**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the matter of                 | *  | WT Docket No. 02-381         |
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| Facilitating the Provision of    | ** |                              |
| Spectrum-Based                   |    |                              |
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| Services to Rural Areas and      | *) |                              |
| Promoting                        | ** |                              |
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| Opportunities for Rural          | *  |                              |
| Telephone Companies              | *) |                              |
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| To Provide Spectrum-Based        |    |                              |
| Services                         | *  |                              |
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**NOTICE OF INQUIRY**

**Adopted: December 11, 2002 Released: December 20, 2002**

**Comment Date:** February 3, 2003

**Reply Comment Date:** February 18, 2003

By the Commission: Chairman Powell, Commissioners Abernathy, Copps, and
Martin issuing separate

statements; Commissioner Adelstein not participating.

# Introduction

1.  This Notice of Inquiry ("NOI") seeks comment on the effectiveness of
    our current regulatory tools in facilitating the delivery of
    spectrum-based services to rural areas. Specifically, we ask whether
    and how the Commission could modify its policies to promote the
    further development and deployment of such services to rural areas,
    pursuant to Section 309(j) of the Communications Act of 1934, as
    amended ("Communications Act").[^1] In addition, we request comment
    on the extent to which rural telephone companies[^2] ("rural
    telcos") and other entities seeking to serve rural areas have
    opportunities to acquire spectrum and provide spectrum-based
    services, pursuant to Sections 309(j)(3) and 309(j)(4) of the
    Communications Act.[^3] This NOI fulfills a Commission commitment to
    develop a record on these matters to determine the extent to which
    the Commission has achieved these statutory goals.[^4] Based on the
    record developed in this proceeding, we will determine whether it
    would be appropriate to revise existing policies or adopt new
    policies to promote more extensive provision of spectrum-based
    services to rural areas and the acquisition of spectrum by rural
    telcos. While satellite services may, in the future, play a critical
    role in bringing telecommunications services to rural America, this
    NOI addresses issues related only to the provision of terrestrial
    wireless service to rural areas, not the provision of general
    telecommunications services to rural areas.

# BACKGROUND

2.  The Omnibus Budget Reconciliation Act of 1993 added Section 309(j)
    to the Communications Act, authorizing, but not requiring, the
    Commission to award licenses for use of the electromagnetic spectrum
    through competitive bidding where mutually exclusive applications
    are accepted for filing.[^5] In 1997, Congress expanded the
    Commission's auction authority by requiring it to award mutually
    exclusive license applications for initial applications or
    construction permits by competitive bidding unless certain specific
    exemptions apply.[^6] Section 309(j) requires the Commission to
    promote various objectives in designing a system of competitive
    bidding. A number of those objectives focus on the provision of
    spectrum-based services to rural areas, and three provisions mention
    providing the opportunity to rural telcos to acquire spectrum and
    provide spectrum-based services. For example, Section 309(j)(3)(A)
    requires the Commission to encourage the development and rapid
    deployment of new technologies, products, and services for the
    benefit of the public, "including those residing in rural
    areas."[^7] Section 309(j)(3)(B) directs the Commission to
    disseminate spectrum licenses among a wide variety of applicants,
    including "rural telephone companies."[^8] Section 309(j)(4)(D)
    requires the Commission to ensure that rural telcos are given the
    opportunity to acquire spectrum and provide spectrum-based
    services.[^9] In addition to the rural service objectives mandated
    by Section 309(j), Congress directed the Commission to pursue other
    broader public interest goals in designing a system of competitive
    bidding. Specifically, Section 309(j)(3) requires the Commission to
    promote efficient and intensive use of the spectrum, encourage
    economic opportunity and competition, and recover for the public a
    portion of the value of the public spectrum.[^10]

3.  In an effort to fulfill the rural service objectives set forth in
    Section 309(j), the Commission has adopted a number of policies
    intended, among other things, to encourage the provision of
    spectrum-based services to rural areas and the participation of
    rural telcos in the competitive bidding for spectrum licenses.
    Specifically, these policies include: (1) the availability of small
    business bidding credits; (2) the designation of various sizes of
    geographic service areas for spectrum licenses; (3) the opportunity
    to obtain licenses through service area partitioning and spectrum
    disaggregation arrangements with existing licensees; and (4) the
    adoption of construction benchmark performance requirements.[^11] In
    addition, apart from its obligation under Section 309(j), the
    Commission has expressed support for the provision of
    telecommunications services to tribal lands.[^12] The Commission
    also established the Rural Radiotelephone Service, which may operate
    in the paired 152/158 and 454/459 MHz bands, and Basic Exchange
    Telephone Radio Systems ("BETRS"), which may operate in those same
    bands as well as on 10 channel blocks in the 816-820/861-865 MHz
    bands, primarily to facilitate the provision of basic telephone
    service to remote and sparsely populated areas where wireline
    service is not feasible.[^13]

4.  In 1994, the Commission adopted small business bidding credits to
    encourage broad participation in spectrum auctions.[^14] A bidding
    credit is a payment discount on a winning bid determined at the
    conclusion of the bidding process.[^15] Small business bidding
    credits are available to businesses --- including rural telcos ---
    whose gross revenues do not exceed a specified threshold. These
    bidding credits are intended to encourage participation in the
    competitive bidding process by entities that otherwise might have
    difficulty gaining access to capital.[^16] Through the use of small
    business bidding credits, the Commission has sought to promote the
    participation of small businesses, rural telcos, and women- and
    minority-owned firms (collectively referred to as "designated
    entities"), thereby addressing Congress's mandate to ensure
    diversity in the ownership of spectrum licenses.[^17] The Commission
    determines on a service-specific basis whether bidding credits will
    be offered, the eligibility criteria for receiving a bidding credit,
    and the amount of the bidding credit.[^18]

5.  However, in the *Part 1 Fifth Report and Order,* the Commission
    declined to adopt a bidding credit specifically for rural
    telcos.[^19] Rather, the Commission determined to continue to make
    small business bidding credits available to entities, including
    rural telcos, that meet the requisite revenue criteria.[^20] In
    2000, the Commission also began offering a tribal land bidding
    credit, the size of which is determined by the amount of tribal land
    area reached by the service provider.[^21] All telcos, including
    rural operators, that fulfill the requisite criteria may obtain a
    tribal land bidding credit.[^22]

6.  Recent statistics indicate that rural telcos have actively
    participated in spectrum auctions and have had some success in
    winning licenses. A significant portion of rural telcos that have
    participated in spectrum auctions have received small business
    bidding credits. For instance, an examination of the 29 auctions
    completed by the Commission as of September 18, 2002, that offered
    small business bidding credits, reveals that 84 percent of the
    qualified bidders that identified themselves as rural telcos and 79
    percent of all qualified bidders were eligible to receive a small
    business bidding credit.[^23] In the Commission's most recent
    auction for licenses in the lower 700 MHz Band, 89 percent of
    qualified bidders that identified themselves as rural telcos won
    licenses. In addition, 77 percent of all winning rural telco bidders
    in that auction received a bidding credit.[^24]

7.  In addition to bidding credits, another way in which the Commission
    has sought to enhance rural telco participation in spectrum auctions
    is by adopting service areas of varying sizes. Although in many
    services we offer licenses that cover geographic areas of only one
    size, in a number of services, we license areas of varying sizes,
    ranging from small to large, in order to attract a diverse group of
    prospective bidders.[^25] Larger entities, for instance, may seek to
    acquire licenses that cover whole regions of the country, while
    other entities, such as rural telcos, may be interested in obtaining
    licenses to serve only particular rural areas. After seeking
    comment, the Commission has varied the size of the geographic
    service area depending upon the nature of the service provided and
    the likely users. In services for which we have adopted one size of
    license area, such areas are usually larger than Rural Service Areas
    ("RSAs"). In determining the appropriate size of a license area, we
    seek to balance two competing concerns. On one hand, we seek to
    adopt service areas of a size that results in efficient and
    intensive use of spectrum resources.[^26] On the other hand, we seek
    to adopt licensing areas that will permit the dissemination of
    licenses among a wide variety of applicants.[^27] The smallest of
    these geographic service areas are RSAs and Metropolitan Statistical
    Areas ("MSAs"), of which there are 734 licenses comprising the
    United States and its territories. Adopting service rules that
    provide for licenses with small geographic areas allows bidders to
    target the precise areas they are interested in serving, rather than
    having to compete for expansive geographic areas that encompass
    smaller, sought-after areas.[^28] The Commission has also licensed
    spectrum according to Economic Area Groupings ("EAGs"), which make
    up six licensing areas for the entire country. Some terrestrial
    wireless services, such as narrowband Personal Communications
    Services ("PCS") and 1670-1675 MHz, have geographic service areas
    that have nationwide coverage.[^29] Other geographic service areas
    fall along a range of intermediate sizes between RSAs and nationwide
    service areas, *e.g.*, BTAs,[^30] Economic Areas ("EAs"), and Major
    Economic Areas ("MEAs").[^31]

8.  The Commission has also adopted partitioning and disaggregation
    policies to enable service providers, including rural telcos, to
    acquire spectrum without bidding on licenses that may not be suited
    to their particular needs.[^32] "Partitioning" is the assignment by
    a licensee of geographic portions of the license. "Disaggregation"
    is the assignment by a licensee of discrete portions or "blocks" of
    spectrum of the license.[^33] Where permitted by our rules,
    licensees may partition or disaggregate any of their licensed
    spectrum to other entities.[^34] Obtaining spectrum through
    partitioning or disaggregation, rather than competitive bidding, is
    often appealing to service providers with limited financial
    resources, specific service area needs, or small bandwidth
    requirements because licenses offered at auction may be more costly,
    cover larger geographic areas, and have greater bandwidth than
    desired. For instance, the geographic service area of a license made
    available at auction may include both urban and rural areas. A rural
    telco interested in serving only a rural area may seek to obtain
    spectrum post-auction through partitioning or disagregation, rather
    than bid for a license covering an area that it does not intend to
    serve.[^35] In this manner, our partitioning and disaggregation
    policies may help service providers, such as rural telcos, to obtain
    spectrum tailored to their specialized service area and financial
    needs.[^36] The Commission's analysis of applications for geographic
    partition and spectrum disaggregation reveals that 13.5 percent of
    all assignees have voluntarily identified themselves as rural
    telcos.[^37] Our analysis also demonstrates that 13.8 percent of all
    assignees (including rural and non-rural telcos) claim they are, or
    will be, serving rural areas.

