**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | WT Docket No. 97-112         |
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| Cellular Service and Other       | ** | CC Docket No. 90-6           |
| Commercial Mobile                |    |                              |
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| Radio Services in the Gulf of    | *) |                              |
| Mexico                           | ** |                              |
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| Amendment of Part 22 of the      | *  |                              |
| Commission's                     | *) |                              |
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| Rules to Provide for Filing and  |    |                              |
| Processing of                    | *  |                              |
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| Applications for Unserved Areas  | ** |                              |
| in the Cellular                  |    |                              |
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| Service and to Modify Other      | *) |                              |
| Cellular Rules                   | ** |                              |
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**REPORT AND ORDER**

**Adopted: December 21, 2001 Released: January 15, 2002**

**By the Commission:**

**TABLE OF CONTENTS**

> **[Paragraph]{.underline}**

I. INTRODUCTION 1

II\. BACKGROUND 3

III\. DISCUSSION 12

**A. Establishment of the Eastern Gulf Coastal Zone 13**

**B. Licensing in the Western Gulf 21**

**C. Service Area Boundary Formula 35**

**D. Placement of Transmitters 37**

**E. Pending Applications 39**

**1. Pending Phase II Applications 39**

**2. Pending *De Minimis* Extension Applications 41**

**F. Other Services. 43**

IV\. CONCLUSION 48

V. PROCEDURAL MATTERS 49

**A. Regulatory Flexibility Act Analysis 49**

**B. Paperwork Reduction Act Analysis 50**

Vi. ORDERING CLAUSES 51

**APPENDIX A: Map of Eastern Gulf Coastal Zone Coordinates**

**APPENDIX B: Phase II and *De Minimis* Extension Applications**

**APPENDIX C: Final Rules**

**APPENDIX D: Final Regulatory Flexibility Analysis**

I.  **INTRODUCTION**

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1.  In this *Report and Order*, we resolve certain issues raised in the
    *Second Further Notice of Proposed Rule Making* in this
    proceeding,[^1] in which we proposed changes to our cellular service
    rules for the Gulf of Mexico Service Area ("GMSA"). Our decision
    also responds to the remand by the United States Court of Appeals
    for the District of Columbia Circuit in *Petroleum Communications v.
    FCC*,[^2] which was the result of an appeal of prior rules for
    licensing in the Gulf adopted in the Commission's *Unserved Area
    Third Report and Order*.[^3] We adopt a bifurcated approach to
    cellular licensing in the Gulf, based on the differences between the
    deployment of cellular service in the Eastern Gulf (the Florida Gulf
    coast) and the Western Gulf (the Texas, Louisiana, Mississippi, and
    Alabama Gulf Coast). In the Eastern Gulf, where there are no
    offshore oil and gas drilling platforms on which to site cellular
    facilities, we adopt our proposal to establish a Coastal Zone in
    which our cellular unserved area licensing rules will apply. In the
    Western Gulf, we find that the extensive deployment of both
    Gulf-based and land-based facilities that has occurred in the past
    few years makes adoption of our *Second Further Notice* proposal
    impractical. Instead, we conclude that cellular service in the
    Western Gulf should continue to be governed by current rules, with
    certain modifications to facilitate negotiated solutions to ongoing
    coverage conflicts between Gulf-based and land-based carriers.
    Accordingly, we establish the Gulf of Mexico Exclusive Zone,
    encompassing the Western Gulf and areas of the Eastern Gulf outside
    of the Coastal Zone, in which the Gulf carriers will be exclusively
    licensed to operate.

2.  The *Second Further Notice* also requested comment regarding the
    possibility of establishing licensing areas in the Gulf for
    Commercial Mobile Radio Services ("CMRS") other than cellular.[^4]
    Given the limited comment we have received on these issues, we
    decline to adopt new licensing and service rules for the provision
    of non-cellular services in the Gulf at this time. Instead, we
    conclude that the issue of establishing new Gulf licensing areas
    should be addressed on a service-by-service basis, as we have done
    in several services since the *Second Further Notice*. In addition,
    we clarify the rights of land-based licensees in those services in
    which we have not provided for licensing of carriers in the
    Gulf.[^5]

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II. **BACKGROUND**

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3.  *Initial Licensing of Cellular Service in the Gulf of Mexico.* The
    Commission first authorized the provision of cellular service in the
    Gulf of Mexico in 1983 and licensed two carriers to serve the region
    in 1985.[^6] The original rules allowed the Gulf carriers to operate
    throughout the GMSA, which extends to the shoreline and, therefore,
    includes coastal water areas. However, the Gulf carriers were
    limited to placing their transmitter sites on offshore platforms
    (predominantly oil and gas drilling platforms) and were prohibited
    from using land-based transmitters to serve the GMSA. In addition,
    in order to prevent interference to adjacent land-based cellular
    systems, the Gulf carriers were required to limit transmitter power
    from offshore sites to the extent necessary to avoid extending their
    service area contours over land.[^7]

4.  The presence of the Gulf licensees placed similar limitations on
    land-based cellular operations in adjacent coastal areas. Land-based
    carriers were prohibited by our rules from extending their service
    area contours into the GMSA, *i.e.*, beyond the mean high-tide line
    that defined the service area border, except for *de minimis*
    extensions.[^8] As a result, land-based carriers seeking to cover
    shore areas, *e.g.*, to provide comprehensive service along coastal
    roads and in coastal communities, were unable to site transmitters
    close to the shoreline without incurring substantial engineering
    costs to avoid their signals being transmitted over water.

