification of Prohibition on Collusion 7

C. Clarification of Section 1.2112 9

D. Computation of Bid Withdrawal Payments Under Section 1.2104 13

E. Installment Payment Grace Periods and Imposition of Late Payment Fees
16

F. Installment Payment Restructuring 29

G. Installment Payment Obligations Under Assignments

of Licenses and Transfers of Control 31

H. Clarification of Unjust Enrichment Rules 34

I. Inapplicability of Section 1.2104 to Installment Payment Defaults 38

J. Eligibility for Participation 40

IV\. Fifth Report and Order 44

A. Introduction 44

B. Rules Governing Designated Entities 45

> 1\. Designated Entities 45
>
> 2\. Rural Telephone Company Provisions 51
>
> 3\. Installment Payments 54
>
> 4\. Attribution of Gross Revenues of Investors and Affiliates 58

C. Default Payments 68

D. Administrative Filing Periods for Applications and Petitions to Deny
74

E. Conclusion 78

V. Fourth Further Notice of Proposed Rule Making 79

A. Introduction 79

B. Rules Governing Designated Entities 80

> 1\. Total Assets Test 80

2\. Attribution of Gross Revenues or Total Assets

of Investors and Affiliates 82

VI\. Procedural Matters and Ordering Clauses 89

APPENDIX A: Final Rules

APPENDIX B: List of Parties

APPENDIX C: Supplemental Final Regulatory Flexibility Analysis

APPENDIX D: Final Regulatory Flexibility Analysis

APPENDIX E: Initial Regulatory Flexibility Analysis

# OVERVIEW

1\. This *Order on Reconsideration of the Third Report and Order, Fifth
Report and Order, and Fourth Further Notice of Proposed Rule Making*
(\"*Order on Reconsideration*,\" \"*Fifth Report and Order*\" and
\"*Fourth Notice*\") clarifies and amends our general competitive
bidding rules for all auctionable services.[^1] These modifications are
intended to increase the efficiency of the competitive bidding process
and provide more specific guidance to auction participants. In the past,
the Commission adopted separate competitive bidding rules for each
auctionable service.[^2] This rule making is part of our ongoing effort
to establish a uniform and streamlined set of general competitive
bidding rules for all auctionable services and to reduce the burden on
both the Commission and the public of conducting service-specific
auction rule makings.

2\. In 1994, in implementing the Omnibus Budget Reconciliation Act of
1993, the Commission prescribed certain general competitive bidding
rules and procedures, indicating that it would use these general rules
and procedures as a basis for adopting specific competitive bidding
rules for each auctionable service.[^3] In 1997, after completing 15
spectrum auctions and adopting service-specific bidding rules for each
such auction, we initiated a proceeding to expand the general
competitive bidding rules, contained in Part 1, Subpart Q of our rules,
and replace any inconsistent or repetitive service-specific auction
rules.[^4] The most recent comprehensive order in this proceeding was
the *Third Report and Order and Second Further Notice of Proposed Rule
Making* (\"*Part 1 Third Report and Order*\" and \"*Second
Notice*\").[^5] In this *Order on Reconsideration*, we address petitions
for reconsideration and comments filed in response to the *Part 1 Third
Report and Order*. The *Fifth Report and Order* addresses comments filed
in response to the *Second Notice*, and the *Fourth Notice* adopted
herein seeks comment on additional proposals relating to the general
competitive bidding rules.

# EXECUTIVE SUMMARY

3\. In this *Order on Reconsideration* we:

• Amend Section 1.2105(c)(1) of our rules to clarify that the
prohibition on collusion begins on the filing deadline for short-form
applications and ends on the down payment deadline.

• Clarify and correct the ownership disclosure requirements contained in
Section 1.2112 of our rules. In particular, with respect to entities not
seeking designated entity status, we eliminate the requirement to
include debt and instruments such as warrants, convertible debentures,
options and other debt interests in reporting their ownership interests.

• Amend Section 1.2104(g)(1) of our rules to clarify that in the case of
multiple bid withdrawals on a single license, within the same or
subsequent auction(s), the payment for each bid withdrawal will be
calculated based on the sequence of bid withdrawals and the amounts
withdrawn. We further clarify that no withdrawal payment will be
assessed for a withdrawn bid if either the subsequent winning bid or any
of the intervening subsequent withdrawn bids, in either the same or
subsequent auction(s), equals or exceeds that withdrawn bid. In
addition, we amend Section 1.2104(g)(1) of our rules to provide that in
instances in which bids have been withdrawn on a license that is not won
in the same auction, the Commission will assess an interim withdrawal
payment equal to 3 percent of the amount of the bid withdrawals.

• Retain, for the most part, the installment payment grace period and
late payment fee provisions adopted in the *Part 1 Third Report and
Order*, but adopt a slight modification to the payment due dates for
late installment payments and associated late fees.

• Clarify that licensees continue to have the opportunity to seek
restructuring of installment payments. There is, however, no longer a
procedure for requesting a grace period to stay installment payment
deadlines pending such restructuring. Rather, licensees will be subject
to the automatic late payment provisions of Section 1.2110(g) as adopted
herein.

• Clarify that the assignee or transferee of a license paid for through
installment payments is not responsible for the license debt until the
assignment of license or transfer of control has been consummated.

• Clarify that the unjust enrichment rules for bidding credits (Section
1.2111(d) of the Commission\'s rules) do not apply to assignments or
transfers of C and F block licenses to non-entrepreneurs. We further
clarify that pursuant to Sections 1.2111(c) and (d) of our rules,
Commission approval of assignments of licenses and transfers of control
that result in unjust enrichment with respect to bidding credits and
installment payments is conditioned upon full payment of the required
unjust enrichment payments on or before the consummation date.

• Clarify that licensees defaulting on installment payments are subject
to the default provisions of Section 1.2110(f)(4) of our rules
(redesignated herein as Section 1.2110(g)(4)), and not to Section
1.2104(g).

• Incorporate into the Part 1 general competitive bidding rules the
\"former defaulter\" policies adopted with respect to C block auction
applicants. Specifically, we: (1) allow \"former defaulters,\" *i.e.*,
applicants that have defaulted or been delinquent in the past, but have
since paid all of their outstanding non-tax debts and all associated
charges or penalties, to certify on FCC Form 175 that they are not in
default and are, therefore, eligible for auction participation; and (2)
require \"former defaulters\" to pay an upfront payment amount of 1.5
times the normal amount set by the Bureau for any given license in a
Commission auction.

• Clarify that licensees defaulting on installment payments will be
permitted to participate in future Commission spectrum auctions if they
have either (1) paid all of their outstanding non-tax debt, along with
all associated charges and penalties; or (2) been relieved of such
obligations pursuant to otherwise applicable law. In all instances,
installment payment defaulters eligible to participate in future
auctions will be required to pay an upfront payment amount of 1.5 times
the normal amount set by the Bureau for any given license in a
Commission auction to assure their future financial soundness.

4\. In this *Fifth Report and Order* we:

• Decline, at this time, to adopt special provisions for minority- and
women-owned businesses pending completion of a series of market studies
to determine whether, and under what circumstances, targeted preferences
for minorities and women are appropriate. We note, however, that
minority- and women-owned businesses that qualify as small businesses
may take advantage of the provisions we have adopted for small
businesses.

• Decline, at this time, to adopt special provisions for rural telephone
companies, such as bidding preferences or an unserved area fill-in
policy. We note, however, that we will continue to provide rural
telephone companies with bidding credits should such entities qualify as
small businesses.

• Adhere to our previous decision to suspend the installment payment
program. We will, however, continue to provide small businesses with
bidding credits as we have done in auctions for a number of services,
*e.g.*, the Local Multipoint Distribution Service (\"LMDS\"), Location
and Monitoring Service (\"LMS\"), 220 MHz and VHF Public Coast services.

• Adopt as our general attribution rule a controlling interest standard
for determining which applicants qualify as small businesses. Under this
standard, we will attribute to the applicant the gross revenues of its
controlling interests and their affiliates in assessing whether the
applicant qualifies for our small business provisions, such as bidding
credits. We do not adopt a minimum equity threshold. Rather, applicants
will be required to identify controlling interests based on the
principles of either *de jure* or *de facto* control. Current C and F
block licensees will continue to be eligible to hold their licenses
regardless of whether or not they would qualify under the newly
established attribution rules adopted herein. As to future C and F block
auctions, however, all applicants, including existing C and F block
licensees, will be subject to the attribution rules in effect at the
time of filing their short-form applications.

• Maintain our rule of calculating default payment amounts on a
license-by-license basis and implement the Balanced Budget Act
provisions regarding administrative filing periods as set forth below.

• Delegate to the Wireless Telecommunications Bureau the authority to
make any revisions to the Code of Federal Regulations that are necessary
to conform the service-specific auction rules to the Part 1 general
competitive bidding rules.

5\. In this *Fourth Notice* we:

• Seek comment on whether to use a total assets test in conjunction with
the gross revenues measure already employed to determine business size.

• Seek comment on proposed exceptions to the requirement in the Part 1
attribution rules that certain stock interests be calculated on a
\"fully diluted\" basis.

# ORDER ON RECONSIDERATION OF THE THIRD REPORT AND ORDER

**A. Introduction**

6\. In response to the *Part 1 Third Report and Order*, we received
seven petitions for reconsideration and two comments in support of the
petitions for reconsideration.[^6] The petitioners raise various issues
regarding installment payments for auction-won licenses.[^7] For the
reasons discussed below, we clarify certain rules at petitioners\'
request and dismiss or deny these petitions in all other respects.
Further, we address comments filed in response to the *ULS Notice* that
relate to aspects of our auction rules.[^8] In addition, we take this
opportunity to clarify, on our own motion, certain aspects of the *Part
1 Third Report and Order*.

**B. Clarification of Prohibition on Collusion**

7\. [Background]{.underline}. Section 1.2105(c)(1) of the Commission\'s
rules generally prohibits collusion between competing bidders from
\"after the filing of short-form applications . . . until after the high
bidder makes the required down payment . . . .\"[^9] Our bidder
information packages generally state that \"\[t\]his prohibition begins
with the filing of short-form applications, and ends on the down payment
due date.\"[^10] Our Public Notices specifically provide that the
collusion prohibition becomes effective on the \"filing deadline of
short-form applications\" and ends on the \"post-auction down payment
due date.\"[^11] To avoid any confusion regarding when the prohibition
on collusion begins and ends, we believe it is necessary to amend
Section 1.2105(c)(1) of our rules.[^12]

8\. [Discussion]{.underline}. On our own motion, we amend Section
1.2105(c)(1) of our rules to provide that applicants are prohibited from
communicating with each other about bids, bidding strategies, or
settlements from \"after the short-form application filing deadline . .
. until after the down payment deadline . . . .\" This rule change makes
clear that competing bidders may not engage in communications prohibited
by the rule from the date that short-form applications are due to the
Commission until after the down payment deadline has passed. The
amendment affirms that there is a uniform date for all bidders on which
restrictions on communications begin and end. Our clarification conforms
Section 1.2105(c)(1) to our practice of applying the collusion
prohibition to applicants beginning on the due date for the submission
of short-form applications.[^13] In addition, it is consistent with our
policy of not permitting individual bidders to abbreviate the period
during which the collusion prohibition is in effect by submitting down
payments prior to the down payment due date.

**C. Clarification of Section 1.2112**

9\. [Background]{.underline}*.* In the *Part 1 Third Report and Order*,
we concluded that detailed ownership information is necessary to ensure
that applicants claiming designated entity status qualify for such
status and that all applicants comply with spectrum caps and other
ownership limits.[^14] We also stated that disclosure of ownership
information helps bidders identify entities that are subject to our
anti-collusion rules.[^15] To these ends, we promulgated Section
1.2112,[^16] based on our broadband PCS rules,[^17] to serve as a
uniform ownership disclosure rule for all auctionable services.[^18]

10\. [Discussion]{.underline}*.* Because a number of applicants in the
Phase II 220 MHz auction found Section 1.2112 confusing, we have
decided, on reconsideration, to reorganize the rule in a more logical,
straightforward manner. We first revise Section 1.2112(b)(1) to use the
term \"controlling interest\" to describe the parties whose connection
or relationship with another FCC-regulated business must be reported
under (b)(1).[^19] Then, because identification of controlling interests
is significant only for applicants claiming designated entity status, we
include those reporting requirements related to such status in paragraph
(b), which applies only to applicants claiming eligibility for small
business provisions.[^20] We also correct the rule to indicate that
gross revenues must be reported not only on the long-form application,
but also on the short-form application.[^21]

11\. In addition, we correct Section 1.2112(a)(3) in which we used
language that was overly broad. Section 1.2112(a)(3) states erroneously
that an applicant must provide: \"\[a\] list of any party holding a 10
percent or greater interest in any entity holding or applying for any
FCC-regulated business in which a 10 percent or more interest is held by
another party which holds a 10 percent or more interest in the
applicant.\"[^22] This language has the unintended effect of requiring
the reporting of parties with a distant relationship to the applicant.
Section 1.2112(a)(3), however, also provides the following example: \"If
Company A owns 10 percent of Company B (the applicant) and 10 percent of
Company C then Companies A and C must be listed on Company B\'s
application.\"[^23] The rule\'s example accurately reflects which
parties we intended the applicant to report. That is, when a company
(Company A) that must be reported under the rule because of its
ownership interest in the applicant (Company B) also owns at least 10
percent of another company that is an FCC-licensed entity or applicant
for an FCC license (Company C), Company C must be reported. Our intent
was to require that FCC-regulated entities be reported when there is a
connection between such an entity and the applicant at issue through a
common owner. We therefore amend Section 1.2112 to better reflect our
intent and comport with the example provided in the rule.[^24] In
addition, we amend Section 1.2112 to require applicants to disclose, in
the case of a limited liability company, only those members that hold a
10 percent or greater interest in the applicant.[^25] Section
1.2112(a)(8), as adopted in the *Part 1 Third Report and Order,*
required applicants to disclose all members of a limited liability
company, regardless of their ownership interest in the applicant. We now
revise the disclosure requirement pertaining to limited liability
companies to be consistent with those regarding limited partnerships.
Finally, we change other aspects of the sequencing so that the revised
rule begins by seeking general information in Sections 1.2112(a)(1)
through (a)(4) and becomes progressively more detailed in (a)(5) and
(a)(6).[^26] This \"building block\" approach is intended to provide
applicants with a clearer understanding regarding the information that
must be disclosed.

12\. We also take this opportunity to address relevant comments that
were filed separately in response to the *ULS Notice.*[^27] In their
comments on the *ULS Notice*, AT&T, BAM, and FCBA object to the breadth
of information collected in Section 1.2112.[^28] In particular, they
argue that the requirement to identify direct and indirect owners with
an interest of 10 percent or greater is burdensome and overly
broad.[^29] We disagree. We believe that the 10 percent reporting
requirement helps competing bidders accurately assess the legitimacy of
their auction opponents and their respective bids.[^30] As discussed in
the *Part 1 Third Report and Order*, the collection of detailed
ownership information is necessary for ensuring compliance with
ownership limits, such as spectrum caps.[^31] Disclosure of ownership
information also aids bidders by providing them with information about
their auction competitors and alerting them to entities subject to our
anti-collusion rules.[^32] We agree with commenters, however, that
Section 1.2112 could be less burdensome in certain regards. Therefore,
except for entities claiming special eligibility or designated entity
status, we will not require applicants to include information regarding
warrants, convertible debentures, stock options, debt securities or
other debt interests as part of the 10 percent reporting requirement
unless and until conversion of such interests is effected. Generally,
the Commission has not included such interests in calculating ownership
interests under rules establishing various ownership limits.[^33] We
agree with FCBA and AT&T that the current reporting burden imposed on
applicants may exceed the benefit of requiring disclosure of these
interests.[^34] We continue to believe, however, that in calculating
ownership interests for the purpose of determining designated entity
status and eligibility for bidding credits, warrants, convertible
debentures, options and other debt interests must be treated as having
been exercised and must be reported as part of the applicant's
disclosure.[^35] In the case of applicants seeking special eligibility
or designated entity status, the Commission has traditionally treated
these interests as being fully diluted because it is reaching
determinations regarding the bona fide nature of the applicant.[^36]
Thus, we agree with AT&T that it is reasonable for the Commission to
require more ownership information from these entities where such
information is designed to show that the special eligibility and/or
bidding credit is both legitimate and warranted.[^37]

**D. Computation of Bid Withdrawal Payments Under Section 1.2104**

13\. [Background]{.underline}*.* Section 1.2104(g)(1) of the
Commission\'s rules sets forth the payment obligations of a bidder that
withdraws a high bid on a license during the course of an auction.[^38]
Specifically, it provides that a bidder that withdraws a standing high
bid is subject to a payment equal to the difference between the amount
of the withdrawn bid and the amount of the subsequent winning bid the
next time the license is offered by the Commission.[^39] As the auctions
program has evolved, however, the Commission has encountered situations
involving multiple bid withdrawals on a single license, which are not
specifically addressed by Section 1.2104(g)(1) of the Commission\'s
rules. We, therefore, believe it is necessary to broaden our rule to
clarify its application to this particular contingency. In addition, we
wish to modify Section 1.2104(g)(1) to more specifically articulate our
policy of assessing interim bid withdrawal payments.

14\. [Discussion]{.underline}. On our own motion, we clarify a policy
that the Bureau has relied on in the past. If a bidder withdraws its bid
and there is no higher bid in the same or subsequent auction(s), the
bidder that withdrew its bid is responsible for the difference between
its withdrawn bid and the net high bid in the same or subsequent
auction(s). In the case of multiple bid withdrawals on a single license,
within the same or subsequent auction(s), the payment for each bid
withdrawal will be calculated based on the sequence of bid withdrawals
and the amounts withdrawn.[^40] No withdrawal payment will be assessed
for a withdrawn bid if either the subsequent winning bid or any of the
intervening subsequent withdrawn bids, in either the same or subsequent
auction(s), equals or exceeds that withdrawn bid. Thus, a bidder that
withdraws a bid will not be responsible for any withdrawal payments if
there is a subsequent higher bid in the same or subsequent auction(s).
This policy allows bidders to most efficiently allocate their resources
as well as to evaluate their bidding strategies and business plans
during an auction while, at the same time, maintaining the integrity of
the auction process. The Bureau retains the discretion to scrutinize
multiple bid withdrawals on a single license for evidence of
anti-competitive strategic behavior and take appropriate action when
deemed necessary.

15\. We also wish to modify Section 1.2104(g)(1) of our rules to state
more specifically our policy of assessing interim bid withdrawal
payments. We amend Section 1.2104(g)(1) to provide that in instances in
which bids have been withdrawn on a license that is not won in the same
auction, the Commission will assess an interim withdrawal payment equal
to 3 percent of the amount of the bid withdrawals. The 3 percent interim
payment will be applied toward any final bid withdrawal payment that
will be assessed at the close of the subsequent auction of the license.
Assessing an interim bid withdrawal payment ensures that the Commission
receives a minimal withdrawal payment pending assessment of any final
withdrawal payment. Below are some examples showing application of the
bid withdrawal payment rule:

\(1\) Bidder A withdraws a bid of \$100. Subsequently, Bidder B places a
bid of \$90 and withdraws. In that same auction, Bidder C wins the
license at a bid of \$95. Withdrawal payments are assessed as follows:
Bidder A owes \$5 (\$100 - \$95). Bidder B owes nothing.

\(2\) Bidder A withdraws a bid of \$100. Subsequently, Bidder B places a
bid of \$95 and withdraws. In that same auction, Bidder C wins the
license at a bid of \$90. Withdrawal payments are assessed as follows:
Bidder A owes \$5 (\$100 - \$95). Bidder B owes \$5 (\$95 - \$90).

\(3\) Bidder A withdraws a bid of \$100. Subsequently, in that same
auction, Bidder B places a bid of \$90 and withdraws. In a subsequent
auction, Bidder C places a bid of \$95 and withdraws. Bidder D wins the
license in that auction at a bid of \$80. Withdrawal payments are
assessed as follows: At the end of the first auction, Bidder A and
Bidder B are each assessed an interim withdrawal payment equal to 3
percent of their withdrawn bids pending Commission assessment of a final
withdrawal payment (Bidder A would owe 3% of \$100, or \$3, and Bidder B
would owe 3% of \$90, or \$2.70). At the end of the second auction,
Bidder A would owe \$5 (\$100 - \$95) less the \$3 interim withdrawal
payment for a total of \$2. Because Bidder C placed a subsequent bid
that was higher than Bidder B\'s \$90 bid, Bidder B would owe nothing.
Bidder C would owe \$15 (\$95 - \$80).

**E. Installment Payment Grace Periods and Imposition of Late Payment
Fees**

16\. [Background]{.underline}. The installment payment rules, adopted in
the *Competitive Bidding Second Report and Order*, permitted a licensee
to make an installment payment up to 90 days after the due date without
a late payment charge and without being considered in default.[^41] A
licensee whose installment payment was more than 90 days past due,
however, was in default, unless a \"grace period\" request was filed
prior to the payment due date.[^42] Specifically, in anticipation of
default on one or more installment payments, a licensee could request
that the Commission grant a three to six month grace period during which
no installment payments need be made.[^43] The licensee would not be
declared in default during the pendency of such request. Grant of the
request would result in the licensee not being considered in default
during the grace period, and the interest that accrued while no payments
were made would be amortized over the remaining term of the
license.[^44] Following the expiration of any grace period without
successful resumption of payment, or upon denial of a grace period
request, or default with no such request submitted, the license would
cancel automatically.[^45]

17\. In the *Part 1 Third Report and Order*, we modified the grace
period provisions as applied to all licensees participating in an
installment payment plan at that time.[^46] These provisions took effect
on March 16, 1998, 60 days after their publication in the Federal
Register.[^47] Thus, beginning with installment payments due on or after
March 16, 1998, a licensee that did not make an installment payment when
due automatically had an additional 90 days in which to submit its
required payment without being considered delinquent, but was assessed a
late payment fee equal to 5 percent of the amount of the past due
installment payment.[^48] If the licensee failed to make the required
payment within the first 90‑day period, the licensee was automatically
provided a subsequent 90 days to submit its required payment without
being considered delinquent, this time subject to a second, additional
late payment fee equal to 10 percent of the amount of the past due
installment payment.[^49] The licensee was not required to submit a
request to take advantage of these provisions. A licensee that failed to
make payment within 180 days after an installment payment due date
sufficient to pay all past due late payment fees, interest, and
principal, was deemed to have failed to make full payment of its
obligation and the license was automatically cancelled without further
Commission action.[^50] The late payment fee and automatic cancellation
provisions described above did not apply to licensees with grace period
requests that were properly filed prior to the effective date of the
*Part 1 Third Report and Order* until such time as the Commission (or
the Bureau upon delegated authority) addressed these grace period
requests.[^51]

18\. [Discussion]{.underline}. All petitioners oppose some aspect of the
modified provisions relating to the submission of late installment
payments. Specifically, Alpine PCS and CONXUS seek repeal of the rules
requiring late payment fees;[^52] DiGiPH and Houston 936 object to the
imposition of late payment fees and request that the Commission retain
the 90-day non-delinquency period with no late fee imposed;[^53]
NextWave proffers a 270‑day late payment window consisting of a 90-day
non-delinquency period, followed by two automatic 90‑day periods in
which a monthly late payment fee would apply;[^54] and CTI and Loli
request that the Commission allow licensees in the 218-219 MHz Service
(formerly, Interactive Video and Data Service) to continue submitting
grace period requests.[^55] In challenging the modified late payment
provisions, petitioners generally argue that: (1) they are unfair,
punitive, and commercially unreasonable; (2) they constitute
impermissible retroactive rulemaking as applied to licensees currently
participating in the installment payment plan; and (3) they violate
basic contract principles. We address each of these arguments in turn.

19\. While installment payments must be timely, the Commission\'s grace
period provisions provide limited relief for entities that find
themselves in financial distress.[^56] Petitioners claim that the
revised late payment provisions are unfair because, in determining
auction and construction strategies, petitioners had relied on the
availability of a 90-day non-delinquency period and deferral of payment
obligations while grace period requests remained pending.[^57] The
Commission\'s late payment provisions, however, were not intended to
serve as a tool that licensees might use in their normal course of
planning auction strategy and build-out. These provisions are provided
for extraordinary circumstances \-- instances of financial distress \--
for which temporary relief is appropriate. Petitioners\' assertions of
reliance on such provisions for any other purpose are misplaced.
Petitioners also claim that it is punitive and commercially unreasonable
to impose the same late payment fee amount whether the payment arrives
one day late or ninety days late.[^58] We disagree. Our fundamental goal
in adopting the late payment provisions is to encourage payment by the
due date. Achievement of this goal is best attainable by adhering to the
5 percent and 10 percent late payment fee schedule we have adopted. A
prorated approach towards late fees could serve as a disincentive to
licensees to pay on time and, thereby, undermine achievement of our
basic goal. As we stated in the *Part 1 Third Report and Order*, our
\"approach is consistent with the standard commercial practice of
establishing late payment fees and developing financial incentives for
licensees to resolve capital issues *before payment due dates*.\"[^59]
Further, the approach we have taken is a commercially reasonable debt
management practice used with respect to a variety of debt instruments
from credit cards to mortgages. Therefore, we disagree with
petitioners\' claims that the revised late payment provisions are
unfair, punitive, and commercially unreasonable.

20\. Petitioners also contend that the regulatory changes to the
installment payment program adopted in the *Part 1 Third Report and
Order* are unlawfully retroactive, insofar as they could have an adverse
effect on the previously established installment payment
obligations.[^60] For example, CTI claims that the revised late payment
rules unsettle the expectations of licensees that opted to pay for
licenses in installments.[^61] CONXUS argues that a \"rule\" under the
Administrative Procedure Act (\"APA\") is supposed to embody \"the whole
or a part of any agency statement of general or particular applicability
and *future effect* . . . .\"[^62] These arguments do not withstand
analysis.

21\. Our new Part 1 rules do not violate the prohibitions on \"primary
retroactivity\" under the APA as set forth in Supreme Court cases such
as *Bowen v. Georgetown Univ. Hospital*, 488 U.S. 204 (1988). We have
*not*, for example, gone back to past transactions and imposed new
penalties for conduct which was previously allowed by our rules. Rather,
the Commission here merely prescribed rules for the future, *i.e.*,
prospective procedures by which licensees remit installment payments
after March 16, 1998, the effective date of the new rules, that deal
with past transactions, *i.e*., the previously established installment
payment obligations. Such a rule change does not constitute unlawful
retroactive rulemaking under the APA.[^63]

22\. Further, the fact that the new rules may unsettle expectations
about the economic benefits of participating in the installment payment
plan does not make the new rules unlawfully retroactive. In that regard,
the U.S. Court of Appeals for the D.C. Circuit has explained: \"\[A\]
new rule or law is not retroactive \'merely because it . . . upsets
expectations based on prior law.\'\"[^64] This type of \"secondary\"
retroactivity is an entirely lawful consequence of much agency
rulemaking and does not by itself render a rule invalid.[^65] Commission
licensees, in particular, have no vested right to an unchanged
regulatory scheme throughout their license term.[^66] Therefore,
petitioners\' claim that the revised late payment provisions are
unlawfully retroactive fails.

23\. Finally, petitioners contend that contract law precludes
application of the new late payment procedures to licensees paying for
their licenses in installments prior to the effective date of the *Part
1 Third Report and Order*. Houston 936, for example, challenges the
Commission\'s elimination of the 90-day non-delinquency period, which
was incorporated as a term of the existing promissory notes executed by
900 MHz Specialized Mobile Radio service (900 MHz SMR) licensees.[^67]
CONXUS and CTI argue that adoption of the new late payment procedures
constitutes unilateral modification (*i.e*., breach) of a contract
between the Commission and the licensees for payment of licenses under
specified payment terms even without a signed promissory note.[^68]

24\. Installment payment programs currently exist in the following
services: the 218-219 MHz Service,[^69] broadband Personal
Communications Services (PCS) frequency block C,[^70] broadband PCS
frequency block F,[^71] broadband PCS frequency block A (pioneers\'
preference licensees only),[^72] regional narrowband PCS,[^73] 900 MHz
SMR,[^74] and the Multipoint Distribution Service (MDS).[^75] For some
services in which we have offered installment payments, far from being
punitive and unreasonable, we have afforded extraordinary relief
regarding installment payment obligations. Specifically, we suspended
the effect of the new late payment provisions as applied to any license
in the 218‑219 MHz Service for which a properly filed grace period
request was pending or for which adequate installment payments were made
as of March 16, 1998, pending Commission resolution of issues raised in
the *218-219 MHz Service Order and NPRM*.[^76] Most recently, we offered
restructuring to certain 218-219 MHz Service licensees.[^77] Further,
licensees in the broadband PCS frequency blocks C and F that are
participating in the installment payment program have signed note
modifications that incorporate the late payment provisions described in
47 C.F.R. § 1.2110(f)(4) (redesignated herein as 47 C.F.R. §
1.2110(g)(4)).[^78] Regarding these licensees, therefore, there is no
conflict between the application of the new late payment procedures and
contract law.

25\. Among the remaining licensees that have benefitted from Commission
installment payment plans, licensees in broadband PCS frequency block A
and regional narrowband PCS did not sign separate loan documents. The
payment terms and conditions with respect to these licenses, therefore,
have always been a matter of Commission regulation through the Part 1
rules. In this regard, the following language appears on the licenses
themselves: \"This authorization is subject to the condition that the
remaining balance of the winning bid amount will be paid in accordance
with Part 1 of the Commission\'s rules, 47 C.F.R. Part 1.\" These
licensees were aware, or should have been aware, that the terms and
conditions of Part 1 or other aspects of the license can be modified by
the Commission by rulemaking, and that such changes have been uniformly
upheld by the courts as lawful.[^79] The Part 1 rules at issue in this
proceeding were modified subject to APA-consistent administrative
rulemaking procedures and are intended to provide greater flexibility to
licensees in determining their use of grace periods and late payment
provisions. The application of our modified late payment provisions does
not constitute a breach of contract as argued by these petitioners.