9.  The Commission has sought to enhance service to rural areas by
    requiring winning bidders of spectrum licensees to meet certain
    performance requirements. Section 309(j)(4)(B) of the Act
    specifically directs the Commission to prescribe such "performance
    requirements" to ensure prompt delivery of service to rural areas,
    to prevent stockpiling of spectrum, and to promote investment in and
    rapid deployment of new technologies and services.[^38] Performance
    requirements include construction benchmarks.[^39] Construction
    benchmarks typically require licensees to serve either a specific
    portion of the geographic service area or a specific percentage of
    the population in the geographic service area by a certain period of
    time.[^40] In some instances, the Commission has adopted a
    "substantial service" requirement as its construction requirement.
    Under this approach, licensees are required to provide "substantial
    service" to either a geographic service area or to the population
    within the geographic service area within a specific period of time.
    The Commission has defined "substantial service" as "service that is
    sound, favorable, and substantially above a level of mediocre
    service that would barely warrant renewal."[^41] The "substantial
    service" requirement was established to assess meaningful service
    through a measure not based on population or geographic
    metrics.[^42] Substantial service was established for circumstances
    where the Commission has determined that more flexible construction
    requirements rather than fixed benchmarks would more likely result
    in the efficient use of spectrum and the provision of service to
    rural, remote, and insular areas.[^43] The Commission may consider
    such factors as whether a licensee's operations serve niche markets
    or focus on serving populations outside of areas served by other
    licensees.[^44] The Commission has indicated that a "substantial
    service" construction requirement may help foster service to less
    densely populated areas.[^45] Because this requirement can be met in
    a variety of ways, the Commission has stated that it will review
    substantial service showings on a case-by-case basis.[^46] The
    Commission has rarely found that a commercial mobile radio service
    ("CMRS") carrier has failed to meet its performance requirements.

10. Another step the Commission has taken to encourage the provision of
    wireless services to rural areas is the retention, in RSAs, of the
    cellular cross-interest rule, which is designed to protect against
    the cellular incumbents developing cross interests that may create
    the incentive and ability to restrict the availability of services
    in those areas.[^47] The cellular cross-interest rule limits the
    ability of parties to have attributable interests in cellular
    carriers on different channel blocks in a single geographic
    area.[^48] In its recent reevaluation of this rule, the Commission
    determined that the cross-interest rule was no longer necessary in
    MSAs because the cellular duopoly conditions that prompted the
    rule's adoption no longer existed.[^49] However, the Commission
    found that in RSAs competition to the incumbent cellular licensees
    was not as developed as in MSAs.[^50] Accordingly, the Commission
    concluded that a combination of interests in cellular licensees
    serving RSAs would more likely result in a significant reduction in
    competition in these areas.[^51] The Commission therefore decided to
    retain the cellular cross-interest rule in RSAs, subject to waiver
    of the rule based on certain conditions.[^52] The Commission noted
    that retention of the cross-interest rule in RSAs does not preclude
    cellular carriers from obtaining PCS licenses in order to expand
    capacity or offer advanced services.[^53]

    **III. REQUEST FOR COMMENT**

11. Under Section 309(j), the Commission has a statutory mandate to
    promote the development and deployment of wireless technologies to
    rural areas and economic opportunities for rural telcos and other
    entities seeking to serve rural areas.[^54] Indeed, as discussed
    above, the Commission has implemented a number of initiatives toward
    achieving those goals. We seek to better understand the nature of
    spectrum supply and demand and the services currently provided and
    planned to be offered in rural areas. We are also interested in
    developing a record on whether there are any discrepancies between
    rural and urban America in the availability, use and cost of
    wireless services. Approximately 80 percent of the U.S. population
    lives in metropolitan areas.[^55] However, our society is
    increasingly mobile and, therefore, ubiquitous wireless service is
    essential, not only for those living in rural areas, but also for
    individuals whose business and leisure activities take them to all
    parts of the nation. Thus, it is in the larger public interest to
    promote seamless wireless service throughout the country. By this
    NOI, we seek to broaden our understanding of the effect our current
    policies have had on the availability of spectrum-based services in
    rural America and on access to spectrum licenses by rural telcos and
    other entities seeking to serve rural areas. Further, we are
    interested in exploring whether it is appropriate to adopt new
    approaches in these areas. We therefore seek comment on the
    effectiveness of our current regulatory tools in facilitating the
    delivery of spectrum-based services to areas that traditionally may
    have been underserved by

    telecommunications providers and on our efforts to provide rural
    telcos with the opportunity to participate in spectrum
    auctions.[^56] We also invite comment on ways in which the
    Commission could modify its policies to best fulfill these statutory
    goals.

12. At the outset, we request comment on the types of wireless services
    that are currently provided, and that are planned to be offered, in
    rural areas. We seek information on the availability of wireless
    services in rural areas and the providers of such services. We ask
    commenters to identify which service providers, in addition to rural
    telcos, are providing wireless services to rural populations. To the
    extent possible, we request that commenters provide particularized
    data on wireless coverage and provision of services to rural
    areas.[^57] The more specific data we receive, the better able we
    will be to tailor our regulations to meet our rural service goals.
    We particularly seek comment from consumer groups, community groups,
    State Commissions, local governments and others about any geographic
    areas that lack adequate wireless coverage, have inadequate quality
    of service, or inequitable pricing. We also ask commenters to
    identify the obstacles to providing wireless service in rural areas.
    In particular, we ask commenters to address the economic viability
    of building out in rural areas. In what ways, if any, can the
    Commission modify its rules to promote build-out to rural regions?
    We also seek comment on whether we should maintain a web site that
    would include information that would be helpful to entities seeking
    to provide wireless services to rural areas. Such a web site, for
    instance, could have links to other sites that contain information
    about programs and financial incentives that are available to those
    seeking to serve rural populations. Should we maintain a database
    that would provide information to prospective service providers,
    including rural carriers, on the availability of spectrum for
    initial licensing or leasing? In addition to the specific issues
    identified in this NOI, we also invite comment on any other issues
    within the Commission's jurisdiction that may directly relate to the
    provision of wireless service in rural areas.

13. Apart from the rural service mandate set forth in Section 309(j),
    Congress also directed the Commission to pursue other public
    interest objectives in designing a system of competitive bidding,
    including the efficient and intensive use of the spectrum, the
    development and rapid deployment of new technologies and services,
    the promotion of competition, and the recovery for the public of a
    portion of the value of the spectrum.[^58] In providing comment on
    how the Commission may best fulfill the rural objectives, we ask
    that commenters also address how any proposed suggestions would
    further, or impede, the Commission's achievement of the other public
    interest goals set forth in Section 309(j)(3).[^59]

14. Finally, we recognize that issues involving spectrum leasing
    opportunities are of significant interest to rural telcos. They have
    expressed interest in gaining access to spectrum usage rights
    through secondary markets.[^60] We plan to address these matters in
    our proceeding on secondary markets.[^61]

    **A. Definition of "Rural Areas"**

15. As discussed above, Sections 309(j)(3) and 309(j)(4) direct the
    Commission to promote the development and deployment of
    spectrum-based services to "rural areas."[^62] The statute, however,
    does not provide a definition of what constitutes a "rural
    area."[^63] The federal government has multiple ways of defining
    "rural," reflecting the multiple purposes for which the definitions
    are used.[^64] The Commission has used RSAs to define "rural" in
    certain instances.[^65] In the *Seventh Report*, the Commission used
    three different proxy definitions of "rural" for purposes of
    analyzing the average number of competitors in rural versus
    non-rural counties.[^66] We compared the number of competitors in 1)
    RSA counties versus MSA counties, 2) non-nodal EA counties versus
    nodal EA counties,[^67] and 3) counties with population densities
    below 100 persons per square mile versus those with population
    densities above 100 persons per square mile.[^68] We request comment
    on whether and how the Commission should define "rural area" for
    purposes of determining the extent to which the Commission has met
    its mandate under Section 309(j). In addition, we seek comment on
    whether we should adopt different definitions of what constitutes a
    "rural area" depending upon the regulatory initiative for which the
    definition is used. Commenters should identify the factors that the
    Commission should consider when defining "rural area." In addition,
    we are interested in compiling a comprehensive list of the number of
    telephone companies that meet the definition of "rural telephone
    company" as defined in 47 U.S.C. § 153(37). The identical definition
    is also included in 47 C.F.R. §§ 1.2110(c)(4) and 51.5. We ask that
    commenters provide data to assist us in this effort.