5.  From the outset, these rules have caused conflict between the Gulf
    carriers and adjacent land carriers regarding the provision of
    service in the Gulf coastal region. Because offshore drilling has
    not occurred in the Eastern Gulf, these conflicts have occurred
    almost exclusively in the Western Gulf, particularly in areas where
    offshore and onshore sites were in close proximity. In some
    instances, the requirement to avoid encroachment into adjacent
    service areas has led to gaps in coverage, both on land and over
    water, because neither Gulf-based nor land-based carriers could
    extend coverage into these areas without capture of each other's
    subscriber traffic. In other instances, disputes have arisen over
    whether particular Gulf or land carriers were improperly extending
    coverage and capturing subscribers in the adjacent land or Gulf
    service area.[^9]

6.  *Unserved Area Rules.* In 1993, the Commission adopted the *Unserved
    Area Second Report and Order*, which established unserved area
    licensing rules for land-based cellular service. Under these rules,
    the Cellular Geographic Service Area ("CGSA") of each cellular
    system was redefined as the composite contour created by the actual
    service areas of all cells in the system.[^10] The CGSA is the area
    in which carriers are entitled to protection from interference and
    from capture of subscriber traffic by adjacent carriers.[^11] In
    addition, areas not within any carrier's CGSA were subject to
    reclamation by the Commission and licensing as unserved areas. In
    the *Unserved Area Third Report and Order*, the Commission extended
    these rules to cellular service in the Gulf. As a result, the Gulf
    carriers' service areas no longer comprised the entire GMSA, but
    were now limited to areas in the Gulf that received actual coverage
    from an offshore platform-based cell site. This caused portions of
    the Gulf that were outside the coverage area of any offshore cell
    site to be redefined as "unserved" areas, which could not be served
    by the Gulf carriers without further application and licensing.

7.  *PetroCom Remand.* In the *PetroCom* decision, the D.C. Circuit
    reversed and remanded certain aspects of the unserved area rules as
    they applied to the Gulf. The Court found that the Commission had
    failed adequately to consider the distinctive nature of Gulf-based
    service, which relied on movable drilling platforms for placement of
    cell sites, in comparison to land-based service, which used
    stationary sites. The Court stated that, while it did not foreclose
    the possibility of a convincing rationale for applying a uniform
    standard to both Gulf and land-based licensees, the Commission had
    failed adequately to justify the decision in the *Unserved Area*
    proceeding to treat Gulf licensees in the same manner as land-based
    cellular licensees in light of their reliance on transitory
    sites.[^12] The Court remanded the issue and instructed the
    Commission to vacate the rule that defined the Gulf carriers' CGSAs
    based on their areas of actual service.[^13] The effect of the
    remand was the restoration of the service area of the Gulf carriers
    as the entire GMSA, regardless of the location of their
    platform-based cell sites.

8.  *Second Further Notice Proposal*. Following the *PetroCom* decision,
    the Commission issued the *Second Further Notice*, in which it
    initiated a comprehensive reexamination of the cellular service
    rules for the Gulf.[^14] Specifically, the Commission proposed
    dividing the GMSA into a Coastal Zone and an Exclusive Zone.[^15]
    Under this proposal, the Coastal Zone would consist of the portion
    of the GMSA extending from the coastline of the Gulf of Mexico to
    the twelve-mile offshore limit,[^16] while the Exclusive Zone would
    extend from the twelve-mile limit to the southern boundary of the
    GMSA. In the Exclusive Zone, the two existing Gulf carriers would be
    able to move their offshore transmitters freely and to expand or
    modify their systems without being required to file additional
    applications, obtain prior Commission approval, or face competing
    applications for the right to serve the territory.[^17] In the
    Coastal Zone, we proposed to apply our Phase II unserved area
    licensing rules, as adopted in the *Competitive Bidding Ninth Report
    and Order*.[^18] Thus, within the Coastal Zone, any qualified
    applicant (including both Gulf- and land-based carriers) would be
    permitted to apply to serve unserved areas, and all mutually
    exclusive applications would be subject to competitive bidding
    procedures.

9.  *Comments and Carriers' Proposals.* In response to the *Second
    Further Notice*, we received a number of comments and alternative
    proposals from land-based and Gulf-based carriers, many of which
    have been supplemented recently with *ex parte* presentations. While
    commenting land carriers generally support our proposal to bifurcate
    the GMSA into a Coastal Zone and Exclusive Zone,[^19] most oppose
    our proposal to use cellular unserved area licensing rules to award
    licenses in the Coastal Zone.[^20] Instead, many of the land-based
    carriers support a proposal by ALLTEL to treat the Coastal Zone as a
    "buffer zone" extending twelve miles out to sea from the Gulf
    coastline. Within this buffer zone, ALLTEL proposes that Gulf and
    land carriers could freely extend their SABs and overlap contours,
    subject to mandatory frequency coordination, but without protection
    from subscriber capture.[^21] In the GMSA outside the buffer zone,
    Gulf carriers would be fully protected from interference. [^22]

