**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+----+------------------------------+
| In the Matter of                 | *  | WT Docket No. 99-266         |
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| Extending Wireless               | ** |                              |
| Telecommunications               |    |                              |
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| Services to Tribal Lands         | *) |                              |
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|                                  | *) |                              |
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+----------------------------------+----+------------------------------+

**THIRD REPORT AND ORDER**

**Adopted: August 18, 2004 Released: September 2, 2004**

By the Commission: Commissioners Copps and Adelstein issuing separate
statements.

**[TABLE OF CONTENTS]{.underline}**

[I. introduction 2](#introduction)

[II. background 2](#background)

[III. discussion 2](#discussion)

[A. Modifying the Construction Requirements of the Tribal Lands Bidding
Credit
2](#modifying-the-construction-requirements-of-the-tribal-lands-bidding-credit)

[B. Increasing the Bidding Credit Limit
2](#increasing-the-bidding-credit-limit)

[C. Adjustment of the Eligibility Criteria Based on 2000 Census Data
2](#adjustment-of-the-eligibility-criteria-based-on-2000-census-data)

[D. Extending the Tribal Lands Bidding Credit to Adjacent Non-Tribal
Areas with Low Penetration Rates
2](#extending-the-tribal-lands-bidding-credit-to-adjacent-non-tribal-areas-with-low-penetration-rates)

[IV. conclusion 2](#conclusion)

[A. Final Regulatory Flexibility Analysis
2](#final-regulatory-flexibility-analysis)

[B. Paperwork Reduction Act Analysis
2](#paperwork-reduction-act-analysis)

[V. ordering clauses 2](#ordering-clauses)

Appendix A: Rules.

Appendix B: Final Regulatory Flexibility Analysis.

# introduction

1.  In this *Third Report and Order*, we modify limited aspects of the
    rules previously adopted in this proceeding[^1] to provide
    incentives for wireless telecommunications carriers to serve
    individuals living on tribal lands.[^2] In the *First* *Report and
    Order*, the Commission adopted rules to grant bidding credits to
    winning bidders who deploy facilities and provide service to
    federally-recognized tribal areas that have a wireline telephone
    subscription or penetration rate equal to or below 70 percent.[^3]
    We also requested comment on whether the bidding credits program
    should be expanded beyond its present scope.[^4] In the *Second
    Report and Order,* we addressed issues raised in the *First Report
    and Order,* and clarified rules previously adopted in this
    proceeding.[^5] We also sought comment on potential adjustments to
    the tribal lands bidding credit program to encourage further
    deployment by carriers of wireless services on tribal lands.[^6] In
    this *Third Report and Order,* we address issues raised in the
    *Second Report and Order* and make limited modifications to the
    existing rules. Specifically, we raise the wireline telephone
    penetration rate at which tribal lands are eligible for a bidding
    credit from 70 percent or less, to 85 percent or less, and increase
    the amount of the bidding credit available to carriers that pledge
    to deploy on and serve qualifying tribal lands. We believe that
    these modifications, together with the Commission's targeted
    outreach efforts and commitment to consult with tribal governments
    on those telecommunications issues that uniquely affect Indian
    Country, will further our goal of ensuring that tribal lands have
    access to affordable, quality telecommunications services.

# background

2.  In its *First Report and Order,* the Commission established the
    tribal lands bidding credit program and limited availability of the
    credit to federally recognized tribal areas with telephone
    penetration rates equal to or less than 70 percent.[^7] The
    Commission concluded that the bidding credits would assist tribal
    communities with the greatest need for access to telecommunications
    service.[^8] The *First Report and Order* also provided that, in
    order to obtain a bidding credit in a particular market, a winning
    bidder must indicate on its long-form application (FCC Form 601)
    that it intended to serve tribal lands in that market.[^9] Following
    the long-form application filing deadline, the applicant was
    provided an additional 90 calendar days[^10] beyond the deadline to
    amend its application to identify the tribal lands to be served, and
    provide certification from the tribal government(s).[^11] In order
    to ensure that applicants awarded bidding credits actually deploy
    facilities and provide service to tribal lands, the Commission also
    imposed performance requirements on licensees that received a tribal
    lands bidding credit. Specifically, the Commission required that a
    licensee construct and operate its system to cover 75 percent of the
    population of the qualifying tribal land within three years of the
    grant of the license.[^12]

3.  In the *First Further Notice* of this proceeding, the Commission
    sought comment regarding whether it should award bidding credits to
    carriers who commit to serve non-tribal areas with a 70 percent or
    less penetration rate, or tribal and/or non-tribal areas with
    penetration levels above 70 percent but significantly below the
    national average.[^13] The Commission also sought comments on
    whether it should expand the program to give transferable bidding
    credits to be used in future auctions to existing and established
    licensees that deploy and provide wireless service to un-served
    tribal communities.[^14] Finally, the Commission asked whether it
    should make credits available to licensees that enter into
    partitioning agreements with tribal authorities that allow the
    tribal government to provide service, either directly or through
    negotiation, with a third-party carrier.[^15]

4.  The Commission's *Second Report and Order* modified and clarified
    aspects of the bidding credit procedures and responded to specific
    issues raised in the *First Further Notice*. First, the Commission
    extended the deadline for obtaining the certifications from the
    applicable tribal governments from 90 to 180 days.[^16] The *Second
    Report and Order* also clarified that if a license is assigned to
    another entity, the construction/repayment obligations associated
    with the credit are transferred to the assignee as well, although
    assignees need not seek re-certification from tribal
    authorities.[^17] With regard to partial license transfers involving
    geographic partitioning, the Commission clarified that the tribal
    land must be wholly contained within either the assignor's or
    assignee's proposed license area after the partition.[^18]
    Additionally, in order to verify compliance with the tribal lands
    construction requirement, the Commission required licensees to file
    an attachment along with their notification of construction, stating
    that it is providing coverage to 75 percent of the population of the
    tribal area for which the credit was awarded.[^19] Finally, the
    Commission expressly codified penalties for failure to comply with
    build-out requirements, and failure to timely repay the bidding
    credit.[^20]

5.  The Commission also determined that it would be premature to extend
    the tribal lands bidding credit program to non-tribal areas or areas
    with penetration rates greater than 70 percent but still below the
    national average. The Commission noted both the lack of comments on
    this issue, as well as the infancy of the program.[^21] The
    Commission also declined to extend the program to already-licensed
    carriers or to make the credit transferable, concluding, once again,
    that a limited record and insufficient time frame within which to
    assess the effectiveness of the program, did not support such an
    expansion.[^22] Finally, the Commission concluded that it would not
    make bidding credits available to carriers that enter into
    partitioning agreements with tribal governments as a result of the
    lack of support in the record for the proposal.[^23]

6.  In its *Second Further Notice,* the Commission sought comment on
    four discrete issues. First, the Commission sought comment regarding
    whether it should reconsider or moderate the buildout obligations
    imposed on carriers in light of the lack of participation in the
    bidding credit program.[^24] Next, the Commission asked for comments
    on whether and how the bidding credit limit and formula might be
    modified to provide greater incentive for carriers to deploy
    facilities on tribal lands.[^25] The Commission also sought comment
    on whether it should adjust the bidding credit formula to
    incorporate data from the 2000 Census figures rather than the 1990
    figures in calculating tribal penetration for purposes of
    determining eligibility for the credit.[^26] Finally, the Commission
    sought comment on allowing carriers who obtain tribal lands bidding
    credits, to obtain additional credit for extending their coverage to
    immediately adjacent non-tribal areas that also have low penetration
    rates.[^27] We address each of these issues, in turn, below.