    **B.** **Bidding credits**

16. As explained above, bidding credits are intended to foster broad
    participation in the competitive bidding process for licenses. A
    bidding credit reduces the amount of the winning bid paid for a
    license by a qualifying entity. The Commission requests comment on
    whether, and the extent to which, small business bidding credits
    have facilitated the participation of rural telcos in competitive
    bidding and the delivery of spectrum-based services to rural areas.
    Our research demonstrates that rural telcos often qualify as small
    businesses and are therefore eligible to receive small business
    bidding credits.[^69] Is the availability of small business bidding
    credits effective in assisting rural telcos to gain access to
    spectrum? Is the availability of such credits helpful in promoting
    the provision of spectrum-based services to rural areas? Commenters
    should support their responses to these questions with data or other
    empirical information.[^70] For instance, if commenters contend that
    small business bidding credits are not helpful in promoting rural
    telco participation in Commission auctions, commenters should
    provide data or statistics supporting that assertion. If empirical
    evidence demonstrates that small business bidding credits are not
    effective in facilitating the provision of wireless services to
    rural areas or the participation of rural telcos in competitive
    bidding, should the Commission adopt a bidding credit specifically
    for rural telcos or based on the provision of service to rural
    areas? For instance, should the Commission adopt a rural service
    bidding credit modeled after the tribal lands bidding credit? In
    responding to these questions, commenters should discuss why the use
    of small business bidding credits is or is not effective in creating
    opportunities for rural telcos or in spurring the provision of
    services to rural areas.

17. If the Commission were to adopt a bidding credit specifically for
    rural telcos, what criteria should it use to determine eligibility
    for the credit (if it is not based on financial size) and what
    should be the size of the credit? Is it appropriate, for instance,
    to adopt a bidding credit for all rural telcos irrespective of how
    large or well-financed these entities may be? When initially
    considering the adoption of a rural telco bidding credit in 1994,
    the Commission found that rural telcos do not *per se* have the same
    difficulty accessing capital as other groups, such as small
    businesses.[^71] The Commission stated that the parties advocating
    the adoption of a rural telco credit had "failed to demonstrate a
    historical lack of access to capital that was the basis for
    according bidding credits to small businesses, minorities and
    women."[^72] In subsequent decisions, the Commission has reiterated
    that large rural telcos do not appear to have barriers to capital
    formation similar to those faced by other designated entities.[^73]
    In commenting on this issue, parties that advocate the adoption of a
    bidding credit specifically for rural telcos should address whether
    we should consider access to capital as a factor in determining
    whether to adopt such a bidding credit. We note that rural telcos
    may seek below-market rate lending through the Department of
    Agriculture's Rural Utilities Service ("RUS").[^74] In addition,
    Section 6103 of the recently-enacted Farm Security and Rural
    Investment Act of 2002 provides loans and loan guarantees to
    construct, improve, and acquire facilities and equipment to provide
    broadband service to rural communities with 20,000 or fewer
    residents.[^75] These financing options suggest that rural telcos
    may have greater ability than other designated entities to attract
    capital. We seek comment on what role these programs should play, if
    any, in our consideration of adopting an independent rural telco
    bidding credit.

    **C. Geographic Service Areas**

18. The sizes of geographic service areas vary on a service-by-service
    basis depending upon such factors as the nature of the service and
    the likely users.[^76] We seek comment on the extent to which the
    size of the geographic service area affects the ability of rural
    telcos to acquire spectrum licenses through competitive bidding. In
    addition, commenters should discuss whether, and in what ways, the
    size of the geographic service area affects the provision of
    wireless services to rural areas. Commenters should provide data to
    support their positions.

19. Does the size of the geographic service area affect the provision of
    wireless services to rural areas by entities other than rural
    telcos? Large license areas, for instance, may enable nationwide
    carriers to compete with local or regional carriers in providing
    service to rural areas.[^77] Such large areas may also provide
    opportunities for new entrants to compete on a wide-area basis in an
    existing service. With regard to commercial mobile telephony
    specifically, there is considerable industry support for the notion
    that relatively large licenses are most efficient.[^78] The original
    geographic scope of cellular, broadband PCS, and certain SMR
    licenses was small and, as a result, the licenses were assigned to a
    large number of entities. The predominant trend since then, however,
    has been for operators progressively to aggregate licenses and build
    large geographic footprints. The Commission has found that these
    footprint-expanding transfers and assignments result in important
    public benefits. Today, six providers approach nationwide status.
    However, less than 50 percent of the geographic area of the country
    is served by three or more carriers.[^79] Given this evidence, are
    small license areas inefficient for licenses of spectrum suitable
    for provision of mobile voice and data service? And for such
    licenses, do the interests of consumers of rural service diverge
    from the interests of rural telcos that wish to supply such service?
    Alternatively, does the use of small geographic licensing areas
    stimulate competition in the provision of wireless services to rural
    populations? Does the adoption of smaller service areas enable rural
    telcos to compete more effectively in spectrum auctions? If rural
    telcos win licenses covering small geographic service areas, are
    they more likely to provide services to those areas than are other
    service providers? Is there evidence that smaller geographic areas
    will result in more rapid deployment of services? Are rural carriers
    better positioned to serve the needs of rural America than
    nationwide carriers?  Reliance on nationwide licenses assumes that
    nationwide carriers and local carriers are equally well positioned
    to serve rural consumer needs.  Is this correct? On the other hand,
    are rural populations better served by carriers that operate on a
    nationwide basis as opposed to local carriers? For example, are
    nationwide carriers better able to offer lower prices, better
    roaming capability, or more services due to economies of scale? If
    the adoption of smaller service areas for licenses does enhance the
    participation and success of rural telcos in competitive bidding
    and/or the provision of services to rural areas, should the
    Commission adopt varied-sized or small-sized geographic service
    areas for all auctionable services? Are there particular services
    that are more appropriate for licensing by smaller geographic areas?
    If smaller geographic service areas promote competition, service,
    and access to spectrum by rural telcos, what size service areas
    would be most effective to achieve these benefits? In addition, we
    seek comment on whether certain auction designs, such as
    combinatorial or "package" bidding, facilitate license
    configurations that are efficient and likely to foster the provision
    of wireless services to rural areas.

    **D.** **Partitioning and Disaggregation***.*

20. Partitioning and disaggregation policies and regulations are
    designed to facilitate more efficient and intensive use of the
    spectrum, including use by rural telcos to serve rural areas. In
    paragraph eight, above, we provide statistics regarding partition
    and disaggregation assignees that have identified themselves as
    rural telcos, and assignees that claim that they are or will be
    serving rural areas. However, because we do not require applicants
    to identify themselves as rural telcos when applying for licenses,
    we cannot with certainty determine the extent of transactions
    involving rural telcos based solely on our licensing records.
    Therefore, we seek comment on the extent to which rural telcos have
    received licenses through geographic partitioning and spectrum
    disaggregation. We are interested in learning whether, and in what
    ways, partitioning and disaggregation policies have been helpful in
    providing rural telcos with access to spectrum. We also ask for
    comment on whether, and to what extent, partitioning and
    disaggregation rules have enhanced the provision of services to
    rural areas. In responding to these questions, commenters should
    provide data or other empirical information to support their
    positions. We also solicit comment on whether partitioning and
    disaggregation policies enhance competition in the provision of
    wireless services to rural areas. If partitioning and disaggregation
    facilitate the provision of services to rural areas, do sufficient
    incentives exist for both winning bidders and prospective licensees
    to participate in the spectrum partitioning and disaggregation
    process? For instance, to what extent do the potential transaction
    costs involved in partitioning and disaggregation discourage
    licensees from pursuing such options? We note that some rural
    interests maintain that such transaction costs and other factors
    lead licensees to avoid pursuing partitioning and disaggregation
    agreements.[^80] If sufficient incentives do not exist to encourage
    partitioning of service areas and disaggregation of spectrum, should
    the Commission adopt additional incentives to motivate parties to
    pursue these options? For example, should the Commission require
    that licensees disaggregate or partition under certain
    circumstances, such as when there is unused spectrum or unserved
    portions of geographic service areas?

    **E.** **Performance Requirements**

21. Performance requirements, such as construction benchmarks, are
    intended to help ensure that licensees promptly provide service to
    potential subscribers. The type of construction benchmark the
    Commission adopts for a license may determine whether services are
    deployed expeditiously to rural areas. For instance, depending on
    the level at which it is set, a population-based requirement may be
    achievable by a licensee providing service only to the urban areas
    covered by its license. In contrast, a geography-based benchmark
    targets the delivery of services to a percentage of a geographic
    area, rather than to a percentage of the population in an area.
    Because population is only rarely distributed uniformly across a
    geographic area, the same percentage requirement under a
    geography-based standard may result in greater geographic area and
    population coverage than that percentage under a population-based
    requirement.

22. We seek comment on whether and how construction benchmarks may be
    utilized to encourage licensees to deliver wireless services to
    rural populations. To what extent are our current construction
    benchmarks effective in ensuring that spectrum-based services are
    provided to rural areas? In what instances, and under what
    circumstances, should the Commission adopt a population-based,
    geography-based, or substantial service construction benchmark? For
    example, in licensing service areas that are predominantly rural,
    should the Commission adopt geography-based construction benchmarks?
    Are there other types of construction benchmarks that would better
    promote service to rural regions? For instance, should we adopt a
    separate construction benchmark applicable only to service areas
    that constitute rural areas? Alternatively, should we revise our
    current construction benchmarks to permit service providers to serve
    either smaller portions of the population or service area if they
    meet a second construction benchmark applicable to the rural
    portions of a licensee's market? If so, commenters should explain
    what construction benchmarks we should adopt for the rural portions
    of the service area? If, as suggested above, we were to require
    licensees to disaggregate or partition unused spectrum or unserved
    portions of geographic service areas, should the Commission adopt
    additional construction benchmarks to implement this requirement? If
    so, what penalties should the Commission impose on licensees for
    failure to timely meet such additional construction benchmarks? As
    noted above, the Commission has generally accepted certifications of
    CMRS carriers that they have met their construction benchmarks.[^81]
    To what extent are our self-certification procedures an adequate
    means of ensuring compliance with our construction benchmark
    requirements?