10. A second alternative proposal has been advanced by PetroCom, the
    A-side Gulf licensee, and US Cellular, an adjacent land-based
    licensee in certain markets. PetroCom and US Cellular propose a
    bifurcated approach in the Eastern and Western Gulf. In the Eastern
    Gulf, they would redraw the GMSA boundary ten miles seaward from the
    shoreline, thus allowing land-based carriers in Florida to expand
    their coverage over water to that extent. In the Western Gulf, this
    proposal would retain the existing GMSA boundary along the
    coastline, and for a period of five years would prohibit either side
    from expanding over that boundary without the other carrier's
    consent. A carrier, however, would be allowed to use a higher
    effective radiated power than that resulting from the Commission's
    SAB formula, based on measurement data demonstrating equal signal
    strengths at the coastline. The resulting SAB extensions, however,
    would not be included as part of the other carrier's CGSA. After
    five years, their proposal would allow a land carrier to serve
    portions of the Gulf from land without consent from the Gulf
    carrier, so long as the latter was not serving that area, but the
    Gulf carrier would have the right to "reclaim" the area if a new or
    relocated drilling platform enabled it to provide service. PetroCom
    and US Cellular also propose that pending, non-mutually exclusive
    Phase II applications to serve coastal waters be granted.[^23]
    Originally, these carriers proposed that either a land-based or
    Gulf-based carrier be permitted to adjust its signal strength to
    equalize that of the adjacent carrier at the coastline boundary
    without the adjacent carrier's consent; recently, however, PetroCom
    informed the Commission that, in light of the recent agreement
    between the B-side land-based and Gulf-based carriers, the proposal
    had been revised to eliminate this provision.[^24]

11. Coastel, the B-side Gulf carrier, argues that the current rules are
    sufficient to meet the Commission's objectives, and therefore
    proposes that we terminate this rulemaking without adopting new
    rules.[^25] According to Coastel, the Gulf carriers have
    substantially expanded their coverage of the Gulf in recent years,
    eliminating gaps in coverage and providing more reliable service to
    coastal waters in the Gulf.[^26] Coastel contends that this change
    in circumstances obviates the need for further rulemaking, and
    further argues that the Commission's proposals in the *Second
    Further Notice* would not reduce conflict because many issues would
    still remain to be resolved between carriers. [^27]

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III. **DISCUSSION**

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12. We find that the record in this proceeding demonstrates that
    different approaches toward the Eastern and Western Gulf are
    warranted. The development of cellular service has followed
    different paths in these two areas, which justifies treating them
    differently so as to spur the development of reliable service where
    needed, minimize the disturbance to current operations and
    contractual arrangements, and address the issues raised in the
    *PetroCom* remand.

######### Establishment of the Eastern Gulf Coastal Zone 

13. As noted above, the circumstances with respect to the Gulf carriers'
    current service to and ability to serve the coastal areas vary
    greatly between the Eastern and Western Gulf. Unlike the Western
    Gulf, where the Gulf carriers have substantial offshore operations,
    the Eastern Gulf has no offshore oil or gas drilling platforms, and
    consequently, the Gulf carriers have no offshore base stations from
    which to provide service in the coastal waters off Florida. The
    record also indicates no likelihood of such platforms being
    constructed in the Eastern Gulf any time in the near future.[^28] We
    agree with PetroCom and US Cellular that, in light of these
    circumstances, there is a basis to differentiate between our
    approach to the Eastern Gulf and the Western Gulf.[^29]

14. We conclude that, in the Eastern Gulf, the best way to ensure that
    seamless cellular service is provided -- both on land and in coastal
    waters \-- is to adopt our proposal to create a Coastal Zone along
    the eastern portion of the GMSA. The current positioning of the
    eastern GMSA boundary directly along the Florida coastline does not
    accomplish this because it requires land carriers to engineer their
    systems to limit signal strength along the coast so as to avoid
    extending their coverage over water. Moreover, section
    22.911(d)(2)(i) requires a land-based carrier in Florida to obtain
    the consent of the Gulf carrier to extend coverage over water, even
    though the Gulf carriers have no cellular facilities to serve
    Florida coastal waters.

15. Establishing a Coastal Zone in the Eastern Gulf will improve
    cellular service to coastal areas by providing an opportunity for
    land-based carriers to extend their service area contours into
    territorial coastal waters, which will in turn enable them to add
    cell sites close to shore and to increase signal strength, thereby
    improving the reliability of service, from existing sites. This will
    not only lead to improved coverage of coastal communities, beach
    resorts, and coastal roads, but will also facilitate service to
    coastal boat traffic operating close to shore that can be served
    from land-based transmitters.

16. The remainder of the Eastern Gulf that is not included in the
    Coastal Zone, along with the entire Western Gulf,[^30] will be
    designated as the Gulf of Mexico Exclusive Zone. In this area, as
    proposed in the *Second Further Notice*, the Gulf carriers will have
    the unrestricted and exclusive right to operate cellular facilities.
    The Gulf carriers will also have the flexibility to add, remove,
    modify, or relocate sites in the Exclusive Zone without notice to or
    approval by the Commission.

