# Before the

# Federal Communications Commission

# Washington, D.C. 20554

In the Matter of

)

Amendment of Part 90 of the )

Commission's Rules To Provide )

for the Use of the 220-222 MHz Band ) PR Docket No. 89-552

by the Private Land Mobile Radio Service )

)

Implementation of Sections 3(n) and 332 )

Of the Communications Act )

) GN Docket No. 93-252

Regulatory Treatment of Mobile Services )

)

Geographic Partitioning and spectrum )

Disaggregation for the 220-222 MHz Service )

# 

# MEMORANDUM OPINION AND ORDER

**Adopted: March 15, 2000 Released: March 29, 2000**

**By the Commission:**

# TABLE OF CONTENTS

**[Paragraph No]{.underline}.**

.

**I. INTRODUCTION 1**

**II. BACKGROUND 2**

**III. DISCUSSION 5**

**A. Available License Area 5**

**B.** **Post- Assignment Construction 8**

**C.** **Post- Assignment Construction Rule Correction 13**

**IV. CONCLUSION 14**

**V. ORDERING CLAUSES 15**

# 

**APPENDIX A - List of Petitioners**

**APPENDIX B - Final Rules**

**APPENDIX C - Regulatory Flexibility Act**

# I. INTRODUCTION

1.  On August 4, 1998, we adopted rules for geographic partitioning[^1]
    and spectrum disaggregation[^2] for the 220-222 MHz service (220 MHz
    service).[^3] Petitions for Reconsideration of the *Fifth Report and
    Order* were filed by Rand McNally & Company (RMC) and Intek Global
    Corp. (Intek)*.*[^4] In this *Memorandum Opinion and Order,* we
    dismiss RMC's Petition to remove the references to Major Trading
    Areas (MTAs) and Basic Trading Areas (BTAs) in the 220 MHz
    partitioning rules. In addition, we deny Intek's Petition to amend
    the construction requirements applicable to partitioned and
    disaggregated licenses. Finally, we correct Section 90.1019 of the
    Commission's rules to make it consistent with the construction rule
    adopted in the *Fifth Report and Order*. Our goal in taking these
    actions is to promote more efficient use of the spectrum, increased
    opportunities for a variety of entities to participate in the
    provision of 220 MHz service, and expedite delivery of 220 MHz
    service to unserved areas.

    **II. BACKGROUND**

2.  On March 12, 1997, we adopted the *Third Report and Order,* which
    established rules for the operation and licensing of the 220-222 MHz
    band.[^5] These rules were adopted to establish a flexible
    regulatory framework that would allow for the efficient licensing of
    the 220 MHz service, eliminate unnecessary regulatory burdens on
    both Phase I and Phase II licensees,[^6] and enhance the competitive
    potential of the 220 MHz service in the mobile services
    marketplace.[^7] *The Fifth Notice of Proposed Rulemaking* (*Fifth
    NPRM*), released with the *Third Report and Order*, proposed that
    any holder of a covered Phase II license [^8] would be permitted to
    partition portions of its license.[^9] The *Fifth NPRM* also sought
    comment on whether to permit full geographic partitioning and
    spectrum disaggregation in the 220 MHz service.[^10] In the *Fifth
    Report and Order*, we adopted full partitioning and disaggregation
    rules for the 220 MHz service similar to those previously
    established for other services, *e.g.,* Broadband PCS, Multipoint
    Distribution Service (MDS), 800 MHz and 900 MHz Specialized Mobile
    Radio (SMR), 39 GHz fixed point-to-point microwave, the Wireless
    Communications Service (WCS), Local Multipoint Distribution Service
    (LMDS) and Maritime Services. Partitioning and disaggregation follow
    the general partitioning and disaggregation framework adopted for
    other wireless services.[^11] These rules permit all 220 MHz service
    licensees, with the exception of Public Safety and Emergency Medical
    Radio Service (EMRS) licensees, to partition and disaggregate their
    licenses. Partitioning is permitted based on any geographic area
    defined by the parties, provided that the parties notify the
    Commission regarding the relevant boundaries and coordinates.
    Disaggregation is allowed for any amount of 220 MHz spectrum, with
    no requirement that the disaggregator retain a certain amount of
    spectrum if the disaggregation is otherwise consistent with the
    Commission's rules.