23. In addition to employing varying types of construction benchmarks
    for auctioned licenses, the Commission has also utilized different
    models with respect to enforcing construction requirements. In the
    Cellular Radiotelephone Service, initial licensees are given five
    years to construct facilities and begin providing service to their
    market.[^82] At the end of the initial five-year period the licensee
    is allowed to "keep what it builds" and the remaining portions of
    the market become available for licensing to other parties via the
    cellular "unserved area" licensing process.[^83] In contrast,
    auctioned services such as broadband PCS provide for an "all or
    nothing" penalty for failing to meet the construction benchmarks,
    *i.e.,* if a licensee does not meet the five- or ten-year benchmark
    or make a showing of substantial service (where applicable) it
    forfeits the entire license and does not get to "keep what it
    builds."[^84] With this past experience in mind, we seek comment on
    whether these models, a hybrid model, or some combination of
    targeted models, may be utilized to facilitate service in rural
    areas. We also seek comment on whether the Commission should adopt
    performance requirements other than construction benchmarks to
    encourage the provision of wireless services to rural areas.

24. For unserved areas in the Cellular Radiotelephone Service, should
    the Commission adopt a different approach to assigning spectrum
    usage rights? Specifically, should the Commission adopt a "commons"
    model, which allows unlimited numbers of unlicensed users to share
    frequencies, with usage rights that are governed by technical
    standards but with no right to protection from interference? In
    addition, should the Commission amend the application filing process
    for cellular unserved areas to further encourage service providers
    to operate in rural areas?[^85] Furthermore, should the Commission
    apply the policy it has adopted with respect to unserved areas in
    the Cellular Radiotelephone Service to other services to promote
    wireless service in rural areas, *i.e.,* allow licensees to continue
    to serve the areas they have built-out, but make available for
    licensing to other parties those portions of a market that are not
    being served by current licensees? With respect to our ownership
    rules for the Cellular Radiotelephone Service, we seek comment on
    whether and to what extent our retention of the cellular
    cross-interest rule for RSAs advances spectrum-based services to
    rural areas. Should the Commission amend this rule to further the
    provision of wireless services to rural areas?

25. Finally, it may be economically inefficient, and thus harmful to
    customers, to require for each wireless service the same number of
    competitors in urban and rural areas. This appears to be true, for
    example, with regard to mobile telephony. How should a performance
    requirement policy for rural areas address this issue? Economic
    theory predicts that where licensees are in competitive markets, and
    no market failures exist and transactions costs are sufficiently
    low, market forces will drive optimal decisions on what is built,
    where, and when. In that setting, build-out rules arguably would
    distort resource allocation, or at best be irrelevant. We ask
    parties to comment on the application of this economic theory to
    construction benchmarks that cover rural areas. In particular, for
    those services and rural markets where there is competition, how
    should we balance the putative efficiency harm of build-out rules
    against the potential equity benefit? Moreover, for those services
    and rural markets where there is a lack of competition, *e.g.,* as a
    result of small market size not being able to support multiple
    operators, is it possible that build-out rules would impose
    efficiency costs in the form of spending on excess capacity?

    **F. Band Manager Licensing**

26. A band manager is a licensee that is specifically authorized to
    lease its licensed spectrum usage rights for use by third parties
    through private contractual agreements without having to seek prior
    Commission approval.[^86] Band managers may make their licensed
    spectrum available to facilitate all types of spectrum use that are
    consistent with the technical restrictions adopted for the
    particular band and in accordance with certain requirements imposed
    on the leasing relationship.[^87] The Commission has adopted band
    manager licensing for several bands.[^88] The band manager may
    subdivide its spectrum in any manner it chooses and make it
    available to any third party, consistent with the frequency
    coordination and interference rules specified for the particular
    band.[^89] Band managers are permitted to apportion spectrum based
    on both geographic area and frequency.[^90] Such spectrum
    apportionment differs from traditional geographic partitioning and
    spectrum disaggregation because it does not involve the transfer or
    assignment of the band manager's licenses to other parties.[^91]
    Band manager licensing is an innovative spectrum management approach
    that can enable parties to acquire spectrum more readily for varied
    uses.[^92] The band manager option will also enable small businesses
    to acquire spectrum in amounts to serve particular geographic areas,
    and for periods of time, that better suit their unique
    characteristics and specialized communications needs.[^93] We seek
    comment on whether rural telcos would be able to obtain more
    affordable access to spectrum through a band manager than by
    acquiring licenses directly at auction or through partitioning and
    disaggregation. We also seek comment on whether rural telcos would
    be more likely to obtain access to spectrum that is tailored to
    their particular needs from a band manager than by acquiring
    licenses in an auction or through partitioning and disaggregation.
    Comments should also discuss whether band manager licensing would
    promote service or enhance the quality of service to rural areas.

**G. Technical and Operational Rules**

27. The Commission has developed technical and operational rules
    throughout its spectrum-based services in order to facilitate
    efficient use of the radio spectrum while minimizing the potential
    for harmful interference among licensees.[^94] We seek comment on
    the degree of flexibility that these regulations afford to providers
    of spectrum-based services in rural areas. Are there aspects of
    these rules that could be modified or made more flexible to
    encourage expanded service to rural areas while ensuring that
    services remain free of harmful interference? For example, would
    increasing permissible power levels be beneficial for particular
    types of services in areas where there is less spectrum congestion?
    Commenters should explain how their proposed changes would satisfy
    the goal of expanded rural service while not increasing the
    likelihood of harmful interference to existing licensees.

28. With respect to the Rural Radiotelephone Service, which includes
    BETRS, we note that as of November 2002, there were 67 active BETRS
    licenses with facilities in 17 states[^95] and 580 active Rural
    Radiotelephone licenses with facilities relatively uniformly spread
    throughout the continental United States. Of these, only one BETRS
    and two Rural Radiotelephone licenses were issued within the last
    two years. We seek comment on how we might revise the rules for
    these services to further facilitate the provision of wireless
    service to rural areas.

    **H. Unlicensed Spectrum**

29. We also seek comment on the extent to which unlicensed spectrum is
    being used to provide wireless services to rural communities.[^96]
    We ask commenters to identify the service providers that are
    utilizing unlicensed spectrum and the types of services they are
    offering. Further, we seek comment regarding actions the Commission
    could take to encourage or facilitate the use of unlicensed
    spectrum. For example, unlicensed operation is generally limited to
    very low power levels in order to help ensure that the operation
    does not interfere with licensed services. However, the interference
    potential of unlicensed devices may be low or negligible in rural
    communities.[^97] Should unlicensed devices be permitted to use
    higher output power levels in such environments? If so, what
    criteria would have to be met in order to qualify to use the higher
    power levels?

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I.  **Eligible Telecommunications Carriers**

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30. The Commission's rules concerning universal service support for
    eligible telecommunications carriers ("ETCs") may impact deployment
    of wireless services to rural areas. Under the Communications Act,
    only carriers designated as ETCs under section 214(e) may receive
    federal universal service support. Under the Commission\'s rules,
    wireless carriers may be designated as ETCs and may receive
    universal service support for providing service to consumers that
    use wireless service as their only phone service as well as to
    consumers that also maintain wireline service. The Commission
    recently asked the Federal-State Joint Board on Universal Service
    (Joint Board) to review the ETC rules and provide recommendations
    regarding if and how these rules should be modified.[^98] We
    anticipate that the Joint Board will develop information on the
    impact of the Commission's ETC rules on deployment of wireless
    services to rural areas. In this docket, we seek comment generally
    on whether the Commission\'s ETC rules have promoted deployment of
    wireless service to rural areas and greater subscribership in these
    areas. We also seek to gather factual information. Specifically, we
    direct the Universal Service Administrative Corporation to provide
    us with information on the number of wireless carriers currently
    designated as ETCs, the amount of federal universal service support
    they have received, and the number of lines they serve. We ask that
    commenters provide any information available on how many of the
    customers served by wireless carrier ETCs also maintain wireline
    phones. How many customers had no phone service whatsoever until
    they purchased wireless service?

**IV. PROCEDURAL ISSUES**

## *Ex Parte* Presentations

31. This is an exempt proceeding in which *ex parte* presentations are
    permitted (except during the Sunshine Agenda period) and need not be
    disclosed.[^99]

    **B. Filing of Comments and Reply Comments**

32. We invite comment on the issues and questions set forth above.
    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 February 3, 2003, and reply comments on or before February
    18, 2003. Comments may be filed using the Commission\'s Electronic
    Comment Filing System (ECFS) or by filing paper copies. *See*
    Electronic Filing of Documents in Rulemaking Proceedings, 63 Fed.
    Reg. 24121 (1998). Commenters that wish confidential treatment of
    their submissions should request that their submission, or specific
    part thereof, be withheld from public inspection.[^100]

33. 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, U.S. Postal Service mailing address,
    and the applicable docket or rulemaking number. Parties may also
    submit an electronic comment by Internet e-mail. To get filing
    instructions for e-mail comments, commenters should send an email to
    ecfs@fcc.gov, and should include the following words in the body of
    the message, \"get form.\" A sample form and directions will be sent
    in reply. Parties who choose to file by paper must file an original
    and four copies of each filing. If more than one docket or
    rulemaking number appears in the caption of this proceeding,
    commenters must submit two additional copies for each additional
    docket or rulemaking number. Filings can be sent by hand or
    messenger delivery, by commercial overnight courier, or by
    first-class or overnight U.S. Postal Service mail (although we
    continue to experience delays in receiving U.S. Postal Service
    mail). The Commission\'s contractor, Vistronix, Inc., will receive
    hand-delivered or messenger-delivered paper filings for the
    Commission\'s Secretary at 236 Massachusetts Avenue, N.E., Suite
    110, Washington, D.C. 20002. The filing hours at this location are
    8:00 a.m. to 7:00 p.m. All hand deliveries must be held together
    with rubber bands or fasteners. Any envelopes must be disposed of
    before entering the building. Commercial overnight mail (other than
    U.S. Postal Service Express Mail and Priority Mail) must be sent to
    9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal
    Service first-class mail, Express Mail, and Priority Mail should be
    addressed to 445 12th Street, S.W., Washington, D.C. 20554. All
    filings must be addressed to the Commission\'s Secretary, Office of
    the Secretary, Federal Communications Commission. Parties also
    should send four (4) paper copies of their filings to **Robert
    Krinsky**, Federal Communications Commission, Room 4-B551, 445 12th
    Street, S.W., Washington, D.C. 20554.