17. In the Second *Further Notice*, we proposed that the Coastal Zone
    would be coextensive with the territorial waters of the United
    States, a maritime zone that extends approximately twelve nautical
    miles from the U.S. coastline.[^31] We conclude that the territorial
    water limit will serve as an appropriate boundary between the
    Coastal Zone and the Exclusive Zone in the Eastern Gulf. This
    approach is also consistent with the approach we have taken more
    recently in established services where we have provided for
    licensing in the Gulf. In the context of WCS, we drew the boundary
    between land-based operations and Gulf-based operations at the
    territorial water limit.[^32] Therefore, we define the Eastern Gulf
    Coastal Zone as the portion of the Gulf that is bounded by a line
    extending approximately twelve nautical miles due south from the
    coastline boundary of the States of Florida and Alabama, and
    continuing along the west coast of Florida at a distance of
    approximately twelve nautical miles from the shoreline.[^33]

18. We believe that the most advisable course for licensing the Eastern
    Gulf Coastal Zone will be to define the region as unserved area.
    This will enable all entities to apply to serve areas of the Coastal
    Zone that are not currently served.[^34] Accordingly, we will begin
    accepting Phase II unserved area applications to serve portions of
    the Coastal Zone sixty days after the effective date of the rules.
    Further, in the event of mutually exclusive applications, use of our
    unserved area competitive bidding rules will ensure that the
    authorization to serve a given area is awarded to the carrier that
    values it most and will help maximize the use of the spectrum.
    Carriers who apply to serve portions of the Eastern Gulf Coastal
    Zone will be required, consistent with our rules for terrestrial
    unserved areas, to construct facilities in these areas within one
    year from the date of receiving approval to serve this area.

19. We recognize that as a result of our decision to apply unserved area
    licensing rules to the Eastern Gulf Coastal Zone, the Gulf carriers
    will no longer have the exclusive right to serve Florida coastal
    waters as part of the GMSA. We conclude, however, that the
    above-described public interest benefits of this course outweigh the
    costs. Because the Gulf carriers have no operations in the Eastern
    Gulf, our decision will not result in any reduction in cellular
    service or stranded investment in cellular facilities by the Gulf
    carriers. Moreover, given the lack of existing or planned
    installation of offshore platforms in the Eastern Gulf Coastal Zone,
    there is no likelihood that the Gulf carriers would be in a position
    to provide service there in the foreseeable future. Nonetheless, our
    decision does not preclude the Gulf carriers from seeking to provide
    service in the Coastal Zone in conformity with the unserved area
    licensing rules we are adopting for this region, either from
    land-based sites or from offshore platforms, at any point in the
    future should they become available.

20. Finally, we note that some land-based carriers in Florida have
    previously-granted *de minimis* extensions extending into the
    GMSA.[^35] Our creation of the Eastern Gulf Coastal Zone is not
    intended to limit the scope of existing cellular operations, and we
    therefore grandfather all existing *de minimis* extensions of land
    carriers in the Eastern Gulf Coastal Zone. However, if a land
    carrier wishes to incorporate the area within an existing *de
    minimis* extension into its CGSA, it must file an unserved area
    application. In addition, carriers who are currently operating on
    the Florida coast under Special Temporary Authorization[^36] must
    file an unserved area application if they wish to operate on a
    permanent basis.

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A.  **Licensing in the Western Gulf**

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21. As noted above, the nature and extent of cellular service in the
    Western Gulf differs significantly from that in the Eastern Gulf.
    While the Gulf carriers do not have offshore facilities in the
    Eastern Gulf, they have built an extensive offshore cellular network
    on oil and gas drilling platforms in the Western Gulf. In
    substantial portions of the Western Gulf, particularly off the coast
    of Louisiana, Mississippi, and Alabama, many of these platforms are
    located only a few miles from shore, enabling the Gulf carriers to
    extend coverage to the coastline.[^37]

22. The close proximity of these water-based sites to the coastline has
    given rise to technical and operational conflicts between the Gulf
    carriers seeking to provide service in coastal waters and the
    adjacent land-based carriers seeking to provide service to coastal
    communities, resorts, beaches, and coastal roads. In areas where
    land and water-based sites are close to one another, Gulf and land
    carriers must reduce their respective signal strength near the
    coastline in order to avoid incursions into their counterparts'
    markets. Some land-based carriers contend that the requirement to
    limit signal strength has led to gaps in their coverage along the
    coast, and that the Gulf carriers refuse to consent to SAB
    extensions into the Gulf that are needed to allow the land-based
    carriers to provide seamless service on land.[^38] The Gulf carriers
    dispute this characterization, and contend that it is the land-based
    carriers who are preventing them from providing ubiquitous service
    in the Gulf.[^39]

23. In addition, both Gulf and land carriers accuse one another of
    improperly extending coverage across the coastline into their
    counterparts' markets and consequently capturing subscriber traffic
    that should be served by the home carrier.[^40] Some land-based
    carriers contend that their customers have complained about placing
    calls on land that were captured by the Gulf carrier's system rather
    than the land-based system, requiring the customer to pay extremely
    high roaming charges to the Gulf carrier.[^41] The Gulf carriers
    argue that the land carriers have failed to document these alleged
    incidents of capture, that such capture is extremely uncommon, and
    that it is far more common in the Gulf for offshore cellular calls
    to be captured by land-based systems.[^42]

24. In the *Second Further Notice*, we proposed to bifurcate the Western
    Gulf into a Coastal and Exclusive Zone in the same manner that we
    proposed (and are adopting today) for the Eastern Gulf. We stated
    that we would grandfather all existing Gulf facilities, but that any
    unserved area in the Coastal Zone (*i.e*., area not currently served
    by the Gulf carrier from an existing offshore drilling platform)
    would be available for licensing under our cellular unserved area
    licensing rules.[^43] As noted above, commenters generally oppose
    this proposal, though from different perspectives.[^44] Most land
    carriers, led by ALLTEL, propose that the Coastal Zone should not be
    subject to unserved area licensing, but should instead be open to
    both Gulf and land-based carriers on a shared, coordinated basis.
    PetroCom, with the concurrence of US Cellular, opposes the creation
    of a Coastal Zone in the Western Gulf, proposing instead that
    land-based carriers be allowed to expand their SAB contours into
    unserved portions of the Gulf but also required to pull back if a
    Gulf carrier sought to serve the area. Coastel opposes the *Second
    Further Notice* proposal and advocates continuing to apply the
    current rules without modification.