# discussion

## Modifying the Construction Requirements of the Tribal Lands Bidding Credit

7.  In the *Second Further Notice,* the Commission sought comment on
    modifying the requirement that, within three years of grant of a
    license, a carrier must cover 75 percent of the tribal area for
    which the bidding credit was awarded.[^28] Given that our current
    rules impose more stringent construction requirements on carriers
    who seek the tribal lands bidding credit than those who do not, the
    Commission asked commenters to discuss whether such requirements
    should be eased, and if so, how.[^29] Specifically, the Commission
    asked commenters to consider whether the 75 percent population
    coverage requirement should be lowered; whether the build-out
    requirement should be extended or otherwise modified; if certain
    geographic characteristics of a given tribal area make compliance
    with the construction requirement more difficult; whether different
    construction rules should apply to different wireless services; and
    whether buildout difficulties should be resolved on an *ad hoc* or
    waiver basis.[^30]

8.  Although we received very limited comments in response to the
    *Second Further Notice*, commenters responding generally agreed that
    the Commission should not modify the current construction
    requirement.[^31] The Commission's underlying objective in applying
    the more stringent construction requirement was to encourage winning
    bidders that are committed to providing telecommunications services
    in Indian Country, and that will deploy those services rapidly.[^32]
    We continue to believe that the heightened requirement serves those
    dual purposes, and conclude that relaxing these requirements is not
    necessary to further the goals of the bidding credit program. In
    particular, the record, though limited, suggests that
    underutilization of the tribal lands bidding credit program stems
    from technical obstacles, economic factors, difficulties obtaining
    certifications, and other problems, rather than from
    overly-restrictive buildout requirements.[^33] In addition, we note
    that tribal lands may vary significantly with regard to population
    density, terrain, and other such buildout factors which can affect
    the feasibility of building out facilities on tribal lands and
    account for the lack of service.[^34] We note, too, that should a
    carrier be unable to fulfill its construction requirement at the end
    of three years, it may seek a waiver from the relevant Commission
    rule. Therefore, we shall not modify the construction requirement.
    Rather, as we stated in the *First Report and Order*, we strongly
    encourage parties to seek waivers of specific rules or file other
    requests for regulatory relief in those instances where greater
    flexibility than the rules allow would facilitate the provision of
    service to tribal lands.[^35] Finally, we note that under
    appropriate and limited circumstances, the Commission, in order to
    further facilitate the provision of wireless services to Indian
    Country, may be flexible regarding the timing of granting an
    applicant's license and awarding tribal land bidding credits.[^36]

### Applicant self-certification

9.  With regard to our application requirements in general, we note that
    one commenter suggested that, in certain circumstances, applicant
    carriers, as opposed to tribal governments, should be allowed to
    certify compliance with basic eligibility requirements, particularly
    where the carrier will provide service to tribes from cell sites
    located adjacent to, but not on, tribal lands.[^37] While we
    recognize that such self-certification may ease the coordination
    efforts necessary to obtain bidding credit approval, we have also
    recognized the unique sovereign status of Indian tribes, the trust
    relationship between the federal government and Indian tribes, and
    our ongoing federal obligation to guarantee the right of Indian
    tribes to self-government.[^38] Moreover, as we stated in our
    *Notice,* as a practical matter, applicants for tribal lands bidding
    credits are unlikely to be able to provide service to tribal lands
    without first obtaining the consent of the tribal governments to
    operate on tribal lands.[^39] Accordingly, we do not find it prudent
    to exclude tribal authorities from any portion of the application
    process for access to telecommunications services that affect them
    so greatly. We therefore decline to adopt this proposal.

## Increasing the Bidding Credit Limit

10. In the *Second Further Notice*, the Commission noted that it
    established the tribal lands bidding credit program to encourage
    participation in auctions by carriers that were in a position to
    provide service to tribal lands rapidly, and to help mitigate the
    costs associated with providing such service.[^40] Observing that
    few applicants had taken advantage of the program, the Commission
    asked commenters whether the current credit amounts were adequate or
    whether the bidding credit limit, as presently structured, was
    insufficient for applicants to recover costs for building on tribal
    lands.[^41]

11. When we initiated the tribal lands bidding credit program in 2000,
    we noted that our original bidding credit figures represented "our
    rough estimate of the approximate infrastructure costs (including
    site acquisition, tower construction, and equipment costs) for a
    representative tower facility."[^42] We also acknowledged that while
    the formula was inexact, the credit would provide a financial
    incentive for carriers to deploy wireless facilities more
    efficiently.[^43] We now believe that an increase in the bidding
    credit limit is warranted in order to further mitigate the economic
    risk associated with provision of service. Most parties commenting
    on this issue support the view that increasing the bidding credit
    amount could provide additional incentives to carriers to deploy
    wireless services to tribal lands.[^44]

12. We adopt the following formula for calculating the credit amount. A
    winning bidder may receive a \$500,000 credit for up to the first
    200 square miles (518 square kilometers) of qualifying tribal land
    within its license area. In instances where qualifying tribal lands
    within a license area exceed 200 square miles (518 kilometers), a
    winning bidder may receive an additional \$2500 per square mile
    (2.59 square kilometer), or \$500,000 for each additional 200 square
    miles (518 square kilometers). All credits will be subject to a
    maximum limit based on the gross bid amount for the license for
    which the credit is sought. Where the gross bid amount is \$1
    million or less, the cap will be 50 percent of the gross bid. Where
    the gross bid amount is greater than \$1 million and equal to or
    less than \$2 million, the cap will be \$500,000. Finally, where the
    gross bid amount exceeds \$2 million, the cap will be 35 percent of
    the gross bid.

13. We believe today's action will provide an additional financial
    incentive for carriers to participate in this program. Increasing
    the bidding credit amount should serve to attract entities that are
    both willing and able to deploy facilities and provide wireless
    services to Indian Country. In addition, we note that the Commission
    set forth a waiver process in the *First Report and Order* by which
    applicants could request additional bidding credits if they could
    demonstrate that their infrastructure costs exceeded the available
    credit set out by the formula.[^45] Today's action, combined with
    our tribal lands bidding credit waiver procedure, is another
    indication of the seriousness with which we approach the subject of
    providing telecommunications service to underserved Americans.

## Adjustment of the Eligibility Criteria Based on 2000 Census Data

14. In the *Second Further Notice*, the Commission noted that the
    statistics used in the initial notice for the tribal lands bidding
    credit program cited 1990 Census data, which showed that basic
    telecommunications service to Indian Country generally was well
    below the national average.[^46] The Commission sought comment on
    the advisability of using data from the 2000 Census, which indicated
    that average telephone penetration rates on tribal lands increased
    markedly during the 1990s.[^47] The Commission asked how that new
    information should be incorporated into the bidding credit formula,
    *i.e.,* should the wireline penetration benchmark be somewhere
    between its present 70 percent but some percentage below the
    national rate?[^48] The Commission also questioned whether the
    program should be tailored to target those tribal areas that
    continue to have unusually low penetration rates.[^49]

15. Statistics from the 1990 Decennial Census estimated that 46.6
    percent of all American Indian household on American Indian
    reservations and Federal Off-Reservation Trust Lands had telephone
    service.[^50] Comparable data from the 2000 Decennial Census
    estimated that 67.9 percent of such American Indian households had
    telephone service.[^51] Data also indicates that only a little over
    ten percent of tribes now have a penetration rate of 70 percent or
    less (as compared to 60 percent in 1990), demonstrating considerable
    growth of telephone service in Indian Country.[^52]

16. While the increased rates in penetration, subscribership, and
    facilities deployment reflect the Commission's resolve in assuring
    that all Americans, including those living in Indian Country, have
    the benefits of access to basic telecommunications services, we
    note, nevertheless, that well over half of tribes continue to have
    penetration rates below our national average.[^53] As such, we
    recognize that more can be done to increase access to
    telecommunications and information services in Indian Country and
    that it is continually appropriate to develop and apply policies
    aimed at promoting further deployment of wireless services to tribal
    lands.

17. Accordingly, we believe that it is appropriate to raise the
    telephone penetration level at which tribal lands are eligible for a
    credit. At the current 70 percent benchmark, based on the 2000
    Census data, only a few dozen (out of nearly 450) federally
    recognized tribal lands would qualify under our rules for a tribal
    lands bidding credit.[^54] That is, maintaining the 70 percent
    benchmark will exclude approximately 90 percent of tribal lands from
    the bidding credit program. It is appropriate then, given the
    overall increase in tribal lands telephone penetration rates, to
    adjust the telephone penetration benchmark from 70 percent to a
    level that serves to increase the number of "qualifying tribal
    lands" while still targeting those tribal communities with the
    greatest need for access to telecommunications service.[^55] We note
    that with regard to this issue, commenters, though few in number,
    consistently urged the Commission to increase the penetration rate
    threshold to broaden the applicability of the program.[^56]

18. We conclude that raising the wireline telephone penetration
    benchmark from 70 to 85 percent will provide a greater incentive for
    carriers to deploy facilities on tribal lands, while at the same
    time increasing the number of qualifying tribal lands eligible for
    this bidding credit program.[^57] We note that almost 35 percent of
    tribal areas continue to endure telephone penetration rates of 85
    percent or less; the change we are making in this program will
    increase by threefold the number of tribal lands deemed eligible for
    tribal lands bidding credit, and will encourage carriers to reach
    out to those tribes and deploy telecommunications facilities.[^58]
    We also believe that an 85 percent benchmark for tribal lands
    bidding credit eligibility represents a balance between our efforts
    to expand the scope of, and encourage participation in, the existing
    tribal lands bidding credit program, with the Commission's objective
    to target those tribal communities with the greatest need for access
    to telecommunications services. Therefore, we shall amend our rule
    accordingly.[^59]