26\. Some SMR and MDS licensees argue that the Promissory Note and
Security Agreements executed by these licensees bound the Commission to
the rules in place at the time of the license grant. This is
demonstrably incorrect. The Commission did not promise these licensees,
or any other licensees, that the Part 1 rules would remain unchanged
during the license term. Rather, the Note and Security Agreement provide
that the licensee must comply with \"all Commission orders and
regulations applicable to the licensee,\"[^80] without regard to the
time in which those applicable rules were promulgated or amended.[^81]
The SMR and MDS notes emphasized that the Commission\'s rules, as
amended, would take precedence over the terms of the notes in case of
any conflict.[^82] Moreover, when addressing *future* events, such as
the making of installment payments, applications for grace periods and
incidents of default, the Note and Security Agreement refer to the
\"then-applicable\" rules of the Commission,[^83] a clear reference to
the rules that would be applicable at the time of such events.
Specifically with respect to \"grace periods\" which were modified by
the revision of Part 1, the SMR and MDS Notes are worded conditionally
\-- \"if any such grace period or extension of payments is provided for
in the then-applicable orders and regulations of the Commission.\"[^84]
This conditional language confirms that the \"then-applicable\" grace
period rules referred to in the Note are those rules that may exist at
the time in the future when a grace period is sought, and not
necessarily the rules that were in place at the time of the license
grant; otherwise, the sentence would not have been phrased as a
contingency, but would have cited whatever grace period rules were in
effect at the time of the Note. Given these provisions, the last
paragraph in the Note \-- which states that the Note may not be changed
except by an agreement in writing executed by the party against whom
enforcement of such change is sought[^85] \-- means that individual
modifications to any particular agreement must be made in writing by
mutual consent. Significantly, however, this clause does not preclude
service-wide changes of the governing rules by the agency\'s public
notice and comment rulemaking process. Specifically, the Payee, by
signing such Note, has already agreed to be bound by the Commission\'s
rules as they may be amended from time to time in the provisions of the
Note and Security Agreement referencing the \"then-applicable\" rules of
Commission.[^86]

We, therefore, retain the modified grace period and late payment fee
provisions adopted in the *Part 1 Third Report and Order.*[^87]

27\. As discussed above, we conclude that the revised late payment rules
are not commercially unreasonable, do not constitute impermissible
retroactive rulemaking, and do not violate basic contract principles. We
believe, however, that a slight modification to the payment due dates
for late installment payments and associated late fees would benefit
licensees. Under the *Part 1 Third Report and Order*, licensees that
miss an installment payment are given up to two 90-day periods in which
to submit the installment payment and associated late fee without being
considered delinquent.[^88] Regularly scheduled installment payments, on
the other hand, are due quarterly (*i.e*., every 3 months), which may
provide a licensee with up to 92 calendar days to make timely payment
depending upon the month in which the payment is due. This discrepancy
in payment due dates may cause confusion for licensees. For example, a
late installment payment and associated late fee may be due a day or two
before the next regularly scheduled quarterly installment payment.
Because these due dates are so proximate, licensees may mistakenly
assume that they can pay their late installment payment and late fee on
the due date of the next regularly scheduled quarterly installment
payment without incurring an additional late payment fee or being
considered delinquent.

28\. In order to avoid any confusion as to when late installment
payments and accompanying late fees are due, we will amend the due dates
for late installment payments to comport with quarterly due dates.
Specifically, rather than providing licensees that fail to make timely
installment payments with two 90-day periods in which to satisfy their
payment obligations, we will provide such licensees with two quarters
(two 3-month periods) in which to submit their late installment payments
and required late fees without being considered delinquent. Thus, due
dates for late installment payments and associated late fees will
coincide with quarterly due dates for regularly scheduled installment
payments. Although we modify the due dates for submitting late
installment payments, we do not change the associated late fee
provisions. We, therefore, amend Section 1.2110(f)(4) (redesignated
herein as Section 1.2110(g)(4)) of our rules to provide that a licensee
that fails to make an installment payment when due will be permitted to
make its required payment by the end of the next quarter (a 3-month
period) without being considered delinquent, but will be assessed a late
payment fee equal to 5 percent of the amount of the past due installment
payment.[^89] If the licensee fails to make the required payment within
the first quarter after the regularly scheduled due date, the licensee
will be allowed to make its required payment by the end of the
subsequent quarter without being considered delinquent, this time
subject to a second, additional late payment fee equal to 10 percent of
the amount of the past due installment payment.[^90] The licensee is not
required to submit a request to take advantage of these provisions. A
licensee that fails to make payment within two quarters (or 6 months)
after an installment payment due date sufficient to pay all past due
late payment fees, interest, and principal, will be deemed to have
failed to make full payment of its obligation and, as has been the case
since the inception of our competitive bidding and auction specific
installment payment rules, the license will automatically cancel without
further Commission action.[^91]

**F. Installment Payment Restructuring**

29\. [Background]{.underline}*.* In the *Competitive Bidding Second
Report and Order*, the Commission stated that once it granted a grace
period request, \"a defaulting licensee could maintain its construction
efforts and/or operations while seeking funds to continue payments *or
seek from the Commission a restructured payment plan*.\"[^92] Reference
to a restructured payment plan also appeared in the former grace period
rule, Section 1.2110(e)(4)(ii), which permitted licensees to temporarily
suspend their installment payments pending the restructuring of such
payment obligations.[^93] In amending Section 1.2110 to be consistent
with our decision in the *Part 1 Third Report and Order* to revise the
late payment provisions and eliminate the grace payment procedure, we
removed language that referred to a restructured payment schedule.

30\. [Discussion]{.underline}. NextWave objects to the elimination of
language in Section 1.2110 referring to a restructuring of installment
payments.[^94] NextWave contends that the Commission eliminated the
option to restructure without providing notice and comment or any
rationale for the elimination in violation of the APA.[^95] By removing
language in Section 1.2110(e)(4)(ii) that referenced a restructured
payment schedule, we did not intend to eliminate a licensee\'s option to
request restructuring of its installment payment obligations. We simply
sought to amend the rule to provide for automatic grace periods rather
than requiring a showing of financial need to support a grace period
request. Licensees in the installment payment program may still submit
requests for payment restructuring or workouts. There is, however, no
longer a procedure for requesting a grace period to stay installment
payment deadlines pending such restructuring. Rather, licensees will be
subject to the automatic late payment provisions of Section 1.2110(g) as
adopted herein.[^96] Because licensees continue to have the opportunity
to seek restructuring of installment payments, the Commission was not
required under the APA to seek comment on the elimination of that
option. Moreover, the reference to a \"restructured payment schedule\"
in Section 1.2110(e)(4)(ii) was part and parcel of our rule section that
provided for individual grace period requests and financial distress
showings.[^97] We proposed to amend that rule section in its entirety
and adopt automatic grace periods in the *Part 1 Notice of Proposed Rule
Making*.[^98] Interested parties could reasonably have anticipated that
our proposal to amend the grace period request rule could result in the
amendment of language in that rule referencing restructuring. Thus,
omitting a reference to a restructured payment schedule is within the
specific scope of the *Part 1 Notice of Proposed Rule Making*[^99] to
adopt automatic grace periods and eliminate the requirement to file
financial distress showings and, therefore, is not violative of the APA.

**G. Installment Payment Obligations Under Assignments of Licenses and
Transfers of Control**

31\. [Background]{.underline}. The Communications Act of 1934
("Communications Act"), as amended, requires the Commission to approve
assignments of licenses and transfers of control.[^100] Prior to the
adoption of the *Universal Licensing System* *(ULS) Report and
Order*,[^101] upon approval of an assignment or transfer, the Bureau
amended its licensing database for certain private and microwave
services.[^102] If an assignment or transfer was not consummated, we
required the filing of a second transfer application that reflected the
\"return\" of the license from the putative transferee to the original
licensee.[^103] The ULS rules, however, now require parties to
assignments of licenses or transfers of control in all wireless services
only to file a notice that they have consummated the underlying
transaction, at which point the Bureau amends its licensing
database.[^104]

32\. [Discussion]{.underline}. In-Sync seeks clarification regarding an
assignee\'s or transferee\'s responsibility for installment payment debt
in the event of default by an assignor or transferor in cases where the
Bureau amended its database simply upon approval of the assignment or
transfer.[^105] Specifically, In‑Sync believes that the assignee or
transferee should not be responsible for licensee debt until the
transaction is consummated.[^106] As an initial matter, we emphasize
that the consummation date of an assignment of license or transfer of
control governs debt obligations irrespective of the post-consummation
notification requirement. Therefore, regarding an assignment of license,
we clarify that the assignee of a license paid for through installment
payments is not responsible for the license debt until the transaction
is consummated. As a practical matter, for services where licensees have
signed promissory notes (*i.e*., C block, F block, MDS and 900 MHz SMR)
assignees must execute loan documents and consummation does not occur
until the execution of such documents. In these instances, the assignee
will, of course, be aware that consummation has occurred. However, for
services where licensees did not sign promissory notes (*i.e.*, 218-219
MHz, regional narrowband PCS and broadband PCS frequency block A
(pioneers\' preference licenses)), if a default occurs prior to
consummation, and the Commission mistakenly initiates debt collection
procedures against the assignee that is not the actual licensee, that
party should notify the Commission in writing that the underlying
transaction was not consummated and the Commission will initiate debt
collection procedures against the assignor that is the licensee.

33\. In contrast to an assignment of license, with transfers of control
the licensee does not change and, therefore, remains liable for the debt
irrespective of consummation. In such cases, the Commission generally
looks to the licensee for repayment of the debt. We recognize, however,
that there may be unusual circumstances in which the Commission might
look beyond the licensee for repayment of the debt, *e.g.*, pierce the
corporate veil, and a new party to the licensing entity could become
subject to debt collection at consummation. We reiterate that the
consummation date governs the debt obligations irrespective of the
post-notification requirements. Therefore, if the Commission
inadvertently initiates debt collection procedures against a party that
is not part of the licensing entity because the transfer of control was
not consummated, the party should notify the Commission in writing that
the underlying transaction was not consummated and the Commission will
stop its debt collection proceedings against the party that is not part
of the licensing entity.

**H. Clarification of Unjust Enrichment Rules**

34\. [Background]{.underline}*.* In the *Part 1 Third Report and Order*,
the Commission revised the Part 1 unjust enrichment rules as applied to
assignments and transfers of control of licenses acquired using bidding
credits and/or installment payments.[^107] Specifically, if a licensee
seeks to assign or transfer control of its license to an entity not
meeting the same eligibility standards for installment payments at any
time during the initial license term, the licensee must make full
payment of the remaining unpaid principal and any unpaid interest
accrued through the date of assignment or transfer as a condition of
Commission approval.[^108] Similarly, if a licensee seeks to assign or
transfer control of its license to an entity not meeting the same
eligibility standards for bidding credits, the licensee must reimburse
the government for the amount of the bidding credit, plus interest based
on the rate for United States Treasury obligations applicable on the
date the license is granted, as a condition of Commission
approval.[^109] Unlike the unjust enrichment payment for installment
payments, however, the unjust enrichment payment for bidding credits
decreases based on the amount of time the initial license has been held,
with no unjust enrichment payment due after the fifth year of initial
licensing.[^110] In making these changes to the unjust enrichment rules
in the *Part 1 Third Report and Order*, we specifically superseded the
existing service-specific unjust enrichment provisions, replacing each
of those rules with a cross-reference to the new Part 1 unjust
enrichment rule, 47 C.F.R. § 1.2111.[^111]

35\. [Discussion]{.underline}. NextWave seeks clarification regarding
the application of the revised unjust enrichment rules for bidding
credits (Section 1.2111(d) of the Commission\'s rules) and the broadband
PCS entrepreneurs\' block prohibition on assignments and transfers to
non-entrepreneurs during the first five years of initial licensing
(Section 24.839 of the Commission\'s rules).[^112] As a practical
matter, under the Part 1 rules as modified in the *Part 1 Third Report
and Order*, bidding credit unjust enrichment payments are not required
for assignments or transfers of control of C and F block licenses to
non-entrepreneurs because, as NextWave points out, Section 24.839 bars
such assignments or transfers until five years after the date of the
initial license grant, at which point the bidding credit unjust
enrichment penalties of Section 1.2111 lapse.[^113] The proscription of
Section 24.839, however, does not apply if an entrepreneur proposes to
assign or transfer its C or F block license to another qualifying
entrepreneur.[^114] In such a case, Section 1.2111 provides for unjust
enrichment payments with respect to assignments and transfers between
entities qualifying for different tiers of bidding credits.[^115]

36\. NextWave further argues that the Commission has not adequately
explained why PCS entrepreneur block licensees are subject to a
five-year transfer restriction when licensees in other services are
allowed to assign or transfer licenses during the first five years of
the license term, subject to the repayment of bidding credits.[^116] In
order to fulfill our statutory duty to give opportunities to small
businesses, we set aside the PCS C and F blocks for participation only
by smaller entities, in this case, entrepreneurs.[^117] To ensure that
licenses in these blocks are used exclusively by smaller entities, we
adopted a rule to preclude the trafficking of entrepreneur block
licenses to non-entrepreneurs for the first five years of
licensing.[^118] In adopting this transfer restriction, we explained
that allowing parties to take advantage of bidding in the
entrepreneurs\' blocks and immediately assign or transfer control of the
authorizations to non-entrepreneurs would undermine our goal of giving
entrepreneurs the opportunity to provide PCS.[^119] Since these
entrepreneur blocks are the only spectrum set aside specifically for
smaller entities, these are the only licenses subject to the five-year
anti-trafficking provision. In contrast, with respect to services in
which all entities, large and small, are permitted to acquire licenses,
our objective is to ensure that, irrespective of entity size, the
license is awarded to the entity that values it most. In such cases, we
may offer bidding credits or other incentives to afford small entities
an opportunity to acquire licenses. In these instances, we are not
concerned with ensuring that a block of spectrum is used exclusively by
smaller entities and, therefore, permit the transfer of licenses early
in the license term subject to repayment under our unjust enrichment
rules for bidding credits and installment payments.[^120]

37\. We further clarify that pursuant to Sections 1.2111(c) and (d) of
our rules, Commission approval of assignments of licenses and transfers
of control that result in unjust enrichment with respect to bidding
credits and installment payments is conditioned upon full payment of the
required unjust enrichment payments on or before the consummation
date.[^121] In other words, consummation of an assignment of license or
transfer of control will not be valid unless the Commission first
receives the required unjust enrichment payment in full. We believe that
this clarification will ensure efficiency in the processing and
consummation of assignments of licenses and transfers of control.

**I. Inapplicability of Section 1.2104 to Installment Payment Defaults**

38\. [Background]{.underline}. In the *Part 1 Third Report and Order*,
we addressed matters relating to defaults on payment obligations by
winning bidders in spectrum auctions.[^122] Under Section 1.2104(g),
winning bidders that default on a down payment or full payment after the
close of an auction are subject to a payment equal to the difference
between the amount of the defaulted bid and the amount of the winning
bid the next time the license is auctioned, plus 3 percent of the lesser
of these amounts.[^123] We considered whether a licensee failing to make
a timely *installment* payment should be subjected to these same
provisions. In paragraphs 115 and 116 of the *Part 1 Third Report and
Order*, we decided against imposing the default provisions of Section
1.2104(g) with respect to defaults on installment payments.[^124] We
found that without such additional payments, our other rules and
installment payment terms are adequate to discourage defaults. Despite
the clear statement on this point in paragraphs 115 and 116, we believe
that paragraph 122 of the *Part 1 Third Report and Order* may still have
left some ambiguity in this matter.[^125] Specifically, the latter
paragraph may be construed as stating that the additional payment
requirements of Section 1.2104(g)(2) relating to down payment and full
payment defaulters are also applicable to installment payment
defaulters.[^126]

39\. [Discussion]{.underline}. We clarify that licensees defaulting on
installment payments (\"installment payment defaulters\") are not
subject to Section 1.2104(g)(2).[^127] The automatic default provisions
of Section 1.2110(f)(4) (redesignated herein as 1.2110(g)(4)) are
adequate to discourage untimely installment payments.[^128] We note that
while Section 1.2109(c) identifies types of defaulters that are subject
to Section 1.2104(g)(2), the rule does not reference installment payment
defaulters.[^129] Instead, installment payment defaults are covered by
Section 1.2110(g)(4), as designated herein, which does not incorporate
Section 1.2104(g)(2). As we noted in the *Part 1 Third Report and
Order*, the risk of losing a license should provide most licensees with
a strong incentive to avoid default.[^130] Accordingly, we conclude that
Section 1.2104(g)(2) does not apply to installment payment
defaulters.[^131] Rather, pursuant to Section 1.2110(g)(4)(iv), as
designated herein, licensees that default on installment payment
obligations will automatically lose their licenses and be subject to
debt collection procedures.[^132]

**J. Eligibility for Participation**

40\. [Background]{.underline}. The Commission\'s FCC Form 175 short-form
application for all auctions requires applicants to certify that they
are not in default on any Commission licenses and that they are not
delinquent on any non-tax debt owed to any Federal agency.[^133] The
purpose of this rule is to preserve the integrity of the auction process
and to ensure that bidders are capable of meeting their financial
commitments to the Commission. In the *C Block Fourth Report and Order*,
the Commission determined that \"former defaulters,\" *i.e.*, applicants
that have defaulted or been delinquent in the past, but have since paid
all of their outstanding non-Internal Revenue Service Federal debts and
all associated charges or penalties, are eligible to participate in
future auctions of C block spectrum, provided that they are otherwise
qualified.[^134] In addition, the Commission adopted a special upfront
payment policy for \"former defaulters\" seeking to participate in C
block auctions.[^135] It required that \"former defaulters\" make an
upfront payment of 50 percent more than the normal amount set by the
Bureau for any given license in a C block auction.[^136] The Commission
applied these policies in the broadband PCS auction that concluded on
April 15, 1999 (Auction No. 22).

41\. [Discussion]{.underline}. On our own motion, we hereby incorporate
into the Part 1 general competitive bidding rules the \"former
defaulter\" policies adopted with respect to C block auction applicants.
While we have determined that it is necessary to limit participation in
Commission auctions to entities that can certify that they are not in
default on certain debts, we also believe that past business misfortunes
do not inevitably preclude an entity from being able to meet its present
and future responsibilities as a Commission licensee.[^137] Therefore,
we will allow \"former defaulters,\" *i.e.*, applicants that have
defaulted or been delinquent in the past, but have since paid all of
their outstanding non-tax debts and all associated charges or penalties,
to certify on Form 175 that they are not in default and are, therefore,
eligible for auction participation. Thus, a bidder that has defaulted on
its down or final payment obligation, but has paid, by the short-form
application deadline, any default payments assessed by the Commission
(*e.g.*, the initial default payment of 3 percent of the defaulted bid
amount pursuant to 47 C.F.R. § 1.2104(g)(2)) is qualified to certify on
Form 175 that it is not in default and is eligible to participate in
Commission auctions. Such bidder, however, remains subject to any as yet
unassessed payment obligations pursuant to Section 1.2104(g) of our
rules, unless otherwise relieved from such obligations under applicable
law.[^138]

42\. In determining the upfront payment amounts required by \"former
defaulters\" seeking to participate in future C block auctions, the
Commission reasoned that \"the integrity of the auctions program and the
licensing process dictates requiring a more stringent financial showing
from applicants with a poor Federal financial track record.\"[^139] We
believe that this reasoning applies with equal force to \"former
defaulters\" seeking to participate in any Commission auction.
Consequently, we will amend Section 1.2106(a) of our general competitive
bidding rules to require that \"former defaulters\" pay an upfront
payment amount of 1.5 times the normal amount set by the Bureau for any
given license in a Commission auction.[^140] So that the Bureau may
implement this rule, we will require applicants to make an additional
certification revealing whether they have ever been in default on any
Commission license or have ever been delinquent on any non-tax debt owed
to any Federal agency.[^141] If any one of an applicant\'s controlling
interests or their affiliates as defined by Section 1.2110 of the
Commission\'s rules (as adopted herein) has ever been in default on
Commission licenses or has ever been delinquent on any non-tax debt owed
to any Federal agency, but has made the requisite payment, the applicant
will be eligible to participate in Commission auctions but will be
considered a \"former defaulter\" for purposes of the upfront payment
requirements.[^142] We may use credit information concerning the
applicant, its controlling interests and their affiliates to verify any
certified statements regarding the history of payments made to the
Federal government by such entities.

43\. Under Section 1.2110(g)(4), as designated herein, when a licensee
defaults on an installment payment, its license automatically cancels
without any action by the Commission, and the entire outstanding debt
obligation becomes subject to debt collection procedures.[^143] A
licensee that has previously defaulted on an installment payment will be
permitted to participate in future Commission spectrum auctions under
certain conditions. In order to be eligible for participation in a
future auction, an installment payment defaulter must have either (1)
paid all of its outstanding non-tax debt, along with all associated
charges and penalties;[^144] or (2) been relieved of such obligations
pursuant to otherwise applicable law.[^145] In all instances,
installment payment defaulters eligible to participate in future
auctions will be required to pay an upfront payment amount of 1.5 times
the normal amount set by the Bureau for any given license in a
Commission auction to assure their future financial soundness.[^146]

# FIFTH REPORT AND ORDER

**A. Introduction**

44\. In the *Part 1 Third Report and Order,* we established a uniform
set of bidding rules for all auctionable services to increase the
efficiency of our licensing process.[^147] In the *Second Notice*, we
sought comment on a variety of additional proposals relating to the
general competitive bidding rules.[^148] In particular, we sought
comment on whether a sufficient evidentiary basis exists for creating
bidding preferences for minority- and women-owned businesses, and
whether there are mechanisms we should employ to further the
opportunities for rural telephone companies to participate in the
provision of spectrum-based services. In addition, we asked whether the
Commission should continue its installment payment program for small
businesses and, if not, whether appropriate alternatives exist that
would further the goals of Section 309(j) of the Communications
Act.[^149] Next, we requested comment on what uniform attribution
standard we should adopt for determining whether entities seeking
bidding credits qualify as small businesses. Finally, we sought comment
on a number of payment and administrative issues, including the
appropriate formula for calculating default payments. In response to the
*Second Notice*, we received six comments and one reply comment.[^150]

**B. Rules Governing Designated Entities**

**1. Designated Entities**

45\. [Background]{.underline}. In *Adarand Constructors, Inc. v. Pena*,
the Supreme Court held that \"all racial classifications . . . must be
analyzed by a reviewing court under strict scrutiny.\"[^151] Under the
*Adarand* decision, any federal program that uses race as a basis for
decisionmaking must serve a compelling governmental interest and must be
narrowly tailored to serve that interest in order to pass constitutional
muster.[^152] In *United States v. Virginia, et al.*, the Supreme Court
determined that gender-based programs are subject to intermediate
scrutiny.[^153] Under this standard of review, there must be an
\"exceedingly persuasive justification\" for a program in which gender
is a determining factor in decisionmaking.[^154] Further, a gender-based
government action is constitutional only if it serves an important
governmental objective and is substantially related to the achievement
of that objective.[^155]

46\. In the *Second Notice*, the Commission sought comment on whether
there is a compelling governmental interest that would justify the use
of preferences for minority-owned businesses or an exceedingly
persuasive justification to support gender-based preferences for
women-owned businesses.[^156] In addition, we asked commenters to
provide evidence in support of their positions and to indicate what
measures, if any, could be narrowly tailored to withstand judicial
review.[^157] What specifically tailored tools, we asked, such as
bidding credits, might be appropriate or should preferences be given to
minority-owned or women-owned businesses that also qualify as small
businesses.[^158]

47\. Finally, we noted that the Office of Management and Budget
(\"OMB\") modified its standards for the classification of federal data
on race and ethnicity.[^159] Specifically, OMB: (1) separated the
category for Asian and Pacific Islander into two categories \--
\"Asian\" and \"Native Hawaiian or Other Pacific Islander;\" and (2)
changed the term \"Hispanic\" to \"Hispanic or Latino.\"[^160] We sought
comment on whether we should amend the designated entity provisions of
the Part 1 rules to reflect this change.[^161]

48\. [Discussion]{.underline}. We did not receive any comments on these
issues. Because the record is sparse, we conclude that it is not
appropriate to adopt special provisions for minority-owned and
women-owned businesses at this time. We have said that minority- and
women-owned businesses that qualify as small businesses may take
advantage of the special provisions we have adopted for small
businesses.[^162]

49\. We note, too, that the Commission\'s Office of Communications
Business Opportunities (OCBO) has initiated several studies to gather
information regarding barriers to entry faced by minority- and
women-owned firms that wish to participate, or have participated, in
Commission auctions. Further, we have recently commenced several new
studies to explore additional entry barriers and to seek further
evidence of racial and gender discrimination against potential
licensees. In addition, we will continue to track the rate of
participation in our auctions by minority- and women-owned firms and
evaluate this information with other data gathered to determine whether
provisions to promote participation by minorities and women can satisfy
judicial scrutiny. If a sufficient record can be adduced, we will
consider race- and gender-based provisions for future auctions.

50\. Finally, having received no comments on the issue, we will amend
our definition of the term \"minority\" in Section 1.2110 of the general
competitive bidding rules to reflect the changes identified above.[^163]
This will conform our definition of the term "minority" to that
currently used by OMB.

**2. Rural Telephone Company Provisions**

51\. [Background]{.underline}. In the *Second Notice*, we noted that
auctions have generally provided rural telephone companies with
favorable opportunities.[^164] We have also observed that the percentage
of rural telephone companies that have won rural geographic area
licenses in the United States is significant.[^165] We sought comment on
whether there were additional mechanisms that might increase
opportunities for rural telephone companies to provide spectrum-based
services to the public.[^166]

52\. [Discussion]{.underline}. Based on the limited record before us, we
will not, at this time, adopt mechanisms, such as bidding preferences or
an unserved area fill-in policy, specifically for rural telephone
companies.[^167] We will, however, continue to provide rural telephone
companies with bidding credits should such entities qualify as small
businesses. The Commission has great interest in ensuring that rural and
underserved areas have access to competitive advanced telecommunications
services.[^168] Indeed, the Commission has implemented a number of
initiatives toward achieving that goal.[^169] We will address issues
affecting rural communities and underserved areas in other upcoming
proceedings and believe a more extensive record can be developed at that
time. We plan to consider methods for enhancing the delivery of
spectrum-based services in areas that traditionally have been
underserved by telecommunications providers. We encourage commenters to
participate in such future proceedings. The record developed here will
be made part of those proceedings.

53\. We do, however, want to highlight one issue raised by commenters.
RTG proposes that we establish geographic area licenses no larger than
BTAs in all future auctions.[^170] RTG argues that the use of small
areas facilitates the delivery of service to rural areas by increasing
the opportunity for rural small businesses and rural telephone companies
to acquire licenses.[^171] RTG also contends that authorizing smaller
geographic areas increases the number of licenses available and the
diversity of licenses, and facilitates the buildout of networks.[^172]
Section 309(j) of the Communications Act requires the Commission to
disseminate licenses to a wide variety of applicants, including small
businesses and rural telephone companies, and to promote the development
and rapid deployment of new technologies to the public, including those
residing in rural areas.[^173] The Commission can best satisfy this
mandate by establishing license areas that promote these goals on a
service-specific basis. Although we have used small license areas in
several services (*e.g.*, broadband PCS D, E and F blocks and LMDS) and
may do so in specific services in the future, we are unwilling to limit
our flexibility by adopting an ironclad rule against large service
areas. We anticipate, for example, that certain satellite-based services
may not be particularly suited to small geographic area licensing, while
other services may indeed be more suitable for this type of license
category (*i.e.*, the broadband PCS C block auction). We always invite
comment on these issues so as to tailor our rules for specific services
in ways that afford opportunities to a wide variety of entities.

**3. Installment Payments**

54\. [Background]{.underline}. In the *Part 1 Third Report and Order*,
we suspended the installment payment program.[^174] Because, however,
small businesses have been successful in the auctions in which
installment payment plans were offered, we sought comment on ways the
Commission could provide an effective installment payment program while
at the same time minimizing the concerns (*e.g.*, licensee default or
difficulty meeting financial obligations to the Commission) that led to
the suspension of installment payment plans for small businesses.[^175]
We also sought comment on how the Commission could create an installment
payment plan that would encourage only serious, financially qualified
small business applicants to apply for licenses while ensuring the rapid
provision of service to the public and guaranteeing that the American
public is reasonably compensated for use of the spectrum.[^176] In
addition, we sought comment on how the Commission might fashion an
installment payment program that would meet the statutory requirement
that all payments of principal and interest for covered auctions be
deposited in the United States Treasury by the statutory deadline
(September 30, 2002) for collection.[^177] We further requested comment
on means other than bidding credits and installment payments by which
the Commission might facilitate the participation of small businesses
and other designated entities in our spectrum auction program.[^178]
Finally, we asked whether we should establish the interest rate for
installment payments (if the program is reinstituted) based upon the
rate of United States Treasury obligations on the date of the close of
the auction.[^179]

55\. [Discussion]{.underline}. Having received no comments regarding
reinstitution of our installment payment program or alternatives
thereto, we will adhere to our previous decision to suspend the
installment payment program.[^180] In suspending the installment payment
program, we concluded that small businesses need not receive installment
payments to successfully participate in our spectrum auctions.[^181] We
noted, for example, that in the cellular auction for unserved areas,
which had no installment payment plans, 36 percent of the licenses went
to small or very small businesses.[^182] In addition, we stated that
requiring payment in full within a short time after the close of the
auction ensures greater financial accountability from applicants.[^183]
Finally, experience has shown that licensees filing for bankruptcy may
impede the Commission\'s processes, resulting in delayed deployment of
service.[^184]

56\. We believe that Section 309(j) of the Communications Act requires
us to explore ways of responding to the investment capital needs of
small, minority-owned and women-owned businesses.[^185] Accordingly,
while we believe our decision to offer bidding credits has been
extremely helpful in allowing these designated entities a foothold in
many of our auctionable wireless services, we remain open to proposals
that would result in even greater participation by these entities.

57\. The Commission will, as it has done in the LMDS, LMS, 220 MHz
Service, and VHF Public Coast Service auctions, continue to provide
small businesses with bidding credits. In light of this decision, we
need not address the method of establishing interest rates for such
installment payments. If we reinstate an installment payment plan in the
future, we will revisit this issue.