25. In evaluating our proposal and the alternatives presented by
    commenters, we consider it important to note that circumstances in
    the Western Gulf appear to have changed significantly since the
    adoption of the *Second Further Notice*. First, in the *Second
    Further Notice*, the Commission expressed concern regarding gaps in
    coverage of the Western Gulf, and sought to advance a solution that
    would ensure ubiquitous coverage of coastal waters (whether from
    land or water-based transmitters) in order to make service available
    not only to personnel on drilling platforms but also to coastal boat
    traffic.[^45] The record in this proceeding indicates that, in the
    past few years, the Gulf carriers have substantially expanded their
    networks and improved their coverage of the Western Gulf.[^46] As a
    result, there appear to be fewer gaps in coverage of coastal waters
    than there were previously.

26. Second, while there are still significant disputes between Gulf and
    land-based carriers generally, some Gulf and land carriers have
    successfully negotiated agreements since the *Second Further Notice*
    that provide a mutually agreed-upon framework for cooperative
    operation along portions of the Western Gulf coast. In particular,
    PetroCom, the A-side Gulf carrier, has entered into a series of
    extension and collocation agreements with US Cellular and several
    other A-side land-based carriers. [^47] These agreements facilitate
    seamless coverage of coastal areas (over both land and water) and
    apply negotiated solutions to issues such as coverage, capture, and
    roaming rates.[^48] A similar accord has been negotiated by Coastel,
    the B-side Gulf carrier, and ALLTEL, the principal B-side land
    carrier, by which they have reached agreement with respect to their
    operations along the Alabama coastline, specifically in Mobile
    Bay.[^49]

27. In light of these developments, we believe that the best way to
    achieve reliable, ubiquitous service in the Western Gulf is to
    encourage further reliance on negotiation and market-based solutions
    to the fullest extent possible. The fact that some Gulf- and
    land-based carriers have reached negotiated agreements suggests that
    carrier-driven solutions to these issues are possible without
    substantial changes to existing rules. Moreover, in other instances
    where negotiations have not been successful, a partial cause may be
    uncertainty and speculation regarding possible rule changes that
    could result from this proceeding. Thus, adopting rules that
    substantially change the relationship between land and Gulf carriers
    in the Western Gulf could be counter-productive by further delaying
    negotiated solutions and even leading parties to seek to unwind
    existing agreements.

28. Therefore, upon review of the record, we conclude that we should not
    adopt our *Second Further Notice* proposal to create a Coastal Zone
    subject to unserved area licensing rules in the Western Gulf. First,
    because of the buildout that has occurred in the Western Gulf in
    recent years, there is relatively little unserved area in what would
    comprise the Coastal Zone. Second, to the extent that applying
    unserved area licensing rules would impose a "use or lose" regime on
    the Gulf carriers (*i.e*., a Gulf carrier providing service from an
    offshore platform could permanently lose the right to serve that
    portion of the Gulf if the platform were moved out of the area, even
    if the relocation was not permanent), we are concerned that such a
    fundamental change in the rules could delay resolution of coverage
    conflicts and discourage negotiation of extension and collocation
    agreements between land and Gulf carriers.

29. We similarly decline to adopt the ALLTEL proposal that the Coastal
    Zone be available for use by both Gulf and land-based carriers on a
    shared, coordinated basis. Although ALLTEL's proposal is designed to
    provide a basis for negotiated agreements, implementing it as a
    formal rule would, in effect, turn the Coastal Zone into a "no-man's
    land" where the prohibition against capture of a neighboring
    carrier's subscriber traffic would not apply. Moreover, by
    eliminating capture protection in a portion of the GMSA while
    retaining it in the CGSAs of the adjacent land carriers, the effect
    of the ALLTEL proposal would be to shift the protections afforded by
    existing rules in favor of the land carriers and against the Gulf
    carriers. While we have no objection to voluntary agreements along
    the lines of ALLTEL's proposal, we see no compelling public interest
    reason to codify it in our rules, and are concerned that doing so
    could reduce the incentive for land carriers to negotiate with Gulf
    carriers regarding traffic capture in the Coastal Zone.[^50] In
    addition, because the ALLTEL proposal does not provide a mechanism
    for settling frequency coordination disputes, there is a substantial
    likelihood that the Commission would be burdened with resolving such
    matters in instances where frequency coordination failed.