## Extending the Tribal Lands Bidding Credit to Adjacent Non-Tribal Areas with Low Penetration Rates

19. The Commission sought comment on a limited expansion of the bidding
    credit program that would allow carriers who obtain tribal lands
    bidding credits to obtain additional credit for extending their
    coverage to immediately adjacent non-tribal areas that have
    comparably low penetration rates.[^60] The Commission noted that
    certain areas abutting tribal lands often share the same
    characteristics as tribal lands (*e.g.,* significant Native American
    population, income levels, terrain, etc.), but do not otherwise
    qualify for the tribal lands bidding credit.[^61] In particular, we
    requested that commenters discuss how to define the geographic areas
    eligible for an additional credit, the appropriate certification
    process, and any other measures or conditions that should be adopted
    to safeguard the integrity of the process.[^62] The Commission also
    requested comment on its legal authority to extend the bidding
    credit in such a way.[^63]

20. While we continue to seek ways to extend telecommunications service
    to all Americans, including providing incentives to carriers that
    will serve areas that might otherwise be neglected, we will not
    extend the bidding credit program to adjacent non-tribal areas at
    this time. First, we note that, using Census tract data, the number
    of immediately adjacent non-tribal areas that would qualify for such
    a bidding credit (*i.e.,* a tract wholly outside tribal lands with a
    telephone penetration rate equal to or less than eighty-five
    percent) is negligible.[^64] In particular, an estimated two percent
    of census tracts wholly outside but immediately adjacent to tribal
    lands have a telephone penetration rate equal to or less than 85
    percent.[^65] Accordingly, it does not appear that expanding the
    bidding credit program to adjacent non-tribal areas with low
    penetration rates would have any marked impact on increased
    subscribership or facilities deployment for those areas.
    Additionally, we remain concerned about both the dearth of comments,
    and the lack of specificity in the comments provided on this
    topic.[^66] Further, we note that we continue to explore other
    avenues to provide telecommunications service to rural areas,
    including lands immediately abutting tribal lands.[^67] Finally, we
    note that nothing in our rules prevents a licensee that has been
    awarded a tribal lands bidding credit from providing service to
    immediately adjacent, non-tribal areas. Therefore, we decline to
    extend the tribal lands bidding credits beyond its present scope to
    adjacent non-tribal areas.

# conclusion

21. In adopting the limited changes set forth in this *Third Report and
    Order,* we continue to strive to fulfill our obligation to provide
    greater access to telecommunications service to all Americans,
    particularly those in Indian Country. We encourage auction winning
    bidders to continue to negotiate with tribal leaders in order to
    bring the promise and benefits of quality telecommunications
    services to tribal lands. Through policy reform, outreach efforts,
    and consultations with tribes, the Commission has, and will continue
    to address telecommunications service-related issues on tribal
    lands.[^68] We are encouraged by the considerable increase in
    telephone penetration rates overall on tribal lands over the past
    ten years, and will continue to work to promote telecommunications
    subscribership and infrastructure deployment within American Indian
    and Alaska Native tribal communities.

## Final Regulatory Flexibility Analysis

22. As required by the Regulatory Flexibility Act of 1980, as
    amended,[^69] the Commission has prepared a Final Regulatory
    Flexibility Analysis (FRFA) of the possible impact on small entities
    of the action taken in this *Third Report and Order.* The FRFA is
    set forth in Appendix B.

## Paperwork Reduction Act Analysis 

23. This document does not contain new or modified information
    collection requirements subject to the Paperwork Reduction Act of
    1995 (PRA), Public Law 104-13. In addition, therefore, it does not
    contain any new or modified "information collection burden for small
    business concerns with fewer than 25 employees," pursuant to the
    Small Business Paperwork Relief Act of 2002, Public Law
    107-198.[^70]

# ordering clauses

24. Accordingly, IT IS ORDERED that, pursuant to Sections 1, 4(i),
    303(r), and 309(j) of the Communications Act of 1934, as amended, 47
    U.S.C. §§ 151, 154(i), 303(r), and 309(j), the REPORT AND ORDER is
    hereby ADOPTED.

25. IT IS FURTHER ORDERED that, pursuant to the authority of Sections
    4(i), 7, 303(c), 303(f), 303(g), 303(r), and 332 of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i),
    157**,** 303(c), 303(f), 303(g), 303(r), and 332, the rule changes
    specified in Appendix A ARE ADOPTED.

26. IT IS FURTHER ORDERED that the rule changes set forth in Appendix A
    WILL BECOME EFFECTIVE 60 days after publication in the *Federal
    Register.*

27. IT IS FURTHER ORDERED that the Commission's Consumer and
    Governmental Affairs Bureau, Reference Information Center, SHALL
    SEND a copy of this *Third Report and Order*, including the Final
    Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy
    of the Small Business Administration.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary 

**APPENDIX A**

**RULES**

Subpart Q of Part 1 of Title 47 of the Code of Federal Regulations is
amended as follows:

1\. Section 1.2110(f)(3) is amended to read as follows:

§ 1.2110 Designated Entities.

\* \* \* \* \*

\(f\) \* \* \*

\* \* \* \* \*

> \(3\) \* \* \*
>
> \(i\) Qualifying tribal land means any federally recognized Indian
> tribe\'s reservation, Pueblo, or Colony, including former reservations
> in Oklahoma, Alaska Native regions established pursuant to the Alaska
> Native Claims Settlement Act (85 Stat. 688), and Indian allotments,
> that has a wireline telephone subscription rate equal to or less than
> eighty-five (85) percent based on the most recently available U.S.
> Census Data.
>
> \* \* \* \* \*
>
> \(iii\) *Bidding credit formula*. Subject to the applicable bidding
> credit limit set forth in §1.2110(f)(3)(iv), the bidding credit shall
> equal five hundred thousand (500,000) dollars for the first two
> hundred (200) square miles (518 square kilometers) of qualifying
> tribal land, and twenty-five hundred (2500) dollars for each
> additional square mile (2.590 square kilometers) of qualifying tribal
> land above two hundred (200) square miles (518 square kilometers).
>
> \(iv\) *Bidding credit limit*. If the high bid is equal to or less
> than one million (1,000,000) dollars, the maximum bidding credit
> calculated pursuant to §1.2110(f)(3)(iii) shall not exceed fifty (50)
> percent of the high bid. If the high bid is greater than one million
> (1,000,000) dollars, but equal to or less than two million (2,000,000)
> dollars, the maximum bidding credit calculated pursuant to
> §1.2110(f)(3)(iii) shall not exceed five hundred thousand (500,000)
> dollars. If the high bid is greater than two million (2,000,000)
> dollars, the maximum bidding credit calculated pursuant to
> §1.2110(f)(3)(iii) shall not exceed thirty-five (35) percent of the
> high bid.
>
> **APPENDIX B**

**FINAL REGULATORY FLEXIBILITY ANALYSIS**

As required by the Regulatory Flexibility Act of 1980, as amended
(RFA),[^71] an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the *First* *Report and Order and Further Notice of
Proposed Rulemaking* (*First Report and Order/First Further
Notice*)[^72] and the *Second Report and Order and Further Notice of
Proposed Rulemaking* (*Second Report and Order/Second Further
Notice*).[^73] The Commission sought written public comment on the
proposals in the *First Further Notice* and *Second Further Notice*,
including comment on the IRFA. This present Final Regulatory Flexibility
Analysis (FRFA) conforms to the RFA.[^74]

**A. Need for, and Objectives of, the Third Report and Order.**

In the *Third Report and Order*, we modify rules previously adopted in
the *First* *Report and Order* in WT Docket 99-266 to provide incentives
for wireless telecommunications carriers to serve individuals living on
tribal lands.[^75] In that proceeding, we authorized the grant of
bidding credits to winning bidders who deploy facilities and provide
service to federally-recognized tribal areas that have a wireline
telephone subscription rate equal to or below 70 percent.[^76] In the
present item, we amend section 1.2110(f)(3)(i) of the Commission's rules
to increase the wireline telephone subscription rate for a qualifying
tribal land to equal to or less than 85 percent with the intention of
increasing participation in the bidding credit program; we also amend
sections 1.2110(f)(3)(iii) and (iv) to increase the bidding credit
available to applicants that deploy facilities on and provide wireless
services to qualifying tribal lands. The objective of these actions, and
of this *Third Report and Order,* is to address the need to provide
incentives for carrier to provide wireless telecommunications services
on generally underserved tribal lands. This *Third Report and Order*
also addresses issues raised in the *Second Further Notice of Proposed
Rulemaking.* In the *Second Further Notice*, we requested comment on
whether we should expand the use of bidding credits. Specifically, we
sought comment as to whether to: 1) modify the program's construction
requirements; 2) increase the bidding credit limit; 3) adjust the
eligibility criteria based on data from the 2000 Census; and 4) allow
carriers who obtain tribal lands bidding credits, to obtain additional
credit for extending their coverage to immediately adjacent non-tribal
areas that also have low penetration rates.