**4. Attribution of Gross Revenues of Investors and Affiliates**

58\. [Background]{.underline}. In the *Second Notice,* we discussed our
earlier proposal to adopt a general attribution rule for determining
small business eligibility for all future auctions.[^186] Specifically,
we sought further comment on whether to adopt a \"controlling interest\"
standard for attributing to an applicant the gross revenues of its
investors and affiliates in determining whether the applicant qualifies
as a small business.[^187] We explained that, in the past, the
Commission adopted service-specific attribution rules with varying
standards of attribution.[^188] In addition, we asked whether a
\"controlling interest\" standard is sufficient to calculate size so
that only those entities truly meriting small business status qualify
for bidding credits.[^189] We also sought comment on whether alternate
standards for attributing the gross revenues of investors and affiliates
in an applicant would better meet our goals.[^190] We further requested
comment on whether or not the controlling interest standard would be
strengthened by imposing a minimum equity requirement (*e.g.*, 15
percent) that any person or entity identified as controlling must
hold.[^191]

59\. [Discussion]{.underline}. We will adopt as our general attribution
rule a \"controlling interest\" standard for determining which
applicants qualify as small businesses. Under this standard, we will
attribute to the applicant the gross revenues of its controlling
interests and their affiliates in assessing whether the applicant is
qualified to take advantage of our small business provisions, such as
bidding credits. We note that operation of our definition of
\"affiliate\" will cause all affiliates of controlling interests to be
affiliates of the applicant.[^192] We believe that this approach is
simpler and more flexible than the previously used control group
approach,[^193] and thus will be more straightforward to implement.
Moreover, application of the \"controlling interest\" standard will
ensure that only those entities truly meriting small business status
qualify for our small business provisions. We used this same approach in
the attribution rules for the LMDS, 800 MHz SMR, 220 MHz, VHF Public
Coast and LMS auction proceedings.[^194]

60\. A \"controlling interest\" includes individuals or entities, or
groups of individuals or entities, that have control of the applicant
under the principles of either *de jure* or *de facto* control. Thus,
there may be more than one \"controlling interest\" whose revenues must
be counted. The premise of this rule is that all parties that control an
applicant or have the power to control an applicant, and their
affiliates, will have their gross revenues counted and attributed to the
applicant in determining the applicant\'s eligibility for small business
status or for any other size-based status using a gross revenue
threshold.

61\. *De jure* control is typically evidenced by the holding of 50.1
percent or more of the voting stock of a corporation or, in the case of
a partnership, general partnership interests. *De facto* control is
determined on a case-by-case basis and includes the criteria set forth
in *Ellis Thompson*.[^195] For instance, the gross revenues of managers
may be attributed to the applicant if *de facto* control standards are
met.[^196] We do not believe it is necessary to presume that equity
interests of less than 50.1 percent are attributable to the applicant
because we rely on the concept of *de facto* control. An applicant may
have interest holders that do not possess *de jure* control but have
\"actual\" (*i.e.*, *de facto*) control. Therefore, in determining the
gross revenues to be attributed to the applicant, we will include
individuals or entities that have either *de jure* or *de facto*
control. Accordingly, we will amend Section 1.2110 to incorporate these
principles of control.[^197]

62\. Controlling interests must be identified by the applicant seeking
status as a small business.[^198] The \"controlling interest\"
definition provides specific guidance on the calculation of various
types of ownership interests. For purposes of calculating equity held in
an applicant, the definition provides for full dilution of certain stock
interests, warrants and convertible debentures.[^199] In addition, the
definition provides for attribution of partnership and other ownership
interests, including stock interests held in trust, non-voting stock and
indirect ownership through intervening corporations. When an applicant
cannot identify controlling interests under the definition, the revenues
of all interest holders in the applicant and their affiliates will be
attributed.[^200] For example, if a company is owned by four entities,
each of which has 25 percent voting equity, and no shareholders\'
agreement or voting trust gives any one of them control of the company,
the revenues of all four entities must be attributed to the applicant.
Treating such a corporation in this way is similar to our treatment of a
general partnership \-- all general partners are considered to have a
controlling interest. This rule, we believe, looks to substance over
form in assessing eligibility for small business status.[^201]

63\. Some commenters have expressed concern over whether the revenues of
so called \"passive investors\" would be attributed to the
applicant.[^202] The controlling interest standard adopted herein will
be applied to all investors in an applicant. In other words, if any
investor has either *de jure* or *de facto* control of the applicant,
that investor\'s gross revenues will be attributed to the applicant for
purposes of determining whether the applicant qualifies as a small
business. Application of the principles of either *de jure* or *de
facto* control will accurately identify those investors that are
controlling interests and that are not, by definition, therefore,
\"passive investors.\" We note too that, under the controlling interest
standard, the officers and directors of any applicant will be considered
to have a controlling interest in the applicant.[^203]

64\. We believe that the *de jure* and *de facto* concepts of control,
together with the application of our affiliation rules, will effectively
prevent larger firms from illegitimately seeking status as small
businesses. For this reason, we disagree with the commenter that urges
us not to amend our attribution rules to include those that have
management agreements and joint marketing agreements with the applicant
or licensee.[^204] We will adopt provisions that make attributable the
gross revenues of those that have management or marketing agreements
with the applicant or licensee where such agreements grant authority
over key aspects of the applicant\'s or licensee\'s business.[^205]
Management or joint marketing agreements, for example, may grant
authority to parties other than the applicant or licensee to make
decisions concerning the nature or types of services offered by the
applicant or licensee, the terms upon which such services are offered,
or the prices charged for such services. Such arrangements allow their
holders to exercise control of the applicant or licensee and therefore
should be included.

65\. We decline to adopt a minimum equity requirement for controlling
interests because it is contrary to our goal of providing legitimate
small businesses maximum flexibility in attracting passive financing. A
minimum equity requirement would require any person or entity identified
as a controlling interest to retain some level of equity in the
applicant, thereby reducing the amount of equity the applicant could
offer to non-controlling interests in exchange for financing. This
policy would thus limit a small business\' ability to raise capital and
undermine our intention of promoting small business participation in the
highly competitive telecommunications marketplace.

66\. Further, we do not believe that the adoption of a minimum equity
requirement is necessary to ensure appropriate identification of an
applicant\'s controlling interests if the principles of *de jure* and
*de facto* control are applied. These principles are, in effect, broader
than the minimum equity requirement because they look to actual control
irrespective of the amount of equity held in an applicant. While we
agree with commenters that lack of equity may indicate lack of *de
facto* control,[^206] we are not persuaded that this factor alone is
dispositive.[^207] Rather than focusing solely on equity holdings,
applicants are required to identify those controlling interests that
actually have control through application of the principles of either
*de jure* or *de facto* control. This approach, which has proven
successful in the broadcast context, we conclude, will operate equally
well in our calculation of gross revenues for purposes of determining
eligibility for bidding preferences.[^208] By alerting the Commission to
all attributable interests, application of the principles of *de jure*
and *de facto* control will preclude unqualified applicants from taking
advantage of our small business provisions. Moreover, as discussed in
the *Part 1 Third Report and Order*, requiring detailed ownership
information under Section 1.2112 will ensure that applicants claiming
small business status qualify for such status and that all applicants
comply with spectrum caps and other ownership limits.[^209]

67\. We agree with CIRI that these new rules should not make current C
and F block licensees ineligible to hold their licenses.[^210] The
eligibility of current C and F block licensees to continue to hold their
licenses will not be reassessed based on the new attribution rules.
These licensees will remain eligible to hold their licenses regardless
of whether or not they would qualify under the newly established
attribution rules. Thus far, the Commission has conducted four auctions
of C block licenses using the Part 24 attribution rules.[^211] In many
instances, entities participating in these auctions restructured their
businesses and formulated business relationships based upon our rules in
effect at the time. In good faith, these entities now wish to continue
operating under the Part 24 attribution rules rather than face the
potential disruption caused by restructuring their organizations and/or
altering their business strategies. We see no reason to require that
existing C and F block licensees restructure to meet new standards in
order to remain licensees. As to future C and F block auctions, however,
all applicants, including existing C and F block licensees, will be
subject to the attribution rules in effect at the time of filing their
short-form applications. For auctions that begin within two years after
the start of Auction No. 22, the C, E, and F block auction that began on
March 23, 1999, our new attribution rules will have no effect on the
eligibility as an entrepreneur of any entity that was eligible for, and
participated in, Auction No. 5 or Auction No. 10.[^212] Eligibility for
small business preferences, however, will be determined based on the
attribution rules in effect at the time of an applicant\'s short-form
filing.[^213] Similarly, with respect to transfers of control and
assignments of license, existing C and F block licensees may be
assignees or transferees within the first five years of license grant
consistent with the anti-trafficking provision contained in Section
24.839(d) of the Commission\'s rules.[^214] Non-licensees, however, are
precluded from being assignees or transferees within the first five
years of license grant unless they qualify as entrepreneurs based on the
attribution rules in effect at the time of assignment or transfer.[^215]

**C. Default Payments**

68\. [Background]{.underline}. In the *Second Notice*, we sought comment
on whether we should modify Section 1.2104(g) of our rules to provide
that, where a winning bidder defaults on multiple licenses, the default
payment will be determined based upon the aggregate winning bid and the
aggregate winning bid the next time the licenses are offered by the
Commission.[^216] We sought comment on whether this system could
encourage insincere bidding and defaults since it could greatly reduce
the effective penalty for a default.[^217] We questioned whether, since
the potential defaulter would not be facing the full harm caused by the
default on the additional license, the incentive for insincere bidding
and default would be too great.[^218] Indeed, we continued, this
modification could encourage speculation by encouraging a high bidder on
a relatively high valued license that anticipates default to purposely
bid and default on a relatively low valued license in order to lessen
the default payment assessed under our rules.[^219] Finally, we sought
comment on whether such a modification could function without nullifying
the provision in Section 1.2104(g) that assesses an additional default
payment equal to three percent of the subsequent winning bid or the
amount bid, whichever is lower.[^220] No comments were received on this
issue.

69\. [Discussion]{.underline}. Section 1.2104(g)(2) of the Commission\'s
rules is central to the integrity of the Commission\'s auction
process.[^221] The principal function of this rule is to establish that
the close of the auction creates a binding contractual obligation by the
high bidder to pay the auction price for the license. Whether the
obligation is thereafter breached by a default of payment or by a
failure to qualify to receive the license for which the bid was placed,
the winning bidder\'s liability remains a function of the high bid and
is based on the obligation that was incurred at auction, plus an
additional 3 percent payment as set forth in the rule.[^222]

70\. Without more comment, we will not amend our rule to adopt an
aggregate approach to calculating default payments. Rather, we will
continue to evaluate each licensee\'s default payment obligations on a
license-by-license basis. In other words, we will calculate the default
payment owed on each license separately, even in cases where a single
bidder defaults on multiple licenses. Therefore, licensees may not use a
subsequent auction gain from one defaulted license to reduce default
payments on other licenses that are subsequently auctioned for less than
that originally bid by the defaulting licensee.

71\. When a winning bidder defaults on a license, the bidder becomes
subject to a default payment equal to the difference between the amount
bid and the subsequent winning bid, plus an additional payment equal to
3 percent of the lower of the initial winning bid or the subsequent
winning bid.[^223] In the case of multiple defaults, the Commission has
determined that the amount of the default payment is calculated on a
license-by-license basis and then added together to determine the total
default payment.

72\. Our auction rules were designed to encourage bidders wishing to
withdraw their bids to do so prior to the close of the auction, rather
than default after the auction.[^224] In the case of withdrawal, the
additional 3 percent payment is not required.[^225] Thus no withdrawal
payment is assessed if the subsequent winning bid exceeds the withdrawn
bid.[^226] Encouraging withdrawals over defaults increases auction
efficiency. If a bidder withdraws its bid during the auction, there is
an opportunity for another bidder to win the license. However, if the
bidder defaults after the auction, a new spectrum license must be
auctioned. A bidder that would have bid to win the license after a
withdrawal may not be as willing or able to pay if it has to wait for
another auction before it can obtain the license. In addition to the
time and expense required to auction the new spectrum license and
collect the default payment, a subsequent auction results in a delay in
provision of service to the public.

73\. Were we to allow a bidder that defaults on multiple licenses to
offset subsequent auction losses with subsequent auction gains, we might
encourage insincere bidding and defaults by greatly reducing the
effective penalty for a default. A budget-constrained winning bidder
that anticipates default on a relatively high valued license would have
an incentive to bid and default on a relatively low valued license that
would be likely to bring a higher price at a subsequent auction as a
means of lowering its total default payment under our rules. Moreover,
if the payment for defaults were determined by aggregating subsequent
auction gains and losses, a bidder that would otherwise withdraw a bid
during the auction might have an incentive to default after the auction
instead.[^227] If aggregation of subsequent auction gains and subsequent
auction losses would result in a net gain, the defaulting bidder would
be required to pay only the 3 percent penalty, an amount that could be
lower than the withdrawal payments determined on a license-by-license
basis.

**D. Administrative Filing Periods for Applications and Petitions to
Deny**

74\. [Background]{.underline}. In the *Part 1 Third Report and Order*,
we amended Section 1.2108 of our rules to conform to the provisions in
the Balanced Budget Act of 1997 regarding the filing period for
petitions to deny the long-form applications of winning bidders.[^228]
The Balanced Budget Act of 1997 gives the Commission authority to
shorten the period in which license applications are granted,
notwithstanding Section 309(b) of the Communications Act which generally
prohibits the Commission from granting applications for licenses prior
to 30 days following public notice of their filing.[^229] Section
1.2108, as amended, provides that the Commission shall not grant a
license less than seven days after public notice that long-form
applications have been accepted for filing and that, in all cases, the
period for filing petitions to deny such applications shall be no
shorter than five days.[^230]

75\. Although noting our belief that a shortened petition to deny period
is appropriate for future auctions, we sought comment on the appropriate
length of a petition to deny period in light of this legislation.[^231]
For example, we sought comment on whether there are instances in which
the Commission should provide for a longer period than the minimums set
forth in the statute for the filing of petitions to deny or for the
grant of initial licenses in auctionable services (five days and seven
days, respectively).[^232] In particular, we asked commenters to address
whether auctions for specific services (*e.g.*, broadcast licenses)
require longer periods for the filing of petitions to deny and why this
may be so.[^233] No comments on these matters were received.

76\. [Discussion]{.underline}. We will adopt our proposal to shorten
administrative filing periods, when possible, as directed by the
Balanced Budget Act of 1997. This conclusion is consistent with our
mandate in Section 309(j)(3)(A) of the Communications Act, which
obligates us to promote \"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*.\"[^234]

77\. In order to have a consistent and general rule for filing petitions
to deny, we will establish a maximum ten-day period for the filing of
such petitions. However, because the provision in the Balanced Budget
Act anticipates \-- and we believe \-- that the appropriate period for
filing petitions to deny may vary from service to service, we will
delegate to the appropriate licensing bureau the discretion, to be
exercised in exigent circumstances, to reduce this period. This reduced
filing period may not be shorter than that prescribed by the Balanced
Budget Act. We will increase the time period from 5 days (as originally
adopted in the rule) to 10 days in order to afford parties (including
small businesses) additional flexibility in challenging license awards.
This approach, we believe, is consistent with the intent of Congress in
the Balanced Budget Act to more expeditiously resolve these disputes
while, at the same time, ensuring that all parties (particularly small
businesses) have a reasonable opportunity to exercise their rights under
the Communications Act.

**E. Conclusion**

78\. In the *Part 1 Third Report and Order*, we stated that \"\[t\]hese
changes to our general competitive bidding rules are intended to
streamline our regulations and eliminate unnecessary rules wherever
possible . . . .\"[^235] With the issuance of this *Order on
Reconsideration of the Third Report and Order, Fifth Report and Order,
and Fourth Further Notice of Proposed Rule Making*, we have made a
majority of the Part 1 rule changes contemplated in our efforts to
streamline the competitive bidding regulations. The next step in this
process is to eliminate unnecessary rules to the best of our ability at
this time. Some service-specific rules repeat portions of our new Part 1
rules almost verbatim;[^236] others contain obvious discrepancies.[^237]
In our attempt to provide the most specific guidance possible to future
auction participants, we believe it is in the public interest to conform
the service-specific auction rules to the general competitive bidding
rules in cases of obvious repetition and where the Commission
specifically superseded inconsistent rules in the course of the Part 1
proceeding. We hereby instruct the Wireless Telecommunications Bureau to
make conforming edits to the Code of Federal Regulations consistent with
this decision.

# FOURTH FURTHER NOTICE OF PROPOSED RULE MAKING

**A. Introduction**

79\. In this *Fourth Further Notice of Proposed Rule Making*, we seek
comments on a total assets test to determine small business status and
propose exceptions to the attribution rule\'s requirement that certain
stock interests be counted on a \"fully diluted\" basis.

**B. Rules Governing Designated Entities**

**1. Total Assets Test**

80\. [Background]{.underline}. In the first *Notice of Proposed
Rulemaking* in this proceeding, we proposed to define small businesses,
for the purposes of auctions, \"purely in terms of gross
revenues.\"[^238] In another proceeding, we observed that \"\[a\]ssets,
being potentially fluid and subject to inconsistent valuation . . . are
generally much less ascertainable than gross revenues . . . .\"[^239] In
the *Part 1 Third Report and Order*, we adopted our proposal to use
gross revenues as our general standard for measuring a business\' size.
We indicated at that time that a gross revenues-based standard provides
\"an accurate, equitable, and easily ascertainable measure of business
size.\"[^240] Furthermore, we observed that while a total assets test
had been used in the past to determine eligibility for participation in
entrepreneur block auctions, it had not been employed for determining
small business eligibility.[^241] We also relied on the Small Business
Act, which controls how agencies may prescribe size standards for
categorizing small businesses. This statute provides no assets test for
categorizing business concerns that provide services.[^242]

81\. [Discussion]{.underline}. The Commission intends its small business
provisions to be available only to bona fide small businesses. While we
have concluded in the past to use gross revenues as the measure of
business size, based on correspondence from the Small Business
Administration, we take this opportunity to revisit the issue of whether
to use a total assets test as well.[^243] We seek comment on whether the
use of a total assets test, in conjunction with the gross revenues
measure already employed, would enhance the Commission\'s determinations
of small business status. For example, commenters may address whether a
gross revenues standard alone allows participation of legitimate
start-up companies that are supported only by assets held by affiliates.
In the alternative, commenters should address whether our comprehensive
affiliation rules counterbalance the effects of a gross revenues
standard when applied to such enterprises. We ask that commenters cite
to specific statistical and/or anecdotal evidence when addressing these
issues. If supporting use of an assets test, commenters should address
appropriate thresholds for small business determinations. For example,
commenters may address whether the \$500 million total assets test used
in determining eligibility for entrepreneurs\' block auctions provides a
suitable benchmark.[^244] A more complete record on this matter will
assist the Commission in meeting its goals for small business
participation in future spectrum auctions.

**2. Attribution of Gross Revenues or Total Assets of Investors and
Affiliates**

82\. [Background]{.underline}. In the *Second Notice*, we sought further
comment on whether to adopt a \"controlling interest\" standard as our
general rule for attributing to an applicant the gross revenues of its
investors and their affiliates in determining whether the applicant is
eligible for small business preferences.[^245] In this *Fifth Report and
Order*, we adopt the \"controlling interest\" standard as our general
attribution rule for all future auctions.[^246] For purposes of
calculating equity held in an applicant, the \"controlling interest\"
definition provides for full dilution of certain stock interests, such
as warrants, stock options, and convertible debentures.[^247]
Accordingly, under the rule we adopt today, as well as under our
existing rules, agreements of this type are generally treated as if the
rights thereunder have been fully exercised.[^248] In our Competitive
Bidding *Fifth Memorandum Opinion and Order* (\"*Fifth M O & O*\"), we
established two exceptions to the \"fully diluted\" requirement for the
broadband PCS attribution rule.[^249] We decided that two types of
ownership interests, \"rights of first refusal\" and \"put\" options,
would not be considered on a fully diluted basis for purposes of
calculating ownership levels.[^250]

83\. [Discussion]{.underline}. In this *Fourth Notice*, we seek comment
on whether to incorporate into our Part 1 general competitive bidding
rules the two exceptions we adopted for our broadband PCS attribution
rule. We also seek comment on a proposed third exception to our general
requirement that we treat certain stock interests as \"fully
exercised.\"

84\. Our attribution rules are designed to preserve control of the
applicant by eligible entities while allowing investment in the
applicant by entities that do not meet the size restrictions in our
rules.[^251] We recognize that some forms of stock options and
convertible debt instruments are common and often beneficial to the
management of a company. Convertible debt instruments may also allow
designated entities to obtain debt financing at a lower cost than would
otherwise be available, thereby preserving working capital for such uses
as the further construction of facilities. Because our rules generally
require us to treat stock interests on a fully diluted basis, if an
applicant grants its lender stock conversion rights in several
promissory notes, the lender\'s equity could exceed the applicable limit
or threshold, thus requiring the applicant to include the lender\'s
gross revenues in determining its eligibility as a designated entity.

85\. Our proposed exception to the general attribution rule is a
refinement to the \"fully diluted\" requirement that addresses stock
conversion rights that are granted on a contingent basis. An applicant
may grant conversion rights on a contingent basis, such rights vesting
only in the event that the lender first assigns or transfers all
interest in one or more other debt instruments to a qualified
unaffiliated third party.[^252] Thus, the contingent right of conversion
in one debt instrument could only be exercised upon divestiture of
enough equity associated with the other debt instruments to allow the
lender to remain below the applicable equity limit.

86\. We tentatively conclude that furtherance of the policy underlying
Section 1.2110(c)(5)(v) of our designated entities rule does not require
us to consider all existing stock conversion rights as having been fully
exercised simultaneously in a case where exercise of the various
conversion rights are mutually exclusive by their terms.[^253] We
therefore propose an exception to the \"fully diluted\" requirement in
Section 1.2110(c)(5)(v) to permit conversion rights or stock options to
be considered individually rather than collectively when they are
mutually exclusive.[^254] Under this interpretation, for the purpose of
calculating ownership interests, all stock interests would continue to
be calculated on a fully diluted basis, but if a stock interest by its
terms is mutually exclusive of one or more other stock interests, the
various ownership interests would be treated as having been fully
exercised only in the possible combinations in which they can be
exercised by their holder.[^255]

87\. We seek comment on whether we should amend the controlling interest
standard in our Part 1 general competitive bidding rules to include this
exception to our requirement for calculating ownership interests on a
fully diluted basis. Under the proposed rule, ownership interests that
by their terms are capable of being exercised simultaneously or
successively would continue to be treated collectively as if the rights
thereunder have been fully exercised. Ownership interests that are
mutually exclusive would be considered separately, but each mutually
exclusive ownership interest would be considered in combination with all
other ownership interests that are capable of being exercised with it
simultaneously or successively.[^256] Thus, in calculating the equity
held in an applicant, we propose to consider the various combinations of
stock options or conversion rights that could possibly be exercised by
an investor. For each combination, the ownership interests would be
considered to have been fully exercised, and each combination would then
be reviewed in the context of the specific equity limit or threshold
applicable in a given case. We also propose that, for purposes of this
rule, we consider one ownership interest to be mutually exclusive of
another only if the agreement that conveys the first interest contains
explicit language making it clear that the rights conveyed by that
agreement cannot be exercised unless all ownership rights associated
with the other agreement are either terminated or transferred or
assigned to a qualified unaffiliated third party.

88\. We further propose to codify in our Part 1 general competitive
bidding rules the policy under which we have previously adopted two
exceptions to our broadband PCS attribution rule for the same reasons
identified in the *Fifth M O & O*.[^257] Under these exceptions, we
would not treat \"rights of first refusal\" and \"put\" options as
having been exercised for purposes of calculating ownership levels. We
seek comment on this proposal.

# PROCEDURAL MATTERS AND ORDERING CLAUSES

## Regulatory Flexibility Analyses

89\. Pursuant to the Regulatory Flexibility Act,[^258] a Supplemental
Final Regulatory Flexibility Analysis for the *Order on Reconsideration*
is attached at Appendix C.

90\. A Final Regulatory Flexibility Analysis for the *Fifth Report and
Order* is contained in Appendix D.

91\. An Initial Regulatory Flexibility Analysis ("IRFA") for the *Fourth
Notice* is attached at Appendix E.[^259] Comments on the IRFA should be
labelled as IRFA Comments, and should be submitted pursuant to the
filing dates and procedures set forth in paragraphs 94-97, *infra*.

## Paperwork Reduction Act Analysis

92\. This *Order on Reconsideration of the Third Report and Order, Fifth
Report and Order, and Fourth Further Notice of Proposed Rule Making*
contains either a proposed or modified information collection. As part
of its continuing effort to reduce paperwork burdens, we invite the
general public and the Office of Management and Budget ("OMB") to take
this opportunity to comment on the information collections contained in
this *Order on Reconsideration of the Third Report and Order, Fifth
Report and Order, and Fourth Further Notice of Proposed Rule Making* as
required by the Paperwork Reduction Act of 1995, Pub. L. No. 104-13.
Public and agency comments are due 60 days after publication of the
*Order on Reconsideration of the Third Report and Order, Fifth Report
and Order, and Fourth Further Notice of Proposed Rule Making* in the
Federal Register. Comments should address: (a) whether the proposed
collection of information is necessary for the proper performance of the
functions of the Commission, including whether the information shall
have practical utility; (b) the accuracy of the Commission\'s burden
estimates; (c) ways to enhance the quality, utility and clarity of the
information collected; and (d) ways to minimize the burden of the
collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology.

93\. In addition to filing comments on the information collections
contained in this *Fifth Report and Order* with the Secretary, a copy of
any comments on the information collections should be submitted to Judy
Boley, Federal Communications Commission, Room 1-C804, 445 12^th^ Street
S.W., Washington, DC 20554, or via the Internet to <jboley@fcc.gov> and
to Edward Springer, OMB Desk Officer, 10236 NEOB, 725 -- 17^th^ Street,
N.W., Washington, DC 20503 or via the Internet to
edward.springer@omb.eop.gov."

## Filing Procedures

94\. Pursuant to Sections 1.415 and 1.419 of the Commission\'s rules, 47
C.F.R. §§ 1.415, 1.419, interested parties may file comments on or
before 45 days after publication in the Federal Register, and reply
comments on or before 66 days after publication in the Federal Register.
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,* 13 FCC Rcd 11322, 11326 (1998).

95\. 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 obtain 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 \<your e-mail
address\>.\" A sample form and directions will be sent in reply.

96\. Parties that 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. All filings must be sent to the Commission\'s Secretary, Magalie
Roman Salas, Office of the Secretary, Federal Communications Commission,
The Portals, 445 12th Street, S.W., Room TW-A325, Washington, D.C.
20554. In addition, a courtesy copy should be delivered to Leora
Hochstein, Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau, Federal Communications Commission, 445 12th
Street, S.W., Room #4A633, Washington, D.C. 20554.

97\. 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 and duplication
during regular business hours in the FCC Reference Information Center,
Room CY-A257, 445 12th Street, S.W., Washington, DC 20554. Copies also
may be obtained from International Transcription Services, Inc., 445
12th Street, S.W., Room CY-B400, Washington, DC 20554, (202) 314-3070.

## Contacts for Further Information

98\. For further information concerning this *Order on Reconsideration
of the Third Report and Order, Fifth Report and Order*, *and Fourth
Further Notice of Proposed Rule Making*, contact Leora Hochstein at
(202) 418-1022 (Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau). For additional information concerning the
information collections contained in this *Order on Reconsideration of
the Third Report and Order, Fifth Report and Order*, *and Fourth Further
Notice of Proposed Rule Making*, contact Judy Boley at (202) 418-0214 or
via the Internet at jboley@fcc.gov.

## Ordering Clauses

99\. Accordingly, IT IS ORDERED that, pursuant to the authority granted
in 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), the petitions for
reconsideration and informal requests for clarification filed in
response to the *Part 1 Third Report and Order* are GRANTED IN PART and
DENIED IN PART, as provided herein.

100\. IT IS FURTHER ORDERED that, pursuant to the authority granted in
Sections 4(i), 5(b), 5(c)(1), 303(r), and 309(j) of the Communications
Act of 1934, as amended, 47 U.S.C. §§ 154(i), 155(b) 155(c)(1), 303(r),
and 309(j), this *Order on Reconsideration of the Third Report and
Order, Fifth Report and Order, and Fourth Further Notice of Proposed
Rule Making* is hereby ADOPTED and Part 1, Subpart Q of the Commission's
rules are amended as set forth in Appendix A, effective 60 days after
publication in the *Federal Register*. The information collection
contained in these rules becomes effective 60 days after publication in
the *Federal Register*, following OMB approval, unless a notice is
published in the *Federal Register* stating otherwise.

101\. IT IS FURTHER ORDERED that, pursuant to 47 U.S.C. § 155(c) and 47
C.F.R. §§ 0.131(c) and 0.331, the Chief of the Wireless
Telecommunications Bureau IS GRANTED DELEGATED AUTHORITY to prescribe
and set forth procedures for the implementation of the provisions
adopted herein, including the authority to seek comment on and set forth
mechanisms relating to the day-to-day conduct of specific auctions.

102\. IT IS FURTHER ORDERED that the Consumer Information Bureau,
Reference Information Center, SHALL SEND a copy of this *Order on
Reconsideration of the Third Report and Order, Fifth Report and Order,
and Fourth Further Notice of Proposed Rule Making*, including the
Supplemental Final Regulatory Flexibility Analysis, the Final Regulatory
Flexibility Analysis, and the Initial Regulatory Flexibility Analysis to
the Chief Counsel for Advocacy of the Small Business Administration.

FEDERAL COMMUNICATIONS COMMISSION

> Magalie Roman Salas

Secretary

**APPENDIX A**

**Final Rules**

Part 1 of title 47 of the Code of Federal Regulations is revised to read
as follows:

1\. Section 1.2104 is amended by revising paragraphs (g)(1) and (g)(2)
to read as follows:

**[§ 1.2104 Competitive bidding mechanisms]{.underline}.**

\* \* \* \* \*

\(g\) \* \* \*

\(1\) [Bid withdrawal prior to close of auction]{.underline}. A bidder
that withdraws a high bid during the course of an auction is subject to
a withdrawal payment equal to the difference between the amount of the
withdrawn bid and the amount of the winning bid in the same or
subsequent auction(s). In the event that a bidding credit applies to any
of the bids, the bid withdrawal payment is either the difference between
the net withdrawn bid and the subsequent net winning bid, or the
difference between the gross withdrawn bid and the subsequent gross
winning bid, whichever is less. No withdrawal payment will be assessed
for a withdrawn bid if either the subsequent winning bid or any of the
intervening subsequent withdrawn bids equals or exceeds that withdrawn
bid. The withdrawal payment amount is deducted from any upfront payments
or down payments that the withdrawing bidder has deposited with the
Commission. In the case of multiple bid withdrawals on a single license,
the payment for each bid withdrawal will be calculated based on the
sequence of bid withdrawals and the amounts withdrawn in the same or
subsequent auction(s). In the event that a license for which there have
been withdrawn bids is not won in the same auction, those bidders for
which a final withdrawal payment cannot be calculated will be assessed
an interim bid withdrawal payment equal to 3 percent of the amount of
their bid withdrawals. The 3 percent interim payment will be applied
toward any final bid withdrawal payment that will be assessed at the
close of the subsequent auction of the license.