    **V. ORDERING CLAUSES**

34. Accordingly, IT IS ORDERED that, pursuant to the authority contained
    in 47 U.S.C. Sections 151, 4(i), and 303(r) this Notice of Inquiry
    is ADOPTED.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Marlene H. Dortch
>
> Secretary

**SEPARATE STATEMENT OF**

**CHAIRMAN MICHAEL K. POWELL**

Re: *Facilitating the Provision of Spectrum-Based Services to Rural
Areas and Promoting Opportunities for Rural Telephone Companies to
Provide Spectrum-Based Services*

Spectrum policy should not be a blunt instrument but a precision tool
enabling us to facilitate as many services as possible to benefit the
American people. As the work of the Spectrum Policy Task Force has made
clear, the first step in wireless policymaking is to consider the
spectrum environment in question -- from the kind and number of users to
the type of radios in use. Our flexibility should allow us to tailor a
spectrum policy to the rural spectrum environment that takes advantage
of each dimension of spectrum: space, frequency, power and time. By the
questions we ask today, we hope to learn more about the unique
characteristics of rural spectrum America. Does the lack of congestion
create an opportunity for more relaxed technical rules? How do build out
requirements affect deployment? Can we do more with an unlicensed
service model? How well have partitioning and disaggregation worked to
get rural spectrum into the hands of those who would use it? Are there
other market-based mechanisms we can use to achieve these goals? Rural
America has greatly benefited from the competition brought about by
spectrum-based services. But those benefits have been achieved through
nation-wide policy making. It is my hope and expectation that through a
more tailored spectrum policy process we can deliver even greater
benefits to rural consumers.

**SEPARATE STATEMENT OF**

**COMMISSIONER KATHLEEN Q. ABERNATHY**

> *Re: Facilitating the Provision of Spectrum-Based Services to Rural
> Areas and Promoting Opportunities for Rural Telephone Companies to
> Provide Spectrum-Based Services, Notice of Inquiry*

Today's NOI is an important step toward improving our policy process
regarding rural spectrum. As I mentioned in my statement in the 27 MHz
Order earlier this year, I believe the decision-making process will
greatly benefit from additional data regarding the spectrum being used,
the services being provided, and the needs in rural America. In turn,
the Commission has an obligation to ensure that our regulatory tools are
effective in facilitating the efficient use of spectrum in rural
regions. This NOI seeks to do just that.

First, it will broaden our understanding of the availability of wireless
services in rural areas. Second, it asks whether the policies the
Commission has adopted in the past to encourage the provision of
spectrum-based services to rural areas and the participation of rural
telephone companies in the competitive bidding for spectrum licenses are
effective. The NOI also solicits comment on whether there are new
approaches that may better accomplish these goals.

SEPARATE STATEMENT OF

COMMISSIONER MICHAEL J. COPPS

RE: Facilitating the Provision of Spectrum-Based Services to Rural Areas
and Promoting Opportunities for Rural Telephone Companies To Provide
Spectrum-Based Services.

I would like to thank the Chairman for initiating this NOI. In several
of the Commission's spectrum management and auction decisions over the
past year, I have remarked, as have my colleagues, on the need to
increase our focus on the rural dimensions of what we do. We certainly
operate under a clear and heavy statutory obligation to bring the
benefits of spectrum-based services to rural America.

In response, the Chairman agreed to initiate this important proceeding.
In it we seek comment on how to improve our spectrum policy so that it
better serves rural consumers. We ask about the need for a rural bidding
credit for auctions to spur development. We explore how the geographic
size of licenses affects the ability of companies to bring service to
rural communities and whether we should use RSAs in more cases. We ask
whether our rules that require carriers to build out their networks in
order to keep their license allow build-out that excludes rural areas.
The list goes on.

The next step is for rural America to raise its voice. Consumer groups,
carriers, local governments, State Commissions, and individuals now have
the chance to tell us how we should change our rules so as to improve
wireless service in rural areas. This is your chance. Don't waste it.
Please send in detailed comments with specific ideas, complaints, data
\-- even praise where its due! The notice and comment process is
sometimes the only eyes and ears we have at the Commission. So make
yourself be seen and heard.

**SEPARATE STATEMENT OF\
COMMISSIONER KEVIN J . MARTIN**

*Re: Facilitating the Provision of Spectrum-Based Services to Rural
Areas and Promoting Opportunities for Rural Telephone Companies To
Provide Spectrum-Based Services*, Notice of Inquiry, WT Docket No.
02-381

I am pleased to support this item. Promoting the deployment of services
to rural America is one of the Commission's most important priorities.
Consumers living in rural areas may lack opportunities to access
telecommunications services comparable to those found in more urban
areas, and those services that are available may be offered at higher
prices. The Commission should, indeed must, work to address these
disparities in all areas of telecommunications. In doing so, the
Commission must work to ensure that rural Americans have access to
reasonably comparable services at reasonably comparable rates to those
found in urban areas.

With respect to wireless services, the Commission has explicit
obligations to promote the development and rapid deployment of wireless
services in rural areas, as well as to ensure that rural telephone
companies have a meaningful opportunity to provide spectrum-based
services. Specifically, section 309 of the Communications Act directs
the Commission, in designing systems of licensing through competitive
bidding, 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." 47 U.S.C. § 309(j)(3)(A). Section 309 also requires
the Commission to ensure that "rural telephone companies" "are given the
opportunity to participate in the provision of spectrum-based services,
and, for such purposes, \[to\] consider the use of tax certificates,
bidding preferences, and other procedures." *Id.* § 309(j)(4)(D).^1^

I take these obligations very seriously and am pleased that the
Commission has opened this inquiry into how we can better fulfill them.
I am hopeful that this proceeding will provide us with not only
information on how well our current policies are working, but also on
what we could do to address more effectively the needs of rural
communities. To that end, I strongly encourage parties to participate in
this proceeding. The more comprehensive data we can gather, the better
we can tailor our policies to promote rural deployment and ensure that
rural telephone companies have a meaningful opportunity to provide
spectrum-based services. As wireless technologies continue to advance,
the Commission must make certain that all Americans are given an
opportunity to participate in these developments, especially those
Americans living in rural areas. I look forward to moving ahead in this
proceeding.

­­­­­­­­­­­­­­­­\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

^1^ That provision requires the Commission to provide the same
opportunity to "small businesses" and "businesses owned by members of
minority groups and women," which are also important Commission
priorities. 47 U.S.C. § 309(j)(4)(D).

[^1]: 47 U.S.C. § 309(j). Section 309(j)(3)(A) provides that the
    Commission's design of systems for licensing through competitive
    bidding "shall seek 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." 47 U.S.C. § 309(j)(3)(A)
    (emphasis added). The Communications Act does not define "rural
    areas," nor has the Commission adopted a specific definition of
    "rural areas" for purposes of implementing Section 309(j). *See*
    discussion of "rural areas" *infra* at ¶ 15.

[^2]: The term "rural telephone company" is defined in 47 U.S.C. §
    153(37) and in 47 C.F.R. §§ 1.2110(c)(4) and 51.5. Since passage of
    the Telecommunications Act of 1996, the Commission generally has
    used the statutory definition to determine which local exchange
    carriers can be classified as rural telephone companies. That
    definition uses a range of standards, including the population of a
    jurisdiction and the number of access lines serving communities of
    various sizes.

[^3]: 47 U.S.C. §§ 309(j)(3) and (4). Section 309(j)(3)(B) provides, in
    pertinent part, that the Commission's design of systems for
    licensing through competitive bidding should avoid the result of an
    "excessive concentration of licenses...by disseminating licenses
    among a wide variety of applicants including...rural telephone
    companies...." 47 U.S.C. § 309(j)(3)(B). Section 309(j)(4)(D),
    provides, in pertinent part, that the Commission, in prescribing
    regulations pursuant to Section 309(j)(3) shall "ensure that...rural
    telephone companies...are given the opportunity to participate in
    the provision of spectrum-based services, and, for such purposes,
    consider the use of tax certificates, bidding preferences, and other
    procedures." 47 U.S.C. § 309(j)(4)(D).

[^4]: In the *27 MHz Report and Order*, the Commission stated that it
    planned to initiate an NOI before the end of the 2002 calendar year
    that would address the following topics: "(a) the nature of spectrum
    supply and demand and the services currently provided and planned in
    rural areas, (b) the effectiveness of our current regulatory tools
    (including partitioning and disaggregation, bidding credits, auction
    service area policies, build out requirements) in facilitating the
    delivery of services to these areas, and (c) how the Commission
    could modify its policies to fulfill its statutory mandate."
    Amendments to Parts 1, 2, 27 and 90 of the Commission's Rules to
    License Services in the 216-220 MHz, 1390-1395 MHz, 1427-1429 MHz,
    1429-1432 MHz, 1432-1435 MHz, 1670-1675 MHz, and 2385-2390 MHz
    Government Transfer Bands*, Report and Order*, 17 FCC Rcd 9980,
    9991, ¶ 18 (2002) ("*27 MHz Report and Order*").