3.  The 220 MHz partitioning and disaggregation rules allow Phase II
    licensees to partition and disaggregate at any time after receiving
    their license. Phase II licensees may negotiate with their partial
    assignees how the construction requirements will be met after
    partitioning and disaggregating their license. Two options are
    provided for satisfying the construction requirements. Under option
    one, the assignee can certify that it will satisfy the construction
    requirements for its area or spectrum, while the original licensee
    is responsible for the area or spectrum it retains. Under option
    two, either party can certify that it will meet the construction
    requirements for both licensees' combined licensed service area or
    spectrum.[^12]

4.  RMC requests that the Commission delete the reference to MTA and BTA
    designations in the Commission's rules. RMC argues that it holds the
    copyright for these terms and that it has not authorized their use
    in the 220 MHz service. Intek requests reconsideration of the
    Commission's post-partition/disaggregation construction requirements
    and proposes alternatives for our consideration.

    **III. DISCUSSION**

    **A. Available License Area**

5.  [Background.]{.underline} The 220 MHz partitioning rules allow
    partitioning based on any area defined by the parties to the
    partitioning agreement.[^13] Parties to the partitioning agreement
    are given the option to define the partitioned area by: (1) county
    lines, (2) FCC recognized service areas, or (3) coordinate points at
    every three degrees. In the *ULS Report and Order*,[^14] the
    Commission amended Section 90.1019(b) of the rules to eliminate any
    reference to Major Trading Area (MTA) and Basic Trading Area (BTA)
    as FCC recognized areas for 220 MHz partitioning purposes.

    6\. [Discussion]{.underline}. RMC requests that Section 90.1019 of
    the Commission\'s rules be amended to remove the reference to MTAs
    and BTAs as FCC recognized areas for partitioning purposes. RMC
    further requests that we clarify that 220 MHz licensees are not
    permitted to use MTA and BTA designations to define a service area
    in connection with their partitioning agreements without RMC's
    consent.[^15] RMC asserts that it is the copyright owner of the MTA
    and BTA designations and that it has entered into licensing
    agreements for the use of these designations in connection with the
    licensing of certain services.[^16] However, RMC notes that there is
    no licensing agreement for use of MTA and BTA designations in the
    220 MHz service. In the absence of a licensing agreement applicable
    to 220 MHz, RMC argues that it is improper for the 220 MHz
    partitioning rules to refer to MTAs or BTAs as FCC recognized areas
    in this service.

    7\. We recognize that RMC holds the copyright for the MTA and BTA
    designations. In those services in which we have used MTAs and BTAs
    to define initial geographic licensing areas (e.g., PCS, 900 MHz
    SMR), RMC has entered into service-specific licensing agreements
    with industry participants in the service to authorize licensee use
    of the copyrighted terms.[^17] In the case of the 220 MHz service,
    however, Section 90.1019 has been amended to remove the reference to
    partitioning by MTAs and BTAs.[^18] Accordingly, we dismiss RMC's
    Petition as moot.

###### B. Post-Assignment Construction

8\. [Background]{.underline}. The construction requirements imposed on
covered Phase II licensees and assignees after a 220 MHz license has
been partitioned or disaggregated are based on the construction
requirements previously adopted for partitioning and disaggregation by
broadband PCS licensees. Phase II licensees are given two options for
satisfying the Commission's construction requirements after partitioning
and disaggregating: (a) a licensee and assignee may agree to be
individually responsible for satisfying the construction requirements
for their respective portions of the partitioned or disaggregated
license; or (b) one party may certify that it will be responsible for
satisfying the construction requirements for the entire market.[^19] If
the first option is selected and either licensee fails to meet the
construction requirement for its portion of the partitioned or
disaggregated license, both parties' licenses will be subject to
automatic cancellation.[^20] If the alternative option is selected,
i.e., one party certifies that it will be responsible for meeting all
future construction requirements for the original license, and that
party fails to meet the requirement, its license will be subject to
automatic cancellation, but the non-certifying party's license will not
be affected if it demonstrates that it is providing "substantial
service" for its partitioned area or disaggregated spectrum.[^21]