[Example]{.underline}: (1) Bidder A withdraws a bid of \$100.
Subsequently, Bidder B places a bid of \$90 and withdraws. In that same
auction, Bidder C wins the license at a bid of \$95. Withdrawal payments
are assessed as follows: Bidder A owes \$5 (\$100 - \$95). Bidder B owes
nothing.

[Example]{.underline}: (2) Bidder A withdraws a bid of \$100.
Subsequently, Bidder B places a bid of \$95 and withdraws. In that same
auction, Bidder C wins the license at a bid of \$90. Withdrawal payments
are assessed as follows: Bidder A owes \$5 (\$100 - \$95). Bidder B owes
\$5 (\$95 - \$90).

[Example]{.underline}: (3) Bidder A withdraws a bid of \$100.
Subsequently, in that same auction, Bidder B places a bid of \$90 and
withdraws. In a subsequent auction, Bidder C places a bid of \$95 and
withdraws. Bidder D wins the license in that auction at a bid of \$80.
Withdrawal payments are assessed as follows: At the end of the first
auction, Bidder A and Bidder B are each assessed an interim withdrawal
payment equal to 3 percent of their withdrawn bids pending Commission
assessment of a final withdrawal payment (Bidder A would owe 3% of
\$100, or \$3, and Bidder B would owe 3% of \$90, or \$2.70). At the end
of the second auction, Bidder A would owe \$5 (\$100 - \$95) less the
\$3 interim withdrawal payment for a total of \$2. Because Bidder C
placed a subsequent bid that was higher than Bidder B\'s \$90 bid,
Bidder B would owe nothing. Bidder C would owe \$15 (\$95 - \$80).

\(2\) [Default or disqualification after close of auction]{.underline}.
A bidder assumes a binding obligation to pay its full bid amount upon
acceptance of the high bid at the close of an auction. If a high bidder
defaults or is disqualified after the close of such an auction, the
defaulting bidder will be subject to the payment in paragraph (g)(1) of
this section plus an additional payment equal to 3 percent of the
subsequent winning bid. If the subsequent winning bid exceeds the
defaulting bidder\'s bid amount, the 3 percent payment will be
calculated based on the defaulting bidder\'s bid amount. If either bid
amount is subject to a bidding credit, the 3 percent credit will be
calculated using the same bid amounts and basis (net or gross bids) as
in the calculation of the payment in paragraph (g)(1) of this section.
Thus, for example, if gross bids are used to calculate the payment in
paragraph (g)(1) of this section, the 3 percent will be applied to the
gross amount of the subsequent winning bid, or the gross amount of the
defaulting bid, whichever is less.

\* \* \* \* \*

2\. Section 1.2105 is amended by revising paragraphs (a)(2)(xi) and
(c)(1) to read as follows:

**[§ 1.2105 Bidding application and certification procedures;
prohibition of collusion]{.underline}.**

\* \* \* \* \*

(a)(2) \* \* \*

\(xi\) An attached statement made under penalty of perjury indicating
whether or not the applicant has ever been in default on any Commission
license or has ever been delinquent on any non-tax debt owed to any
Federal agency.

\* \* \* \* \*

\(c\) [Prohibition of collusion]{.underline}. (1) Except as provided in
paragraphs (c)(2), (c)(3) and (c)(4) of this section, after the
short-form application filing deadline, all applicants are prohibited
from cooperating, collaborating, discussing or disclosing in any manner
the substance of their bids or bidding strategies, or discussing or
negotiating settlement agreements, with other applicants until after the
down payment deadline, unless such applicants are members of a bidding
consortium or other joint bidding arrangement identified on the
bidder\'s short-form application pursuant to § 1.2105(a)(2)(viii).

\* \* \* \* \*

3\. Section 1.2106 is amended by revising paragraph (a) to read as
follows:

[**§** **1.2106 Submission of upfront payments**]{.underline}**.**

\(a\) The Commission may require applicants for licenses subject to
competitive bidding to submit an upfront payment. In that event, the
amount of the upfront payment and the procedures for submitting it will
be set forth in a Public Notice. Any auction applicant that has
previously been in default on any Commission license or has previously
been delinquent on any non-tax debt owed to any Federal agency must
submit an upfront payment equal to 50 percent more than that set for
each particular license. No interest will be paid on upfront payments.

\* \* \* \* \*

4\. Section 1.2108 is amended by revising paragraph (b) to read as
follows:

[**§** **1.2108 Procedures for filing petition to deny against long-form
applications**]{.underline}**.**

\* \* \* \* \*

\(b\) Within a period specified by Public Notice, and after the
Commission by Public Notice announces that long-form applications have
been accepted for filing, petitions to deny such applications may be
filed. The period for filing petitions to deny shall be no more than ten
(10) days. The appropriate licensing Bureau, within its discretion, may,
in exigent circumstances, reduce this period of time to no less than
five (5) days. Any such petitions must contain allegations of fact
supported by affidavit of a person or persons with personal knowledge
thereof.

\* \* \* \* \*

5\. Section 1.2110 is amended by redesignating paragraphs (b) through
(m) as (c) through (n), adding new paragraph (b), and revising newly
redesignated paragraphs (c), (g)(4), and (j) to read as follows:

**[§ 1.2110 Designated entities]{.underline}.**

\* \* \* \* \*

\(b\) Eligibility for small business provisions.

\(1\) [Size attribution]{.underline}. The [gross revenues]{.underline}
of the applicant (or licensee), its [controlling interests]{.underline}
and their [affiliates]{.underline} shall be attributed to the applicant
and considered on a cumulative basis and aggregated for purposes of
determining whether the applicant (or licensee) is eligible for status
as a small business under this section. An applicant seeking status as a
small business under this section must disclose on its short- and
long-form applications, separately and in the aggregate, the [gross
revenues]{.underline} of the applicant (or licensee), its [controlling
interests]{.underline} and their [affiliates]{.underline} for each of
the previous three years.

\(2\) [Aggregation of affiliate interests]{.underline}. Persons or
entities that hold interests in an applicant (or licensee) that are
[affiliates]{.underline} of each other or have an identity of interests
identified in [§]{.underline} 1.2110(c)(5)(iii) will be treated as
though they were one person or entity and their ownership interests
aggregated for purposes of determining an applicant\'s (or licensee\'s)
compliance with the requirements of this section.

[Example 1]{.underline}: ABC Corp. is owned by individuals, A, B and C,
each having an equal one-third voting interest in ABC Corp. A and B
together, with two-thirds of the stock have the power to control ABC
Corp. and have an identity of interest. If A&B invest in DE Corp., a
broadband PCS applicant for block C, A and B\'s separate interests in DE
Corp. must be aggregated because A and B are to be treated as one person
or entity.

[Example 2]{.underline}: ABC Corp. has subsidiary BC Corp., of which it
holds a controlling 51 percent of the stock. If ABC Corp. and BC Corp.,
both invest in DE Corp., their separate interests in DE Corp. must be
aggregated because ABC Corp. and BC Corp. are affiliates of each other.

\(3\) [Exceptions]{.underline}. (i) Small business consortia. Where an
applicant (or licensee) is a [consortium of small
businesses]{.underline}, the [gross revenues]{.underline} of each small
business consortium member shall not be aggregated. Each small business
consortium member must constitute a separate and distinct legal entity
to qualify.

\(ii\) Applicants without identifiable controlling interests. Where an
applicant (or licensee) cannot identify controlling interests under the
standards set forth in this section, the gross revenues of all interest
holders in the applicant, and their affiliates, will be attributable.

\(c\) *[Definitions]{.underline}.*

\(1\) [Small businesses]{.underline}. The Commission will establish the
definition of a small business on a service-specific basis, taking into
consideration the characteristics and capital requirements of the
particular service.

\(2\) [Controlling interests]{.underline}. (i) For purposes of this
section, controlling interest includes individuals or entities with
either *de jure* or *de facto* control of the applicant. *De jure*
control is evidenced by holdings of greater than 50 percent of the
voting stock of a corporation, or in the case of a partnership, general
partnership interests. *De facto* control is determined on a
case-by-case basis. An entity must disclose its equity interest and
demonstrate at least the following indicia of control to establish that
it retains *de facto* control of the applicant:

\(A\) the entity constitutes or appoints more than 50 percent of the
board of directors or management committee;

\(B\) the entity has authority to appoint, promote, demote, and fire
senior executives that control the day-to-day activities of the
licensee; and

\(C\) the entity plays an integral role in management decisions.

\(ii\) [Calculation of certain interests]{.underline}.

\(A\) Ownership interests shall be calculated on a fully diluted basis;
all agreements such as warrants, stock options and convertible
debentures will generally be treated as if the rights thereunder already
have been fully exercised.

\(B\) Partnership and other ownership interests and any stock interest
equity, or outstanding stock, or outstanding voting stock shall be
attributed as specified below.

\(C\) Stock interests held in trust shall be attributed to any person
who holds or shares the power to vote such stock, to any person who has
the sole power to sell such stock, and to any person who has the right
to revoke the trust at will or to replace the trustee at will. If the
trustee has a familial, personal, or extra‑trust business relationship
to the grantor or the beneficiary, the grantor or beneficiary, as
appropriate, will be attributed with the stock interests held in trust.

\(D\) Non‑voting stock shall be attributed as an interest in the issuing
entity.

\(E\) Limited partnership interests shall be attributed to limited
partners and shall be calculated according to both the percentage of
equity paid in and the percentage of distribution of profits and losses.

\(F\) Officers and directors of an entity shall be considered to have a
controlling interest in the entity. The officers and directors of an
entity that controls a licensee or applicant shall be considered to have
a controlling interest in the licensee or applicant.

\(G\) Ownership interests that are held indirectly by any party through
one or more intervening corporations will be determined by successive
multiplication of the ownership percentages for each link in the
vertical ownership chain and application of the relevant attribution
benchmark to the resulting product, except that if the ownership
percentage for an interest in any link in the chain exceeds 50 percent
or represents actual control, it shall be treated as if it were a 100
percent interest.

\(H\) Any person who manages the operations of an applicant or licensee
pursuant to a management agreement shall be considered to have a
controlling interest in such applicant or licensee if such person, or
its affiliate, has authority to make decisions or otherwise engage in
practices or activities that determine, or significantly influence:

([1]{.underline}) The nature or types of services offered by such an
applicant or licensee;

([2]{.underline}) The terms upon which such services are offered; or

([3]{.underline}) The prices charged for such services.

\(I\) Any licensee or its affiliate who enters into a joint marketing
arrangement with an applicant or licensee, or its affiliate, shall be
considered to have a controlling interest, if such applicant or
licensee, or its affiliate, has authority to make decisions or otherwise
engage in practices or activities that determine, or significantly
influence:

([1]{.underline}) The nature or types of services offered by such an
applicant or licensee;

([2]{.underline}) The terms upon which such services are offered; or

([3]{.underline}) The prices charged for such services.

\(3\) Businesses owned by members of minority groups and/or women.
Unless otherwise provided in rules governing specific services, a
business owned by members of minority groups and/or women is one in
which minorities and/or women who are U.S. citizens control the
applicant, have at least greater than 50 percent equity ownership and,
in the case of a corporate applicant, have a greater than 50 percent
voting interest. For applicants that are partnerships, every general
partner must be either a minority and/or woman (or minorities and/or
women) who are U.S. citizens and who individually or together own at
least 50 percent of the partnership equity, or an entity that is 100
percent owned and controlled by minorities and/or women who are U.S.
citizens. The interests of minorities and women are to be calculated on
a fully diluted basis; agreements such as stock options and convertible
debentures shall be considered to have a present effect on the power to
control an entity and shall be treated as if the rights thereunder
already have been fully exercised. However, upon a demonstration that
options or conversion rights held by non-controlling principals will not
deprive the minority and female principals of a substantial financial
stake in the venture or impair their rights to control the designated
entity, a designated entity may seek a waiver of the requirement that
the equity of the minority and female principals must be calculated on a
fully-diluted basis. The term minority includes individuals of Black or
African American, Hispanic or Latino, American Indian or Alaskan Native,
Asian, and Native Hawaiian or Pacific Islander extraction. *See* Office
of Management and Budget, Revisions to Standards for the Classification
of Federal Data on Race Ethnicity, *Notice of Decision*, 62 FR 58782
(October 30, 1997).

\* \* \* \* \*

\(g\) \* \* \*

\(4\) A license granted to an eligible entity that elects installment
payments

shall be conditioned upon the full and timely performance of the
licensee\'s payment obligations under the installment plan.

\(i\) Any licensee that fails to submit its quarterly payment on an
installment payment obligation (the "Required Installment Payment") may
submit such payment on or before the last day of the next quarter (the
\"first additional quarter\") without being considered delinquent. Any
licensee making its Required Installment Payment during this period (the
\"first additional quarter grace period\") will be assessed a late
payment fee equal to five percent (5%) of the amount of the past due
Required Installment Payment. The late payment fee applies to the total
Required Installment Payment regardless of whether the licensee
submitted a portion of its Required Installment Payment in a timely
manner.

\(ii\) If any licensee fails to make the Required Installment Payment on
or before the last day of the first additional quarter set forth in
paragraph (i) of this section, the licensee may submit its Required
Installment Payment on or before the last day of the next quarter (the
\"second additional quarter\"), except that no such additional time will
be provided for the July 31, 1998 suspension interest and installment
payments from C or F block licensees that are not made within 90 days of
the payment resumption date for those licensees, as explained in
Amendment of the Commission\'s Rules Regarding Installment Payment
Financing for Personal Communications Services (PCS) Licensees, *Order
on Reconsideration of the Second Report and Order*, WT Docket No. 97‑82,
13 FCC Rcd 8345 (1998). Any licensee making the Required Installment
Payment during the second additional quarter (the \"second additional
quarter grace period\") will be assessed a late payment fee equal to ten
percent (10%) of the amount of the past due Required Installment
Payment. Licensees shall not be required to submit any form of request
in order to take advantage of the first and second additional quarter
grace periods.

\(iii\) All licensees that avail themselves of these grace periods must
pay the associated late payment fee(s) and the Required Installment
Payment prior to the conclusion of the applicable additional quarter
grace period(s). Payments made at the close of any grace period(s) will
first be applied to satisfy any lender advances as required under each
licensee\'s \"Note and Security Agreement,\" with the remainder of such
payments applied in the following order: late payment fees, interest
charges, installment payments for the most back-due quarterly
installment payment.

\(iv\) If an eligible entity obligated to make installment payments
fails to pay the total Required Installment Payment, interest and any
late payment fees associated with the Required Installment Payment
within two quarters (6 months) of the Required Installment Payment due
date, it shall be in default, its license shall automatically cancel,
and it will be subject to debt collection procedures. A licensee in the
PCS C or F blocks shall be in default, its license shall automatically
cancel, and it will be subject to debt collection procedures, if the
payment due on the payment resumption date, referenced in paragraph
(g)(4)(ii) of this section, is more than ninety (90) days delinquent.

\* \* \* \* \*

\(j\) Designated entities must describe on their long-form applications
how they satisfy the requirements for eligibility for designated entity
status, and must list and summarize on their long-form applications all
agreements that affect designated entity status such as partnership
agreements, shareholder agreements, management agreements and other
agreements, including oral agreements, establishing, as applicable, *de
facto* or *de jure* control of the entity. Such information must be
maintained at the licensees\' facilities or by their designated agents
for the term of the license in order to enable the Commission to audit
designated entity eligibility on an ongoing basis.

\* \* \* \* \*

6\. Section 1.2112 is revised to read as follows:

[**§** **1.2112 Ownership disclosure requirements for short- and
long-form applications**]{.underline}**.**

\(a\) Each application to participate in competitive bidding (*i.e*.,
short-form application (*see* 47 CFR 1.2105)), or for a license,
authorization, assignment, or transfer of control shall disclose fully
the real party or parties in interest and must list the following
information:

\(1\) The name, address, and citizenship of any party holding 10 percent
or more of stock in the applicant, whether voting or nonvoting, common
or preferred, including the specific amount of the interest or
percentage held.

\(2\) In the case of a limited partnership, the name, address and
citizenship of each limited partner whose interest in the applicant is
10 percent or greater (as calculated according to the percentage of
equity paid in or the percentage of distribution of profits and losses);

\(3\) In the case of a general partnership, the name, address and
citizenship of each partner, and the share or interest participation in
the partnership;

\(4\) In the case of a limited liability company, the name, address and
citizenship of each of its members whose interest in the applicant is 10
percent or greater.

\(5\) All parties holding indirect ownership interests in the applicant
as determined by successive multiplication of the ownership percentages
for each link in the vertical ownership chain, that equals 10 percent or
more of the applicant, except that if the ownership percentage for an
interest in any link in the chain exceeds 50 percent or represents
actual control, it shall be treated and reported as if it were a 100
percent interest.

\(6\) Any FCC-licensed entity or applicant for an FCC license, in which
the applicant or any of the parties identified in subparagraphs (1)
through (5) of above, owns 10 percent or more of stock, whether voting
or nonvoting, common or preferred. This list must include a description
of each such entity\'s principal business and a description of each such
entity\'s relationship to the applicant (*e.g.*, Company A owns 10
percent of Company B (the applicant) and 10 percent of Company C, then
Companies A and C must be listed on Company B\'s application, where C is
an FCC licensee and/or license applicant);

\(b\) *[Designated Entity Status]{.underline}*: In addition to the
information required under paragraph (a) of this section, each applicant
claiming eligibility for small business provisions shall disclose the
following:

\(1\) On its application to participate in competitive bidding (*i.e.*,
short-form application (*see* 47 CFR 1.2105)),

> \(i\) List the names, addresses, and citizenship of all officers,
> directors, and other controlling interests of the applicant, as
> described in §1.2110;
>
> \(ii\) List any FCC-licensed entity or applicant for an FCC license,
> in which any controlling interest of the applicant owns a 10 percent
> or greater interest or a total of 10 percent or more of any class of
> stock, warrants, options or debt securities. This list must include a
> description of each such entity\'s principal business and a
> description of each such entity\'s relationship to the applicant;

\(iii\) List separately and in the aggregate the gross revenues,
computed in accordance with § 1.2110, for each of the following: the
applicant, its affiliates, its controlling interests, and affiliates of
its controlling interests; and if a consortium of small businesses, the
members comprising the consortium;

\(2\) As an exhibit to its long-form application (*[i.e]{.underline}.*,
*[see]{.underline}* 47 CFR 1.2107):

> \(i\) List and summarize all agreements or instruments (with
> appropriate references to specific provisions in the text of such
> agreements and instruments) that support the applicant\'s eligibility
> as a small business under the applicable designated entity provisions,
> including the establishment of *de facto* or *de jure* control*;* such
> agreements and instruments include articles of incorporation and
> bylaws, shareholder agreements, voting or other trust agreements,
> franchise agreements, and any other relevant agreements (including
> letters of intent), oral or written; and

\(ii\) List and summarize any investor protection agreements, including
rights of first refusal, supermajority clauses, options, veto rights,
and rights to hire and fire employees and to appoint members to boards
of directors or management committees.

(iii) List separately and in the aggregate the gross revenues, computed
      in accordance with § 1.2110, for each of the following: the
      applicant, its affiliates, its controlling interests, and
      affiliates of its controlling interests; and if a consortium of
      small businesses, the members comprising the consortium.

**APPENDIX B**

**List of Parties**

**I. Order on Reconsideration**

[Petitions for Reconsideration]{.underline}

Alpine PCS, Inc., *et al.* (\"Alpine PCS\")

Community Teleplay, Inc. (\"CTI\")

DiGiPH PCS, Inc. (\"DiGiPH\")

Loli, Inc. *et al.* (\"Loli\")

NextWave Telecom Inc. (\"NextWave\")

[Petition for Limited Reconsideration and Clarification]{.underline}

CONXUS Communications, Inc. (\"CONXUS\")

[Petition for Partial Reconsideration]{.underline}

Houston 936 SMR, Inc. (\"Houston 936\")

[Comments]{.underline}

Bellingham Corporation and Pueblo Communications, Inc. (\"Bellingham\")

In-Sync Interactive/Akron, Inc. *et al.* (\"In-Sync\")

[Comments on Section 1.2112 Filed in Universal Licensing System
Proceeding]{.underline}

Comments of AT&T Wireless Services, Inc. (\"AT&T\")

Comments of Bell Atlantic Mobile, Inc. (\"BAM\")

Comments of The Federal Communications Bar Association (\"FCBA\")

Reply Comments of The Federal Communications Bar Association

**II. Fifth Report and Order**

[Comments]{.underline}

AmeriCall International, LLC (\"AmeriCall\")

Cook Inlet Region, Inc. (\"CIRI\")

National Telephone Cooperative Association (\"NTCA\")

NextWave Telecom Inc. (\"NextWave\")

Rural Telecommunications Group (\"RTG\")

Western Wireless Corporation (\"Western\")

[Reply Comments]{.underline}

Western Wireless Corporation (\"Western\")

[Ex Parte Filing]{.underline}

Small Business Administration

# APPENDIX C {#appendix-c .unnumbered}

# Supplemental Final Regulatory Flexibility Analysis {#supplemental-final-regulatory-flexibility-analysis .unnumbered}

#  (*Order on Reconsideration*) {#order-on-reconsideration .unnumbered}

1.  As required by the Regulatory Flexibility Act (RFA),[^260] an
    Initial Regulatory Flexibility Analysis (IRFA) was incorporated in
    the *Notice of Proposed Rulemaking* in WT Docket No. 97-82.[^261]
    The Commission sought written public comment on the proposals in the
    *Notice of Proposed Rulemaking*, including comment on the IRFA. A
    Final Regulatory Flexibility Analysis (FRFA) was incorporated in the
    report and order section of the *Third Report and Order and Second
    Further Notice of Proposed Rule Making* (\"*Part 1 Third Report and
    Order*\" and \"*Second Notice*\").[^262] The Commission received
    seven petitions for reconsideration in response to the *Part 1 Third
    Report and Order* and two comments in support of the petitions for
    reconsideration. This supplemental FRFA analyzes the modifications
    adopted in response to those petitions and comments, and conforms to
    the RFA.[^263]

## Need for, and Objectives of, This *Order on Reconsideration*.

2.  This *Order on Reconsideration of the Third Report and Order*
    (\"*Order on Reconsideration*\") amends and clarifies the
    Commission\'s general competitive bidding rules for all auctionable
    services. Specifically, the Commission clarifies that the
    prohibition on collusion begins on the filing deadline for
    short-form applications and ends on the down payment deadline. In
    addition, the Commission clarifies and corrects the ownership
    disclosure requirements. With respect to entities not seeking
    designated entity status, we eliminate the requirement to include
    debt and instruments such as warrants, convertible debentures,
    options and other debt interests in reporting their ownership
    interests. The Commission also amends its rules to clarify that in
    the case of multiple bid withdrawals on a single license, within the
    same or subsequent auction(s), the payment for each bid withdrawal
    will be calculated based on the sequence of bid withdrawals and the
    amounts withdrawn. The Commission further amends its rules to
    provide that in instances in which bids have been withdrawn on a
    license that is not won in the same auction, the Commission will
    assess an interim withdrawal payment equal to 3 percent of the
    amount of the bid withdrawals. In addition, the Commission retains,
    for the most part, the installment payment grace period and late
    payment fee provisions adopted in the *Part 1 Third Report and
    Order*, but adopts a slight modification to the payment due dates
    for late installment payments and associated late fees. The
    Commission also concludes that licensees defaulting on installment
    payments are subject to the default provisions of Section
    1.2110(f)(4) of our rules (redesignated herein as § 1.2110(g)(4))
    and not to Section 1.2104(g).[^264] The Commission incorporates into
    the Part 1 general competitive bidding rules the \"former
    defaulter\" policies adopted with respect to C block auction
    applicants. The Commission clarifies the circumstances under which
    installment payment defaulters will be eligible to participate in
    future auctions. Finally, this *Order on Reconsideration* makes a
    number of clarifications with respect to the restructuring of
    installment payments, the assignment and transfer of licenses paid
    for through installment payments, and the unjust enrichment rules
    for bidding credits.

3.  These amendments and clarifications are intended to simplify the
    Commission\'s general competitive bidding rules, increase the
    efficiency of the competitive bidding process, and provide more
    specific guidance to auction participants.

## Summary of Significant Issues Raised by Public Comment in Response to the FRFA Contained in The *Part 1 Third Report and Order*.

4.  No petitions for reconsideration directly addressed the FRFA
    contained in the *Part 1 Third Report and Order*.[^265] The
    Commission, however, did receive petitions for reconsideration of
    the *Part 1 Third Report and Order* that addressed issues affecting
    small businesses. In particular, the Commission received petitions
    opposing various aspects of the installment payment grace period and
    late payment fee provisions adopted in the *Part 1 Third Report and
    Order*.[^266] The *Order on Reconsideration* addresses petitioners\'
    arguments and concludes that the revised late payment rules relating
    to the submission of installment payments are not commercially
    unreasonable, do not constitute impermissible retroactive
    rulemaking, and do not violate basic contract principles.[^267] The
    Commission further determines that the modified grace period and
    late payment fee provisions apply to 900 MHz SMR and MDS licensees
    that have signed Promissory Notes and Security Agreements.[^268] In
    addition, the Commission adopts a slight modification to the payment
    due dates for late installment payments and associated late fees in
    order to avoid any confusion as to when such payments are due.[^269]
    The Commission clarifies that, despite amendments to the installment
    payment rules, licensees in the installment payment program continue
    to have the opportunity to seek restructuring of installment
    payments.[^270] The Commission notes, however, that there is no
    longer a procedure for requesting a grace period to stay installment
    payment deadlines pending such restructuring.[^271] Rather,
    licensees will be subject to the automatic late payment provisions
    of Section 1.2110(g) of the Commission\'s rules as adopted in this
    *Order on Reconsideration*. The Commission further clarifies in
    response to comments that the assignee or transferee of a license
    paid for through installment payments is not responsible for the
    license debt until the assignment of license or transfer of control
    has been consummated.[^272] Also in response to requests for
    clarification, the Commission clarifies that the unjust enrichment
    rules for bidding credits do not apply to assignments and transfers
    of C and F block licenses to non-entrepreneurs.[^273]

## Description and Estimate of the Number of Small Entities to Which Rules will Apply.

5.  The Commission is required to provide a description of, and, where
    feasible, an estimate of, the number of small entities that may be
    affected by the proposed rules, if adopted.[^274] The RFA generally
    defines the term \"small entity\" as having the same meaning as the
    terms \"small business,\" \"small organization,\" and \"small
    governmental jurisdiction.\"[^275] In addition, the term \"small
    business\" has the same meaning as the term \"small business
    concern\", under Section 3 of the Small Business Act, unless the
    Commission has developed one or more definitions that are
    appropriate for its activities.[^276] Under the Small Business Act,
    a \"small business 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).[^277] A small organization is
    generally "any not-for-profit enterprise which is independently
    owned and operated and is not dominant in its field."[^278]
    Nationwide, as of 1992, there were approximately 275,801 small
    organizations.[^279] "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."[^280] As of 1992, there were approximately 85,006 such
    jurisdictions in the United States.[^281] This number includes
    38,978 counties, cities and towns; of these, 37,566, or 96 percent,
    have populations of fewer than 50,000.[^282] The Census Bureau
    estimates that this ratio is approximately accurate for all
    governmental entities. Thus, of the 85,006 governmental entities, we
    estimate that 81,600 (96 percent) are small entities. Nationwide,
    there are 4.44 million small business firms, according to SBA
    reporting data.[^283]

6.  The rules adopted in this *Order on Reconsideration* apply to all
    entities, including small entities, seeking to obtain licenses in
    auctionable services through competitive bidding. These rules
    generally apply to future auctions. In estimating the number of
    small entities that may participate in future auctions of radio
    services, we anticipate that current radio services licensees are
    representative of future auction participants. The following is our
    estimate of the number of small entities that are current radio
    licensees:

*Cellular Licensees*. Neither the Commission nor the SBA has 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.[^284] According to the Bureau of
the Census, only 12 radiotelephone firms out of a total of 1,178 such
firms that operated during 1992 had 1,000 or more employees.[^285]
Therefore, even if all 12 of these firms were cellular telephone
companies, nearly all cellular carriers were small businesses under the
SBA\'s definition. In addition, we note that there are 1,758 cellular
licenses; however, we do not know the number of cellular licensees,
since a cellular licensee may own several licenses. 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 most recent *Telecommunications Industry
Revenue* data, 808 carriers reported that they were engaged in the
provision of either cellular service or Personal Communications Service
(PCS) services.[^286] We do not have data specifying the number of these
carriers that are not independently owned and operated or have more than
1,500 employees, and thus are unable at this time to estimate with
greater precision the number of cellular service carriers that would
qualify as small business concerns under the SBA\'s definition.
Consequently, we estimate that there are no more than 808 small cellular
service carriers.

*220 MHz Radio Service \-- Phase I Licensees*. The 220 MHz service has
both Phase I and Phase II licenses. Phase I licensing was conducted by
lotteries in 1992 and 1993. There are approximately 1,515 such
non‑nationwide licensees and four nationwide licensees currently
authorized to operate in the 220 MHz band. The Commission has not
developed a definition of small entities specifically applicable to such
incumbent 220 MHz Phase I licensees. To estimate the number of such
licensees that are small businesses, we apply the definition under the
SBA rules applicable to radiotelephone communications companies. This
definition provides that a small entity is a radiotelephone company
employing no more than 1,500 persons.[^287] According to a 1995 estimate
by the Bureau of the Census, only 12 radiotelephone firms out of a total
of 1,178 such firms that operated during 1992 had 1,000 or more
employees.[^288] Therefore, assuming this general ratio has not changed
significantly in recent years in the context of Phase I 220 MHz
licensees, we estimate that nearly all such licensees are small
businesses under the SBA\'s definition.