[^5]: Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, §
    6002, 107 Stat. 312, 387-397 ("1993 Budget Act") (codified at 47
    U.S.C. § 309(j) (1993)).

[^6]: Section 309(j), as amended by the Balanced Budget Act of 1997,
    provides that in cases of mutually exclusive applications for
    initial licenses or construction permits, all spectrum is
    auctionable except licenses or construction permits for (1) public
    safety services; (2) digital television service given to existing
    broadcasters to replace their analog license; and (3) non-commercial
    educational or public broadcast stations. Balanced Budget Act of
    1997, P.L. 105-33, § 3002, 111 Stat. 251, 258-265 (codified as
    amended at 47 U.S.C. § 309(j) (1997)).

[^7]: 47 U.S.C. § 309(j)(3)(A).

[^8]: 47 U.S.C. § 309(j)(3)(B).

[^9]: 47 U.S.C. § 309(j)(4)(D). *See also* 47 U.S.C. §§ 309(j)(4)(B)-(C)
    (relating to the promotion of service to rural areas and the
    provision of economic opportunities for rural telephone companies).

[^10]: 47 U.S.C. §§ 309(j)(3)(B)-(D).

[^11]: Generally, after notice and comment, we have addressed these
    policies in adopting service rules for particular spectrum bands.
    *See, e.g.*, In the Matter of Service Rules for Advanced Wireless
    Services in the 1.7 GHz and 2.1 GHz Bands, WT Docket No. 02-353,
    *Notice of Proposed Rulemaking*, FCC 02-305 (rel. Nov. 22, 2002). We
    encourage rural interests to participate in these service-specific
    rulemaking proceedings.

[^12]: *See* In the Matter of Statement of Policy on Establishing a
    Government-to-Government Relationship with Indian Tribes, *Policy
    Statement*, FCC 00-207, 16 FCC Rcd 4078 (2000); 47 C.F.R. §
    1.2110(f)(3).

[^13]: Rural Radiotelephone Service is a fixed radio service that uses
    wireless technology to provide radio telecommunications services, in
    particular, basic telephone service, to subscribers in rural areas.
    *See* 47 C.F.R. § 22.99. In the mid-1980s, the Commission
    established BETRS in the Rural Radiotelephone Service to serve
    rural, mountainous, and sparsely populated areas that might not
    otherwise receive basic telephone service. Revision of Part 22 and
    Part 90 of the Commission's Rules to Facilitate Future Development
    of Paging Systems, *Second Report and Order*, 12 FCC Rcd 2732, 2753,
    ¶ 34 (1997). BETRS is a fixed radio service where a multiplexed,
    digital radio link is used as the last segment of the local loop to
    provide wireless telephone service to subscribers in remote areas.
    BETRS may be licensed only to local exchange carriers or others that
    have been certified to provide basic exchange telephone service in
    the area involved.

[^14]: Implementation of Section 309(j) of the Communications Act --
    Competitive Bidding, *Second Report and Order*, 9 FCC Rcd 2348,
    2350, ¶ 6 (1994) ("We will use these preferences to promote the
    participation of small businesses...when we adopt service-specific
    competitive bidding rules, thereby meeting Congress's mandate by
    ensuring diversity in the ownership and management of
    telecommunications facilities, which in turn will increase the
    diversity of service offerings and better meet the needs of more
    consumers.") ("*Competitive Bidding* *Second Report and Order*").

[^15]: *Id.* at 2391, ¶ 241.

[^16]: *Id.* at 2391, ¶ 242.

[^17]: *Id.* at 2350, ¶ 6.

[^18]: 47 C.F.R. § 1.2110(f).

[^19]: Amendment of Part 1 of the Commission's Rules ─ Competitive
    Bidding Procedures, *Order on Reconsideration of the Third Report
    and Order, Fifth Report and Order, and Fourth Further Notice of
    Proposed Rule Making*, 15 FCC Rcd 15293, 15320-321, ¶¶ 51-52 (2000)
    ("*Part 1 Fifth Report and Order"). See also Melcher v. Federal
    Communications Comm\'n*, 134 F.3d 1143, 1155 (D.C. Cir. 1998)
    (\"\[S\]ection 309(j)(4)(D) does not mandate that the rural LECs
    receive preferential treatment in the form of  \'tax certificates
    bidding preferences, and other procedures\'; it just instructs the
    FCC to \'consider\' the possibility.\").

[^20]: *Part 1 Fifth Report and Order,* 15 FCC Rcd at 15320-321, ¶ 52.

[^21]: 47 C.F.R. § 1.2110(f)(3). *See also* Extending Wireless
    Telecommunications Services to Tribal Lands*, Report and Order and
    Further Notice of Proposed Rule Making*, 15 FCC Rcd 11794 (2000)
    (*"Tribal Lands Report and* *Order"*).

[^22]: In some instances, the competitive bidding rules for services
    have offered both a small business bidding credit and a tribal lands
    bidding credit. Within specified limits, these credits are
    cumulative if the applicant independently qualifies for each type of
    bidding credit. *Tribal Lands Report and* *Order*, 15 FCC Rcd at
    11805, ¶ 30.

[^23]: These calculations are based on data available at the
    Commission's Auction Form 175 database, *available at*
    [http://auctionfiling.fcc.gov/form175/index.htm](http://auctionfiling.cc.gov/form175/index.htm)
    (last visited Sept. 18, 2002) ("*Form 175 Database*").

[^24]: These figures include two rural telcos whose eligibility for a
    bidding credit is contingent upon the disposition of their pending
    requests for a waiver of the Commission's rules. Auction No. 44,
    Revised Qualified Bidder Notification, 125 Qualified Bidders,
    *Public Notice*, DA 02-1933, n. 12, (rel. Aug. 7, 2002).

[^25]: For example, the Commission designed the competitive bidding for
    800 MHz Specialized Mobile Radio ("SMR") using Economic Areas ("EA")
    rather than the larger Major Trading Area ("MTA") because the
    Commission "believe\[d\] use of these smaller geographic areas
    ultimately will result in a more diverse group of prospective
    bidders...." Amendment of Part 90 of the Commission's Rules to
    Facilitate Further Development of SMR Systems in the 800 MHz
    Frequency Band, *First Report and Order, Eighth Report and Order,
    and Second* *Further Notice of Proposed Rule Making*, 11 FCC Rcd
    1463, 1483-84, ¶ 23 (1996). The Commission "conclude\[d\] that such
    an outcome...furthers the public interest because it would result in
    the dissemination of EA licenses among a wide variety of applicants
    as anticipated by Section 309(j) of the Communications Act." *Id.*

[^26]: 47 C.F.R. § 309(j)(3)(D).

[^27]: 47 C.F.R. § 309(j)(3)(B), (4)(C).

[^28]: Reallocation and Service Rules for the 698-746 MHz Spectrum Band
    (Television Channels 52-59), *Report and* *Order*, 17 FCC Rcd 1022
    (2002).

[^29]: Narrowband PCS is also licensed on a regional basis. 47 C.F.R. §
    24.102.

[^30]: Rand McNally & Company owns the copyright to the BTA Listings.
    *See* Rand McNally, 1992 Commercial Atlas and Marketing Guide at
    36-39 (123rd ed. 1992).

[^31]: Summary of Completed Auctions, *available at*
    <http://wireless.fcc.gov/auctions/> (denoting geographic service
    areas for each auction that has been conducted pursuant to 47 U.S.C.
    § 309(j)) (last visited Nov. 4, 2002).

[^32]: Partitioning and disaggregation is now permitted in the 218-219
    MHz Service (47 C.F.R. § 95.823), 220 MHz Service (47 C.F.R. §
    90.1019), 800 MHz (47 C.F.R. § 90.911) and 900 MHz (47 C.F.R. §
    90.813) Specialized Mobile Service ("SMR"), 24 GHz Service (47
    C.F.R. § 101.535), 39 GHz Service (47 C.F.R. § 101.56), Guard Band
    Manager's Spectrum in the 746-764 MHz and 776-794 MHz bands (47
    C.F.R. § 27.605), Local Multipoint Distribution Service ("LMDS") (47
    C.F.R. §101.1111), Location and Monitoring Service ("LMS") (47
    C.F.R. § 90.365), Multiple Address Systems ("MAS") (47 C.F.R.
    §101.1323), Multipoint Distribution Service ("MDS") (47 C.F.R. §
    21.931), Maritime Services (47 C.F.R. § 80.60), Paging and
    Radiotelephone Service (47 C.F.R. § 22.513), Cellular Radiotelephone
    Service (47 C.F.R. § 22.948), broadband Personal Communications
    Services ("PCS") (47 C.F.R. § 24.714), narrowband PCS (47 C.F.R. §
    27.104), and the Wireless Communications Service ("WCS") (47 C.F.R.
    § 27.15).

[^33]: *See* Geographic Partitioning and Spectrum Disaggregation by
    Commercial Mobile Radio Services Licenses, WT Docket No. 96-148,
    *Memorandum Opinion and Order*, 15 FCC Rcd 8726, 8727, nn. 1-2; FCC
    Report to Congress on Spectrum Auctions, *Report*, 13 FCC Rcd 9601,
    9627-9628 (1997) ("*FCC Auctions Report*").

[^34]: The rules for partition and disaggregation are promulgated on a
    service-specific basis. *Supra* n. 32. Each of these
    service-specific rules cross-reference the Commission's Part 1
    competitive bidding rules regarding unjust enrichment in the context
    of partition and disaggregation. 47 C.F.R. § 1.2111(e).