We believe that increasing the wireline telephone subscription rate at
which tribal lands are eligible for a bidding credit to 85 percent or
less, will have the affect of increasing participation in the program by
increasing the number of qualifying tribes and providing additional
incentives to carriers to enter into agreements with tribal governments
to deploy wireless services within Indian Country. We also believe that
increasing the amount of bidding credit available will provide
additional incentives to prospective wireless providers in Indian
Country. Regarding the other issues raised, we believe that the lack of
a record supporting the proposed changes in the rules, as well as the
availability of *ad hoc* or waiver process remedies, make it
inappropriate to adopt those proposals as rules at this time.
Specifically, we do not believe that modifying the construction
requirements or extending the bidding credit to adjacent, non-tribal
lands will further the objectives of this *Third Report and Order.*

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

No comments were filed that specifically addressed the rules and
policies proposed in the IRFA.

**C. Description and Estimate of the Number of Small Entities to which
the Rules Will Apply.**

The RFA directs agencies to provide a description of, and where
feasible, an estimate of the number of small entities that may be
affected by the rules adopted herein.[^77] The RFA generally defines the
term "small entity" as having the same meaning as the terms "small
business," "small organization," and "small governmental
jurisdiction."[^78] In addition, the term "small business" has the same
meaning as the term "small business concern" under the Small Business
Act.[^79] A "small business concern" is one which: (1) is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the Small Business
Administration (SBA).[^80]

[Cellular Licensees]{.underline}. The SBA has developed a small business
size standard for small businesses in the category "Cellular and Other
Wireless Telecommunications."[^81] Under that SBA category, a business
is small if it has 1,500 or fewer employees.[^82] According to the
Bureau of the Census, only twelve firms from a total of 1238 cellular
and other wireless telecommunications firms operating during 1997 had
1,000 or more employees.[^83] Therefore, even if all twelve 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 1807 cellular licenses; however, a cellular licensee may
own several licenses. According to the most recent *Trends in Telephone
Service* data, 858 carriers reported that they were engaged in the
provision of either cellular service, Personal Communications Service
(PCS), or Specialized Mobile Radio telephony services, which are placed
together in that data.[^84] We have estimated that 291 of these are
small under the SBA small business size standard.[^85] Accordingly,
based on this data, we estimate that not more than 291 cellular service
providers will be affected by these revised rules.

[220 MHz Radio Service -- Phase I Licensees]{.underline}. 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 "Cellular and Other Wireless Telecommunication"
companies. This category provides that a small business is a wireless
company employing no more than 1,500 persons.[^86] According to the
Bureau of the Census, only twelve firms from a total of 1238 cellular
and other wireless telecommunications firms operating during 1997 had
1,000 or more employees.[^87] If this general ratio continues in 2002 in
the context of Phase I 220 MHz licensees, we estimate that nearly all
such licensees are small businesses under the SBA\'s small business
standard.

[220 MHz Radio Service -- Phase II Licensees]{.underline}. 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 a small business
size standard for defining "small" and "very small" businesses for
purposes of determining their eligibility for special provisions such as
bidding credits and installment payments.[^88] This small business
standard indicates that a "small business" is an entity that, together
with its affiliates and controlling principals, has average gross
revenues not exceeding \$15 million for the preceding three years.[^89]
A "very small business" is defined as an entity that, together with its
affiliates and controlling principals, has average gross revenues that
do not exceed \$3 million for the preceding three years.[^90] The SBA
has approved these small size standards.[^91] Auctions of Phase II
licenses commenced on September 15, 1998, and closed on October 22,
1998.[^92] In the first auction, 908 licenses were auctioned in three
different‑sized geographic areas: three nationwide licenses, 30 Regional
Economic Area Group (EAG) Licenses, and 875 Economic Area (EA) Licenses.
Of the 908 licenses auctioned, 683 were sold.[^93] Thirty-nine small
businesses won licenses in the first 220 MHz auction. The second auction
included 225 licenses: 216 EA licenses and 9 EAG licenses. Fourteen
companies claiming small business status won 158 licenses.[^94]

[700 MHz Guard Band Licenses]{.underline}. In the *700 MHz Guard Band
Order*, we adopted a small business size standard for "small businesses"
and "very small businesses" for purposes of determining their
eligibility for special provisions such as bidding credits and
installment payments.[^95] A small business is an entity that, together
with its affiliates and controlling principals, has average gross
revenues not exceeding \$40 million for the preceding three years.[^96]
Additionally, a "very small business" is an entity that, together with
its affiliates and controlling principals, has average gross revenues
that are not more than \$15 million for the preceding three years.[^97]
An auction of 52 Major Economic Area (MEA) licenses commenced on
September 6, 2000, and closed on September 21, 2000.[^98] Of the 104
licenses auctioned, 96 licenses were sold to 9 bidders. Five of these
bidders were small businesses that won a total of 26 licenses. A second
auction of 700 MHz Guard Band licenses commenced on February 13, 2001
and closed on February 21, 2001. All eight of the licenses auctioned
were sold to three bidders. One of these bidders was a small business
that won a total of two licenses.[^99]

[Lower 700 MHz Band Licenses]{.underline}. We adopted criteria for
defining three groups of small businesses for purposes of determining
their eligibility for special provisions such as bidding credits.[^100]
We have defined a small business as an entity that, together with its
affiliates and controlling principals, has average gross revenues not
exceeding \$40 million for the preceding three years. 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 \$15 million for the preceding three years. Additionally, the lower
700 MHz Service has a third category of small business status that may
be claimed for Metropolitan/Rural Service Area (MSA/RSA) licenses. The
third category is entrepreneur, which 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. An auction of 704 licenses (one license in each of the 734
MSAs/RSAs and one license in each of the six Economic Area Groupings
\[EAGs\]) commenced on August 27, 2002, and closed on September 18,
2002.[^101] Of the 740 licenses available for auction, 484 licenses were
sold to 102 winning bidders. Seventy-two of the winning bidders claimed
small business, very small business or entrepreneur status and won a
total of 329 licenses.

[Private and Common Carrier Paging]{.underline}. In the *Paging* *Second
Report and Order*, we adopted a small size standard for "small
businesses" for purposes of determining their eligibility for special
provisions such as bidding credits and installment payments.[^102] A
small business is an entity that, together with its affiliates and
controlling principals, has average gross revenues not exceeding \$15
million for the preceding three years.[^103] The SBA has approved this
definition.[^104] An auction of Metropolitan Economic Area (MEA)
licenses commenced on February 24, 2000, and closed on March 2,
2000.[^105] Of the 985 licenses auctioned, 440 were sold. Fifty-seven
companies claiming small business status won. At present, there are
approximately 24,000 Private Paging site-specific licenses and 74,000
Common Carrier Paging licenses. According to the most recent *Trends in
Telephone Service,* 608 carriers reported that they were engaged in the
provision of either paging or "other mobile" services.[^106] Of these,
we estimate that 589 are small, under the SBA-approved small business
size standard. We estimate that the majority of private and common
carrier paging providers would qualify as small entities under the SBA
definition.

[Broadband Personal Communications Service (PCS).]{.underline} 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 has created a small business size standard for Blocks C and F
as an entity that has average gross revenues of less than \$40 million
in the three previous calendar years.[^107] For Block F, an additional
small business size standard 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.[^108] These small business size standards, in the
context of broadband PCS auctions, have been approved by the SBA.[^109]
No small businesses within the SBA-approved small business size
standards bid successfully for licenses in Blocks A and B. There were 90
winning bidders that qualified as small entities in the Block C
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.[^110] On
March 23, 1999, the Commission reauctioned 347 C, D, E, and F Block
licenses; there were 48 small business winning bidders. Based on this
information, we conclude that the number of small broadband PCS
licensees will include the 90 winning C Block bidders and the 93
qualifying bidders in the D, E, and F blocks plus the 48 winning bidders
in the re-auction, for a total of 231 small entity PCS providers as
defined by the SBA small business standards and the Commission\'s
auction rules. On January 26, 2001, the Commission completed the auction
of 422 C and F Broadband PCS licenses in Auction No. 35. Of the 35
winning bidders in this auction, 29 qualified as "small" or "very small"
businesses.