*220 MHz Radio Service \-- Phase II Licensees*. The Phase II 220 MHz
service is a new service, and is subject to spectrum auctions. In the
220 MHz *Third Report and Order*, we adopted criteria for defining small
businesses and very small businesses for purposes of determining their
eligibility for special provisions such as bidding credits and
installment payments.[^289] We have defined a small business as an
entity that, together with its affiliates and controlling principals,
has average gross revenues not exceeding \$15 million for the preceding
three years. Additionally, a very small business is defined as an entity
that, together with its affiliates and controlling principals, has
average gross revenues that are not more than \$3 million for the
preceding three years.[^290] The SBA has approved these
definitions.[^291] An auction of Phase II licenses commenced on
September 15, 1998, and closed on October 22, 1998.[^292] Nine hundred
and eight (908) licenses were auctioned in 3 different‑sized geographic
areas: three nationwide licenses, 30 Regional Economic Area Group
("REAG") licenses, and 875 Economic Area (EA) licenses. Of the 908
licenses auctioned, 693 were sold. Companies claiming small business
status won: 1 of the Nationwide licenses, 67% of the Regional licenses,
47% of the REAG licenses and 54% of the EA licenses. As of January 22,
1999, the Commission announced that it was prepared to grant 654 of the
Phase II licenses won at auction.[^293] A second 220 MHz Radio Service
auction began on June 8, 1999 and closed on June 30, 1999. This auction
offered 225 licenses in 87 EAs and four REAGs. (A total of 9 REAG
licenses and 216 EA licenses. No nationwide licenses were available in
this auction.) Of the 215 EA licenses won, 153 EA licenses (71%) were
won by bidders claiming small business status. Of the 7 REAG licenses
won, 5 REAG licenses (71%) were won by bidders claiming small business
status.

*Private and Common Carrier Paging*. The Commission has adopted a
two-tier definition of small businesses in the context of auctioning
licenses in the Common Carrier Paging and exclusive Private Carrier
Paging services. A small business will be defined as either (1) 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, or (2) 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. Because the SBA
has not yet approved this definition for paging services, we will
utilize the SBA\'s definition applicable to radiotelephone companies,
*i.e.,* an entity employing no more than 1,500 persons.[^294] At
present, there are approximately 24,000 Private Paging licenses and
74,000 Common Carrier Paging licenses. According to the most recent
*Telecommunications Industry Revenue* data, 172 carriers reported that
they were engaged in the provision of either paging or \"other mobile\"
services, which are placed together in the data.[^295] We do not have
data specifying the number of these carriers that are not independently
owned and operated or have more than 1,500 employees, and thus are
unable at this time to estimate with greater precision the number of
paging carriers that would qualify as small business concerns under the
SBA\'s definition. Consequently, we estimate that there are no more than
172 small paging carriers. We estimate that the majority of private and
common carrier paging providers would qualify as small entities under
the SBA definition.

*Mobile Service Carriers*. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
mobile service carriers, such as paging companies. As noted above in the
section concerning paging service carriers, the closest applicable
definition under the SBA rules is that for radiotelephone (wireless)
companies,[^296] and the most recent *Telecommunications Industry
Revenue* data shows that 172 carriers reported that they were engaged in
the provision of either paging or "other mobile\" services.[^297]
Consequently, we estimate that there are no more than 172 small mobile
service carriers.

*Broadband Personal Communications Service (PCS).* The broadband PCS
spectrum is divided into six frequency blocks designated A through F,
and the Commission has held auctions for each block. The Commission
defined \"small entity\'\' for blocks C and F as an entity that has
average gross revenues of less than \$40 million in the three previous
calendar years.[^298] For block F, an additional classification for
\"very small business\" was added and is defined as an entity that,
together with their affiliates, has average gross revenues of not more
than \$15 million for the preceding three calendar years.[^299] These
regulations defining \"small entity\'\' in the context of broadband PCS
auctions have been approved by the SBA.[^300] No small businesses within
the SBA-approved definition bid successfully for licenses in blocks A
and B. There were 90 winning bidders that qualified as small entities in
the C block auctions. A total of 93 small and very small business
bidders won approximately 40% of the 1,479 licenses for blocks D, E, and
F.[^301] On March 23, 1999, the Commission held another auction (Auction
No. 22) of C, D, E, and F block licenses for PCS spectrum returned to
the Commission by previous license holders. In that auction, 48 bidders
claiming small business, very small business or entrepreneurial status
won 272 of the 341 licenses (80%) offered. Based on this information, we
conclude that the number of small broadband PCS licensees includes the
90 winning C block bidders, the 93 qualifying bidders in the D, E, and F
blocks, and the 48 winning bidders from Auction No. 22, for a total of
231 small entity PCS providers as defined by the SBA and the
Commission\'s auction rules.

*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 by auction. Such auctions, however, have not
yet been scheduled.. 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, we assume,
for our purposes here, that all of the licenses will be awarded to small
entities, as that term is defined by the SBA.

*Rural Radiotelephone Service.* The Commission has not adopted a
definition of small entity specific to the Rural Radiotelephone
Service.[^302] A significant subset of the Rural Radiotelephone Service
is the Basic Exchange Telephone Radio Systems (BETRS).[^303] We will use
the SBA\'s definition applicable to radiotelephone companies, *i.e.,* an
entity employing no more than 1,500 persons.[^304] There are
approximately 1,000 licensees in the Rural Radiotelephone Service, and
we estimate that almost all of them qualify as small entities under the
SBA\'s definition.

*Air-Ground Radiotelephone Service.* The Commission has not adopted a
definition of small entity specific to the Air-Ground Radiotelephone
Service.[^305] Accordingly, we will use the SBA\'s definition applicable
to radiotelephone companies, *i.e.,* an entity employing no more than
1,500 persons.[^306] There are approximately 100 licensees in the
Air-Ground Radiotelephone Service, and we estimate that almost all of
them qualify as small under the SBA definition.

*Specialized Mobile Radio (SMR).* The Commission awards bidding credits
in auctions for geographic area 800 MHz and 900 MHz SMR licenses to two
tiers of firms: (1) \"small entities,\" those with revenues of no more
than \$15 million in each of the three previous calendar years; and (2)
\"very small entities,\" those with revenues of no more than \$3 million
in each of the three previous calendar years. The regulations defining
\"small entity\" and \"very small entity\" in the context of 800 MHz SMR
(upper 10 MHz and lower 230 channels) 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. We assume, for our purposes here, 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 800 MHz (upper 10 MHz)
and 900 MHz SMR bands. There were 60 winning bidders that qualified as
small and very small entities in the 900 MHz auction. Of the 1,020
licenses won in the 900 MHz auction, 263 licenses were won by bidders
qualifying as small and very small entities. In the 800 MHz SMR auction,
38 of the 524 licenses won were won by small and very small entities.

*Private Land Mobile Radio (PLMR).* PLMR systems serve an essential role
in a range of industrial, business, land transportation, and public
safety activities. These radios are used by companies of all sizes
operating in all U.S. business categories. The Commission has not
developed a definition of small entity specifically applicable to PLMR
licensees due to the vast array of PLMR users. 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 that could be affected by the rules. However, the
Commission\'s 1994 Annual Report on PLMRs[^307] 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. Any entity
engaged in a commercial activity is eligible to hold a PLMR license.
Therefore, these rules could potentially affect every small business in
the United States if PLMR licenses are subject to auction.

*Amateur Radio Service.* We estimate that 8,000 applicants will apply
for vanity call signs in FY 2000. All are presumed to be individuals.

*Aviation and Marine Radio Service.* Small businesses 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 for radiotelephone communications.[^308] Most
applicants for 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 our
evaluations and conclusions here, we estimate that there may be at least
712,000 potential licensees that are individuals or small entities, as
that term is defined by the SBA.

*Marine Coast Service*. Between December 3, 1998 and December 14, 1998,
the Commission held an auction of 42 VHF 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, and for future public
coast auctions, the Commission defines 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
dollars. 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 dollars.[^309] There are
approximately 10,672 licensees in the Marine Coast Service, and the
Commission estimates that almost all of them qualify as \"small\"
businesses under the Commission\'s definition, which has been approved
by the SBA.

*Location and Monitoring Service (LMS)*. The SBA has not developed a
definition of small entities specifically applicable to LMS licensees.
Therefore, the applicable definition under SBA rules of a small entity
is the definition under the rules applicable to radiotelephone
(wireless) companies. This provides that a small entity is a
radiotelephone company employing no more than 1,500 persons.[^310]
According to the Bureau of the Census, only twelve radiotelephone firms
out of a total of 1,178 such firms which operated during 1992 had 1,000
or more employees.[^311] Therefore, using such data, even if all twelve
of these firms were LMS companies, nearly all such carriers were small
businesses under the SBA\'s definition. As a practical matter, there are
only a handful of existing LMS licensees \-- those being those licensed
under the former Automatic Vehicle Monitoring service.

*Fixed Microwave Services*. Microwave services include common
carrier,[^312] private‑operational fixed,[^313] and broadcast auxiliary
radio services.[^314] At present, there are approximately 22,015 common
carrier fixed licensees and 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 our purposes here, we will utilize the SBA\'s
definition applicable to radiotelephone companies \-- *i.e.,* an entity
with no more than 1,500 persons.[^315] Under this definition, we
estimate that all of the Fixed Microwave licensees (excluding broadcast
auxiliary licensees) would qualify as small entities.

*Local Multipoint Distribution Service*. The Commission held two
auctions for licenses in the Local Multipoint Distribution Services
(LMDS) (Auction No. 17 and Auction No. 23). For both of these auctions,
the Commission defined a small business as an entity, together with its
affiliates and controlling principals, having average gross revenues for
the three preceding years of no more than \$15 million but not more than
\$40 million. A very small business was defined as an entity, together
with affiliates and controlling principals, having average gross
revenues for the three preceding years of not more than \$15 million. Of
the 144 winning bidders in Auction Nos. 17 and 23, 125 bidders (87%)
were small or very small businesses.

*24 GHz \--* *Incumbent 24 GHz Licensees*. The rules we are adopting
today may affect incumbent licensees who were relocated to the 24 GHz
band from the 18 GHz band, and applicants who wish to provide services
in the 24 GHz band. The Commission has not developed a definition of
small entities applicable to licensees in the 24 GHz band. Therefore,
the applicable definition of small entity is the definition under the
SBA rules for the radiotelephone industry that provides that a small
entity is a radiotelephone company employing fewer than 1,500
persons.[^316] The 1992 Census of Transportation, Communications, and
Utilities, conducted by the Bureau of the Census, which is the most
recent information available, shows that only 12 radiotelephone firms
out of a total of 1,178 such firms that operated during 1992 had 1,000
or more employees.[^317] This information notwithstanding, we believe
that there are only two licensees in the 24 GHz band that were relocated
from the 18 GHz band, Teligent and TRW, Inc.[^318] Both Teligent and TRW
appear to have more than 1,500 employees. Therefore, it appears that no
incumbent licensee in the 24 GHz band is a small business entity.

*Future 24 GHz Licensees*. The proposals also affect potential new
licensees on the 24 GHz band. Pursuant to 47 C.F.R. § 24.720(b), the
Commission has defined "small business" for Blocks C and F broadband PCS
licensees as firms that had average gross revenues of less than \$40
million in the three previous calendar years. This regulation defining
"small business" in the context of broadband PCS auctions has been
approved by the SBA.[^319] With respect to new applicants in the 24 GHz
band, we shall use this definition of "small business" and apply it to
the 24 GHz band under the name "entrepreneur." With regard to "small
business," we shall adopt the definition of "very small business" used
for 39 GHz licenses and PCS C and F block licenses: businesses with
average annual gross revenues for the three preceding years not in
excess of \$15 million. Finally, "very small business" in the 24 GHz
band shall be defined as an entity with average gross revenues not to
exceed \$3 million for the preceding three years. The Commission will
not know how many licensees will be small or very small businesses until
the auction, if required, is held. Even after that, the Commission will
not know how many licensees will partition their license areas or
disaggregate their spectrum blocks, if partitioning and disaggregation
are allowed.

*39 GHz*. The Commission held an auction (Auction No. 30) for fixed
point-to-point microwave licenses in the 38.6 to 40.0 GHz band (39 GHz
Band).[^320] For this auction, the Commission defined a small business
as an entity, together with affiliates and controlling interests, having
average gross revenues for the three preceding years of not more than
\$40 million. A very small business was defined as an entity, together
with affiliates and controlling principals, having average gross
revenues for the three preceding years of not more than \$15 million.
The SBA has approved these definitions.[^321] Of the 29 winning bidders
in Auction No. 30, 18 bidders (62%) were small business participants.

*Multipoint Distribution Service (MDS).* This service involves a variety
of transmitters, which are used to relay data and programming to the
home or office, similar to that provided by cable television
systems.[^322] In connection with the 1996 MDS auction, the Commission
defined small businesses as entities that had annual average gross
revenues for the three preceding years not in excess of \$40
million.[^323] This definition of a small entity in the context of MDS
auctions has been approved by the SBA.[^324] These stations were
licensed prior to implementation of Section 309(j) of the Communications
Act of 1934, as amended.[^325] Licenses for new MDS facilities are now
awarded to auction winners in Basic Trading Areas (BTAs) and BTA-like
areas.[^326] The MDS auctions resulted in 67 successful bidders
obtaining licensing opportunities for 493 BTAs. Of the 67 auction
winners, 61 meet the definition of a small business.

MDS is also heavily encumbered with licensees of stations authorized
prior to the MDS auction. SBA has developed a definition of small
entities for pay television services, which includes all such companies
generating \$11 million or less in annual receipts.[^327] This
definition includes MDS systems, and thus applies to incumbent MDS
licensees and wireless cable operators which may not have participated
or been successful in the MDS auction. Information available to us
indicates that there are 832 of these licensees and operators that do
not generate revenue in excess of \$11 million annually. Therefore, for
purposes of this analysis, we find there are approximately 892 small MDS
providers as defined by the SBA and the Commission\'s auction rules.

*Public Safety Radio Services*. Public Safety radio services include
police, fire, local government, forestry conservation, highway
maintenance, and emergency medical services.[^328] There are a total of
approximately 127,540 licensees within these services. Governmental
entities[^329] as well as private businesses comprise the licensees for
these services. As noted above, governmental entities with populations
of less than 50,000 fall within the SBA definition of a small
entity.[^330] There are 85,006 governmental entities in the nation, as
of the last census.[^331] 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.[^332] 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 our rules.

*Offshore Radiotelephone Service*. This service operates on several UHF
TV broadcast channels that are not used for TV broadcasting in the
coastal area of the states bordering the Gulf of Mexico.[^333] At
present, there are approximately 55 licensees in this service. We are
unable at this time to estimate the number of licensees that would
qualify as small under the SBA\'s definition for radiotelephone
communications.

*Wireless Communications Services*. This service can be used for fixed,
mobile, radio-location and digital audio broadcasting satellite uses.
The Commission defined \"small business\" for the wireless
communications services (WCS) auction as an entity with average gross
revenues of \$40 million for each of the three preceding years, and a
\"very small business\" as an entity with average gross revenues of \$15
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 winning bidder that qualified as a small business entity. We
conclude that the number of geographic area WCS licensees affected
includes these eight entities.

*General Wireless Communication Service*. This service was created by
the Commission on July 31, 1995[^334] 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 in this band.[^335] 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.[^336] By letter dated March 30,
1999, NTIA reclaimed the spectrum allocated to GWCS and identified
alternative spectrum at 4940-4990 MHz. On February 23, 2000, the
Commission released its *Notice of Proposed Rule Making* in WT Docket
No. 00-32 proposoing to allocate and establish licensing and service
rules for the 4.9 GHz band.[^337]

*Television Broadcasting Stations*. The SBA defines a television
broadcasting station that has no more than \$10.5 million in annual
receipts as a small business.[^338] Television broadcasting stations
consist of establishments primarily engaged in broadcasting visual
programs by television to the public, except cable and other pay
television services.[^339] Included in this industry are commercial,
religious, educational, and other television stations.[^340] Also
included are establishments primarily engaged in television broadcasting
and which produce taped television program materials.[^341] Separate
establishments primarily engaged in producing taped television program
materials are classified under another SIC number.[^342]

There were 1,509 television stations operating in the nation in
1992.[^343] That number has remained fairly steady as indicated by the
approximately 1,590 operating television broadcasting stations in the
nation as of January 1999.[^344] For 1992,[^345] the number of
television stations that produced less than \$10.0 million in revenue
was 1,155 establishments.[^346] Thus, of the 1,590 television stations
approximately 77%, or 1,224, of those stations are considered small
businesses.[^347] As of January 1999, 2136 low power television stations
and 4921 television translator stations were also licensed,[^348] and we
believe the vast majority of these stations are small businesses. These
estimates may overstate the number of small entities since the revenue
figures on which they are based do not include or aggregate revenues
from non-television affiliated companies.

*Radio Broadcasting Stations*. The SBA defines a radio broadcasting
station that has no more than \$5 million in annual receipts as a small
business.[^349] A radio broadcasting station is an establishment
primarily engaged in broadcasting aural programs by radio to the
public.[^350] Included in this industry are commercial, religious,
educational and other radio stations.[^351] Radio broadcasting stations
that primarily are engaged in radio broadcasting and that produce radio
program materials are similarly included.[^352] However, radio stations
that are separate establishments and are primarily engaged in producing
radio program material are classified under another SIC number.[^353]
The 1992 census indicates that 96% (5,861 of 6,127) of radio station
establishments produced less than \$5 million in revenue in 1992.[^354]
Official Commission records indicate that 11,334 individual radio
stations were operating in 1992.[^355] As of January 1999, official
Commission records indicate that 12,496 radio stations were
operating.[^356] We conclude that a similarly high percentage (96%) of
current radio broadcasting licensees are small entities.[^357] As of
January 1999, there were also 3171 FM translator/booster stations
licensed, and we believe the vast majority of these stations are small
businesses. These estimates may overstate the number of small entities
since the revenue figures on which they are based do not include or
aggregate revenues from non-radio affiliated companies.

*Instructional Television Fixed Service (ITFS)*. In addition, there are
presently 2032 ITFS licensees. All but 100 of these licenses are held by
educational institutions. Educational institutions may be included in
the definition of a small entity.[^358] ITFS is a non-pay,
non-commercial educational microwave service that, depending on SBA
categorization, has, as small entities, entities generating either
\$10.5 million or less, or \$11.0 million or less, in annual
receipts.[^359] However, we do not collect, nor are we aware of other
collections of, annual revenue data for ITFS licensees. Thus, we
conclude that up to 1932 of these licensees are small entities.

*Pending and Future Broadcast Applicants*. We have given the SBA
broadcast size standards, *supra*. The competitive bidding procedures
set forth in the *Order on Reconsideration* will affect: (1) any entity
with a pending application for a construction permit for a new full
service commercial radio or analog television broadcast station, if
mutually exclusive applications have been filed; (2) any entity that
files an application in the future for a new full service commercial
radio or analog television station, if mutually exclusive applications
are filed; (3) any entity with a pending application on file, or filing
an application in the future, for a new low power television station, or
a television or FM translator station, if mutually exclusive
applications have been or are filed; (4) any entity that has a pending
or future application to make a make a major change in an existing
facility in any commercial broadcast or secondary broadcast service, if
mutually exclusive applications have been or are filed; and (5) any
entity that has filed or files in the future an application for a
license for an ITFS station, if mutually exclusive applications have
been filed or are filed.

We estimate that there are currently pending before the Commission the
following mutually exclusive applications:

-   approximately 620 mutually exclusive applications for full power
    commercial radio

stations, and approximately 165 competing applications for full power

commercial analog television stations;[^360]

-   approximately 275 mutually exclusive applications for low power
    television stations

and television translator stations, and approximately 20 competing
applications for

FM translator stations; and

-   approximately 200 or more mutually exclusive applications for ITFS
    stations.

Although applicants for broadcast construction permits have been
required to demonstrate sufficient financing to construct and initially
operate the proposed broadcast station, we do not require the filing of
financial information specifically concerning the entity seeking a
construction permit, such as the entity\'s annual revenues. Thus, we
have no data on file as to whether entities with pending permit
applications, which are subject to the new competitive bidding selection
procedures adopted for the broadcast services, meet the SBA\'s
definition of a small business concern. However, we conclude that, given
the smaller size of the markets at issue in the pending applications,
most of the entities with pending applications for a permit to construct
a new primary or secondary broadcast station are small entities, as
defined by the SBA rules.

In addition to the pending applicants that may be affected by the
auction procedures adopted for the broadcast services, any entity that
applies for a construction permit for a new broadcast station in the
future will be subject to these competitive bidding rules if mutually
exclusive applications are filed. It is not possible, at this time, to
estimate the number of markets for which mutually exclusive applications
will be received, nor the number of entities that in the future may seek
a construction permit for a new broadcast station. Given the fact that
fewer new stations (particularly fewer analog television stations) will
be licensed in the future and that these stations generally will be
located in smaller, more rural areas, we conclude that most of the
entities applying for these stations will be small entities, as defined
by the SBA rules.

*Digital Audio Radio Service (DARS)*. The Commission has not developed
its own definition of "small entity" for purposes of licensing satellite
delivered services. Accordingly, we rely on the definition of "small
entity" provided under the Small Business Administration (SBA) rules
applicable to Communications Services, Not Elsewhere Classified.[^361] A
"small entity" under these SBA rules is defined as an entity with \$11.0
million or less in annual receipts. The two current U.S. satellite DARS
licensees, XM Satellite Radio and Sirius Satellite Radio, are in the
midst of deplying their systems, and appear to have no revenues. Thus,
XM and Sirius are "small entities" under the SBA definition.

*Direct-to-Home (DTH) Satellite Service* \-- *Direct Broadcast Satellite
(DBS) and Home Satellite Services (HSD)*. Video service is available
from high power DBS satellites that transmit signals to small DBS dish
antennas installed at subscribers\' premises, and from medium and low
power satellites requiring larger satellite dish antennas. In the last
year, DirecTV merged with United States Satellite Broadcasting Co., Inc.
(USSB) and acquired PrimeStar. DirecTV and EchoStar are among the ten
largest providers of multichannel video programming service. DBS
represented a 12.5% share of the national MVPD market in June 1999 and
HSD represented another 2.2% of that market. Thus, it appears that no
DBS or HSD operators meet the SBA's definition of "small entity."

## Description of the Projected Reporting, Record-keeping, and Other Compliance Requirements. 

7.  One rule amendment adopted in this *Order on Reconsideration* will
    decrease the reporting requirements for entities not seeking
    designated entity status. Other rule amendments, however, may
    increase the reporting and recordkeeping requirements for all
    license applicants, including small entities.

8.  Specifically, we amend Section 1.2112 of our rules to reduce the
    amount of ownership information that applicants must report on their
    short- and long-form applications.[^362] Section 1.2112 requires
    applicants to identify direct and indirect owners with an interest
    of 10 percent or greater. Previously under Section 1.2112, in
    calculating the 10 percent interest, we required applicants to
    include debt and interests such as warrants and convertible
    debentures, stock options, debt securities or other debt interests.
    In this *Order on Reconsideration,* we amend Section 1.2112 to
    provide that such interests need not be reported unless the entity
    is seeking status as a designated entity. For the purpose of
    determining designated entity status and eligibility for bidding
    credits, we believe that warrants, convertible debentures, options
    and other debt interests should be treated as having been exercised.
    For the broader purpose of determining all applicants' ownership
    interests, we will not require information regarding interests in an
    applicant that have not yet vested.

9.  The Commission amends its general competitive bidding rules to
    permit "former defaulters," *i.e.*, applicants that have defaulted
    or been delinquent in the past, but have since paid all of their
    outstanding non-Internal Revenue Service Federal debts and all
    associated charges or penalties, to certify on FCC Form 175 that
    they are not in default and are, therefore, eligible for auction
    participation.[^363] \"Former defaulters\" will be required to pay
    an upfront payment amount of 1.5 times the normal amount set by the
    Bureau for any given license in a Commission auction.[^364] So that
    the Bureau may implement this rule, it will require applicants to
    make an additional certification revealing whether they or any of
    their controlling interests or affiliates have ever been in default
    on any Commission license or have ever been delinquent on any
    non-tax debt owed to any Federal agency.[^365]

10. The *Order on Reconsideration* also clarifies that the assignee or
    transferee of a license paid for through installment payments is not
    responsible for the license debt until the assignment or transfer
    has been consummated.[^366] There may be cases in which the
    Commission believes that an assignment or transfer has been
    consummated when it has not. In such instances, the Commission may
    mistakenly initiate debt collection procedures against the wrong
    party. If such action occurs, the affected party should notify the
    Commission in writing that the underlying transaction was not
    consummated and the Commission will stop its debt collection
    proceedings against that party.[^367]

## Steps Taken to Minimize the Economic Impact on Small Entities, and Significant Alternatives Considered.

11. Incorporation into the Part 1 general competitive bidding rules of
    the "former defaulter" policies adopted with respect to C block
    auction applicants will provide more opportunities for all entities,
    including small entities, to participate in spectrum auctions. The
    "former defaulter" policies adopted herein permit all "former
    defaulters" including small entities, to participate in future
    spectrum auctions under certain conditions.

12. All petitioners in this proceeding oppose some aspect of the
    Commission's installment payment grace period and late payment fee
    provisions adopted in the *Part 1 Third Report and Order*. The
    Commission has reviewed petitioners' arguments and concludes that it
    will retain these provisions, but will adopt a slight modification
    to the payment due dates for late installment payments and
    associated late fees. [^368] Specifically, we amend the due dates
    for installment payments to comport with quarterly due dates. An
    alternative would be to maintain the current rules, but this
    modification may avoid confusion as to when such payments are due.
    Revisions to the Commission's installment payment rules were first
    proposed in the notice section of the *Order, Memorandum Opinion and
    Order and Notice of Proposed Rule Making*, released in 1997.[^369]
    Comments on installment payment issues were received and addressed
    in the *Part 1 Third Report and Order*.[^370] In response to the
    *Part 1 Third Report and Order*, the Commission received petitions
    for reconsideration of its installment payment grace period and late
    payment fee provisions. In concluding to retain these provisions in
    this *Order on Reconsideration*, the Commission has thoroughly
    reviewed and carefully evaluated all of the opposing arguments
    presented.[^371] The Commission rejected the alternative of
    reinstating the requirement for licensees using installment payments
    to submit grace period requests demonstrating financial needs due,
    in part, to the burdens that procedure imposes on small business
    licensees.

13. The Commission determines that the revised late payment rules
    relating to the submission of installment payments are not
    commercially unreasonable, do not constitute impermissible
    retroactive rulemaking, and do not violate basic contract
    principles.[^372] The late installment payment provisions were not
    intended to serve as a tool that licensees might use in their normal
    course of planning auction strategy and build-out. These provisions
    are provided for extraordinary circumstances \-- instances of
    financial distress \-- for which temporary relief is appropriate. We
    considered a number of alternatives presented by petitioners, but
    found that those proposals were not consistent with the Commissions
    fundamental goal in adopting the late payment provisions, which is
    to encourage payment on the due date.[^373] The Commission has
    determined that this goal is best attainable by adhering to the 5
    percent and 10 percent late payment fee schedule adopted in the
    *Part 1 Third Report and Order*. The Commission further determines
    that the modified grace period and late payment fee provisions apply
    to 900 MHz SMR and MDS licensees that have signed Promissory Notes
    and Security Agreements.[^374] The SMR and MDS notes emphasized that
    the Commission's rules, as amended, would take precedence over the
    terms of the notes in case of any conflict. The Commission clarifies
    that, despite amendments to the installment payment rules, licensees
    in the installment payment program continue to have the opportunity
    to seek restructuring of installment payments.[^375] The Commission
    notes, however, that there is no longer a procedure for requesting a
    grace period to stay installment payment deadlines pending such
    restructuring.[^376] Rather, licensees will be subject to the
    automatic late payment provisions of Section 1.2110(g) of the
    Commission\'s rules as adopted in this *Order on Reconsideration*.

## Report to Congress.

14. The Commission shall send a copy of this Final Regulatory
    Flexibility Analysis, along with this *Order on Reconsideration*, in
    a report to Congress pursuant to the Small Business Regulatory
    Enforcement Fairness Act of 1996, 5 U.S.C. § 801(a)(1)(A). A copy of
    the Order and this FRFA (or a summary thereof) will be published in
    the Federal Register. *See* 5 U.S.C. § 604(b). A copy of the Order
    and this FRFA will also be sent to the Chief Counsel for Advocacy of
    the Small Business Administration.

# APPENDIX D {#appendix-d .unnumbered}

# Final Regulatory Flexibility Analysis {#final-regulatory-flexibility-analysis .unnumbered}

# (*Fifth Report and Order*) {#fifth-report-and-order-1 .unnumbered}

1.  As required by the Regulatory Flexibility Act (RFA),[^377] an
    Initial Regulatory Flexibility Analysis (IRFA) was incorporated in
    the notice section of the *Third Report and Order and Second Further
    Notice of Proposed Rule Making* (\"*Part 1 Third Report and Order*\"
    and \"*Second Notice*\") in WT Docket No. 97-82.[^378] The
    Commission sought written public comment on the proposals in the
    *Second Notice*, including comment on the IRFA. This Final
    Regulatory Flexibility Analysis (FRFA) in this *Fifth Report and
    Order* conforms to the RFA, as amended by the Contract With America
    Advancement Act of 1996 (CWAAA), Pub. L. No. 104-121, 110 Stat. 847
    (1996).[^379]

## Need for, and Objectives of, This *Fifth Report and Order*.

15. This *Fifth Report and* *Order* makes substantive amendments to the
    Commission\'s general competitive bidding rules for auctionable
    services. Specifically, the *Fifth Report and* *Order* adopts a
    \"controlling interest\" standard for the attribution of gross
    revenues in determining whether a license applicant qualifies as a
    small business.[^380] The \"controlling interest\" standard is
    intended to prevent larger firms from illegitimately seeking status
    as small businesses and ensure that only those entities truly
    meriting small business status are eligible for the small business
    provisions. In addition, the *Order* establishes a maximum 10-day
    filing period for the submission of petitions to deny the long-form
    applications of winning bidders.[^381] The Commission increases the
    filing period from 5 days (as adopted in the *Part 1 Third Report
    and Order*) to 10 days in order to afford parties (including small
    businesses) additional flexibility in challenging license awards.
    The Commission also delegates to the Wireless Telecommunications
    Bureau the authority to make any revisions to the Code of Federal
    Regulations that are necessary to conform the service-specific
    auction rules to the Part 1 general competitive bidding rules.[^382]
    Finally, the Commission addresses other issues raised by the *Second
    Notice* and affirms its existing rules relative to those issues.