9\. [Discussion]{.underline}. Intek contends that the 220 MHz
construction requirements will deter 220 MHz Phase II licensees
partitioning their licenses to assignees who are small businesses.[^22]
According to Intek, small businesses are most interested in partitioning
their 220 MHz licenses, and they will be reluctant to partition their
licenses to other small businesses, who are less likely to meet their
construction obligations, as compared to well established companies from
whom recourse is available.[^23] Intek suggests that the Commission
consider two alternatives for satisfying the Commission's construction
requirements. One option would permit the partitioner and partitionee to
separately satisfy the construction requirements upon a demonstration of
the bona fide nature of the partitioning request. The second option
would permit the partitioner and partitionee to avoid the construction
requirements if partitioning occurs before a specific date (e.g., within
three years of license grant). For the reasons discussed below, we
decline Intek's request.[^24]

10\. Intek offers little evidence to support its argument that small
business 220 MHz licensees are unlikely to partition their licenses to
other small businesses. Although Intek points out that all but seven of
the bidders in the 220 MHz Phase II auction qualified for small or very
small business bidding credits, and therefore almost all of the 220 MHz
licensees are small businesses, we note that a significant number of the
220 MHz Phase II licenses awarded actually are held by licensees that
are not small businesses.[^25] The record fails to demonstrate that
these non-small business 220 MHz Phase II licensees would have the same
concerns about partitioning their licenses to small businesses. Absent a
definitive showing that the Commission's construction requirements are
hampering partitioning by 220 MHz licensees, we are reluctant to make
any changes to these requirements.

11\. We are not convinced that Intek's proposed alternatives represent
an improvement over the Commission's existing post-assignment
construction requirements. Intek's first alternative is that upon a
demonstration of the bona fide nature of the partitioning request, the
Commission should permit the licensee and partitionee separately to
satisfy the construction requirements for their retained licensed
areas.[^26] Unlike the existing rules, which contain primarily objective
criteria for the Commission to decide whether the construction
requirements have been satisfied by a partitioner or partitionee,
Intek's proposal requires the Commission to make a fact specific, case
by case determination that the partitioning request is of a "bona fide
nature" before the partitioner and partitionee may separately satisfy
the construction requirements. Intek suggests no criteria for how the
Commission should make this determination. Moreover, while the existing
rules provide licensees and assignees with an incentive to build out
their networks, i.e., failure to satisfy the construction requirements
could result in license cancellation, Intek's proposal would eliminate
this build out incentive. For these reasons, we find that Intek's first
alternative does not serve the public interest.

12\. Intek's second alternative would permit a licensee and partitionee
to be able to avoid the post-assignment construction requirements if
partitioning occurs before a specific date (e.g., within three years of
license grant).[^27] Intek does not suggest or justify a specific date,
or range of dates, by which time partitioning must occur. Moreover, we
are concerned that the proposal is likely to result in licensees and
partitionees enjoying the benefits of partitioning without the burdens.
Because licensees and partitionees could avoid the post-assignment
construction requirements, the proposal is likely to stimulate
partitioning activity early in the license term. This might facilitate
greater participation by small business partitionees interested in
tailoring their 220 MHz services to meet the more specialized needs of
areas that otherwise would not be served as rapidly or remain unserved
by incumbent licensees.[^28] This benefit is outweighed, however, by the
disincentive the proposal creates for licensees and partitionees to
actually build out their networks in their respective service areas once
partitioning occurs. Without the obligation to satisfy post-assignment
construction requirements, the proposal offers no assurance that
licensees and partitionees would continue to build out their networks
after partitioning to serve those unserved areas within their respective
service areas. Consequently, we find that Intek's second alternative
does not serve the public interest.