[^35]: *See, e.g*., 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, *Third Order on Reconsideration*, 13 FCC Rcd
    4856, 4902, ¶ 103 (1998) ("\[T\]he Commission consistently has found
    that allowing licenses in other services to be geographically
    partitioned from larger service areas provides rural \[local
    exchange carriers\] with enhanced opportunity to participate in the
    provision of new services and is thus in the public interest.");
    Amendment of Part 90 of the Commission's Rules to Facilitate Future
    Development of SMR Systems in the 800 MHz Frequency Band, *Second
    Report and Order*, 12 FCC Rcd 19079, 19134, ¶ 156 (1997) ("SMR
    partitioning will...ensure the faster delivery of SMR service to
    rural areas."); Implementation of Section 309(j) of the
    Communications Act -- Competitive Bidding, *Fifth Report and Order*,
    9 FCC Rcd 5532, 5599, ¶ 153 (1994) ("We believe that the
    partitioning plan we are adopting will provide rural telephone
    companies with substantial capabilities to acquire licenses to
    provide broadband PCS in their rural telephone service areas,
    consistent with our statutory mandate.") ("*Competitive Bidding
    Fifth Report and Order*").

[^36]: We note that eligibility for partitioning and disaggregation is
    not limited to rural telcos as the recipient of partitioned licenses
    or disaggregated spectrum.

[^37]: This analysis includes applications for partition or
    disaggregation that were either pending before the Commission,
    granted by, or consented to, by the Commission, or consummated by
    the parties to the transaction. These statistics were derived from
    the review of 500 partitioning/disaggregation applications filed
    with the Commission between April 29, 1997 and September 18, 2002.

[^38]: 47 U.S.C. § 309(j)(4)(B).

[^39]: *Competitive Bidding* *Second Report and Order*, 9 FCC Rcd at
    2386, ¶ 219.

[^40]: *See, e.g.,* 47 C.F.R. § 90.796(a) (nationwide licensees in the
    220-222 MHz Service must construct a sufficient number of base
    stations to provide coverage to a composite area of at least 750,000
    square kilometers or 37.5 percent of the United States population
    within five years of the initial license grant; within ten years of
    the initial license grant the licensee must provide coverage to a
    composite area of at least 1,150,000 square kilometers or 75 percent
    of the United States population). The Commission has granted waivers
    of the construction deadline to extend the time to meet construction
    benchmarks based upon the provision of services to rural areas.
    *See, e.g*., Minnesota PCS Limited Partnership, Request for Waiver
    and Extension of the Broadband PCS Construction Requirements,
    *Order*, 17 FCC Rcd 16371, 16374, ¶ 7 (WTB/CWD 2002)
    (\[E\]xtension...is warranted \[because it will\] bring service to
    rural and otherwise underserved areas."); Northstar Technology, LLC,
    Request for Waiver and Extension of the Broadband PCS Construction
    Requirements, *Order*, 17 FCC Rcd 10908, 10911, ¶ 7 (WTB/CWD 2002)
    ("Northstar's service to rural areas is a critical component to
    \[this\] grant of an extension, we do so on the condition that
    Northstar must, in addition to the 25 percent coverage benchmark,
    provide service to the portions of the BTAs that it has committed to
    serve in its request."); Monet Mobile Networks, Inc., Request for
    Waiver and Extension of the Broadband PCS Construction Requirements,
    *Order*, 17 FCC Rcd 6452, 6454, ¶ 5 (WTB/CWD 2002) ("\[W\]e find
    that an extension in this case will serve the public interest by
    meeting another statutory goal of performance requirements to ensure
    prompt delivery of service to rural areas. .... Furthermore...the
    fact that Monet intends to provide broadband services, and not
    traditional voice services, to these sparsely-populated areas
    furthers the Commission's goal of bringing advanced services to
    rural areas.").

[^41]: *See, e.g.,* 47 C.F.R. § 22.940(a)(1)(i) (Cellular Radiotelephone
    Service); 47 C.F.R. § 27.14(a) (Wireless Communications Services);
    and 47 C.F.R. § 101.1413(b) (Multichannel Video Distribution and
    Data Service).

[^42]: *See* Amendment of the Commission's Rules Regarding the 37.0-38.6
    GHz and 38.6-40.0 GHz Bands, *Report and Order and Second Notice of
    Proposed Rule Making*, 12 FCC Rcd 18600, 18622-26, ¶¶ 39-50 (1997).

[^43]: *See, e.g.,* Amendment of the Commission's Rules to Establish
    Part 27, the Wireless Communications Service ("WCS"), *Report and
    Order*, 12 FCC Rcd 10785, 10843, ¶¶ 111-112 (1997) ("*WCS Report and
    Order*"); Amendment of the Commission's Rules to Establish New
    Personal Communications Services, *Memorandum and Order*, 9 FCC Rcd
    4957, 5018-5020, ¶¶ 154-158 ("*PCS MO&O*").

[^44]: *See, e.g., WCS Report and Order,* 12 FCC at 10843, ¶ 112;
    Amendment of Parts 2 and 90 of the Commission's Rules to Provide for
    the Use of 200 Channels Outside the Designated Filing Areas in the
    896-901 MHz and the 935-940 MHz Bands Allotted to the Specialized
    Mobile Radio Pool, *Third Order on Reconsideration*, 11 FCC Rcd
    1170, ¶ 2 (1995) ("The 'substantial service' showing is a mechanism
    designed for specialized users.... Two possible examples...which
    could warrant a showing of 'substantial service' are licensees who
    provide a 'niche service' to businesses or who focus on serving
    populations outside the areas currently served by incumbent
    licensees."); *PCS MO&O*, 9 FCC Rcd at 5018, ¶ 154 ("\[W\]e continue
    to believe that minimum construction requirements are necessary to
    ensure that PCS service is made available to as many communities as
    possible and that the spectrum is used effectively.").

[^45]: *See, e.g.,* *PCS MO&O,* 9 FCC Rcd at 5019, ¶ 155 (1994)
    ("\[T\]hese relaxed construction requirements may increase the
    viability and value of some broadband licenses, especially those in
    less densely populated service areas."); Chasetel License Corp.,
    Request for Extension of Broadband PCS Construction Requirements and
    Construction Notification for Call Sign KNLF468 in
    Middlesboro-Harlan, KY BTA, *Order*, 17 FCC Rcd 9351, 9355-56, ¶ 11
    (WTB/CWD 2002) ("\[T\]he substantial service option was intended to
    encourage...licensees to serve unserved or underserved areas,
    including rural markets...." ) ("*Chasetel Order*"); Service Rules
    for the 746-764 and 776-794 MHz Bands, and Revisions to Part 27 of
    the Commission's Rules, *Second Report and Order*, 15 FCC Rcd 5299,
    5332, ¶ 76 (2000) ("*700* *MHz Second Report and Order")* ("We
    conclude with respect to the 6 megahertz of spectrum to be licensed
    to Guard Band Managers that a substantial service requirement will
    be sufficient to act as a deterrent against anticompetitive
    warehousing and other abusive practices and to ensure prompt
    delivery of services to rural areas.").

[^46]: *See, e.g.,* *Chasetel Order,* 17 FCC Rcd at 9354, n.25.

[^47]: 2000 Biennial Regulatory Review Spectrum Aggregation Limits for
    Commercial Mobile Radio Services, *Report and Order*, WT Docket No.
    01-14, 16 FCC Rcd 22668, 22708-710, ¶¶ 88-92 (2001) ("*2000 Biennial
    Review*"). Petition for Reconsideration, filed by Cingular Wireless,
    LLC on February 13, 2002; Petition for Reconsideration, filed
    jointly by Dobson Communications Corporation, Western Wireless
    Corporation, and Rural Cellular Corporation on February 13, 2002.

[^48]: 47 C.F.R. § 22.942.

[^49]: *2000 Biennial Review,* 16 FCC Rcd at 22671, ¶ 7 and 22707-710,
    ¶¶ 84-92.

[^50]: *Id*. at 22708, ¶ 88.

[^51]: *Id*. at 22708-709, ¶¶ 88-89.

[^52]: *Id*. at 22708, ¶ 88.

[^53]: *Id*. at 22709, ¶ 90.

[^54]: 47 C.F.R. § 309(j)(3)(A) and (B).

[^55]: Calculation based on data provided in the statistical table
    "Metropolitan and Nonmetropolitan Area Population by State: 1980 to
    2000," U.S. Dept. of Commerce, Bureau of the Census, *Statistical
    Abstract of the United States: 2001* at 30 (2002), *available at*
    <http://www.census.gov/prod/2002pubs/01statab/pop.pdf> (last visited
    Nov. 4, 2002).

[^56]: We note that the National Telecommunications Cooperative
    Association ("NTCA") recently released the "NTCA 2002 Wireless
    Survey Report," which addresses issues related to the provision of
    wireless services by rural entities (rel. Oct. 2002). The survey
    reflects responses received by 30 percent of NTCA's membership, or
    148 member companies out of a total of 494 member companies.

[^57]: *See* Implementation of Section 6002(b) of the Omnibus Budget
    Reconciliation Act of 1993, Annual Report and Analysis of
    Competitive Market Conditions With Respect to Commercial Mobile
    Services, *Notice of Inquiry*, FCC 02-327 (rel. Dec. 13, 2002)
    ("*CMRS NOI*").

[^58]: 47 U.S.C. §§ 309(j)(3)(A)-(D).

[^59]: 47 U.S.C. § 309(j)(3).

[^60]: For instance, several rural telcos have filed comments in the
    *Secondary Markets Proceeding*. Promoting Efficient Use of Spectrum
    Through Elimination of Barriers to the Development of Secondary
    Markets, *Notice of Proposed Rulemaking*, WT Docket No. 00-230, 15
    FCC Rcd 24203 (2000) ("*Secondary Markets NPRM*"). *See, e.g.,*
    Rural Telecommunications Group Comments at 2-3, 10-36; National
    Telephone Cooperative Association Comments; Organization for the
    Promotion and Advancement of Small Telecommunications Companies
    Comments at 2-14; Blooston, Mordkovsky, Dickens, Duffy and
    Prendergast Comments at 2-10. *See also* Comments of Caressa Bennet,
    Counsel for the Rural Telecommunications Group, *Transcript of
    Secondary Market Forum*, at 26-27, 123-124 (May 31, 2000),
    *available at* <http://www.fcc.gov/realaudio/tr053100.pdf> (last
    visited Nov. 4, 2002).