## Summary of Significant Issues Raised by Public Comments in Response to the IRFA.

16. No comments were received directly in response to the IRFA. The
    Commission, however, did receive comments on issues affecting small
    businesses in response to the *Second Notice*.[^383] Specifically,
    RTG proposed that we establish geographic area licenses no larger
    than BTAs in all future auctions.[^384] RTG argued that the use of
    small areas facilitates the delivery of service to rural areas by
    increasing the opportunity for rural small businesses and rural
    telephone companies to acquire licenses.[^385] RTG also contends
    that authorizing smaller geographic areas increases the number of
    licenses available and the diversity of licenses, and facilitates
    the buildout of networks.[^386] We reject RTG's proposal. Section
    309(j) of the Communications Act requires the Commission to
    disseminate licenses to a wide variety of applicants, including
    small businesses and rural telephone companies, and to promote the
    development and rapid deployment of new technologies to the public,
    including those residing in rural areas.[^387] We believe that we
    can best satisfy this mandate by establishing license areas that
    promote these goals on a service-specific basis. Although we have
    used small license areas in several services (*e.g.*, broadband PCS
    D, E and F blocks and LMDS) and may do so in specific services in
    the future, we are unwilling to limit our flexibility by adopting an
    ironclad rule against large service areas. We anticipate, for
    example, that certain satellite-based services may not be
    particularly suited to small geographic area licensing, while other
    services may indeed be more suitable for this type of license
    category (*i.e.*, the broadband PCS C block auction).

17. Comments were also filed in response to the Commission\'s proposal
    to adopt a \"controlling interest\" standard as its general
    attribution rule for determining which applicants qualify as small
    businesses.[^388] In this *Fifth Report and Order*, the Commission
    adopts a \"controlling interest\" standard and addresses the related
    comments.[^389] Under the \"controlling interest\" standard, the
    gross revenues of the applicant, its controlling interests and their
    affiliates will be aggregated and attributed to the applicant in
    determining whether the applicant qualifies as a small business. A
    \"controlling interest\" includes individuals or entities that have
    control of the applicant as determined by the principles of *de*
    *jure* or *de facto* control.

18. Commenters raised various issues regarding the attribution standard.
    Some commenters expressed concern over whether the revenues of so
    called "passive investors" would be attributed to the
    applicant.[^390] The Commission states that the controlling interest
    standard adopted herein will be applied to all investors of the
    applicant.[^391] In other words, if any investor has either *de
    jure* or *de facto* control of the applicant, that investor\'s gross
    revenues will be attributed to the applicant for purposes of
    determining whether the applicant qualifies as a small
    business.[^392] Some commenters suggested that the Commission adopt
    a minimum equity requirement for controlling interests.[^393] The
    Commission concludes that rather than focusing solely on
    equity-holdings, applicants will be required to identify those
    controlling interests that actually have control through application
    of the principles of *de jure* or *de facto* control.[^394] Western
    Wireless Corporation (\"Western\") urges the Commission not to amend
    its attribution rules to include entities that have management and
    joint marketing agreements with the applicant or licensee.[^395] The
    Commission adopts provisions that make attributable the gross
    revenues of those that have management or marketing agreements where
    such agreements grant authority over key aspects of the applicant\'s
    or licensee\'s business.[^396] Cook Inlet Region, Inc., (\"CIRI\")
    urges the Commission not to apply any new attribution or affiliation
    rules adopted in this proceeding to current C block licensees that
    won their licenses under the control group broadband PCS
    rules.[^397] The Commission will not reassess the eligibility of
    current C and F block licensees to continue to hold their licenses
    under the new attribution rules adopted herein.[^398] These
    licensees will remain eligible to hold their licenses regardless of
    whether or not they would qualify under the newly established
    attribution rules. As to future C and F block auctions, however, all
    applicants, including existing C and F block licensees, will be
    subject to the attribution rules in effect at the time of filing
    their short-form applications.[^399] For auctions that begin within
    two years after the start of Auction No. 22 (March 23, 1999), our
    new attribution rules will have no effect on the eligibility as an
    entrepreneur of any entity that was eligible for, and participated
    in, Auction No.5 or Auction No.10.[^400] Eligibility for small
    business preferences, however, will be determined based on the
    attribution rules in effect at the time of an applicant\'s
    short-form filing.[^401]

## Description and Estimate of the Number of Small Entities to Which Rules Will Apply.

19. The Commission is required to provide a description of, and, where
    feasible, an estimate of, the number of small entities that may be
    affected by the proposed rules, if adopted.[^402] The rules adopted
    in this *Fifth Report and* *Order* apply to all entities, including
    small entities, seeking to obtain licenses in auctionable services
    through competitive bidding. These rules generally apply to future
    auctions. In estimating the number of small entities that may
    participate in future auctions of wireless services, we anticipate
    that current wireless services licensees are representative of
    future auction participants. The Commission hereby incorporates into
    this FRFA section the detailed Supplemental FRFA analysis and
    descriptions of potentially affected small entities, *supra*,
    including the cellular, broadband and narrowband PCS, 220 MHz,
    paging, mobile service, air-ground, SMR, PLMR, aviation and marine,
    offshore radiotelephone services, GWCS, fixed microwave, rural,
    wireless, public safety, governmental entities and Marine Coast
    Services.[^403]

## Description of the Projected Reporting, Record-keeping, and Other Compliance Requirements. 

20. All license applicants are subject to the reporting and
    record-keeping requirements of the competitive bidding rules.[^404]
    Specifically, applicants are required to apply for spectrum auctions
    by filing a short-form application prior to auction. Applicants are
    also required to file a long-form application at the conclusion of
    an auction. Entities seeking treatment as \"small businesses\" must
    disclose on their short- and long-form applications, separately and
    in the aggregate, the gross revenues of the applicant, its
    controlling interests (as that term is defined in this *Fifth Report
    and Order*), and their affiliates.

## Steps Taken to Minimize the Economic Impact on Small Entities, and Significant Alternatives Considered.

21. The Commission has considered the economic impact on small entities
    of the following rules and modifications adopted in this *Order* and
    has taken steps to minimize the burdens on small entities.

*Attribution of Gross Revenues of Investors and Affiliates*. The
Commission adopts a \"controlling interest\" standard for attributing to
an applicant the gross revenues of its investors and affiliates in
determining whether the applicant qualifies as a small business.[^405]
Application of the controlling interest standard protects the interests
of small businesses by preventing larger firms from illegitimately
seeking small business status and ensuring that only those entities
truly meriting such status are eligible for the small business
provisions. The Commission further concludes that the eligibility of
current C and F block licensees to continue to hold their licenses will
not be reassessed based on the new attribution rules.[^406] Therefore,
these licensees will continue to be eligible to hold their licenses
regardless of whether or not they would qualify under the newly
established attribution rules. By applying the current, rather than the
new, rules to existing C and F block licensees, the Commission
eliminates the burden on such licensees of having to restructure to meet
new standards in order to remain licensees.

*Administrative Filing Periods for Applications and Petitions to Deny*.
The Commission establishes a maximum 10-day filing period for submitting
petitions to deny against long-form applications.[^407] The Commission
increases the filing period from 5 days (as adopted in the *Part 1 Third
Report and Order*) to 10 days in order to afford parties (including
small businesses) additional flexibility in challenging license
applications.

22. In addition to the modifications adopted in this *Fifth Report and*
    *Order*, the Commission affirms its existing rules with respect to
    certain other issues affecting small businesses. Specifically, the
    Commission declines, at this time, to adopt special provisions for
    minority- and women-owned businesses pending completion of a series
    of market studies to determine whether, and under what
    circumstances, targeted preferences for minorities and women are
    appropriate.[^408] The Commission notes, however that minority- and
    women-owned businesses that qualify as small businesses may take
    advantage of the provisions adopted for small businesses. In
    addition, the Commission declines, at this time, to adopt special
    provisions for rural telephone companies, such as bidding
    preferences or an unserved area fill-in policy.[^409] The Commission
    notes, however, that it will continue to provide rural telephone
    companies with bidding credits should such entities qualify as small
    businesses. The Commission further determines that, for the time
    being, it will not offer installment payments for auctionable
    services.[^410] The Commission notes that commenters did not offer
    suggestions as to how to retain the program or alternatives to
    replace the program. The Commission states that it will, as it has
    done in the LMDS, LMS, 220 MHz Service, and VHF Public Coast Service
    auctions, continue to provide small businesses with bidding credits.

## Report to Congress.

23. The Commission shall send a copy of this Final Regulatory
    Flexibility Analysis, along with this *Order*, in a report to
    Congress pursuant to the Small Business Regulatory Enforcement
    Fairness Act of 1996, 5 U.S.C. § 801(a)(1)(A). A copy of the *Order*
    and this FRFA (or a summary thereof) will be published in the
    Federal Register. *See* 5 U.S.C. § 604(b). A copy of the *Order* and
    this FRFA will also be sent to the Chief Counsel for Advocacy of the
    Small Business Administration.

# APPENDIX E {#appendix-e .unnumbered}

# Initial Regulatory Flexibility Analysis {#initial-regulatory-flexibility-analysis .unnumbered}

# (*Fourth Notice*) {#fourth-notice .unnumbered}

1.  As required by the Regulatory Flexibility Act (RFA),[^411] the
    Commission has prepared this Initial Regulatory Flexibility Analysis
    (IRFA) of the expected impact on small entities of the rules
    proposed in this *Fourth Further Notice of Proposed Rule Making*
    (\"*Fourth Notice*\") in WT Docket No. 97-82. Written public
    comments are requested on the IRFA. Comments on the IRFA must have a
    separate and distinct heading designating them as responses to the
    IRFA and must be filed by the deadlines for comments on the *Fourth
    Notice*. The Commission will send a copy of the *Fourth Notice*,
    including this IRFA, to the Chief Counsel for Advocacy of the Small
    Business Administration. In addition, the *Fourth Notice* and IRFA
    (or summaries thereof) will be published in the Federal Register.

## Need for, and Objectives of, This *Fourth Notice*.

24. This *Fourth Notice* is being initiated to secure comment on
    additional issues relating to the general competitive bidding rules
    for all auctionable services. Specifically, the *Fourth Notice*
    seeks comment on whether the Commission should use a total assets
    test, in conjunction with the gross revenues measure already
    employed, in determining whether auction applicants qualify as small
    businesses. The Commission seeks to ensure that only *bona fide*
    small businesses are eligible for the small business provisions. It,
    therefore, solicits comment on whether the application of a total
    assets test would enhance its determinations of small business
    status. Further, in the *Fifth Report and Order*, the Commission
    adopts as its general attribution rule a \"controlling interest\"
    standard, which provides for the full dilution of certain stock
    interests for purposes of calculating equity held in an
    applicant.[^412] In this *Fourth Notice*, the Commission proposes to
    codify in the Part 1 competitive bidding rules the policy under
    which it previously adopted two exceptions to the \"fully diluted\"
    requirement of its broadband PCS attribution rule.[^413] Under these
    exceptions, two types of ownership interests, \"rights of first
    refusal\" and \"put\" options, would not be considered on a fully
    diluted basis for purposes of calculating ownership levels.[^414]
    The Commission also seeks comment on whether it should adopt a third
    exception to the \"fully diluted\" requirement of Section
    1.2110(b)(4)(v) of the Commission\'s Rules.[^415] The Commission
    proposes that, in calculating the equity held in an applicant, the
    conversion rights or stock options be considered individually rather
    than collectively when they are mutually exclusive. The Commission
    believes that these proposals will enhance its assessments of small
    business eligibility.

## Legal Basis.

25. This action is taken pursuant to Sections 4(i), 5(b), 5(c)(1),
    303(r), and 309 (j) of the Communications Act of 1934, as amended,
    47 U.S.C. Sections 154(i), 155(b), 155(c)(1), 303(r), and 309(j).

## Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply.

26. The Commission is required to provide a description of and, where
    feasible, an estimate of the number of small entities that may be
    affected by the proposed rules, if adopted.[^416] The rules proposed
    in this *Fourth Notice* would apply to license applicants seeking
    small business status in all future auctions. In estimating the
    number of small entities that may participate in future auctions of
    wireless services, the Commission anticipates that the makeup of
    current wireless services licensees is representative of future
    auction participants. The Commission hereby incorporates into this
    IRFA section the Supplemental FRFA analysis and descriptions of
    potentially affected small entities.[^417]

## Description of Reporting, Recordkeeping, and Other Compliance Requirements.

27. The *Fourth Notice* proposes the adoption of a total assets test to
    be used in conjunction with the gross revenues measure already
    employed in determining whether auction applicants qualify as small
    businesses. The total assets test would require auction applicants
    seeking small business status to disclose their assets.

## Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered.

28. The RFA requires an agency to describe any significant alternatives
    that it has considered in reaching its proposed approach, which may
    include the following four alternatives (among others): (1) the
    establishment of differing compliance or reporting requirements or
    timetables that take into account the resources available to small
    entities; (2) the clarification, consolidation, or simplification of
    compliance or reporting requirements under the rule for small
    entities; (3) the use of performance, rather than design, standards;
    and (4) an exemption from coverage of the rule or any part thereof
    for small entities.[^418]

29. The Commission has adopted specific provisions to promote small
    business participation in spectrum auctions. In order to ensure that
    only those entities truly meriting small business status qualify for
    special preferences, such as bidding credits, the Commission must
    have an accurate and easily applicable method of calculating
    business size. While it has concluded in the past to use gross
    revenues as the measure of business size, it now seeks comment on
    whether to use a total assets test as well. The Commission also
    seeks comment on whether it should adopt exceptions to the general
    requirement that certain stock interests are treated as fully
    diluted in calculating the equity held in an applicant. These
    proposals are intended to help the Commission realize its goal of
    widening the opportunities for small businesses in the spectrum
    auction program.

## Federal Rules Which Overlap, Duplicate, Or Conflict With These Rules.

30. None.

[^1]: The general competitive bidding rules are codified at 47 C.F.R. §§
    1.2101-1.2113.

[^2]: *See, e.g.*, 47 C.F.R §§ 21.921-21.961 (Multipoint Distribution
    Service (MDS)); 47 C.F.R §§ 24.301-24.320 (narrowband Personal
    Communications Service (PCS)); 47 C.F.R. §§ 24.701-24.720 (broadband
    PCS); 47 C.F.R §§ 90.901-90.913 (800 MHz Specialized Mobile Radio
    Service (SMR)); 47 C.F.R §§ 90.1001-90.1025 (220 MHz Service); 47
    C.F.R §§ 100.71-100.80 (Direct Broadcast Satellite (DBS)).

[^3]: *See* Implementation of Section 309(j) of the Communications Act
    -- Competitive Bidding, PP Docket No. 93‑253, *Second Report and
    Order*, 9 FCC Rcd 2348 (1994) (*\"Competitive Bidding Second Report
    and Order*\"). *See also* Implementation of Section 309(j) of the
    Communications Act -- Competitive Bidding, PP Docket No. 93‑253*,
    Second Memorandum Opinion and Order*, 9 FCC Rcd 7245 (1994).

[^4]: *See* Amendment of Part 1 of the Commission\'s Rules \--
    Competitive Bidding Proceeding, WT Docket No. 97‑82, *Order,
    Memorandum Opinion and Order and Notice of Proposed Rule Making*, 12
    FCC Rcd 5686 (1997) (*\"Part 1 Notice of Proposed Rule Making*\").

[^5]: Amendment of Part 1 of the Commission\'s Rules \-- Competitive
    Bidding Procedures, Allocation of Spectrum Below 5 GHz Transferred
    from Federal Government Use, 4660-4685 MHz, WT Docket No. 97-82, ET
    Docket No. 94-32, *Third Report and Order and Second Further Notice
    of Proposed Rule Making*, 13 FCC Rcd 374 (1997) (\"*Part 1 Third
    Report and Order*\" and \"*Second Notice*\"). In this same
    proceeding, on December 13, 1999, the Commission released Amendment
    of Part 1 of the Commission\'s Rules \-- Competitive Bidding
    Procedures*,* *Third Further Notice of Proposed Rulemaking*, WT
    Docket No. 97-82, 14 FCC Rcd 21558 (1999) (seeking comment on
    proposed amendments to Section 1.2105(c)(1) of the Commission\'s
    rules, which prohibits collusion between competing bidders).

[^6]: A list of the parties that filed pleadings in response to the
    *Part 1 Third Report and Order*, and the abbreviations used to refer
    to such parties, is attached at Appendix B.

[^7]: The installment payment rules are generally codified at 47 C.F.R.
    § 1.2110.

[^8]: *See* Biennial Regulatory Review \-- Amendment of Parts 0, 1, 13,
    22, 24, 26, 27, 80, 87, 90, 95, 97, and 101 of the Commission\'s
    Rules to Facilitate the Development and Use of the Universal
    Licensing System in the Wireless Telecommunications Services, WT
    Docket No. 98-20, *Notice of Proposed Rulemaking*, 13 FCC Rcd 9672
    (1998) (*\"ULS Notice\"*).

[^9]: 47 C.F.R. § 1.2105(c)(1).

[^10]: *See, e.g.*, C, D, E, & F Broadband PCS Auction, March 23, 1999,
    Bidder Information Package at 109; Location and Monitoring Service
    Auction, December 15, 1998, Bidder Information Package at 61; The
    Phase II 220 MHZ Service Auction, September 15, 1998, Bidder
    Information Package at 65.

[^11]: *See, e.g.,* \"Auction of 168 Local Multipoint Distribution
    Service Licenses; Status of Applications to Participate in the
    Auction,\" *Public Notice*, DA 99-639 (rel. April 5, 1999);
    \"Auction of C, D, E, and F Block Broadband PCS Licenses; Status of
    Applications to Participate in the Auction,\" *Public Notice*, DA
    99-375 (rel. February 24, 1999); \"Auction of 528 Multilateration
    Location and Monitoring Service Licenses; Status of Applications to
    Participate in the Auction,\" *Public Notice*, DA 99-249 (rel.
    January 29, 1999); Auction of 156-162 MHz VHF Public Coast Station
    Licenses; Status of Applications to Participate in the Auction,\"
    *Public Notice*, DA 98-2248 (rel. November 6, 1998).

[^12]: *See* Letter to Ari Fitzgerald, Federal Communications
    Commission, from Louis Gurman, dated April 14, 1999. The Commission
    is also seeking comment in a separate proceeding on other proposed
    amendments to Section 1.2105(c)(1) of the Commission\'s rules. *See*
    Amendment of Part 1 of the Commission\'s Rules \-- Competitive
    Bidding Procedures*,* *Third Further Notice of Proposed Rulemaking*,
    WT Docket No. 97-82, 14 FCC Rcd 21558 (1999).

[^13]: *See* \"Wireless Telecommunications Bureau Responds to Questions
    About Local Multipoint Distribution Service Auction,\" *Public
    Notice*, DA 98-37 (rel. January 9, 1998) (stating that \"\[a\]fter
    the deadline for submission of the FCC Form 175, applicants may not
    discuss the substance of their bids or bidding strategies with other
    bidders . . . .\").

[^14]: *Part 1 Third Report and Order*, 13 FCC Rcd at 417, ¶ 73. The
    majority of commenters supported our ownership disclosure
    requirements. *Id.* at 418, ¶ 74.

[^15]: *Id.* at 417-18, ¶ 73.

[^16]: 47 C.F.R. § 1.2112.

[^17]: *See* 47 C.F.R. § 24.813 (1997). This section was subsequently
    removed from the Code of Federal Regulations. *See* Biennial
    Regulatory Review \-- Amendment of Parts 0, 1, 13, 22, 24, 26, 27,
    80, 87, 90, 95, 97, and 101 of the Commission\'s Rules to Facilitate
    the Development and Use of the Universal Licensing System in the
    Wireless Telecommunications Services, WT Docket No. 98-20, *Report
    and Order*, 13 FCC Rcd 21027 (1998).

[^18]: *See Part* 1 *Third Report and Order*, 13 FCC Rcd at 418-19, ¶
    75.

[^19]: A \"controlling interest\" includes individuals or entities, or
    groups of individuals or entities, that have control of the
    applicant under the principles of either *de jure* or *de facto*
    control*. See infra* ¶¶ 58-67 (discussing the \"controlling
    interest\" standard).

[^20]: By limiting the reporting requirement in (b)(1) to only those
    applicants claiming designated entity status, this revision responds
    to AT&T\'s argument that the requirement is overly burdensome for
    large publicly-held corporations that may have hundreds of officers
    and directors. *See* AT&T Comments at 4.

[^21]: *See Part 1 Third Report and Order*, 13 FCC Rcd at 418, 420, ¶¶
    75, 77.

[^22]: 47 C.F.R. § 1.2112(a)(3) as adopted in the *Part 1 Third Report
    and Order*.

[^23]: *Id.*

[^24]: *See* 47 C.F.R. § 1.2112(a)(6) as adopted herein. Note that
    (a)(3) is renumbered as (a)(6) in the revised rule.

[^25]: *See* 47 C.F.R. § 1.2112(a)(4) as adopted herein.

[^26]: *See* 47 C.F.R. § 1.2112(a) as adopted herein.

[^27]: *ULS Notice*, 13 FCC Rcd 9672 (1998).

[^28]: AT&T Comments at 4-5; BAM Comments at 12; FCBA Comments at 28-29;
    FCBA Reply Comments at 19-22.

[^29]: AT&T Comments at 5; BAM Comments at 12; FCBA Reply Comments at
    20-21. Section 1.2112(a) of our rules requires applicants to
    disclose various stock interests of 10 percent or greater. 47 C.F.R.
    § 1.2112(a). Note that for purposes of determining ownership
    interests, stock interests held in trust shall be attributed to (1)
    any person who holds or shares the power to vote such stock; (2) any
    person who has the sole power to sell such stock; and (3) in the
    case of stock held in trust, to any person who has the right to
    revoke the trust at will or to replace the trustee at will. If the
    trustee has a familial, personal, or extra-trust business
    relationship to the grantor or the beneficiary, the grantor or
    beneficiary, as appropriate, will be attributed with the stock
    interests held in trust. *See* *Part 1 Third Report and Order*, 13
    FCC Rcd at 419 n.207.

[^30]: *See id.* at 418, ¶ 74.

[^31]: *Part 1 Third Report and Order*, 13 FCC Rcd at 417, ¶ 73.

[^32]: *Id. at* 417-18, ¶ 73. For purposes of our anti-collusion rules,
    the term "applicant" is defined to include entities that have a 10
    percent or greater interest in the applicant. 47 C.F.R. §
    1.2105(c)(6)(i).

[^33]: *See, e.g.,* 47 C.F.R. §§ 20.6(d) (CMRS spectrum cap), 22.942(d)
    (cellular cross-interest), 73.3555 Note 2 (broadcast multiple
    ownership), 76.501 Note 2 (cable cross-ownership).

[^34]: FCBA Reply Comments at 21; AT&T Comments at 5.

[^35]: *See* 47 C.F.R. § 1.2112(b); *compare* 47 C.F.R. § 1.2112(a)
    *with* § 1.2112(b).

[^36]: *See* 47 C.F.R. § 24.813 (1997). This section was subsequently
    removed from the Code of Federal Regulations. *See* Biennial
    Regulatory Review \-- Amendment of Parts 0, 1, 13, 22, 24, 26, 27,
    80, 87, 90, 95, 97, and 101 of the Commission\'s Rules to Facilitate
    the Development and Use of the Universal Licensing System in the
    Wireless Telecommunications Services, WT Docket No. 98-20, *Report
    and Order*, 13 FCC Rcd 21027 (1998).

[^37]: *See* AT&T Comments at 5.

[^38]: 47 C.F.R. § 1.2104(g)(1).

[^39]: *Id*.

[^40]: *See, e.g.*, \"VHF Public Coast Service Auction Closes,\" *Public
    Notice*, DA 98-2542, Attachment C, (rel. December 16, 1998); \"Phase
    II 220 MHz Service Auction Closes,\" *Public Notice*, DA 98-2143,
    Attachment C, (rel. October 23, 1998); \"LMDS Auction Closes,\"
    *Public Notice*, DA 98-572, Attachment C, (rel. March 26, 1998);
    \"D, E, and F Block Auction Closes,\" *Public Notice*, DA 97-81,
    Attachment B, (rel. January 15, 1997).

[^41]: *Competitive Bidding Second Report and Order*, 9 FCC Rcd at
    2389-91, ¶¶ 231-240.

[^42]: 47 C.F.R. § 1.2110(b)(4)(x)(E)(4)(i) and (ii) (1994). *See also*
    Public Notice, \"Reminder to Licensees with Installment Payment
    Plans: Availability of Grace Periods,\" 12 FCC Rcd 7971 (1997).

[^43]: 47 C.F.R. § 1.2110(b)(4)(x)(E)(4)(ii) (1994). In determining
    whether to grant a request for a grace period, the Commission (or
    Wireless Telecommunications Bureau upon delegated authority)
    considered, among other things, the licensee\'s financial condition
    and payment history, including whether the licensee had previously
    defaulted. *Id.*

[^44]: 47 C.F.R. § 1.2110(b)(4)(x)(E)(4)(ii) (1994).

[^45]: 47 C.F.R. § 1.2110(b)(4)(x)(E)(4)(iii) (1994).

[^46]: *Part 1 Third Report and Order*, 13 FCC Rcd at 434-42, ¶¶
    103-113.

[^47]: A summary of the *Part 1 Third Report and Order* appeared in the
    Federal Register on January 15, 1998. *See* 63 Fed. Reg. 2315
    (1998).

[^48]: *Part 1 Third Report and Order*, 13 FCC Rcd at 436, ¶ 106; 47
    C.F.R. § 1.2110(f)(4)(i).

[^49]: *Part 1 Third Report and Order*, 13 FCC Rcd at 436, ¶ 106; 47
    C.F.R. § 1.2110(f)(4)(ii).

[^50]: *Part 1 Third Report and Order*, 13 FCC Rcd at 438, ¶ 107; 47
    C.F.R. § 1.2110(f)(4)(iii), (iv).

[^51]: *See* *Part 1 Third Report and Order*, 13 FCC Rcd at 441-442, ¶
    113 (stating that \"\[w\]e further clarify that such licensees are
    not deemed to be in default on these licenses until such time as the
    Bureau issues a decision on these grace period requests\"). *See
    also* Amendment of Part 95 of the Commission\'s Rules to Provide
    Regulatory Flexibility in the 218‑219 MHz Service, WT Docket No.
    98‑169, *Order, Memorandum Opinion and Order and Notice of Proposed
    Rulemaking*, 13 FCC Rcd 19064, 19072, ¶ 11 (1998) (*218-219 MHz
    Service Order and NPRM*); Public Notice, \"Wireless
    Telecommunications Bureau Provides Guidance on Grace Period and
    Installment Payment Rules,\" DA 98-1897, at 3 (rel. Sept. 18, 1998).

[^52]: *See generally* Alpine PCS Petition; CONXUS Petition.

[^53]: *See generally* DiGiPH Petition; Houston 936 Petition.

[^54]: *See* NextWave Petition at 3. We specifically considered, and
    declined to adopt, such an alternative late payment structure in the
    *Part 1 Third Report and Order*, 13 FCC Rcd at 438-439, ¶¶ 108-109
    (in response to comments filed by Airadigm (270-day window) and GWI
    (pro-rated late payment fees)).

[^55]: *See* *generally* CTI Petition and Loli Petition. *Accord*
    In-Sync Comments at 1; Bellingham Comments at 3. On a related
    matter, the Loli Petition at 3-7 requests that the Commission (1)
    suspend all payment obligations of 218‑219 MHz Service licensees
    until resolution of the proposals set forth in the Petition for
    Rulemaking of Euphemia Banas, *et al.* (filed September 4, 1996,
    amended January 28, 1997, February 26, 1997, and March 13, 1998)
    (\"RM‑8951\"); and (2) give licensees in the 218-219 MHz Service a
    range of options for alleviating financial difficulties similar to
    those given to broadband PCS C block licensees (*see* Amendment of
    the Commission\'s Rules Regarding Installment Payment Financing For
    Personal Communications Services (PCS) Licensees, WT Docket No.
    97‑82, *Order on Reconsideration of the Second Report and Order*, 13
    FCC Rcd 8345, 8358‑60, ¶¶ 34-37 (1998) (\"*C Block Order on
    Reconsideration*\")). *Accord* In-Sync Comments at 3-6; Bellingham
    Comments at 3-4. Although the Commission did not suspend the payment
    obligations of 218-219 MHz Service licensees, it decided not to
    assess late payment fees or cancel 218‑219 MHz Service licenses for
    which a properly filed grace period request was pending, or for
    which adequate installment payments were made as of the effective
    date of the new Part 1 grace period rules (*i.e*., March 16, 1998),
    until resolution of the issues raised in RM-8951. *See 218-219 MHz
    Service Order and NPRM*, 13 FCC Rcd at 19073, ¶ 13. In light of
    these actions, Loli\'s requests described above are moot. *See also*
    Amendment of Part 95 of the Commission\'s Rules to Provide
    Regulatory Flexibility in the 218-219 MHz Service, WT Docket No.
    98-169, RM-8951, *Report and Order and Memorandum Opinion and
    Order*, 15 FCC Rcd 1497 (1999) (adopting a restructuring plan for
    existing 218-219 MHz Service licensees that (i) were current in
    installment payments; (ii) were less than ninety days delinquent on
    the last payment due before March 16, 1998; or (iii) had properly
    filed grace period requests under the former installment payment
    rules).

[^56]: *See* 47 C.F.R. § 1.2110(f)(4) (redesignated herein as §
    1.2110(g)(4)).

[^57]: *See, e.g.*, DiGiPH Petition at 2, 4-5; In-Sync Comments at 6.

[^58]: Alpine PCS Petition at 2-3; CONXUS Petition at 3; NextWave
    Petition at 2-3.

[^59]: *Part 1 Third Report and Order*, 13 FCC Rcd at 440, ¶ 110
    (citing, *e.g.*, Eldon H. Reiley, Guidebook to Security Interests in
    Personal Property § 4.02(iii) (1989)) (emphasis added).

[^60]: *See* CTI Petition at 5-11. *See also* Alpine PCS Petition at
    3-5; CONXUS Petition at 3-7; DiGiPH Petition at 2; Houston 936
    Petition at 3‑4. *Accord* In-Sync Comments at 6-7.

[^61]: CTI Petition at 5-9.

[^62]: CONXUS Petition at 4 (citing 5 U.S.C. § 551(4)) (emphasis added).