[Narrowband PCS]{.underline}. 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. In March 2002, 106 MTA and BTA narrowband PCS licenses were
granted to 4 licensees.[^111] Each of the licensees are small or very
small businesses.

[Specialized Mobile Radio (SMR).]{.underline} Pursuant to 47 C.F.R. §
90.814(b)(1), the Commission has established a small business size
standard for purposes of auctioning 900 MHz SMR licenses, 800 MHz SMR
licenses for the upper 200 channels, and 800 MHz SMR licenses for the
lower 230 channels on the 800 MHz band as a firm that has had average
annual gross revenues of \$15 million or less in the three preceding
calendar years.[^112] The SBA has approved this small business size
standard for the 800 MHz and 900 MHz auctions.[^113] Sixty winning
bidders for geographic area licenses in the 900 MHz SMR band qualified
as small businesses under the \$15 million size standard. The auction of
the 525 800 MHz SMR geographic area licenses for the upper 200 channels
began on October 28, 1997, and was completed on December 8, 1997. Ten
(10) winning bidders for geographic area licenses for the upper 200
channels in the 800 MHz SMR band qualified as small businesses under the
\$15 million size standard.

The auction of the 1,050 800 MHz SMR geographic area licenses for the
General Category channels began on August 16, 2000, and was completed on
September 1, 2000. Eleven (11) winning bidders for geographic area
licenses for the General Category channels in the 800 MHz SMR band
qualified as small businesses under the \$15 million size standard. In
an auction completed on December 5, 2000, a total of 2,800 Economic Area
licenses in the lower 80 channels of the 800 MHz SMR service were sold.
Of the 22 winning bidders, 19 claimed "small business" status. Thus, 40
winning bidders for geographic licenses in the 800 MHz SMR band
qualified as small business. In addition, there are numerous incumbent
site-by-site SMR licensees on the 800 and 900 MHz band. The Commission
awards bidding credits in auctions for geographic area 800 MHz and 900
MHz SMR licenses to firms that had revenues of no more than \$15 million
in each of the three previous calendar years.[^114] This analysis
applies to SMR providers in the 800 MHz and 900 MHz bands that either
hold geographic area licenses or have obtained extended implementation
authorizations. We do not know how many firms provide 800 MHz or 900 MHz
geographic area SMR 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
purposes of this analysis, that all of the remaining existing extended
implementation authorizations are held by small entities, as that small
business size standard is established by SBA.

**D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements.**

The *Third Report and Order* modifies a basic qualification for
participation in the tribal lands bidding credit program. The Commission
increases the wireline telephone subscription rate for an area to
qualify for the tribal lands bidding credit from 70 percent or less to
85 percent or less. The Commission also increases the amount of bidding
credit available that may be awarded to auction high bidders for
deploying facilities on and providing service to qualifying tribal
lands. The Commission does not propose any additional reporting,
recordkeeping or compliance requirements.

> **E. Steps Taken to Minimize Significant Economic Impact on Small
> Entities, and Significant Alternatives Considered.**

The RFA requires an agency to describe any significant, specifically
small business, alternatives that it has considered in developing its
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.[^115]

In the *Third Report and Order*, we first decline to modify the current
construction requirements for a licensee that has been awarded a bidding
credit for serving qualifying tribal lands, believing that the
Commission's underlying objective (rapid deployment to underserved
Indian Country) is best served by the current rules; this action will
have no significant impact on small entities. Next, we increase the
amount of bidding credit to 500,000 dollars for the first 200 square
miles of qualifying tribal lands, and 2,500 dollars for each additional
square mile above the first 200 square miles; this action will have no
significant negative impact on small entities. While the Commission
considered leaving the existing bidding credit amount in place, we
determined that increasing the bidding credit amount would provide a
greater incentive for carriers and may benefit small entities that are
capable of providing wireless services to Indian Country. We also set
the wireline telephone subscription rate for a qualifying tribal land at
85 percent or less, in order to increase the number of tribes whose
lands qualify for the bidding credit; this action will have no
significant impact on small entities. While the Commission considered
implementing a benchmark above 85 percent or leaving the benchmark at 75
percent, we concluded that an 85 percent benchmark represents a balance
between our efforts to expand the scope of, and encourage participation
in, the existing tribal lands bidding credit program, with the
Commission's objective to target tribal communities with the greatest
need for access to telecommunications services. Finally, we decline to
extend the tribal lands bidding credit to carriers serving adjacent,
non-tribal lands, as we believe such action does not further the
objective of this program; this action will not have a significant
economic impact on small entities.

[Report to Congress]{.underline}: The Commission will send a copy of the
*Third Report and Order* in a report to be sent to Congress and the
General Accounting Office pursuant to the *Congressional Review
Act*.[^116] In addition, the Commission will send a copy of the Order,
including this FRFA, to the Chief Counsel for Advocacy of the Small
Business Administration. A copy of the *Third Report and Order* and FRFA
(or summaries thereof) will also be published in the Federal
Register.[^117]

SEPARATE STATEMENT OF

COMMISSIONER MICHAEL J. COPPS

> *RE: Extending Wireless Telecommunications Services to Tribal Lands,
> Third Report and Order (WT Docket No. 99-266).*

The FCC has a special responsibility to increase telephone penetration
rates in tribal lands. Access to telecommunications services on tribal
lands continues to lag significantly behind other parts of the country
despite our current efforts. Because we must work harder to erase this
gap, I support increasing the tribal lands bidding credit and adjusting
our eligibility criteria so that bidding credits are available for
spectrum associated with tribal lands where penetration rates are lower
than 85 percent rather than 70 percent. We must remember that
penetration rates are still far lower than these levels in many tribal
areas. I hope that these two changes make serving tribal areas more
attractive to bidders and result in increased service.

I am disappointed, however, that we have not found a way to make bidding
credits available in adjacent, non-tribal areas. This is a change that
both wireless companies and tribal organizations have indicated could
make a difference. This issue has lingered too long, and we must strive
to work with tribal representatives and industry experts to find
creative solutions for this and other challenges. Nonetheless, this
Order is another step forward, so I support it.

**SEPARATE STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

*Re: Extending Wireless Telecommunications Services to Tribal Lands;WT
Docket No. 99-266*

I was very pleased to work with the Wireless Telecommunications Bureau
on the development of the Second Further Notice of Proposed Rulemaking
in this proceeding last year because I was concerned about the apparent
lack of interest in the Commission's tribal lands bidding credit
program. Hailing from South Dakota, I have a particular interest in
ensuring that the benefits of wireless telecommunications reach all
Americans, particularly those who live on tribal lands.

It obviously is difficult to pinpoint with any certainty specific
aspects of the tribal lands bidding credit program that need to be
adjusted to ensure the success of the program. I believe that by our
decision today, however, we are adopting modifications that make great
strides to ensuring that the credit is utilized to its fullest possible
extent in the near future. For example, the decision to raise the
wireline telephone penetration benchmark from 70 to 85 percent for
qualifying tribal lands will triple the number of tribal lands deemed
eligible for bidding credits. Similarly, we adopt a two-thirds increase
to the bidding credit limit to further incentivize investment in these
underserved areas.

I applaud the work of the Bureau in developing these adjustments to the
tribal lands bidding credit program. These changes are particularly
appropriate as we plan to hold a number of significant auctions over the
next few years. As an agency, we must be ever vigilant to support the
deployment of wireless services in tribal areas, particularly those that
are underserved by traditional wireline services.

Finally, I wanted to note that in the past, I heard anecdotal concerns
regarding the challenges of meeting the 75 percent population coverage
construction requirement of the tribal lands bidding credit within three
years of grant of a license. However, the record before us is clear that
the construction requirement should be maintained, and is not likely the
cause of the under-utilization of the bidding credit program. While we
decline to modify the construction requirement, I am pleased that we
reiterate the Commission position that parties can file for waiver
requests should their particular circumstances require additional
construction time.

[^1]: In the Matter of Extending Wireless Telecommunications Services to
    Tribal Lands, WT Docket No. 99-266, *Report and Order and Further
    Notice of Proposed Rule Making*, 15 FCC Rcd 11,794 (2000) ("*First
    Report and Order"* or *"First Further Notice,"* as appropriate).

[^2]: Section 1.2110(f)(3)(i) of the Commission's rules provides that a
    qualifying tribal land is any federally recognized Indian tribe's
    reservation, Pueblo, or Colony, including former reservations in
    Oklahoma, Alaska Native regions established pursuant to the Alaska
    Native Claims Settlement Act (85 Stat. 688), and Indian allotments,
    that has a wireline telephone subscription rate equal to or less
    than seventy (70) percent based on the most recently available U.S.
    Census Data. 47 C.F.R. § 1.2110(f)(3)(i) (2003).