[^61]: *Secondary Markets NPRM*. In addition, we note that rural
    interests have raised issues related to the controlling interest
    standard that the Commission adopted in the *Part 1 Fifth Report and
    Order,* 15 FCC Rcd at 15323-27, ¶¶ 58-67. In essence, they argue
    that application of this rule will inappropriately disqualify rural
    telco cooperative applicants from attaining small business bidding
    status and will frustrate the objectives of the Commission's small
    business bidding preference program and the mandates of Section
    309(j). Because we will respond to petitions for reconsideration of
    the *Part 1 Fifth Report and Order* in a subsequent order, as part
    of the Part 1 rulemaking proceeding, we do not seek comment on, and
    will not address, these matters in this NOI.

[^62]: 47 U.S.C. §§ 309(j)(3), 309(j)(4).

[^63]: *CMRS NOI* at ¶¶ 41-43.

[^64]: *See* Implementation of Section 6002(b) of the Omnibus Budget
    Reconciliation Act of 1993, Annual Report and Analysis of
    Competitive Market Conditions With Respect to Commercial Mobile
    Services, *Seventh Report*, 17 FCC Rcd 12985 at 13020-21 (2002)
    *("Seventh Report").*

[^65]: In the CMRS spectrum cap proceeding, the Commission designated
    RSAs as rural areas and stated, "\[o\]ther market designations used
    by the Commission for CMRS, such as \[EAs\], combine urbanized and
    rural areas, while MSAs and RSAs are defined expressly to
    distinguish between rural and urban areas." Biennial Regulatory
    Review, Spectrum Aggregation Limits for Wireless Telecommunications
    Carriers, *Report and Order*, 15 FCC Rcd 9219, 9256 at n. 203
    (1999).

[^66]: *See* *Seventh Report*, 17 FCC Rcd at 13022-23.

[^67]: Each EA consists of one or more counties that are "Economic
    Nodes" and the surrounding counties that are economically related to
    it. An EA may have more than one economic node. The counties that
    are economic nodes are metropolitan areas or similar areas that
    serve as the EA's center(s) of economic activity. As a proxy for
    urban and rural geographic areas, we looked at counties which make
    up economic nodes, *i.e.*, nodal counties, versus those counties
    that do not make up economic nodes, *i.e.*, non-nodal counties. *See
    Seventh Report*, 17 FCC Rcd at 13022.

[^68]: *Id.* at 13022-23.

[^69]: *Supra* at ¶ 6.

[^70]: *See also Melcher,* 134 F.3d at 1154 (\"\[Section 309(j)(4)(D)\]
    insists only that rural telephone companies have \'the opportunity
    to participate in the provision of spectrum-based services\'\....
    The meaning of \'opportunity\' in the context of section
    309(j)(4)(D) is necessarily ambiguous. \[T\]he term is capable of
    supporting a range of interpretations extending from...licensee
    guarantees \[for\] rural \[telcos\]...to a regime in which there are
    no guarantees \....\").

[^71]: *See* Implementation of Section 309(j) of the Communications Act
    *-* Competitive Bidding, *Fifth Memorandum Opinion and Order*, 10
    FCC Rcd 403, 457-458, ¶ 100 (1994) (*"Competitive Bidding Fifth
    MO&O")*.

[^72]: *Id.*

[^73]: *See, e.g., Part 1 Fifth Report and Order*, 15 FCC Rcd at
    15320-21, ¶ 52; *Paging Third Report and Order Reconsideration*, 14
    FCC Rcd at 10091-92, ¶ 114 (1999); *Narrowband PCS Second Report and
    Order*, 15 FCC Rcd at 10476-77, ¶ 41 (2000); *24 GHz Report and
    Order*, 15 FCC Rcd at 16968-69, ¶ 81.

[^74]: *See* 7 C.F.R. §§ 1735.1-1735.101.

[^75]: Farm Security and Rural Investment Act of 2002, Pub. L. No.
    107-171, 116 Stat. 134, 415-418 (2002), *available at*
    <http://thomas.loc.gov/bss/d107/d107laws.html> (last visited Nov. 4,
    2002).

[^76]: *See, e.g.,* Amendments to Parts 1, 2, 27 and 90 of the
    Commission's Rules to License Services in the 216-220 MHz, 1390-1395
    MHz, 1427-1429 MHz, 1429-1432 MHz, 1432-1435 MHz, 1670-1675 MHz, and
    2385-2390 MHz Government Transfer Bands, *Report and Order*, 17 FCC
    Rcd 9980, 9989-92, ¶¶ 13-20 (2002) (1390-1392 MHz band is assigned
    by Major Economic Area, the paired 1392-1395 MHz and 1432-1435 MHz
    bands are assigned by Economic Area Groups, and the 1670-1675 MHz
    band is assigned on a single nationwide basis) ("*24 MHz Report and
    Order*").

[^77]: *See* Service Rules for the 746-764 and 776-794 MHz Bands, and
    Revisions to Part 27 of the Commission's Rules, WT Docket No.
    99-168, *First Report and Order*, 15 FCC Rcd 476, 499, ¶ 55 (2000).

[^78]: *Id*.

[^79]: *Seventh Report*, 17 FCC Rcd at 13095, Appendix C: Table 5.

[^80]: *See, e.g.,* Testimony of Caressa Bennet, Counsel for the Rural
    Telecommunications Group, In the Matter of Secondary Market Forum,
    at 26 (transcript of May 31, 2000 Public Forum on Secondary Markets)
    (available at \<http://www.fcc.gov/oet/smsi\>); Comments of the
    Rural Telecommunications Group, In the Matter of Promoting Efficient
    Use of Spectrum Through Elimination of Barriers to the Development
    of Secondary Markets, WT Docket No. 00-230, at 6 (filed Feb. 9,
    2001).

[^81]: *See supra* at ¶ 9.

[^82]: 47 C.F.R. § 22.947.

[^83]: 47 C.F.R. § 22.949. At the end of the five-year build-out period
    the licensee provides the Bureau with a map of all constructed
    facilities. All areas within the market that are not covered by
    those facilities are considered \"unserved areas\" and become
    available for re-licensing on a site-by-site basis. The incumbent
    licensee, neighboring licensees, or new entrants may then apply on a
    site-by-site basis to serve any and all portions of the unserved
    area. The Commission receives approximately 40 cellular unserved
    area applications each month.

[^84]: 47 C.F.R. § 24.203.

[^85]: 47 C.F.R. § 22.949. The unserved area licensing process begins
    with Phase I, which is a one-time, one-day window for all interested
    parties to file for licenses in the unserved portions of the market.
    After disposition of any Phase I application(s), the cellular market
    proceeds to Phase II, in which carriers may file applications under
    a 30-day notice and cut-off filing window.

[^86]: *700* *MHz Second Report and Order; 24 MHz Report and Order*
    (adopting band manager licensing in the paired 1392-1395 MHz and
    1432-1435 MHz bands and the unpaired 1390-1392 MHz, 1670-1675 MHz,
    and 2385-2390 MHz bands).

[^87]: *See 700* *MHz Second Report and Order,* 15 FCC Rcd at 5312, ¶
    27.

[^88]: *700* *MHz Second Report and Order;* *24 MHz Report and Order*.
    *See also* In the Matter of Access 220, LLC, Request for Waivers to
    Provide Band Management Services Utilizing Licenses in the 220-222
    MHz Band, *Memorandum Opinion and Order*, 17 FCC Rcd 20464 (2002).

[^89]: *700* *MHz Second Report and Order,* 15 FCC Rcd at 5312, ¶ 27.

[^90]: *Id.* at 5313, ¶ 28*.*

[^91]: *Id.*

[^92]: *Id.* at 5313, ¶ 30*.*

[^93]: *Id.*

[^94]: *See, e.g.,* 47 C.F.R. §§ 22.301-22.383 and 22.901-22.925
    (Cellular Radiotelephone Service); 47 C.F.R. §§ 24.50-24.55 and
    24.229-24.238 (Broadband PCS); 47 C.F.R. §§ 90.201-90.219,
    90.401-90.469, 90.476-90.483, and 90.635-90.658 (Specialized Mobile
    Radio Service); 47 C.F.R. §§ 101.101-101.151 (technical standards
    for fixed microwave services); and 47 C.F.R. §§ 101.201-101.217
    (operational standards for fixed microwave services).

[^95]: Those states include: Alaska, Arizona, Arkansas, California,
    Colorado, Hawaii, Maine, Montana, New Mexico, Nevada, Oklahoma,
    Oregon, Pennsylvania, Tennessee, Texas, Utah, and Washington.

[^96]: Part 15 of the Commission's rules permits operation of unlicensed
    devices provided such devices do not cause interference to
    authorized services. These devices must also accept interference
    received from authorized services. *See* 47 C.F.R. § 15.5.

[^97]: *But see*, the "NTCA 2002 Wireless Survey Report" at 8, in which
    survey respondents cite interference/congestion as a problem with
    using unlicensed spectrum.

[^98]: Federal-State Joint Board on Universal Service, CC Docket No.
    96-45, *Order*, FCC 02-307 (rel. Nov. 8, 2002).

[^99]: 47 C.F.R. § 1.1204(b)(1).

[^100]: *See* 47 C.F.R. § 0.459.