**C. Post- Assignment Construction Rule Correction**

13\. In the *Fifth Report and Order*, we determined that, under option
two of our post-assignment construction requirements, one party may
certify that it will meet the construction requirements for the entire
licensed service area or spectrum.[^29] This decision was inadvertently
not incorporated in Section 90.1019(d)(1)(ii) of the Commission's rules.
Accordingly, on our own motion, we correct Section 90.1019(d)(1)(ii) of
the Commission's rules to be consistent with our decision in the *Fifth
Report and Order*.

# IV. CONCLUSION

14\. For the reasons discussed above, we dismiss Rand McNally's
Petition, deny Intek's Petition, and correct the Commission's rules as
set forth in Appendix B. As we have previously stated, our goal in
taking these actions is to allow for more efficient use of the spectrum,
increased opportunities for a variety of entities to participate in the
provision of 220 MHz service, and expedite delivery to unserved areas.

# V. ORDERING CLAUSES

15\. Accordingly, IT IS ORDERED THAT, pursuant to Sections 4(i), 302,
303(r), and 332(a)(2) of the Communications Act of 1934, as amended, 47
U.S.C. §§ 154(i), 302, 303(r), and 332(a)(2), the Petition for
Reconsideration filed on October 13, 1998, by Rand McNally & Company IS
DISMISSED.

16\. IT IS FURTHER ORDERED THAT, pursuant to the authority of Sections
4(I), 257, 303(g), 303 (r), and 332(a) of the Communications Act of
1934, as amended, 47 U.S.C. §§ 154(i), 302, 303(r), and 332(a)(2) the
Petition for Reconsideration filed on October 15, 1998, by Intek Global
Corporation IS DENIED.

17\. IT IS FURTHER ORDERED THAT, the rule correction adopted herein
SHALL BECOME EFFECTIVE sixty days after date of publication in the
Federal Register. This action is taken pursuant to Section 303(r) of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i) and 303(r).

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

# APPENDIX A

**LIST OF PETITIONERS**

[Comments]{.underline}

Intek Global Corporation

Rand McNally & Company

# APPENDIX B

**FINAL RULES**

Chapter 1 of Title 47 of the Code of Federal Regulations is amended as
follows:

> 1\. Section 90.1019(d)(1)(ii) is revised as follows:

\(d\) *Construction Requirements*.

*\* \* \* \**

\(ii\) One party may certify that it has or will meet its five-year
construction requirement and will meet the ten-year construction
requirement, as set forth in Sections 90.767 or 90.769, as applicable,
for the entire license area. In that case, the other party must only
satisfy the requirements for \"substantial service,\" as set forth in
Sec. 90.743(a)(1), for the partitioned license area by the end of the
original ten-year license term of the licensee.

#  APPENDIX C

**SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS**

*Memorandum Opinion* *and Order on Reconsideration*

As required by section 603 of the Regulatory Flexibility Act (RFA), 5
U.S.C. § 603, an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the *Third Report & Order; Fifth Notice of Proposed
Rulemaking* *(Fifth NPRM*) in PR Docket No. 89-552, RM-8506. The
Commission sought written public comment on the proposals in the *Fifth
NPRM*, including the IRFA. The Final Regulatory Flexibility Analysis
(FRFA) was incorporated in the *Fifth Report and Order* (*Fifth R&O*).
The Commission's Supplemental Final Regulatory Flexibility Analysis
(SFRFA) in this *Memorandum Opinion* *and Order on Reconsideration*
(*MO&O*) conforms to the RFA, as amended by the Contract With America
Advancement Act of 1996.[^30]

**A. Need for and Purpose of this Action:**

In the *MO&O,* the Commission modifies Section 90.1019 of the
Commission's rules to delete the reference to Major Trading Area (MTA)
and Basic Trading Area (BTA) designations which are used in the rule to
define the service area for partitioned licenses. The *MO&O* further
corrects Section 90.1019(e)(1)(ii) of the Commission's rules to make it
consistent with the construction rule adopted in the *Fifth R&O.*

**B. Summary of Issues Raised in Response to the Final Regulatory
Flexibility Analysis:**

None of the commenters submitted comments that were specifically in
response to the FRFA.