30. Rather than adopt our *Second Further Notice* proposal or the ALLTEL
    proposal in the Western Gulf, we conclude that the wisest course is
    to designate a Gulf of Mexico Exclusive Zone by generally
    maintaining the currently applicable rules and continuing to
    encourage carriers to resolve their differences through negotiated
    agreements. Specifically, we identify the GMSA area west of the
    Eastern Gulf Coastal Zone as part of the Gulf of Mexico Exclusive
    Zone, which will reach landward up to the land-water boundary in the
    western portion of the Gulf. In reaching this conclusion, we do not
    subscribe to Coastel's position that no revisions to the rules are
    required. However, we believe that with relatively minor
    modifications, described below, the current rules should provide
    sufficient incentives for both Gulf and land carriers to negotiate
    agreements that lead to seamless cellular coverage in coastal areas
    at competitive rates.

31. Accordingly, in the Western Gulf, we will maintain the GMSA border
    at the coastline as currently defined in our rules, and will allow
    the Gulf carriers to provide service throughout the Gulf of Mexico
    Exclusive Zone regardless of the location of their cell sites at any
    particular time. Thus, Gulf carriers will not be subject to a "use
    or lose" regime based on the movement of offshore drilling
    platforms. We note that this approach addresses the concern
    expressed by the court in *PetroCom* that our rules for the Gulf
    carriers take into account the transitory nature of water-based
    transmission sites. Our decision today gives the Gulf carriers full
    flexibility to build, relocate, modify and remove offshore
    facilities throughout the Western Gulf without seeking prior FCC
    approval or facing competing applications.

32. In the *Second Further Notice*, we noted that, although under our
    proposal only the Gulf carriers would have exclusive rights within
    the Exclusive Zone, we tentatively concluded that *de minimis*
    extensions into unserved areas in the GMSA Exclusive Zone should be
    permitted.[^51] Upon further consideration of our proposal, however,
    we do not believe it is necessary to permit *de minimis* extensions
    into the Exclusive Zone in light of the ability of the land-based
    and Gulf carriers to enter into agreements regarding their
    operations. In instances where it is necessary for a carrier to
    extend into an adjacent carrier's licensed area, the record reflects
    that contract extensions (*i.e.* where the Gulf and land licensees
    mutually agree to the extension) are sufficient to ensure reliable
    coverage.

33. We recognize that the rules we are adopting for the Western Gulf
    cannot resolve all of the technical and operational conflicts
    (*e.g*., interference, subscriber capture) that have arisen in areas
    where Gulf carriers and land carriers operate in close proximity to
    one another. Ultimately, only negotiation and cooperative
    arrangements between land and Gulf-based carriers can resolve these
    conflicts. Nonetheless, because our decision here provides finality
    regarding our licensing and operational rules, we expect that it
    will facilitate and speed the progress of such negotiations. We
    emphasize that under our decision today, parties remain free to
    negotiate consensual agreements that provide for extensions,
    coordination of frequencies, collocation, facilities sharing, or
    other solutions, so long as such agreements do not affect the rights
    of third parties.[^52] Thus, nothing in our decision today is
    intended to modify or alter the effect of the existing agreements
    that have been negotiated by PetroCom or Coastel with adjacent
    land-based carriers. We also encourage Gulf and land-based carriers
    who have not reached negotiated agreements to enter into
    negotiations that could result in such agreements.

34. In seeking to facilitate negotiated agreements, it is our goal to
    create incentives for carriers to reach agreements that are not only
    mutually beneficial, but that also benefit existing and potential
    cellular subscribers. For example, while we recognize that the
    operating costs of Gulf carriers are typically higher than those of
    land-based carriers, we seek to ensure that they cannot recover
    those costs by charging uncompetitive rates or roaming charges to
    their customers, including the numerous land-based subscribers who
    may roam onto a Gulf carrier's network when close to the coastline
    (*e.g.*, recreational boaters). We believe that the rules we adopt
    today will help to foster a competitive marketplace in the Gulf that
    will protect consumers from such charges and practices. We note, for
    example, that some of the recently negotiated agreements between
    Gulf and land-based carriers provide for "in-shore" roaming rates
    that are comparable to roaming rates on land as opposed to the
    higher rates that PetroCom charges roamers operating significantly
    further out to sea. This creates a competitive incentive for similar
    terms to be negotiated in future agreements also. Moreover, the
    deployment of non-cellular services such as PCS along the Gulf coast
    will apply pressure on both cellular providers in the Gulf, and
    their land-based counterparts, to offer competitive services and
    rates.

######### Service Area Boundary Formula

35. In the *Unserved Area Second Report and Order*, the Commission
    applied the standard land-based SAB formula to operations by land
    carriers along the Gulf coast ("land formula"), but adopted a
    separate mathematical formula to define the SABs of facilities
    operated by the Gulf carriers from offshore sites ("water formula")
    in the *Unserved Area Third Report and Order*.[^53] The use of
    different formulas recognized that cellular signals transmitted over
    water typically have stronger propagation characteristics (*i.e.*,
    can be received at greater distances from the transmitter) than
    comparable signals transmitted over land, which are attenuated by
    variations in terrain, buildings, trees, and other obstacles. The
    two SAB formulas also incorporated different assumptions regarding
    receivers: the land formula determined the distance to the service
    area boundary that results in reliable service to a conventional
    mobile unit, while the water formula established the distance to the
    service area boundary that results in reliable service to a marine
    mobile unit with a mast-mounted antenna.[^54] In the *Second Further
    Notice*, the Commission sought comment on whether to retain the
    two-formula approach or to adopt an alternative "hybrid" approach
    that would account for signals in the Gulf coastal region that are
    transmitted over both land and water.[^55]