[^63]: For example, in *Bowen v. Georgetown University Hospital*, 488
    U.S. 209, 219-20 (1988), Justice Scalia gave the following
    illustration of a regulation that was *not* improperly retroactive
    under the APA:

    > The Treasury Department might prescribe, for example, that for
    > purposes of assessing future income tax liability, income from
    > certain trusts that has previously been considered nontaxable will
    > be taxable \-- whether those trusts were established before or
    > after the effective date of the regulation. That is not
    > retroactivity in the sense at issue here, *i.e.*, in the sense of
    > altering the past legal consequences of past actions. Rather, it
    > is what has been characterized as \"secondary\" . . . A rule with
    > exclusively future effect . . . can unquestionably *affect* past
    > transactions (rendering previously established trusts less
    > desirable in the future), but it does not for that reason cease to
    > be a rule under the APA.

    *Accord* *Bell Atlantic Tel. Cos. v. FCC*, 79 F.3d 1195 (D.C. Cir.
    1996) (upholding FCC rule changes that did not require carriers to
    refund sums previously collected, but which used past facts in
    setting the carriers\' sharing obligations for the future period).

[^64]: *DirectTV, Inc. v. FCC*, 110 F.3d 816, 826 (D.C. Cir. 1997)
    (quoting *Landgraf v. USI Film Products*, 511 U.S. 244, 269, 114 S.
    Ct. 1483, 1499 (1994)). \"\'Even uncontroversially prospective
    statutes may unsettle expectations and impose burdens on past
    conduct: a new property tax or zoning regulation may upset the
    reasonable expectations that prompted those affected to acquire
    property; . . . .\'\" *Id.* (quoting *Landgraf*, 511 U.S. at 270
    n.24).

[^65]: ^?^ *See, e.g.,* Chemical Manufacturers Ass\'n v. EPA, 869 F.2d
    1526, 1536 (D.C. Cir. 1989):

    > It is often the case that a business will undertake a certain
    > course of conduct based on the current law, and will then find its
    > expectations frustrated when the law changes. This has never been
    > thought to constitute retroactive rulemaking, and indeed most
    > economic regulation would be unworkable if all laws disrupting
    > prior expectations were deemed suspect.

[^66]: *See* *FCC v. National Citizens Comm. for Broadcasting*, 436 U.S.
    775 (1978) (upholding prospective regulations limiting multi-media
    ownership under the FCC\'s general rulemaking powers, including
    requirement for divestiture as a condition to license renewal);
    *Committee for Effective Cellular Rules v. FCC*, 53 F.3d 1309,
    1316-17 (D.C. Cir. 1995) (in upholding FCC rules amending the
    technical standards for determining reliable cellular service,
    resulting in restrictions on the areas served by existing cellular
    providers, the court sustained the Commission\'s right to modify
    license provisions through a notice and comment rulemaking); *WBEN,
    Inc. v. United States*, 396 F.2d 601, *cert. denied*, 393 U.S. 914
    (1968) (upholding license modifications that limited predawn AM
    broadcasting rights of \"daytimer\" licensees that previously had
    some of the more ample privileges granted to \"fulltimer\"
    licensees).

[^67]: *See* Houston 936 Petition at 1‑3. *See also* DiGiPH Petition at
    5 (referencing C block notes); Alpine PCS Petition at 6‑7 (same).
    *Cf.* NextWave Petition at 5‑7 (Commission should reconcile its
    seemingly conflicting roles of regulator and party to commercial
    contract).

[^68]: *See* CONXUS Petition at 7-8; CTI Petition at 8‑9. *See also*
    In‑Sync Comments at 6.

[^69]: 47 C.F.R. § 95.816.

[^70]: 47 C.F.R. § 24.711.

[^71]: 47 C.F.R. § 24.716.

[^72]: *See* American Personal Communications Washington-Baltimore MTA
    #10 Frequency Block A, File No. 15000-CW-L-94, Call Sign: KNLF200,
    *Order*, 11 FCC Rcd 12384 (1996).

[^73]: 47 C.F.R. § 24.309.

[^74]: 47 C.F.R. § 90.812.

[^75]: 47 C.F.R. § 21.960.

[^76]: *218-219 MHz Service Order and NPRM*, 13 FCC Rcd at 19072-19074,
    ¶¶ 12-14.

[^77]: Amendment of Part 95 of the Commission\'s Rules to Provide
    Regulatory Flexibility in the 218-219 MHz Service, WT Docket No.
    98-169, RM-8951, *Report and Order and Memorandum Opinion and
    Order*, 15 FCC Rcd 1497 (adopting a restructuring plan for existing
    218-219 MHz Service licensees that (i) were current in installment
    payments; (ii) were less than ninety days delinquent on the last
    payment due before March 16, 1998; or (iii) had properly filed grace
    period requests under the former installment payment rules).

[^78]: *See* Amendment of the Commission\'s Rules Regarding Installment
    Payment Financing for Personal Communications Services (PCS)
    Licensees, WT Docket No. 97-82, *Order on Reconsideration of the
    Second Report and Order*, 13 FCC Rcd 8345, 8373, ¶ 65 (1998); *see
    also* Amendment of the Commission\'s Rules Regarding Installment
    Payment Financing for Personal Communications Service (PCS)
    Licenses, *Second Report and Order and Further Notice of Proposed
    Rulemaking*, WT Docket No. 97-82, 12 FCC Rcd 16436 (1997).

[^79]: *See Stein, Mitchell & Mezines*, [Administrative Law]{.smallcaps}
    § 41.04 at page 41-66 (observing that the lower courts have
    unanimously permitted agencies to modify existing licenses through
    APA rulemakings).

[^80]: MDS and SMR Security Agreements at ¶ 11.

[^81]: *See* Association of Accredited Cosmetology v. Alexander, 979
    F.2d 859, 863-66 (D.C. Cir. 1992):

    > Member schools have no \"vested right\" to future eligibility to
    > participate in the GSL program. Although we do not doubt AACS\'s
    > submission that the schools expected to be eligible in the future,
    > such an expectation did not constitute a vested interest. *Nowhere
    > in the Program Participation Agreements are member schools
    > promised or even led to believe that there will be no background
    > changes in the federal law.* The Agreements explicitly provide
    > that participating schools must \"comply will all relevant program
    > statutes and regulations.\" (Emphasis added.)

[^82]: MDS and SMR Notes at p. 5

    > The enforceability of the Note and/or the Security Agreement do
    > not alter the rights and obligations of the Maker and Payee under
    > the Communications Act of 1934, as amended, or under the
    > then‑applicable orders and regulations of the Commission, as
    > amended.

    \* \* \*

    > This Note shall be governed by and construed in accordance with
    > the Communications Act of 1934, as amended, the then‑applicable
    > orders and regulations of the Commission, and federal law. Nothing
    > in this Note shall be deemed to modify any then‑applicable orders
    > and regulations of the Commission, and *nothing in this Note shall
    > be deemed to release the Maker from compliance therewith.*
    > (Emphasis added.)

[^83]: For example, the MDS and SMR Notes provide at p. 2:

    > All payments shall be made during normal business hours at the
    > Commission\'s designated lockbox location as set forth from time
    > to time in the Commission\'s then‑applicable orders and
    > regulations and/or public notices.

[^84]: MDS and SMR Notes at p. 2.

[^85]: MDS and SMR Notes at p. 5.

[^86]: Some petitioners argue that the Supreme Court decision in *United
    States v. Winstar Corp.*, 518 U.S. 839 (1996), precludes the
    unilateral modifications of the terms of the Note and Security
    Agreement. *See, e.g.,* Alpine PCS Petition at 6; CONXUS Petition at
    7. *Winstar* addressed an entirely different regulatory scheme, and
    one in which the Court found that the government agreed to protect
    private parties from the risk of changing regulations. Here, in
    contrast, the Note and Security Agreement put the licensees on
    notice that they must continue to comply with the Commission\'s
    regulations, as the may be amended. Alpine PCS, CONXUS and other
    petitioners do not, and cannot, point to any provision in the Notes
    and Security Agreements in which the government affirmatively
    promised not to make any regulatory changes that would affect the
    licensees during the 10-year life of the licenses. Accordingly, the
    *Winstar* decision has no application to the circumstances here.

[^87]: While the instant reconsideration petitions were under
    consideration, we informally allowed SMR and MDS licensees to make
    installment payments under a modified regime in which licensees in
    these services were not charged a late fee if the payment was made
    within 90-days of the due date (as provided for in the text of the
    SMR and MDS Notes), and in which a 10 percent late fee was imposed
    for payments that were made within the 90-180 day period (as
    provided for in the new Part 1 rules). We did this as an
    accommodation to these licensees so as not to prejudice their
    argument that the Note and Security Agreement provisions restricted
    the Commission to the old Part 1 rules, at least for the first
    90-day period. Now that we have completed our review on
    reconsideration, we see no reason to continue that special
    procedure, since we have concluded that the Note and Security
    Agreements do not preclude the adoption of new grace period and
    payment rules for the future. While we will not seek to recover the
    amounts that might otherwise have been due for late payments under
    our Part 1 rules during this reconsideration period, we will
    commence applying the Part 1 rules uniformly to all services,
    including SMR and MDS, beginning with the first installment payment
    due after the effective date of this rule making.

[^88]: *Part 1 Third Report and Order*, 13 FCC Rcd at 436, ¶ 106; 47
    C.F.R. § 1.2110(f)(4) (redesignated herein as § 1.2110(g)(4)).

[^89]: *See* 47 C.F.R. § 1.2110(g)(4) as adopted herein.

[^90]: *See* 47 C.F.R. § 1.2110(g)(4) as adopted herein. These
    amendments of the due dates for late installment payments and
    associated late fees do not apply to C and F block licensees that
    were provided a single 90-day non-delinquency period for remittance
    of the initial resumption payment that was due on July 31, 1998.
    *See* Amendment of the Commission\'s Rules Regarding Installment
    Payment Financing for Personal Communications Services (PCS)
    Licensees, WT Docket No. 97-82, *Order on Reconsideration of the
    Second Report and Order*, 13 FCC Rcd at 8355, ¶ 26.

[^91]: *See* 47 C.F.R. § 1.2110(g)(4) as adopted herein. These late
    payment fee and automatic cancellation provisions do not apply to
    licensees with grace period requests that were properly filed prior
    to the effective date of the *Part 1 Third Report and Order* (March
    16, 1998) until such time as the Commission (or the Bureau upon
    delegated authority) addresses those grace period requests.

[^92]: *Competitive Bidding Second Report and Order*, 9 FCC Rcd at 2391,
    ¶ 240 (emphasis added).

[^93]: Section 1.2110(e)(4)(ii) provided in part: \"If the Commission
    grants a request for a grace period, or *otherwise approves a
    restructured payment schedule* . . . .\" 47 C.F.R. §
    1.2110(e)(4)(ii) (1997).

[^94]: NextWave Petition at 4. *See also* Loli Petition at 7-8
    (requesting that 218-219 MHz Service licensees be allowed to
    continue filing requests for \"work-outs\").

[^95]: NextWave Petition at 5.

[^96]: *See* 47 C.F.R. § 1.2110(g) as adopted herein.

[^97]: 47 C.F.R. § 1.2110(e)(4)(ii) (1997).

[^98]: *See Part 1 Notice of Proposed Rule Making*, 12 FCC Rcd at
    5723-5726, ¶¶ 71-74.

[^99]: *See Part 1 Notice of Proposed Rule Making*, 12 FCC Rcd at
    5723-5726, ¶¶ 69-78.

[^100]: 47 U.S.C. § 310(d).

[^101]: Biennial Regulatory Review \-- Amendment of Parts 0, 1, 13, 22,
    24, 26, 27, 80, 87, 90, 95, 97, and 101 of the Commission\'s Rules
    to Facilitate the Development and Use of the Universal Licensing
    System in the Wireless Telecommunications Services, WT Docket No.
    98-20, *Report and Order*, 13 FCC Rcd 21027 (1998) (*\"ULS Report
    and Order*\").

[^102]: *See*, *e.g.*, 47 C.F.R. § 95.821 (1997) (218-219 MHz service).

[^103]: *See, e.g*., *ULS Report and Order,* 13 FCC Rcd at 21081, ¶ 118.

[^104]: *Id.* at 21081-21082, ¶¶ 118-119 and Appendix G (final rule 47
    C.F.R. § 1.948(d)). The ULS rules became effective on February 16,
    1999, 60 days after their date of publication in the Federal
    Register.

[^105]: In‑Sync Comments at 7.

[^106]: *Id.*

[^107]: *Part 1 Third Report and Order*, 13 FCC Rcd at 405-409, ¶¶
    49-56.

[^108]: *See* 47 C.F.R. § 1.2111(c).

[^109]: *See* 47 C.F.R. § 1.2111(d).

[^110]: *See* 47 C.F.R. § 1.2111(d)(2).

[^111]: *See* 47 C.F.R. §§ 24.309(f) (narrowband PCS), 24.711 (C block),
    24.716(d) (F block), 27.209(d)(1), (2) (WCS), 90.812(b) (900 MHz),
    95.816(e) (IVDS); *Part 1 Third Report and Order*, 13 FCC Rcd at
    407, ¶ 53.

[^112]: NextWave Petition at 8-10. 47 C.F.R. §§ 1.2111(d), 24.839.

[^113]: NextWave Petition at 8-10. 47 C.F.R. §§ 1.2111(d), 24.839.

[^114]: *See* 47 C.F.R. § 24.839.

[^115]: *See* 47 C.F.R. § 1.2111(d).

[^116]: Nextwave Petition at 10.

[^117]: Implementation of Section 309(j) of the Communications Act -
    Competitive Bidding, PP Docket No. 93-253, *Fifth Report and Order*,
    9 FCC Rcd 5532, 5580-5589, ¶¶ 113-129 (1994).

[^118]: *See* 47 C.F.R. § 24.839.

[^119]: *See* Implementation of Section 309(j) of the Communications
    Act - Competitive Bidding, PP Docket No. 93-253, *Fifth Report and
    Order*, 9 FCC Rcd at 5588, ¶ 128.

[^120]: *See* 47 C.F.R. § 1.2111(c) and (d).

[^121]: 47 C.F.R. § 1.2111(c) and (d).

[^122]: *Part I Third Report and Order*, 13 FCC Rcd at 432-434, ¶¶
    100-102.

[^123]: 47 C.F.R. § 1.2104(g).

[^124]: *Part 1 Third Report and Order*, 13 FCC Rcd at 443, ¶¶ 115-116;
    47 C.F.R. § 1.2104(g).

[^125]: *Part 1 Third Report and Order*, 13 FCC Rcd at 446, ¶ 122. *See*
    Amendment of Part 1 of the Commission\'s Rules \-- Competitive
    Bidding Procedures, WT Docket No. 97-82, *Erratum to Third Report
    and Order and Second Further Notice of Proposed Rule Making,* 13 FCC
    Rcd 4621, 4625, ¶ 8 (amending ¶ 122 of the *Part 1 Third Report and
    Order*). *See* *also* NextWave Petition at 7-8.

[^126]: *Part 1 Third Report and Order*, 13 FCC Rcd at 446, ¶ 122; 47
    C.F.R. § 1.2104(g)(2).

[^127]: 47 C.F.R. § 1.2104(g)(2). But note that licensees in the
    installment payment program that default on *down* payments are
    subject to Section 1.2104(g)(2). *See* 47 C.F.R. §§ 1.2104(g)(2),
    1.2110(g)(1) (as designated herein).

[^128]: 47 C.F.R. § 1.2110(f)(4) (redesignated herein as §1.2110(g)(4)).

[^129]: 47 C.F.R. §§ 1.2109(c), 1.2104(g)(2).

[^130]: *Part 1 Third Report and Order*, 13 FCC Rcd at 443, ¶ 116.

[^131]: 47 C.F.R. § 1.2104(g)(2).

[^132]: 47 C.F.R. § 1.2110(g)(4)(iv) (formerly §1.2110(f)(4)(iv)).

[^133]: *See* 47 C.F.R. § 1.2105(a)(2)(x).

[^134]: Amendment of the Commission\'s Rules Regarding Installment
    Payment Financing for Personal Communications Services (PCS)
    Licensees, WT Docket No. 97-82, *Fourth Report and Order,* 13 FCC
    Rcd 15743, 15753-15754, ¶ 18 (1998).

[^135]: *Id.* at 15761-15762, ¶ 34.

[^136]: *Id.* at 15761, ¶ 34.

[^137]: *See* *id.* at 15754, ¶ 18.

[^138]: *See* 47 C.F.R. § 1.2104(g).

[^139]: Amendment of the Commission\'s Rules Regarding Installment
    Payment Financing for Personal Communications Services (PCS)
    Licensees, WT Docket No. 97-82, *Fourth Report and Order,* 13 FCC
    Rcd at 15761, ¶ 34.

[^140]: *See* 47 C.F.R. § 1.2106(a) as adopted herein.

[^141]: *See* 47 C.F.R. § 1.2105(a)(2)(xi) as adopted herein.

[^142]: *See* 47 C.F.R. § 1.2110 as adopted herein. If any one of an
    applicant\'s controlling interests or their affiliates as defined by
    Section 1.2110 of the Commission\'s rules (as adopted herein) is in
    default on any Commission licenses or is delinquent on any non-tax
    debt owed to any Federal agency at the time the applicant files it
    Form 175, the applicant will not be able to make the certification
    required by Section 1.2105(a)(2)(x) of the Commission\'s rules and
    will not be eligible to participate in Commission auctions. 47
    C.F.R. §§ 1.2110 (as adopted herein), 1.2105(a)(2)(x).

[^143]: 47 C.F.R. § 1.2110(g)(4) (formerly § 1.2110(f)(4)).

[^144]: *See* 47 C.F.R. § 1.2105(a)(2)(x).

[^145]: For example, under the Debt Collection Improvement Act of 1996
    (DCIA), the Government may agree to a compromise of the claim. 31
    U.S.C. § 3711 *et seq.; see also* 4 C.F.R. § 103.1 *et seq.*
    Similarly, financial obligations due to the Government after license
    cancellation may be subject to the provisions of the Bankruptcy
    Code. *In re NextWave Personal Comms., Inc.,* 200 F.3d 43, 59 at
    n.15 (2d Cir. Dec. 22, 1999).

[^146]: A non-discriminatory requirement that installment payment
    defaulters must demonstrate future financial viability through a
    higher upfront payment does not violate the prohibitions in Section
    525 of the Bankruptcy Code. 11 U.S.C. § 525(a).

[^147]: *Part 1 Third Report and Order*, 13 FCC Rcd 374.

[^148]: *Second Notice*, 13 FCC Rcd at 471-481, ¶¶ 170-194.

[^149]: 47 U.S.C. § 309(j).

[^150]: A list of the parties that filed comments in response to the
    *Second Notice*, and the abbreviations used to refer to such
    parties, is attached at Appendix B.

[^151]: *Adarand Constructors, Inc. v. Pena*, 515 U.S. 200, 227 (1995).

[^152]: *Id*. at 227.

[^153]: *United States v. Virginia,* *et al.,* 518 U.S. 515 (1996).

[^154]: *Id*. at 531-534. *See also J.E.B. v. Alabama ex rel. T.B*., 511
    U.S. 127 (1994); *Mississippi University for Women v. Hogan*, 458
    U.S. 718 (1982).

[^155]: *United States v. Virginia, et al*., 518 U.S. 515, 531-534.

[^156]: *Second Notice*, 13 FCC Rcd at 471, ¶ 172.

[^157]: *Id*. at 471-472, ¶ 172.

[^158]: *Id*. at 472, ¶ 174.

[^159]: *Id.* at 474, ¶ 176 (citing Office of Management and Budget,
    Revisions to the Standards for the Classification of Federal Data on
    Race Ethnicity, *Notice of Decision*, 62 Fed. Reg. 58782 (Oct. 30,
    1997)).

[^160]: Office of Management and Budget, Revisions to the Standards for
    the Classification of Federal Data on Race Ethnicity, *Notice of
    Decision*, 62 Fed. Reg. 58782 (October 30, 1997).

[^161]: *Second Notice*, 13 FCC Rcd at 474, ¶ 176.

[^162]: Amendment of Parts 20 and 24 of the Commission\'s Rules \--
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap, Amendment of the Commission\'s Cellular/PCS
    Cross-Ownership Rule, WT Docket No. 96-59, GN Docket No. 90-314,
    *Report and Order*, 11 FCC Rcd 7824, 7833, ¶ 16 (1996);
    Implementation of Section 309(j) of the Communications Act \--
    Competitive Bidding, Amendment of the Commission\'s Cellular PCS
    Cross-Ownership Rule, Implementation of Sections 3(n) and 332 of the
    Communications Act Regulatory Treatment of Mobile Services, PP
    Docket No. 93-253, GN Docket No. 90-314, GN Docket No. 93-252,
    *Sixth Report and Order*, 11 FCC Rcd 136, 143, ¶ 11 (1995).

[^163]: *See* *Second Notice*, 13 FCC Rcd at 474, ¶ 176; 47 C.F.R. §
    1.2110(c)(3) as amended herein.

[^164]: *Second Notice*, 13 FCC Rcd at 475, ¶ 179 (citing \"The FCC
    Report to Congress on Spectrum Auctions,\" WT Docket No. 97-150, at
    p. 25 (rel. October 9, 1997)). The term \"rural telephone company\"
    is defined in 47 U.S.C. § 153(37) and in 47 C.F.R. § 1.2110(c) as
    adopted herein.

[^165]: Specifically, in \"The FCC Report to Congress on Spectrum
    Auctions,\" WT Docket No. 97-150, at p. 25 (rel. October 9, 1997),
    we noted that rural telephone companies had won about 44 percent of
    the 123 rural Basic Trading Area (\"BTA\") licenses in the United
    States. These statistics were based on auctions completed as of the
    date of the report, *i.e.*, Auction Nos. 1-15. *See also Second
    Notice*, 13 FCC Rcd at 475, ¶ 179.

[^166]: *Second Notice*, 13 FCC Rcd at 475, ¶ 179.

[^167]: *See* RTG Comments at 12-17.

[^168]: *See* 47 U.S.C. § 309(j)(3)(A). In addition, the Preamble to the
    Telecommunications Act of 1996 provides that its purpose is to
    promote competition and reduce regulation in order to secure lower
    prices and higher quality services for American telecommunications
    consumers and encourage the rapid deployment of new
    telecommunications technologies. *See* Telecommunications Act of
    1996, Pub. L. 104-104, 110 Stat. 56 (1996). *See also* Statement of
    Policy on Establishing a Government-to-Government Relationship with
    Indian Tribes, FCC 00-207 (rel. June 23, 2000); Virginia Tech
    Foundation, Inc. Petition for Reconsideration of Request for Waiver
    of Section 101.23 \-- Auction No. 17, Local Multipoint Distribution
    Service, *Order*, 13 FCC Rcd 4535 (1998) and Requests for Waiver of
    Section 101.1003(a) of the Commission\'s Rules Establishing
    Eligibility Restrictions on Incumbent LECs and Cable Operators in
    the Local Multipoint Distribution Service, *Order*, 13 FCC Rcd 18694
    (1998).

[^169]: *See, e.g.*, Extending Wireless Telecommunications Services to
    Tribal Lands, WT Docket No. 99-266, *Report and Order and Further
    Notice of Proposed Rulemaking*, FCC 00-209 (rel. June 30, 2000);
    Federal-State Joint Board on Universal Service: Promoting Deployment
    and Subscribership in Unserved and Underserved Areas, Including
    Tribal and Insular Areas, CC Docket No. 96-45, *Twelfth Report and
    Order, Memorandum Opinion and Order, and Further Notice of Proposed
    Rulemaking*, FCC 00-208 (rel. June 30, 2000). In particular, in the
    Tribal Lands proceeding, we established bidding credits that will be
    available in future auctions in markets that contain qualifying
    tribal areas that have a telephone service penetration rate below 70
    percent. To qualify for the credit, winning bidders must commit to
    use the license to deploy facilities and offer service to qualifying
    tribal areas, and must obtain tribal consent to such deployment. We
    also sought comment on whether to award bidding credits to carriers
    that commit to serve non-tribal areas with low penetration rates,
    whether to award transferable credits for use in future auctions to
    licensees in already-established wireless services that deploy
    facilities and provide service to unserved tribal communities, and
    whether to make credits available to licensees that enter into
    partitioning agreements with tribal authorities.

[^170]: RTG Comments at 14-15.

[^171]: *Id*. at 15.

[^172]: *Id.*

[^173]: 47 U.S.C. § 309(j)

[^174]: *Part 1 Third Report and Order*, 13 FCC Rcd at 397, ¶ 38.

[^175]: *Second Notice*, 13 FCC Rcd at 475-476, ¶ 181.

[^176]: *Id.* at 476, ¶ 181.

[^177]: *Id. See* Section 3007 of the Balanced Budget Act of 1997, Pub.
    L. 105-33, Title III, 111 Stat. 251 (1997) (\"Balanced Budget
    Act\").

[^178]: *Second Notice*, 13 FCC Rcd at 476, ¶ 181.

[^179]: *Id*. at 476, ¶ 182.

[^180]: *See* *Fresno Mobile Radio, Inc. v. FCC*, 165 F.3d 965, 971
    (upholding Commission\'s decision to eliminate installment payment
    program with respect to 800 MHz SMR licenses).

[^181]: *Part 1 Third Report and Order*, 13 FCC Rcd at 397-398, ¶ 38.

[^182]: *Id*.

[^183]: *Id*. at 398, ¶ 38.

[^184]: *See, e.g., In re GWI PCS1, Inc.*, No. 397‑39676‑SAF‑11 (Bankr.
    N.D. Tex.); *In re NextWave Personal Communications, Inc.*, No. 98 B
    21529 (ASH) (Bankr. S.D.N.Y.).

[^185]: *See* 47 U.S.C. § 309(j)(4)(D).

[^186]: *Second Notice*, 13 FCC Rcd at 476-478, ¶¶ 183-187. The
    Commission initially proposed to adopt a general attribution rule
    for determining small business eligibility in the *Part 1 Notice of
    Proposed Rule Making*, 12 FCC Rcd at 5703, ¶ 28.

[^187]: *Second Notice*, 13 FCC Rcd at 477, ¶ 185 and Appendix E at
    534-536 (proposed revision to 47 C.F.R. § 1.2110).

[^188]: *Second Notice,* 13 FCC Rcd at 477, ¶ 183.

[^189]: *Id.* at 477, ¶ 185.

[^190]: *Id*. at 477-478, ¶ 185.

[^191]: *Id.* at 478, ¶ 186.

[^192]: *See* 47 C.F.R. § 1.2110(c)(5) as redesignated herein.

[^193]: *See*, *e.g.*, 47 C.F.R. § 24.709(b)(5) and (6). *See also*
    NextWave Comments at 2-4.

[^194]: *See* 47 C.F.R. § 101.1112 (LMDS); 47 C.F.R. § 90.912 (800 MHz
    SMR); 47 C.F.R. § 90.1021 (220 MHz service); 47 C.F.R. § 80.1252(c)
    (Public Coast); 47 C.F.R. § 90.1103(c) (LMS).

[^195]: *See Ellis Thompson Corporation*, 9 FCC Rcd 7138, 7138-7139, ¶
    9, (1994) (\"*Ellis Thompson*\"), in which the Commission identified
    the following factors used to determine control of a business: (1)
    use of facilities and equipment; (2) control of day-to-day
    operations; (3) control of policy decisions; (4) personnel
    responsibilities; (5) control of financial obligations; and (6)
    receipt of monies and profits. *See also* *Intermountain Microwave*,
    24 Rad. Reg. (P&F) 983 (1963); In re Application of Baker Creek
    Communications, L.P. for Authority to Construct and Operate Local
    Multipoint Distribution Services in Multiple Basic Trading Areas,
    *Memorandum Opinion and Order*, 13 FCC Rcd 18709 (Wireless Tel. Bur.
    1998) (discussing in detail the factors constituting *de facto*
    control); Stephen F. Sewell, *Assignments and Transfers of Control
    of FCC Authorizations Under Section 310(d) of the Communications Act
    of 1934*, 43 Fed. Comm. L.J. 277 (1991).

[^196]: *See*, *e.g.*, 47 C.F.R. § 20.6(d)(9).

[^197]: *See* 47 C.F.R. § 1.2110 as adopted herein.

[^198]: *See* 47 C.F.R. § 1.2112(b) as adopted herein.

[^199]: *See* 47 C.F.R. § 1.2110(c)(2)(ii) as adopted herein. *See also*
    47 C.F.R. § 1.2110(b)(4)(v) (redesignated as § 1.2110(c)(5)(v))
    (defining affiliation arising under stock options, convertible
    debentures, and agreements to merge) and NextWave Comments at 6
    (supporting the Commission\'s approach of calculating equity on a
    fully-diluted basis).

[^200]: The Part 1 affiliation rules are codified at 47 C.F.R. §
    1.2110(b)(4) (redesignated herein as § 1.2110(c)(5)).

[^201]: *See* In re Application of Baker Creek Communications, L.P. for
    Authority to Construct and Operate Local Multipoint Distribution
    Services in Multiple Basic Trading Areas, *Memorandum Opinion and
    Order*, 13 FCC Rcd 18709 (Wireless Tel. Bur. 1998) (discussing in
    detail the factors constituting *de facto* control).

[^202]: Western Comments at 8-9; Americall Comments at 2-3.

[^203]: *See* 47 C.F.R. 1.2110(c)(2)(ii)(F) as adopted herein (also
    providing that the officers and directors of an entity that controls
    a licensee or applicant shall be considered to have a controlling
    interest in the licensee or applicant). This rule applies to the
    officers and directors of rural telephone companies and of entities
    that control rural telephone companies. *See* RTG Comments at 20-21
    (requesting that the Commission rely on its affiliation rules rather
    than presume that the officers and directors of rural telephone
    companies have controlling interests in the companies).

[^204]: Western Comments at 3-5; Western Reply Comments at 3.

[^205]: *See* 47 C.F.R. § 1.2110(c)(2)(ii)(I) as adopted herein. *See
    also* 47 C.F.R. § 20.6(d)(9) and (10).

[^206]: *See, e.g.*, AmeriCall Comments at 3.

[^207]: *See* NextWave Comments at 5-6.

[^208]: *See, e.g.*, 47 C.F.R. § 73.3555 (broadcast multiple ownership).

[^209]: *Part 1 Third Report and Order*, 13 FCC Rcd at 417-421, ¶¶
    73-78.

[^210]: CIRI Comments at 2-6.

[^211]: *See* 47 C.F.R. § 24.709.