[^3]: The "telephone penetration rate," or telephone subscribership
    rate, represents the actual percentage of households that subscribe
    to telephone service. *See* *Telephone Subscribership in the United
    States (Data Through July 2003)* (rel. January 2004), available at
    <http://www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/IAD/subs0703.pdf>).

[^4]: *See First Further Notice,* 15 FCC Rcd at 11,816, para. 65.

[^5]: In the Matter of Extending Wireless Telecommunications Services to
    Tribal Lands, WT Docket No. 99-266, *Second Report and Order and
    Second Further Notice of Proposed Rulemaking*, 18 FCC Rcd 4775
    (2003) ("*Second Report and Order"* or "*Second Further Notice,"* as
    appropriate).

[^6]: *Second Further Notice,* 18 FCC Rcd at 4783, para. 20. Since the
    program's inception in 2000, the Commission has conducted 17
    auctions, and received 34 applications seeking a tribal land bidding
    credit. Of those 34 applications, six have been granted, six are
    pending, and the remaining applicants have withdrawn their request
    for a tribal lands bidding credit.

[^7]: *First Report and Order,* 15 FCC Rcd at 11,802, para. 22.

[^8]: *First Report and Order,* 15 FCC Rcd at 11,802, para. 22.

[^9]: *First Report and Order*, 15 FCC Rcd at 11,805, para. 31.

[^10]: As noted *infra*, the Commission, on its own motion, subsequently
    extended the grace period to 180 days. *See Second Report and
    Order,* 18 FCC Rcd 4775, 4779 para. 10; *see also* 47 C.F.R. §
    1.2110(f)(3)(ii)(A) (2003).

[^11]: In particular, applicants must provide certification from the
    applicable tribal government that: (1) it will allow the bidder to
    site facilities and provide service on its tribal land(s), in
    accordance with our rules; (2) it has not and will not enter into an
    exclusive contract with the applicant precluding entry by other
    carriers, and will not unreasonably discriminate against any
    carrier; and (3) its tribal land is a qualifying tribal land as
    defined in Commission rules. In addition, at the conclusion of the
    grace period, the applicant was required to amend its long-form
    application to file a certification that it would comply with the
    bidding credit build-out requirement, and that it would consult with
    the tribal government regarding the siting of facilities and
    deployment of service on the tribal land. *First Report and Order,*
    15 FCC Rcd at 11,805-06, para. 32.

[^12]: *First Report and Order,* 15 FCC Rcd at 11,806-07, para. 35. The
    Commission also required that, at the conclusion of the three-year
    period, licensees file a notification of construction indicating
    that they have met the 75% construction requirement on the tribal
    lands for which the credit was awarded. If the licensee fails to
    comply with any condition, it is required to repay the bidding
    credit plus interest thirty days after the conclusion of the
    construction period. In the event the licensee fails to repay the
    amount, the license automatically cancels. *Id.* at 11,807, para.
    37.

[^13]: *First Further Notice,* 15 FCC Rcd at 11,816, paras. 66-67.

[^14]: *First Further Notice,* 15 FCC Rcd at 11,816-17, paras. 68-69.

[^15]: *First Further Notice,* 15 FCC Rcd at 11,818, para. 72.

[^16]: *Second Report and Order,* 18 FCC Rcd at 4779, para. 10. A
    winning bidder now has 180 days to amend its long-form application
    to identify the tribal land it seeks to serve, and to provide the
    required certification from the tribal government. The winning
    bidder also has 180 days to file a certification that it will comply
    with the tribal lands build-out requirements, and consult with the
    tribal government regarding the siting of facilities and deployment
    of service on tribal lands.

[^17]: *Second Report and Order,* 18 FCC Rcd at 4779-80, para. 11. The
    Commission, however, cautioned assignees that the tribe may not
    allow the assignee to deploy facilities on its land. *Id*.

[^18]: The construction/repayment obligation will attach to the license
    for the partitioned area encompassing the tribal land for which the
    credit was awarded. The Commission noted, however, that in partial
    license transfers involving spectrum disaggregation (but not
    partitioning), the construction/repayment obligation will be
    presumed to remain with the original licensee whose stated intention
    was to serve the tribal land unless the parties to the transaction
    inform us otherwise. *Second Report and Order,* 18 FCC Rcd at 4780,
    para. 12.

[^19]: *Second Report and Order,* 18 FCC Rcd at 4780, para.13. The
    licensee is obligated to provide the total population of the tribal
    area covered by its license as well as the number of persons it is
    serving in the tribal area, or face repayment penalties and,
    potentially, license termination.

[^20]: *Second Report and Order,* 18 FCC Rcd at 4781, para. 14; *see
    also* 47 C.F.R. § 1.2110(f)(3)(vii) (2003).

[^21]: *Second Report and Order*, 18 FCC Rcd at 4781-82, para. 16.

[^22]: *Second Report and Order,* 18 FCC Rcd at 4782, para. 18.

[^23]: *Second Report and Order,* 18 FCC Rcd at 4782-83, para. 19.

[^24]: *Second Report and Order,* 18 FCC Rcd at 4783-84, paras. 22-24.

[^25]: *Second Report and Order,* 18 FCC Rcd at 4785, para. 26.

[^26]: *Second Report and Order,* 18 FCC Rcd at 4785-86, paras. 27-28.
    Notably, the 2000 Census indicated that average telephone
    penetration rates on tribal lands have increased appreciably from
    levels reported in 1990. *Id.* at 4786, para. 28 & n.46.

[^27]: *Second Report and Order,* 18 FCC Rcd at 4786-87, paras. 29-30.

[^28]: *Second Report and Order,* 18 FCC Rcd at 4783-84, paras. 22-24;
    *see also* 47 C.F.R. § 1.2110(f)(3)(vi) (2003).

[^29]: *Second Report and Order,* 18 FCC Rcd at 4783, para. 23.

[^30]: *Second Report and Order,* 18 FCC Rcd at 4783-84, paras. 22-24*.*

[^31]: *See, .e.g.,* Erratum Comments of the National Telecommunications
    Cooperative Association (NTCA Comments) at 1-2 (noting that there is
    no evidence that the more stringent buildout requirement causes
    under-utilization of the program, and stating that easing the rules
    would weaken the intended effect of the program and undercut the
    objective of promoting prompt deployment of spectrum-based services
    to tribal areas); Ex Parte Reply Comments of the Cheyenne River
    Sioux Tribe Telephone Authority (Cheyenne River Reply Comments) at 2
    (stating that the Commission should not lower the 75% population
    coverage requirement since it is not likely the cause of the
    under-utilization of the program); Navajo Nation Telecommunications
    Regulatory Commission (Navajo Nation) Comments at 1-2 (stating that
    "there are no circumstances" that warrant relaxing the current
    buildout requirement); Whidbey Telephone Company (Whidbey) Reply
    Comments at 4, 6 (generally agreeing that current coverage and
    construction requirements should not be modified in such a way "as
    to create a windfall for licensees in exchange for little or no
    legal obligation" but suggesting that the Commission allow for
    creative service proposals or "tribal telecommunications improvement
    plans").

[^32]: *See First Report and Order*, 15 FCC Rcd at 11,807, para. 35;
    *Second Further Notice*, 18 FCC Rcd at 4783, para. 21.

[^33]: *See, e.g.,* Navajo Nation Comments at 1 (stating that
    "remoteness, low population density, rough terrain, or other factors
    negatively affect the ability of wireless carriers to provide the
    requisite coverage in \[tribal land\] areas"); Whidbey Reply
    Comments at 2-3 (enumerating problems with identifying and
    certifying certain tribal lands); Cheyenne River Reply Comments at
    2-3 (noting that "the more likely cause of underutilized bidding
    credits is the fact that increasingly fewer Indian reservations have
    penetration rates of less than 70%").

[^34]: *First Report and Order*, 15 FCC Rcd at 11,808-09, para. 41.

[^35]: *First Report and Order*, 15 FCC Rcd at 11,808, para. 39.

[^36]: *See, e.g.,* OP Corporation, FCC File No. 0001312627, "Request
    for Waiver," filed Jun. 23, 2003 (noting the exceptional nature of
    its single, nation-wide license, the Commission first granted OP
    Corporation's license and then allowed OP Corporation an additional
    year to secure the required tribal certifications. *See Order,* 18
    FCC Rcd 19653 (2003).

[^37]: Windsong Comments at 6-8 (suggesting that an applicant is in as
    good a position as a tribal government to file the certifications
    required under 47 C.F.R. § 1.2110(f)(3)(ii)(1)-(3), and that the
    Commission may in fact have more clear enforcement authority
    regarding such certification when made by an applicant).