36. We will continue to use the two existing SAB formulas for land and
    water-based sites, respectively. While no mathematical formula can
    precisely duplicate actual signal propagation in all circumstances,
    we conclude that the two-formula approach adequately accounts for
    the different characteristics of signal propagation over land and
    water. In addition, the record reflects little support for a hybrid
    formula, and we find that it would be difficult to establish such a
    formula that would account for the variation in propagation of a
    single signal over both land and water. Finally, retaining the
    existing SAB formulas is consistent with our overall decision to
    maintain the existing relationship between land and Gulf carriers in
    the Western Gulf as the basis for negotiated solution of their
    operational conflicts. The Gulf carriers have been using the water
    formula to depict SAB contours for their facilities operating in the
    Gulf since the formula was adopted, while the land carriers have
    used the land-based formula for their facilities. Consequently,
    changing the SAB definitions at this point could lead to one side or
    the other unilaterally increasing their transmitter power under the
    revised definitions, which could upset existing agreements and
    create new conflicts. Of course, this does not preclude parties from
    entering into voluntary agreements that would allow for consensual
    transmitter power adjustments based on alternative contour
    definitions.

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B.  **Placement of Transmitters**

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37. When we initially licensed carriers to provide cellular service in
    the Gulf, we did not prohibit them from placing sites on land, but
    required Gulf carriers to avoid causing significant overlap of their
    reliable service area contours with land-based licensees.[^56]
    Subsequently, we determined that allowing Gulf carriers to place
    transmitters on land would cause significant incursions over land
    and hamper the ability of land-based MSA and RSA licensees to carry
    out the initial build out of their systems. Thus we concluded that
    Gulf carriers should not be permitted to place transmitters on land
    without the consent of the affected land-based carrier.[^57]

38. In the *Second Further Notice*, we observed that the land-based
    licensees along the Gulf coast have built out their cellular systems
    to encompass nearly the entire coastal land area of the Gulf region,
    and tentatively concluded that it was no longer necessary to
    prohibit Gulf carriers from siting on land, so long as no overlap
    with any land-based carrier's CGSA occurred. We therefore proposed
    to abandon our blanket prohibition against Gulf carriers placing
    their transmitters on land, and proposed to rely solely on our CGSA
    and SAB extension rules to determine whether or not the placement of
    a particular transmitter was permissible.[^58] In light of the
    course we now take, we believe that it is appropriate to adopt this
    part of the proposal from the *Second Further Notice* and permit
    Gulf carriers to operate land-based sites, subject to SAB extension
    rules as discussed above. We believe that this additional
    flexibility will help facilitate contractual resolutions of the
    issues facing adjacent carriers along the Gulf of Mexico.

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C.  **Pending Applications**

**1. Pending Phase II Applications**

39. In December 1992, following our adoption of cellular unserved area
    licensing rules applicable to the Gulf, we accepted Phase II
    applications for unserved area licenses in the GMSA.[^59] Many of
    these applications were petitioned against by the Gulf carriers. In
    addition, PetroCom filed a Phase II application that remains
    pending. However, following the *PetroCom* remand of the unserved
    area rules as they applied to the GMSA, we suspended processing of
    these applications pending reconsideration of our policies in the
    Gulf region.[^60] In the *Second Further Notice*, we proposed that
    areas of the Coastal Zone that do not receive cellular service be
    treated as unserved areas and that Phase II competitive bidding
    procedures should be implemented for those areas.[^61] We further
    proposed that all unserved area applications previously filed to
    serve Coastal Zone areas would be dismissed without prejudice, and
    that applicants would be allowed to resubmit their applications
    sixty days after the effective date of this rulemaking.[^62]

40. In light of our actions today, we will dismiss all pending Phase II
    applications and associated petitions to deny. In both the Western
    Gulf, where we have decided not to apply unserved area licensing
    procedures, and the Eastern Gulf, where we are instituting unserved
    area licensing in the Coastal Zone, we will allow carriers to refile
    to the extent allowed under the new rules adopted in this *Report
    and Order*. In light of the passage of several years since the
    applications were filed, we conclude that dismissing applications
    filed under superseded rules and allowing carriers currently serving
    or desiring to serve the Eastern Gulf Coastal Zone to submit new
    applications is the fairest and most efficient manner to license
    cellular service in that region.

**2. Pending *De Minimis* Extension Applications**

41. Following the *PetroCom* remand, we also suspended processing of
    applications for *de minimis* extensions into the Gulf. In the
    *Second Further Notice*, we proposed to dismiss all such pending
    applications because the *PetroCom* court directed us to vacate
    former section 22.903(a) to the extent that it applied to the Gulf
    carriers, and because virtually all applications for contour
    extensions were subject to petitions to deny and applications for
    review. We also noted that pending applicants would not be
    prejudiced by a dismissal of extension applications, because such
    applicants would have the opportunity to resubmit applications under
    our revised licensing rules for unserved areas in the Gulf.[^63]

42. Based on the action we take today, we will dismiss all pending
    extension applications and allow carriers to refile to the extent
    permissible under the rules we adopt in this *Report and Order*. We
    conclude that dismissal is the more equitable course in light of the
    passage of time since the applications were filed and the fact that
    the rules under which they were filed have undergone some
    modification.