**C. Description and Number of Small Entities Involved**

The rules adopted in the *MO&O* will affect all small businesses which
avail themselves of these rule changes, including small businesses that
obtained 220 MHz licenses through auction and subsequently decide to
partition or disaggregate, and small businesses who may acquire licenses
through partitioning and/or disaggregation.

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

The reporting, recordkeeping and other compliance requirements in the
*MO&O* do not modify those established in the FRFA.

**E. Steps Taken to Minimize Burdens on Small Entities:**

The *MO&O* does not affect any of the steps taken to minimize burdens on
small entities established in the FRFA. Intek Global Corporation (Intek)
raises the argument that because most of the bidders for 220 MHz
spectrum are eligible for small business credits, they may be unwilling
to partition licenses to other small businesses, who may have difficulty
complying with the Commission's build-out requirements. Intek suggests
alternative build-out requirements for 220 MHz licensees. The *MO&O*
rejects this argument because a significant number of 220 MHz licensees
are not small businesses and there is no definitive showing that there
will be a disincentive to partition licenses to small businesses.

**F. Significant Alternatives Considered and Rejected:**

The Commission considered and rejected the following alternative
proposals concerning 220 MHz partitioning and disaggregation.

Intek suggests that the Commission consider two alternatives for
satisfying the Commission's construction requirements. Intek's first
alternative is that upon a demonstration of the bona fide nature of the
partitioning request, the Commission should permit the licensee and
partitionee separately to satisfy the construction requirements for
their retained licensed areas. Unlike the existing rules, which contain
primarily objective criteria for the Commission to decide whether the
construction requirements have been satisfied by a partitioner or
partitionee, Intek's proposal requires the Commission to make a fact
specific, case by case determination that the partitioning request is of
a "bona fide nature" before the partitioner and partitionee may
separately satisfy the construction requirements. Intek suggests no
criteria for how the Commission should make this determination.
Moreover, while the existing rules provide licensees and assignees with
an incentive to build out their networks, i.e., failure to satisfy the
construction requirements could result in license cancellation, Intek's
proposal would eliminate this build out incentive. For these reasons,
the *MO&O* finds that Intek's first alternative does not serve the
public interest.

Intek's second alternative would permit a licensee and partitionee to be
able to avoid the post-assignment construction requirements if
partitioning occurs before a specific date (e.g., within three years of
license grant). Intek does not suggest or justify a specific date, or
range of dates, by which time partitioning must occur. Moreover, Intek's
proposal is likely to result in licensees and partitionees enjoying the
benefits of partitioning without the burdens. Because licensees and
partitionees could avoid the post-assignment construction requirements,
the proposal is likely to stimulate partitioning activity early in the
license term. This might facilitate greater participation by small
business partitionees interested in tailoring their 220 MHz services to
meet the more specialized needs of areas that otherwise would not be
served as rapidly or remain unserved by incumbent licensees. This
benefit is outweighed, however, by the disincentive the proposal creates
for licensees and partitionees to actually build out their networks in
their respective service areas once partitioning occurs. Without the
obligation to satisfy post-assignment construction requirements, the
proposal offers no assurance that licensees and partitionees would
continue to build out their networks after partitioning to serve those
unserved areas within their respective service areas. Consequently, the
*MO&O* concludes that Intek's second alternative does not serve the
public interest.

**G. Report to Congress**

The Commission shall include a copy of this Supplemental Final
Regulatory Flexibility Analysis, along with this *MO&O*, in a report to
be sent to Congress pursuant to the Small Business Regulatory
Enforcement Fairness Act of 1996, 5 U.S.C. § 801(a)(1)(A).

[^1]: Partitioning is the assignment of geographic portions of a
    licensee's authorized service along geopolitical or other geographic
    boundaries.

[^2]: Disaggregation is the assignment of discrete portions or "blocks"
    of spectrum licensed to a geographic licensee or qualifying entity.