[^38]: *See* Extending Wireless Telecommunications Services to Tribal
    Lands, WT Docket 99-266, *Notice of Proposed Rulemaking*, 14 FCC Rcd
    13679, 13,695-96, para. 41 (1999) ("*Notice*").

[^39]: *Notice*, 14 FCC Rcd at 13,695-96, para. 41.

[^40]: *Second Further Notice*, 18 FCC Rcd at 4785, para. 25.

[^41]: Presently, a winning bidder may receive a \$300,000 credit for up
    to the first 200 square miles (518 square kilometers) of qualifying
    tribal land within its license area. In instances where qualifying
    tribal lands within a license area exceed 200 square miles, a
    winning bidder may receive an additional \$1500 per square mile
    (2.59 square kilometer), or \$300,000 for each additional 200 square
    miles. All credits are subject to a maximum limit based on the gross
    bid amount for the license for which the credit is sought. 47 C.F.R.
    § 1.2110(f)(3)(iii)-(iv) (2003); *see also Second Further Notice*,
    18 FCC Rcd at 4785, para. 26 & n.41.

[^42]: *First Report and Order,* 15 FCC Rcd at 11,804, para. 25.

[^43]: *First Report and Order,* 15 FCC Rcd at 11,802, para. 27.

[^44]: *See, e.g.,* Navajo Nation Comments at 2 (urging a modification
    of the bidding credit amount and methodology to ensure that remote
    areas within tribal lands are also served); NTCA Comments at 2
    (noting that steps such as indexing the credit to inflation would
    ensure that the real value of the credit does not decline over
    time); Whidbey Reply Comments at 5-6 (noting that increasing the
    bidding credit amount would clearly provide licensees greater
    financial incentive to pursue the credit, but that this alone does
    not address other factors that may also stymie participation);
    Duluth PCS, Inc., West Virginia PCS, Inc., St. Joseph PCS, Inc.,
    collectively dba Windsong PCS ("Windsong") Comments at 4-6
    (recommending that the Commission offer existing wireless service
    providers relief from future installment payments in the amount of
    the bidding credit in return for extending service to tribal lands).

[^45]: *First Report and Order,* 15 FCC Rcd at 11,805, para. 31.

[^46]: *Second Further Notice*, 18 FCC Rcd at 4785, para. 27 & n.43
    (*citing Notice,* 14 FCC Rcd at 13,682, para. 5).

[^47]: *Second Further Notice*, 18 FCC Rcd at 4785-86, para. 28.

[^48]: *Second Further Notice*, 18 FCC Rcd at 4785, para. 27 & n.45;
    *see also* *Second Report and Order*, 18 FCC Rcd at 4786, para. 28.

[^49]: *Second Further Notice*, 18 FCC Rcd at 4786, para. 28.

[^50]: *See* "Telephone Subscribership on American Indian Reservations
    and Off-Reservation Trust Lands" ("American Indian Telephone
    Subscribership"), Industry Analysis and Technology Div., Wireline
    Competition Bur., Federal Communications Commission (rel. May 2003),
    available at <http://www.fcc.gov/wcb/stats>.

[^51]: *See* "American Indian Telephone Subscribership."

[^52]: *See* "List of Federally Recognized Tribal Lands and Telephone
    Penetration Rates," ("Tribal Telephone Penetration Rates"),
    available at
    http:/wireless.fcc.gov/auctions/data/crossreferences/Auctions
    \_2000_1990_TL&TelephonePenetrationRate.xls; *see also* Windsong
    Comments at 9 & note 13 (noting that "overall penetration rates are
    now higher than 70% in all but two states, Mississippi and Utah").

[^53]: *See* "Tribal Telephone Penetration Rates."

[^54]: *See* "Tribal Telephone Penetration Rates." We note that our
    rules already require the use of the most recently available U.S.
    Census Data in determining whether a qualifying tribe has a wireline
    telephone subscription rate of 70% or less. *See* 47 C.F.R. §
    1.2110(f)(3)(i) (2003).

[^55]: *See* *Second Report and Order*, 18 FCC Rcd at 4778, para. 7.

[^56]: *See* Cheyenne River Reply Comments at 3 (noting that the number
    of tribal lands within the 70% penetration eligibility bracket is
    rapidly diminishing); NTCA Comments at 2-3 (stating that the 70%
    "restriction" may pose a barrier to application of the bidding
    credit, and noting that the low threshold limits the number of
    tribal areas that meet the rule's qualifications); Navajo Nation
    Comments at 2-3 (suggesting that increasing the penetration rate
    will encourage large carriers to offer services on Navajo Nation
    tribal lands); Whidbey Reply Comments at 7 (stating that increasing
    the penetration rate would allow for the extension of basic
    telecommunications services to underserved portions of tribal
    lands); Windsong Comments at 8-10 (suggesting that any tribal area
    with a penetration rate below the national average is "underserved"
    and should thus be eligible for the tribal lands bidding credit
    program).

[^57]: We emphasize, however, that in order to provide greater access to
    wireless services to Indian Country, we may at some later point seek
    to redefine the benchmark used in the tribal lands bidding credit
    formula using different methodology.

[^58]: *See* "Tribal Telephone Penetration Rates."

[^59]: We reiterate that the tribal lands bidding credit program
    continues to apply only to future auctions, and the Commission will
    "not extend the program to already-licensed carriers or make the
    credit transferable . . . . ." *Second Report and Order,* 18 FCC Rcd
    at 4782, para. 18.

[^60]: *Second Further Notice*, 18 FCC Rcd at 4786-87, paras. 29-30.

[^61]: *Second Further Notice*, 18 FCC Rcd at 4787, para. 30.

[^62]: *Second Further Notice*, 18 FCC Rcd at 4787-88, paras. 31-33.

[^63]: *Second Further Notice*, 18 FCC Rcd at 4788, para. 35.

[^64]: *See* 2000 Census Tract Data. Census tracts are small, relatively
    permanent statistical subdivisions of a county or statistically
    equivalent entity which are delineated by the U.S. Census Bureau
    where no local participant existed or where a local or tribal
    government declined to participate. U.S. Census Bureau, Census 2000.

[^65]: *See* 2000 Census Tract Data.

[^66]: *See, e.g.* NTCA Comments at 3-4 (supporting an extension of the
    bidding credit program to adjacent underserved areas where adjacent
    areas are remote rural areas with unique barriers to
    telecommunications access); Navajo Nation Comments at 3 (suggesting
    that the Commission allow qualifying applicants to increase their
    bidding credit for also serving adjacent non-tribal areas); Cheyenne
    River Reply Comments at 6; Whidbey Reply Comments at 6; Windsong
    Comments at 10, note 15.

[^67]: *See, e.g.,* In the Matter of Facilitating the Provision of
    Spectrum-Based Services to Rural Areas and Promoting Opportunities
    for Rural Telephone Companies to Provide Spectrum-Based Service, WT
    Docket No. 02-381, 2000 Biennial Review Spectrum Aggregation Limits
    for Commercial Mobile Radio Service, WT Docket No. 01-14, Increasing
    Flexibility to Promote Access to and the Efficient and Intensive Use
    of Spectrum and the Widespread Deployment of Wireless Services, and
    to Facilitate Capital Formation, *Notice of Proposed Rulemaking,* 18
    FCC Rcd 20,802 (2003).

[^68]: Indeed there are various programs, in addition to the tribal
    lands bidding credit program, which the Commission has initiated to
    increase telephone subscribership in Indian Country. In particular,
    the Commission continues to promote Enhanced Lifeline, Link-Up, and
    other universal service-related programs targeted specifically
    toward tribal lands, and continues to promote and encourage
    participation in Indian Telecommunications Initiatives, a series of
    interactive workshops and roundtables, with the goal of increasing
    the telephone penetration rate, facilitating deployment of
    telecommunications infrastructure on tribal lands, and informing
    Tribes about federal government programs. *See* Federal
    Communications Commission Tribal Home Page
    \<<http://www.fcc.gov/indians>\>. The Commission also has an open
    rulemaking proceeding on extending Enhanced Lifeline and Link-Up to
    areas near reservations in order to target such assistance to the
    most underserved areas of the Nation. *See* Federal-State Joint
    Board on Universal Service; Promoting Deployment and Subscribership
    in Unserved and Underserved Areas, Including Tribal and Insular
    Areas; Commonwealth of Northern Marianna Islands; Petitions for
    Reconsideration filed by: Crow Tribal Council, Florida Public
    Service Commission, Fort Belknap Indian Community, Goshute Indian
    Reservation, National Telephone Cooperative Association, Oglala
    Sioux Tribe, Rosebud Sioux Tribe, South Dakota Independent Telephone
    Coalition, Western Wireless Corporation, *Twenty-Fifth Order on
    Reconsideration, Report and Order, Order, and Further Notice of
    Proposed Rulemaking*, CC Docket No. 96-45, 18 FCC Rcd 10,958 (2003).