[^212]: Amendment of the Commission\'s Rules Regarding Installment
    Payment Financing for Personal Communications Services (PCS)
    Licensees, WT Docket No. 97-82, *Fourth Report and Order*, 13 FCC
    Rcd 15743, 15751, ¶ 13 and 15752, ¶ 15 (1998) (\"*C Block Fourth
    Report and Order*\"); 47 C.F.R. § 24.709(b)(9)(i). We note that
    Auction No. 22 was originally announced as an auction of licenses
    for C, D, E, and F block spectrum; however, no D block spectrum
    remained in the license inventory by the start of the auction.

[^213]: *C Block Fourth Report and Order* at ¶ 47

[^214]: *See* 47 C.F.R. § 24.839(d).

[^215]: *Id.* We recently issued a *Further Notice of Proposed
    Rulemaking* seeking comment on whether to open to all qualified
    applicants, not just entrepreneurs, certain C and F block licenses.
    Amendment of the Commission's Rules Regarding Installment Payment
    Financing for Personal Communications Services (PCS) Licensees, WT
    Docket No. 97-82, FCC 00-197, *Further Notice of Proposed
    Rulemaking* (rel. June 7, 2000). In addition, we sought comment on
    modifying our assignment and transfer rules for C and F block
    licenses. *Id.*

[^216]: *Second Notice*, 13 FCC Rcd at 479, ¶ 189; 47 C.F.R. §
    1.2104(g).

[^217]: *Second Notice*, 13 FCC Rcd at 479, ¶ 189.

[^218]: *Id.*

[^219]: *Id*.

[^220]: *Id*.

[^221]: 47 C.F.R. § 1.2104(g)(2).

[^222]: By imposing the obligation to pay the winning bid at the time of
    the auction close, rather than at the time of the license grant, the
    Commission\'s rules make clear that the obligation to pay the
    winning bid amount originates at the close of the auction, not the
    grant of the license, and thereby eliminates any incentive to
    abandon the bid before the license grant because of a change in
    market conditions or the financial condition of the bidder. In
    short, Section 1.2104(g)(2) places the risk of a post-auction change
    of circumstances squarely on the winning bidder rather than on the
    Commission.

[^223]: 47 C.F.R. § 1.2104(g)(2). In the event that a bidding credit
    applies to any of the bids, the default payment is either the
    difference between the net withdrawn bid and the subsequent net
    winning bid, or the difference between the gross withdrawn bid and
    the subsequent gross winning bid, whichever is less, plus an
    additional payment equal to 3 percent of the lower of the initial
    winning bid or the subsequent winning bid.

[^224]: *Competitive Bidding Second Report and Order*, 9 FCC Rcd 2348,
    2374, ¶ 154.

[^225]: *Compare* 47 C.F.R. § 1.2104(g)(1) *with* 47 C.F.R. §
    1.2104(g)(2).

[^226]: 47 C.F.R. § 1.2104(g)(1).

[^227]: *See* BDPCS, Inc., BTA Nos. B008, B036, B055, B089, B110, B133,
    B149, B261, B298, B331, B347, B358, B391, B395, B407, B413, and
    B447, Frequency Block C, *Memorandum Opinion and* *Order*, FCC
    00-243 (rel. July 10, 2000).

[^228]: *Part 1 Third Report and Order*, 13 FCC Rcd at 431-432, ¶ 98; 47
    C.F.R. § 1.2108.

[^229]: Balanced Budget Act § 3008; 47 U.S.C. § 309(b).

[^230]: 47 C.F.R. § 1.2108.

[^231]: *Second Notice*, 13 FCC Rcd at 480, ¶ 191.

[^232]: *Id.*

[^233]: *Id*.

[^234]: 47 U.S.C. § 309(j)(3)(A) (emphasis added).

[^235]: *Part 1 Third Report and Order*, 13 FCC Rcd at 376, ¶ 1.

[^236]: *Compare, e.g.*, 47 C.F.R. § 24.720(e) (definition of \"Rural
    Telephone Company\" in the broadband PCS rules) *with* 47 C.F.R. §
    1.2110(b)(3) (definition of \"Rural Telephone Companies\" in the
    Part 1 rules).

[^237]: *Compare*, *e.g*., 47 C.F.R. § 1.2110(e)(2) (redesignated herein
    as 47 C.F.R. § 1.2110(f)(2)) (providing a standard schedule of
    bidding credits) *with* §§ 27.209(b), (c) and 27.210(b) (providing
    for greater bidding credits than the standard schedule).

[^238]: *Part 1 Notice of Proposed Rule Making*, 12 FCC Rcd at
    5699-5700, ¶ 20.

[^239]: Rulemaking to Amend Parts 1, 2, 21, and 25 of the Commission\'s
    Rules to Redesignate the 27.5-29.5 GHz Frequency Band, to Reallocate
    the 29.5-30.0 GHz Frequency Band, to Establish Rules and Policies
    for Local Multipoint Distribution Service and for Fixed Satellite
    Services, Petitions for Reconsideration of the Commission\'s
    Competitive Bidding Rules, CC Docket No. 92-297, *Second Order on
    Reconsideration*, 12 FCC Rcd 15082, 15096-97, ¶ 22 (1997)
    (petitioners had sought an assets test whereby entities with assets
    exceeding a specific threshold would be excluded from eligibility
    for small business provisions).

[^240]: *Part 1 Third Report and Order*, 13 FCC Rcd at 388-389, ¶ 19.

[^241]: *Id*. Eligibility for the C and F block PCS auctions was based
    on an applicant\'s gross revenues and total assets (*see* 47 C.F.R.
    § 24.709(a)). \"Total assets\" are defined as \"the book value . . .
    of all property owned by an entity, whether real or personal,
    tangible or intangible . . . .\" 47 C.F.R. § 24.720(g).

[^242]: *See* 15 U.S.C. § 632(a).

[^243]: In an *ex parte* filing, the Small Business Administration,
    Office of Advocacy, asks the Commission to reconsider the use of a
    total assets test. *See* Letter to William E. Kennard, Chairman,
    Federal Communications Commission, from Jere W. Glover, Chief
    Counsel for Advocacy, and S. Jenell Trigg, Assistant Chief Counsel
    for Telecommunications, Office of Advocacy, U.S. Small Business
    Administration, dated September 10, 1998.

[^244]: To bid in the PCS entrepreneur block auctions, applicants were
    required to have less than \$125 million in gross revenues and less
    than \$500 million in total assets. *See* Implementation of Section
    309(j) of the Communications Act - Competitive Bidding, PP Docket
    No. 93-253, *Fifth Report and Order*, 9 FCC Rcd at 5581-82, ¶ 115.
    *See also* 47 C.F.R. § 24.709(a).

[^245]: *Second Notice*, 13 FCC Rcd at 476-78, ¶¶ 183-87.

[^246]: *See* *supra* ¶¶ 58-66.

[^247]: *See* *supra* ¶ 62.

[^248]: *See, e.g*., 47 C.F.R. §§ 1.2110(c)(5)(v) (formerly §
    1.2110(b)(4)(v)), 24.709(b)(7). However, agreements such as
    warrants, stock options, and convertible debentures may not be used
    to appear to terminate or divest ownership interests before they
    actually do so. *See* 47 C.F.R. § 24.709(b)(7).

[^249]: Implementation of Section 309(j) of the Communications Act\--
    Competitive Bidding, PP Docket No. 93-253, *Fifth Memorandum Opinion
    and Order,* 10 FCC Rcd 403, 454-56, ¶¶ 93-95 (1994) (\"*Fifth M O &
    O*\").

[^250]: *Id.* A \"right of first refusal\" is an agreement between
    parties which grants an investor the right to match a purchase offer
    from a third party. *See id*. at 455 n.220. A \"put\" option gives
    the holder of an ownership instrument the right to sell a share of
    stock at a specified price at any time up to the expiration date.
    *See id.* at 454, ¶ 92.

[^251]: *See* Implementation of Section 309(j) of the Communications
    Act\-- Competitive Bidding, PP Docket No. 93-253*, Fifth Report and
    Order*, 9 FCC Rcd 5532, 5620, ¶ 205 (1994).

[^252]: *See* Letter from Amy J. Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, to Cheryl A.
    Tritt, Esq., and Michael K. Kurtis, Esq., counsel for DiGiPH PCS,
    Inc., 13 FCC Rcd 17950 (1998) (\"Division Letter to DiGiPH\").

[^253]: 47 C.F.R. § 1.2110(c)(5)(v) (formerly § 1.2110(b)(4)(v)).

[^254]: *Id.*

[^255]: For example, a licensee might execute three promissory notes,
    giving its lender the right to convert the loan amounts to 15
    percent, 20 percent, and 25 percent equity interests in the
    licensee. If the conversion rights in each note were granted on a
    contingent basis, vesting only on the condition that the lender
    divest enough equity associated with the other notes to ensure that
    it remains below the applicable equity limit, we would calculate the
    stock interests of the lender in all three notes on a fully diluted
    basis, but we would not consider the conversion rights in all three
    notes as having been exercised simultaneously. Depending on the
    equity limit that is applicable in a given case, we could consider
    the various stock interests as having been exercised alone or in
    pairs. *See* Division Letter to DiGiPH.

[^256]: In the example described in *supra* n.255, if the lender was
    subject to the 49.9 equity limit in Section 24.709(b)(4) of the
    Commission\'s C block eligibility rules, we would consider the
    conversion rights in only two of the three notes as having been
    exercised simultaneously. In this example, combining the conversion
    rights in two of the notes would give the lender either 35 percent,
    40 percent, or 45 percent of the licensee\'s total equity.
    Therefore, the lender would not be considered to have exceeded the
    49.9 percent equity limit in Section 24.709(b)(4). *See* Division
    Letter to DiGiPH.

[^257]: *Fifth M O & O*, 10 FCC Rcd at 454-56 ¶¶ 93-95.

[^258]: *See* 5 U.S.C. § 604. The RFA, *see* 5 U.S.C. § 601 *et seq*.,
    has been amended by the Contract With America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of
    CWAAA is the Small Business Regulatory Enforcement Fairness Act of
    1996 (SBREFA).

[^259]: *See* 5 U.S.C. § 603

[^260]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et seq*.,
    has been amended by the Contract With America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of
    CWAAA is the Small Business Regulatory Enforcement Fairness Act of
    1996 (SBREFA).

[^261]: Amendment of Part 1 of the Commission\'s Rules \-- Competitive
    Bidding Proceeding, WT Docket No. 97-82, *Order, Memorandum Opinion
    and Order, and Notice of Proposed Rulemaking*, 12 FCC Rcd 5686, 5749
    (1997).

[^262]: *Third Report and Order and Second Further Notice of Proposed
    Rulemaking*, 13 FCC Rcd 374, 492 (\"*Part 1 Third Report and
    Order*\" and \"*Second Notice*\") (Appendix B) (1997).

[^263]: *See* 5 U.S.C. § 604.

[^264]: 47 C.F.R. §§ 1.2110(f)(4) (redesignated herein as §
    1.2110(g)(4)), 1.2104(g).

[^265]: One party, Merlin Telecom, Inc., filed comments in response to
    the IRFA. These comments were addressed in the FRFA contained in the
    *Part 1 Third Report and Order*. *See Part 1 Third Report and
    Order*, 13 FCC Rcd at 492 (Appendix B).

[^266]: *See Part 1 Third Report and Order*, 13 FCC Rcd at 434-442, ¶¶
    103-113.

[^267]: *See supra* ¶¶ 16-28.

[^268]: *See supra* ¶ 26.

[^269]: *See supra* ¶¶ 27-28.

[^270]: *See supra* ¶¶ 29-30.

[^271]: *Id.*

[^272]: *See supra* ¶¶ 31-33.

[^273]: *See supra* ¶¶ 34-37.

[^274]: 5 U.S.C. § 603(b)(3).

[^275]: 5 U.S.C. § 601(6).

[^276]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    \"small business concern\" in 15 U.S.C. § 632).

[^277]: 15 U.S.C. § 632.

[^278]: 5 U.S.C. § 601(4).

[^279]: 1992 Economic Census, U.S. Bureau of the Census, Table 6
    (special tabulation of data under contract to Office of Advocacy of
    the U.S. Small Business Administration).

[^280]: 5 U.S.C. §601(5).

[^281]: U.S. Dept. of Commerce, Bureau of the Census, "1992 Census of
    Governments."

[^282]: *Id*.

[^283]: *See* 1992 Economic Census, U.S. Bureau of the Census, Table 6
    (special tabulation of data under contract to Office of Advocacy of
    the U.S. Small Business Administration).

[^284]: 13 C.F.R. § 121.201, SIC code 4812.

[^285]: U.S. Bureau of the Census, U.S. Department of Commerce, 1992
    Census of Transportation, Communications, and Utilities, UC92-S-1,
    Subject Series, Establishment and Firm Size, Table 5, Employment
    Size of Firms: 1992, SIC Code 4812 (issued May 1995).

[^286]: *Trends in Telephone Service*, Table 19.3 (March 2000).

[^287]: 13 C.F.R. § 121.201, Standard Industrial Classification (SIC)
    code 4812.

[^288]: U.S. Bureau of the Census, U.S. Department of Commerce, 1992
    Census of Transportation, Communications, and Utilities, UC92‑S‑1,
    Subject Series, Establishment and Firm Size, Table 5, Employment
    Size of Firms; 1992, SIC code 4812 (issued May 1995).

[^289]: 220 MHz Third Report and Order, 12 FCC Rcd 10943, 11068‑70, ¶¶
    291‑ 295 (1997).

[^290]: 220 MHz Third Report and Order, 12 FCC Rcd at 11068‑69, ¶ 291.

[^291]: *See* Letter from A. Alvarez, Administrator, SBA, to D.
    Phythyon, Chief, Wireless Telecommunications Bureau, FCC (Jan. 6,
    1998).

[^292]: *See generally* Public Notice, \"220 MHz Service Auction
    Closes,\" Report No. WT 98‑36 (Wireless Telecom. Bur. Oct. 23,
    1998).

[^293]: Public Notice, \"FCC Announces It is Prepared to Grant 654 Phase
    II 220 MHz Licenses After Final Payment is Made,\" Report No.
    AUC-18-H, DA No. 99-229 (Wireless Telecom. Bur., rel. Jan. 22,
    1999).

[^294]: 13 C.F.R. § 121.201, SIC code 4812.

[^295]: *Trends in Telephone Service*, Table 19.3 (Feb. 19, 1999).

[^296]: 13 C.F.R. § 121.201, SIC code 4812.

[^297]: *Trends in Telephone Service*, Table 19.3 (February 19, 1999).

[^298]: *See Amendment of Parts 20 and 24 of the Commission\'s Rules \--
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap, Report and Order*, FCC 96-278, WT Docket No.
    96-59, ¶¶ 57- 60 (released Jun. 24, 1996), 61 FR 33859 (Jul. 1,
    1996); *see also* 47 C.F.R.§ 24.720(b).

[^299]: *See Amendment of Parts 20 and 24 of the Commission\'s Rules \--
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap, Report and Order*, FCC 96-278, WT Docket No.
    96-59, ¶ 60 (1996), 61 FR 33859 (Jul. 1, 1996).

[^300]: *See, e.g*[.]{.underline}, Implementation of Section 309(j) of
    the Communications Act \-- Competitive Bidding, PP Docket
    No. 93-253, *Fifth Report and Order*, 9 FCC Rcd 5532, 5581-84
    (1994).

[^301]: FCC News, *Broadband PCS, D, E and F Block Auction Closes*, No.
    71744 (rel. Jan. 14, 1997).

[^302]: The service is defined in § 22.99 of the Commission\'s Rules, 47
    C.F.R. § 22.99.

[^303]: BETRS is defined in §§ 22.757 and 22.759 of the Commission\'s
    Rules, 47 C.F.R. §§ 22.757 and 22.759.

[^304]: 13 C.F.R. 121.201, SIC code 4812.

[^305]: The service is defined in § 22.99 of the Commission\'s Rules, 47
    C.F.R. § 22.99.

[^306]: 13 C.F.R. § 121.201, SIC code 4812.

[^307]: Federal Communications Commission, *60th Annual Report, Fiscal
    Year 1994,* at 116.

[^308]: 13 C.F.R. § 121.201, SIC code 4812.

[^309]: Amendment of the Commission\'s Rules Concerning Maritime
    Communications, *Third Report and Order and Memorandum Opinion and
    Order* (rel. July 9, 1998) PR Docket No. 92-257, FCC 98-151

[^310]: ^?^ 13 C.F.R. § 121.201, SIC code 4812.

[^311]: ^?^ *1992 Census, Series UC92-S-1*, at Table 5, SIC code 4812.

[^312]: 47 C.F.R. §§ 101 *et seq*. (formerly, part 21 of the
    Commission\'s Rules).

[^313]: Persons eligible under parts 80 and 90 of the Commission\'s
    rules can use Private Operational-Fixed Microwave services. *See* 47
    C.F.R. parts 80 and 90. Stations in this service are called
    operational-fixed to distinguish them from common carrier and public
    fixed stations. Only the licensee may use the operational-fixed
    station, and only for communications related to the licensee\'s
    commercial, industrial, or safety operations.

[^314]: Auxiliary Microwave Service is governed by part 74 of Title 47
    of the Commission\'s Rules. *See* 47 C.F.R. 74 *et seq.* Available
    to licensees of broadcast stations and to broadcast and cable
    network entities, broadcast auxiliary microwave stations are used
    for relaying broadcast television signals from the studio to the
    transmitter, or between two points such as a main studio and an
    auxiliary studio. The service also includes mobile TV pickups, which
    relay signals from a remote location back to the studio.

[^315]: 13 C.F.R. § 121.201, SIC 4812.

[^316]: *See* 13 C.F.R. § 121.201, Standard Industrial Classification
    (SIC) Code 4812.

[^317]: U.S. Bureau of the Census, U.S. Department of Commerce, 1992
    Census of Transportation, Communications, and Utilities, UC92‑S‑1,
    Subject Series, Establishment and Firm Size, Table 5, Employment
    Size of Firms: 1992, SIC Code 4812 (issued May 1995).

[^318]: Teligent has acquired the DEMS licenses of FirstMark, the only
    other licensee in the 24 GHz band whose license has been modified to
    require relocation to the 24 GHz band.

[^319]: See Implementation of Section 309(j) of the Communications Act
    --- Competitive Bidding, Fifth Report and Order, 9 FCC Rcd 5532,
    5581-82 ¶ 115 (1994).

[^320]: *See* 39 GHz Band Auction Closes; Winning Bidders of 2,173
    Licenses Announced, *Public Notice*, DA 00-1035 (rel. May 10, 2000)

[^321]: *See* Letter to Ms. Kathleen O'Brien Ham, Chief, Auction and
    Industry Analysis Division, Wireless Telecommunications Bureau,
    Federal Communications Commission, from Aida Alvarez, Administrator,
    U.S. Small Business Administration, dated February 4, 1998.

[^322]: For purposes of this item, MDS includes both the single channel
    Multipoint Distribution Service (MDS) and the Multichannel
    Multipoint Distribution Service (MMDS).

[^323]: 47 CFR 1.2110 (a)(1).

[^324]: Amendment of Parts 21 and 74 of the Commission\'s Rules with
    Regard to Filing Procedures in the Multipoint Distribution Service
    and in the Instructional Television Fixed Service and Implementation
    of Section 309(j) of the Communications Act - Competitive Bidding,
    10 FCC Rcd 9589 (1995), 60 FR 36524 (Jul. 17, 1995).

[^325]: 47 U.S.C. 309(j).

[^326]: *Id*. A Basic Trading Area (BTA) is the geographic area by which
    the Multipoint Distribution Service is licensed. *See* Rand McNally
    *1992 Commercial Atlas and Marketing Guide*, 123rd Edition, pp.
    36-39.

[^327]: 13 C.F.R. §121.201.

[^328]: With the exception of the special emergency service, these
    services are governed by Subpart B of part 90 of the Commission\'s
    Rules, 47 C.F.R. §§ 90.15 through 90.27. The police service includes
    26,608 licensees that serve state, county, and municipal enforcement
    through telephony (voice), telegraphy (code) and teletype and
    facsimile (printed material). The fire radio service includes 22,677
    licensees comprised of private volunteer or professional fire
    companies as well as units under governmental control. The local
    government service that is presently comprised of 40,512 licensees
    that are state, county, or municipal entities that use the radio for
    official purposes not covered by other public safety services. There
    are 7,325 licensees within the forestry service, which is comprised
    of licensees from state departments of conservation and private
    forest organizations who set up communications networks among fire
    lookout towers and ground crews. The 9,480 state and local
    governments are licensed to highway maintenance service provide
    emergency and routine communications to aid other public safety
    services to keep main roads safe for vehicular traffic. The 1,460
    licensees in the Emergency Medical Radio Service (EMRS) use the 39
    channels allocated to this service for emergency medical service
    communications related to the delivery of emergency medical
    treatment. 47 C.F.R. §§ 90.15 through 90.27. The 19,478 licensees in
    the special emergency service include medical services, rescue
    organizations, veterinarians, handicapped persons, disaster relief
    organizations, school buses, beach patrols, establishments in
    isolated areas, communications standby facilities, and emergency
    repair of public communications facilities. 47 C.F.R. §§
    90.33 through 90.55.

[^329]: 47 C.F.R. § 1.1162.

[^330]: 5 U.S.C. § 601(5).

[^331]: 1992 Census of Governments, Bureau of the Census, U.S.
    Department of Commerce.

[^332]: *Id*.

[^333]: This service is governed by subpart I of part 22 of the
    Commission\'s Rules. *See* 47 C.F.R. §§ 22.1001 through 22.1037.

[^334]: *See* Allocation of Spectrum Below 5 GHz Transferred from
    Federal Government Use, ET Docket No. 94-32, *Second Report and
    Order,* 11 FCC Rcd 624 (1995).

[^335]: *See* Letter to Daniel B. Phythyon, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, U.S. Small Business Administration,
    dated May 19, 1998.

[^336]: *See* 47 C.F.R. § 26.4.

[^337]: *See* In the Matter of the 4.9 GHz Band Transferred From Federal
    Government Use, *Notice of Proposed Rule Making*, WT Docket No.
    00-32, 15 FCC Rcd 4778 (2000).

[^338]: ^ ?^ 13 C.F.R. § 121.201, Standard Industrial Code (SIC) 4833
    (1996).

[^339]: ^ ?^ Economics and Statistics Administration, Bureau of Census,
    U.S. Department of Commerce, 1992 Census of Transportation,
    Communications and Utilities, Establishment and Firm Size, Series
    UC92-S-1, Appendix A-9 (1995).

[^340]: ^ ?^ *Id*. *See* Executive Office of the President, Office of
    Management and Budget, Standard Industrial Classification Manual
    (1987), at 283, which describes Television Broadcasting Stations
    (SIC Code 4833) as: Establishments primarily engaged in broadcasting
    visual programs by television to the public, except cable and other
    pay television services. Included in this industry are commercial,
    religious, educational and other television stations. Also included
    here are establishments primarily engaged in television broadcasting
    and which produce taped television program materials.

[^341]: ^ ?^ Economics and Statistics Administration, Bureau of Census,
    U.S. Department of Commerce, 1992 Census of Transportation,
    Communications and Utilities, Establishment and Firm Size, Series
    UC92-S-1, Appendix A-9 (1995).

[^342]: ^ ?^ *Id*.; SIC 7812 (Motion Picture and Video Tape Production);
    SIC 7922 (Theatrical Producers and Miscellaneous Theatrical
    Services) (producers of live radio and television programs).

[^343]: ^ ?^ FCC News Release No. 31327, January 13, 1993; Economics and
    Statistics Administration, Bureau of Census, U.S. Department of
    Commerce, *supra* note 6, Appendix A-9.

[^344]: ^ ?^ FCC News Release, \"Broadcast Station Totals as of January
    31, 1999\" (rel. Feb. 18, 1999).

[^345]: ^ ?^ Census for communications establishments are performed
    every five years, during years ending with a \"2\" or \"7.\" *See*
    Economics and Statistics Administration, Bureau of Census, U.S.
    Department of Commerce, *supra* note 6, III.

[^346]: ^ ?^ The amount of \$10 million was used to estimate the number
    of small business establishments because the relevant census
    categories stopped at \$9,999,999 and began at \$10,000,000. No
    category for \$10.5 million existed. Thus, the number is as accurate
    as it is possible to calculate with the available information.

[^347]: ^ ?^ We use the 77% figure of television stations producing less
    than \$10 million in revenue for 1992 and apply it to the 1999 total
    of 1,590 television stations to arrive at stations categorized as
    small businesses.

[^348]: ^ ?^ FCC News Release, \"Broadcast Station Totals as of January
    31, 1999\" (rel. Feb. 18, 1999).

[^349]: ^ ?^ 13 C.F.R. § 121.201, SIC 4832.

[^350]: ^ ?^ Economics and Statistics Administration, Bureau of Census,
    U.S. Department of Commerce, *supra* note 6, Appendix A-9.

[^351]: ^ ?^ *Id*.

[^352]: ^ ?^ *Id*.

[^353]: ^ ?^ *Id*.

[^354]: ^ ?^ The Census Bureau counts radio stations located at the same
    facility as one establishment. Therefore, each co-located AM/FM
    combination counts as one establishment.

[^355]: ^ ?^ FCC News Release No. 31327, January 13, 1993.

[^356]: ^ ?^ FCC News Release, \"Broadcast Station Totals as of January
    31, 1999\" (rel. Feb. 18, 1999).

[^357]: ^ ?^ We use the 96% figure of radio station establishments with
    less than \$5 million revenue from the census data and apply it to
    the 12,496 individual station count to arrive at 11,996 individual
    stations as small businesses.

[^358]: ^ ?^ *See* 5 U.S.C. §§ 601(3)-(5).

[^359]: ^ ?^ *See* 13 C.F.R. § 121.210, SIC 4833, 4841 and 4899.

[^360]: ^ ?^ These numbers of pending applications do not include
    situations where both commercial and noncommercial applicants have
    filed competing applications for nonreserved, or \"commercial,\"
    channels. As described in the *First Report and Order*, resolution
    of these cases will be addressed in our noncommercial proceeding (MM
    Docket No. 95-31).

[^361]: 1987 Standard Industrial Classification Manual; 13 CFR Part 121.

[^362]: *See supra* ¶12.

[^363]: *See supra* ¶ 41.

[^364]: *See supra* ¶¶ 42-43.

[^365]: *See supra* ¶ 42.

[^366]: *See supra* ¶¶ 32-33.

[^367]: *See supra* ¶¶ 26-27.

[^368]: *See supra* ¶¶ 16-28.

[^369]: Amendment of Part 1 of the Commission\'s Rules \-- Competitive
    Bidding Proceeding, *Order, Memorandum Opinion and Order and Notice
    of Proposed Rule Making*, WT Docket No. 97-82, 12 FCC Rcd 5686, 5725
    (1997).

[^370]: *Part 1 Third Report and Order* at 13 FCC Rcd at 434-442, ¶¶
    103-113.

[^371]: *See supra* ¶¶ 16-28.

[^372]: *Id.*

[^373]: *See supra* ¶¶ 18-28.

[^374]: *See supra* ¶ 26.

[^375]: *See supra* ¶¶ 29-30.

[^376]: *Id.*

[^377]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et seq*.,
    has been amended by the Contract With America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of
    CWAAA is the Small Business Regulatory Enforcement Fairness Act of
    1996 (SBREFA)*.*

[^378]: Amendment of Part 1 of the Commission\'s Rules \-- Competitive
    Bidding Procedures, Allocation of Spectrum Below 5 GHz Transferred
    from Federal Government Use, 4660-4685 MHz, WT Docket No. 97-82, ET
    Docket No. 94-32, *Third Report and Order and Second Further Notice
    of Proposed Rule Making*, 13 FCC Rcd 374 (1997) (\"*Part 1 Third
    Report and Order*\" and \"*Second Notice*\") (*see* IRFA at Appendix
    C).

[^379]: *See* 5 U.S.C. § 603.

[^380]: *See supra* ¶¶ 58-67.

[^381]: *See supra* ¶¶ 74-77.

[^382]: *See supra* ¶ 78.

[^383]: *Second Notice*, 13 FCC Rcd at 471-482, ¶¶ 170-194.

[^384]: RTG Comments at 14-15.

[^385]: *Id*. at 15.

[^386]: *Id.*

[^387]: 47 U.S.C. § 309(j)

[^388]: *Second Notice*, 13 FCC Rcd at 477-478, ¶¶ 185-187.

[^389]: *See supra* ¶¶ 58-67.

[^390]: Western Wireless Corporation (\"Western\") Comments at 8-9; RTG
    Comments at 21; AmeriCall International, LLC (\"AmeriCall\")
    Comments at 2-3.

[^391]: *See supra* ¶ 63.

[^392]: *Id.*

[^393]: NextWave Comments at 5; AmeriCall Comments at 3.

[^394]: *See supra* ¶ 66.

[^395]: Western Comments at 3-5.

[^396]: *See supra* ¶ 64.

[^397]: CIRI Comments at 2-4.

[^398]: *See supra* ¶ 67.

[^399]: *Id.*

[^400]: *Id*.

[^401]: *Id.*

[^402]: 5 U.S.C. § 603(b)(3).

[^403]: *See* Appendix C at section C*, supra*.

[^404]: *See* 47 C.F.R. Part 1, Subpart Q.

[^405]: *See supra* ¶¶ 58-67.

[^406]: *See supra* ¶ 67.

[^407]: *See supra* ¶¶ 74-77.

[^408]: *See supra* ¶¶ 45-50.

[^409]: *See supra* ¶¶ 51-53.

[^410]: *See supra* ¶¶ 54-57.

[^411]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et seq*.,
    has been amended by the Contract With America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of
    CWAAA is the Small Business Regulatory Enforcement Fairness Act of
    1996 (SBREFA).

[^412]: *See supra* ¶¶ 58-67.

[^413]: *See* Implementation of Section 309(j) of the Communications
    Act-Competitive Bidding, PP Docket No. 93-253, *Fifth Memorandum
    Opinion and Order,* 10 FCC Rcd 403, 454-56, ¶¶ 93-95 (1994)
    (\"*Fifth M O & O*\").

[^414]: *Id.*

[^415]: 47 C.F.R. § 1.2110(b)(4)(v) (redesignated as 47 C.F.R. §
    1.2110(c)(5)(v)).

[^416]: 5 U.S.C. §§ 603(b)(3).

[^417]: *See* Appendix C at section C*, supra*.

[^418]: *See* 5 U.S.C. § 603.