[^3]: *See* 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, Implementation of Sections 3(n) and
    332 of the Communications Act, Regulatory Treatment of Mobile
    Services, GN Docket No. 93-252, Geographic Partitioning and Spectrum
    Disaggregation for the 220-222 MHz Service*, Fifth Report and
    Order,* 13 FCC Rcd. 24615 (1998) (*Fifth Report and Order*).

[^4]: RMC filed a Petition for Reconsideration (RMC Petition) on October
    13, 1998. Intek filed a Petition for Reconsideration (Intek
    Petition) on October 15, 1998.

[^5]: *See* 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, Implementation of Sections 3(n) and
    332 of the Communications Act, Regulatory Treatment of Mobile
    Services, GN Docket No. 93-252, Implementation of Section 309(j) of
    the Communications Act -- Competitive Bidding, PP Docket No. 93-253,
    *Third Report and Order; Fifth Notice of Proposed Rulemaking*, 12
    FCC Rcd. 10943 (1997).

[^6]: Licensees granted initial authorizations for operations in the
    220-222 MHz band from among applications filed on or before May 24,
    1991, are referred to as \"Phase I\" licensees. Licensees granted
    initial authorizations for operations in the 220-222 MHz band from
    among applications filed after May 24, 1991, are referred to as
    \"Phase II\" licensees.

[^7]: *Third Report and Order*, 12 FCC Rcd. at 10948, ¶ 3.

[^8]: ^?^ There are two types of Phase II licenses: (1) \"covered Phase
    II licenses\" which were granted on an Economic Area (EA), Regional
    or nationwide basis, and (2) \"non-covered Phase II licenses\" which
    were granted on a site-specific basis and were to be used for Public
    Safety or Emergency Medical Radio Service (EMRS) under 47 C.F.R. §
    90.720. *See Third Report and Order*, 12 FCC Rcd. at 11078, n.553.

[^9]: *Third Report and Order, 12 FCC Rcd.* at 11074, ¶ 308.

[^10]: *Id.* at 11079, ¶ 321.

[^11]: *See* *Fifth Report and Order,* 13 FCC Rcd. 24615 (1998).

[^12]: ^?^ *Id.*

[^13]: *Id.*

[^14]: *See* In the Matter of Biennial Regulatory Review \-\-- Amendment
    of Parts 0, 1, 13, 22, 24, 26, 27, 80, 87, 90, 95, 97 and 101 of the
    Commission's Rules to Facilitate The Development and Use of the
    Universal Licensing System in the Wireless Telecommunications
    Services, *Report and Order*, 13 FCC Rcd 21027 (1998) (*ULS Report
    and Order*).

[^15]: RMC Petition at 1-2.

[^16]: *Id.*

    *.*

[^17]: *Id.*

[^18]: *See* 47 C.F.R. § 90.1019(b).

[^19]: ^?^ *Broadband PCS R&O*, 11 FCC Rcd. 21831.

[^20]: *See* 47 C.F.R. §§ 90.767, 90.769, 90.1019(d). *See also Fifth
    Report and Order* at 24634, ¶ 24.

[^21]: *See* 47 C.F.R. Sec. 90.1019(d)(1)(ii).

[^22]: Intek Petition at 3. Intek notes that only 7 of 54 bidders in the
    Phase II 220 MHz service auctions did not qualify for small or very
    small business bidding credits.

[^23]: *Id.*

[^24]: *Id.* at 4-5.

[^25]: Out of 915 220 MHz covered Phase II licenses awarded, non-small
    businesses received 385 of the licenses, including two nationwide
    licenses, or approximately 42 percent of the covered 220 MHz Phase
    II licenses awarded. *See* FCC, Wireless Telecommunications Bureau
    220 MHz Fact Sheet (auction #18 and #24) at
    http://www.fcc.gov/wtb/auctions/220/220fact.html.

[^26]: Intek Petition at 4.

[^27]: *Id.* at 4-5.

[^28]: *Fifth Report and Order*, 13 FCC Rcd. at 24647.

[^29]: ^?^ *Id.*

[^30]: ^?^ Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAA, Subtitle II
    of the Small Business Regulatory Enforcement Fairness Act of 1996
    (SBREFA) *codified at* 5 U.S.C. § 601 *et seq.*)