[^69]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 -- 612 has
    been amended by the Small Business Regulatory Enforcement Fairness
    Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857
    (1996).

[^70]: *See* 44 U.S.C. 3506(c)(4).

[^71]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et. seq*.,
    has been amended by the Small Business Regulatory Enforcement
    Fairness Act of 1996 (SBREFA), Title II, Pub. L. No. 104-121, 110
    Stat. 857 (1996).

[^72]: In the Matter of Extending Wireless Telecommunications Services
    to Tribal Lands, WT Docket No. 99-266, *Report and Order and Further
    Notice of Proposed Rulemaking*, 15 FCC Rcd 11,794 (2000).

[^73]: In the Matter of Extending Wireless Telecommunications Services
    to Tribal Lands, WT Docket No. 99-266, *Second Report and Order and
    Second Further Notice of Proposed Rulemaking*, 18 FCC Rcd 4775
    (2003).

[^74]: *See* 5 U.S.C. § 604.

[^75]: Section 1.2110(f)(3)(i) of the Commission's rules provides that a
    qualifying tribal land "means any federally recognized Indian
    tribe's reservation, Pueblo, or Colony, including former
    reservations in Oklahoma, Alaska Native regions established pursuant
    to the Alaska Native Claims Settlement Act (85 Stat. 688), and
    Indian allotments," (*see* 25 C.F.R. § 20.1(v)), that has a wireline
    telephone subscription rate to or less than seventy (70) percent
    based on the most recently available U.S. Census Data." 47 C.F.R. §
    1.2110(f)(3)(i).

[^76]: The "telephone penetration rate," or telephone subscribership
    rate, represents the actual percentage of households that subscribe
    to telephone service. *See* *Telephone Subscribership in the United
    States* (rel. January 2004), available at
    \<[http://www.fcc.gov/Bureaus/
    Common_Carrier/Reports/FCC-State_Link/recent.html](http://www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/recent.html)\>.

[^77]: 5 U.S.C. § 604(a)(3).

[^78]: 5 U.S.C. § 601(6).

[^79]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    "small business concern" in the Small Business Act, 15 U.S.C. §
    632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a
    small business applies "unless an agency, after consultation with
    the Office of Advocacy of the Small Business Administration and
    after opportunity for public comment, establishes one or more
    definitions of such term which are appropriate to the activities of
    the agency and publishes such definition(s) in the Federal
    Register."

[^80]: 15 U.S.C. § 632.

[^81]: 13 C.F.R. § 121.201, North American Industry Classification
    System (NAICS) code 513322.

[^82]: *Id.*

[^83]: U.S. Department of Commerce, U.S. Census Bureau, 1997 Economic
    Census, Information - Subject Series, Establishment and Firm Size,
    Table 5 -- Employment Size of Firms Subject to Federal Income Tax at
    64, NAICS code 513322 (October 2000).

[^84]: *See Trends in Telephone Service*, Industry Analysis Division,
    Wireline Competition Bureau , Table 5.3 - Number of
    Telecommunications Service Providers that are Small Businesses (May
    2002).

[^85]: *Id.* Data found in *Trends in Telephone Service* is based on
    information filed by service providers on FCC Form 499-A worksheets,
    in combination with employment information obtained from ARMIS and
    Securities and Exchange Commission filings as well as industry
    employment estimates published by the Bureau of Labor Statistics.

[^86]: 13 C.F.R. § 121.201, NAICS code 513322.

[^87]: U.S. Department of Commerce, U.S. Census Bureau, 1997 Economic
    Census, Information - Subject Series, Establishment and Firm Size,
    Table 5 -- Employment Size of Firms Subject to Federal Income Tax at
    64, NAICS code 513322 (October 2000).

[^88]: Amendment of Part 90 of the Commission\'s Rules to Provide for
    the Use of the 220-222 MHz Band by the Private Land Mobile Radio
    Service, PR Docket No. 89-552, *Third Report and Order*, 12 FCC Rcd
    10943, 11068‑70, paras. 291‑295 (1997) (*220 MHz Third Report and
    Order*).

[^89]: *Id.* at para. 291.

[^90]: *Id.*

[^91]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    January 6, 1998.

[^92]: *See generally* \"220 MHz Service Auction Closes,\" *Public
    Notice*, 14 FCC Rcd 605 (WTB 1998).

[^93]: "FCC Announces It is Prepared to Grant 654 Phase II 220 MHz
    Licenses After Final Payment is Made,\" *Public Notice*, 14 FCC Rcd
    1085 (WTB 1999).

[^94]: "Phase II 220 MHz Service Spectrum Auction Closes," *Public
    Notice*, 14 FCC Rcd 11218 (WTB 1999).

[^95]: *See* Service Rules for the 746-764 MHz Bands, and Revisions to
    Part 27 of the Commission's Rules, WT Docket No. 99-168, *Second
    Report and Order*, 15 FCC Rcd 5299 (2000).

[^96]: *Id.* at para. 133.

[^97]: *Id.*

[^98]: *See generally* "220 MHz Service Auction Closes: Winning Bidders
    In the Auction of 908 Phase II 220 MHz Service Licenses," *Public
    Notice*, DA 98-2143 (rel. October 23, 1998).

[^99]: "700 MHz Guard Bands Auction Closes: Winning Bidders Announced,"
    *Public Notice*, 16 FCC 4590 (WTB 2001).

[^100]: *See* Reallocation and Service Rules for the 698-746 MHz
    Spectrum Band (Television Channels 52-59), GN Docket No. 01-74,
    *Report and Order*, 17 FCC Rcd 1022 (2002).

[^101]: *See* "Lower 700 MHz Band Auction Closes, 17 FCC Rcd 17272
    (2002).

[^102]: Revision of Part 22 and Part 90 of the Commission\'s Rules to
    Facilitate Future Development of Paging Systems, WT Docket No.
    96-18, *Second Report and Order*, 12 FCC Rcd 2732, 2811-2812, paras.
    178-181 (*Paging Second Report and Order*); *see also* Revision of
    Part 22 and Part 90 of the Commission\'s Rules to Facilitate Future
    Development of Paging Systems, WT Docket No. 96-18*, Memorandum
    Opinion and Order on Reconsideration*, 14 FCC Rcd 10030, paras.
    98-107 (1999).

[^103]: *Paging Second Report and Order*, 12 FCC Rcd at 2811, para. 179.

[^104]: *See* Letter to Amy J. Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, from Aida
    Alvarez, Administrator, Small Business Administration, dated
    December 2, 1998.

[^105]: *See generally* "220 MHz Service Auction Closes," *Public
    Notice*, 14 FCC Rcd 605 (WTB 1998).

[^106]: *See Trends in Telephone Service,* Industry Analysis Division,
    Wireline Competition Bureau , Table 5.3 - Number of
    Telecommunications Service Providers that are Small Businesses (May
    2002).

[^107]: *See* Amendment of Parts 20 and 24 of the Commission\'s Rules --
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap, WT Docket No. 96-59, *Report and Order*, 11
    FCC Rcd 7824, paras. 57-60 (1996); *see also* 47 C.F.R. § 24.720(b).

[^108]: *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*, 11 FCC Rcd 7824,
    para. 60 (1996).

[^109]: *See* Letter to Amy Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, Federal
    Communications Commission, from A. Alvarez, Small Business
    Administration, dated December 2, 1998.

[^110]: FCC News, *Broadband PCS, D, E and F Block Auction Closes*, No.
    71744 (rel. January 14, 1997).

[^111]: *See* "Wireless Telecommunications Bureau Announces It is
    Prepared to Grant 109 Narrowband PCS Auction Licenses Upon Full And
    Timely Payment," *Public Notice,* 17 FCC Rcd 1559 (WTB 2002).

[^112]: 47 C.F.R. § 90.814(b)(1).

[^113]: *See* Letter to Tom Sugrue, Chief, Wireless Telecommunications
    Bureau, Federal Communications Commission, from Aida Alvarez,
    Administrator, Small Business Administration, dated August 10, 1999.

[^114]: 47 C.F.R. § 90.814(b)(1).

[^115]: 5 U.S.C. § 603 (c).

[^116]: *See* 5 U.S.C. § 801(a)(1)(A).

[^117]: *See* 5 U.S.C. § 604(b).