> **F. Other Services**

43. In the *Second Further Notice*, the Commission requested comment
    regarding possible operations in the Gulf by CMRS licensees in
    services other than cellular.[^64] Specifically, we asked whether we
    should establish a Gulf licensing area, analogous to the cellular
    GMSA, for use in other CMRS services and, if such a licensing area
    were established, where the boundary should lie between it and the
    adjacent licensing areas of land-based CMRS providers.[^65] We
    received only limited comment on the issue of licensing such
    services in the Gulf. Stratos Offshore Services Company ("Stratos'),
    which operates a microwave network that supports communications in
    the Gulf, generally supports creating a license area for the
    non-cellular services to protect licensees operating in the
    Gulf.[^66] Stratos, however, does not support licensing PCS in the
    Gulf because of the high cost of relocating microwave networks
    operating at 2 GHz. On the other hand, DW Communications, a 900 MHz
    operator with at least one license along the Gulf coast, argues that
    creating Gulf area licenses in other services would create more
    problems than would be solved.[^67] PCS licensees Sprint PCS and
    Verizon Wireless each argue that the Commission's PCS service area
    rules define boundaries based on county lines, which, under state
    law, extend into the Gulf's offshore areas, and therefore, the
    Commission should not create a separate license area for PCS in the
    Gulf.[^68]

44. Since the issuance of the *Second Further Notice*, the Commission
    has established Gulf licensing areas in several other services,
    including Wireless Communications Service ("WCS"),[^69] Multiple
    Address Systems (MAS),[^70] 746-747/776-777 and 762-764/792-794 MHz
    bands ("700 MHz Guardband"),[^71] 24.25-24.45 GHz and 25.05-25.25
    GHz bands ("24 GHz"),[^72] and the 746-764 MHz and 776-794 MHz bands
    ("700 MHz").[^73] In the case of WCS, the Commission incorporated
    United States territorial waters in the Gulf, *i.e.*, waters from
    the shoreline to a line 12 nautical miles offshore, into the
    adjacent land-based licensing areas. Thus, the WCS licensing area,
    unlike the original cellular GMSA, extends seaward from the 12-mile
    limit, and includes coastal waters. For 700 MHz, the Commission
    established Economic Area Groupings (EAGs) whereby the Gulf of
    Mexico is divided in two, with the eastern portion being included in
    the license for Southeast EAG, and the western portion being
    included in the license for the Central/Mountain EAG.

45. With respect to non-cellular CMRS services, we conclude that we
    should not create a Gulf licensing area in this proceeding for all
    such services, but instead should take up the issue of establishing
    a Gulf licensing area on a service-by-service basis, as we did for
    WCS, MAS, 24 GHz, 700 MHz Guardband, and 700 MHz. The dearth of
    support in this proceeding advocating creation of Gulf licensing
    areas suggests that there is limited interest among carriers in many
    non-cellular CMRS services in providing service to offshore drilling
    facilities analogous to that provided by the Gulf cellular carriers.
    Furthermore, to the extent that carriers in a particular service may
    wish to establish a Gulf licensing area for that service, we can
    address such issues separately, taking into account the specific
    characteristics of that service.[^74]

46. On the other hand, land-based carriers in services that have no
    service provider licensed in the Gulf have expressed significant
    interest in our clarifying whether they can extend their coverage
    offshore from land-based sites. We find that in those services where
    there is no licensed carrier in the Gulf, it is in the public
    interest to allow land-based CMRS carriers to extend their coverage
    offshore, both to increase coverage and service quality for
    land-based customers along the coastline and to offer service to
    coastal boating traffic. In general, the geographic service area
    definitions used for non-cellular CMRS services are based on county
    boundaries, which extend over water pursuant to state law.[^75] We
    therefore clarify that the licensing areas of land-based licensees
    in such services extend to the limit of county boundaries that
    extend over water. In addition, licensees may provide service
    extending further into the Gulf on a secondary basis so long as they
    comply with the technical limitations applicable to the radio
    service and do not cause co-channel or adjacent channel interference
    to others.

47. Finally, PetroCom has filed a petition for rulemaking with respect
    to establishment of special interference criteria for Gulf-based
    facilities.[^76] Although we have never adopted specific rules for
    licensing of water-based SMR facilities, the Commission has issued
    some site-specific SMR licenses to PetroCom for sites in the
    Gulf.[^77] Under the existing SMR rules, these sites are entitled to
    interference protection on the same basis as site-specific licenses
    on land. In its petition, PetroCom sought to change the interference
    protection rules for site-based SMR facilities in the Gulf, arguing
    that the land-based rules did not adequately protect its water-based
    facilities. We incorporated PetroCom\'s petition into the *Second
    Further Notice* and sought comment on it.[^78] However, we received
    only limited comment on issues relating to Gulf-based SMR
    facilities.[^79] Moreover, since the *Second Further Notice*, we
    have issued land-based EA licenses in the 800 MHz SMR service, and
    have received no indication that the operations of these licensees
    have caused interference to Gulf-based SMR facilities. We conclude
    that in light of these circumstances, the record before us does not
    support amending the existing SMR rules as they apply to service in
    the Gulf, and we therefore deny PetroCom's petition.[^80] However,
    PetroCom or any other party is free to file an updated petition for
    rulemaking if it believes that current or potential circumstances
    warrant revision of the SMR rules to protect the operation of
    Gulf-based facilities.

**IV. CONCLUSION**

48. We conclude this reevaluation of our Gulf cellular rules by finding
    that the carriers themselves are best able to resolve most of the
    issues standing in the way the provision of reliable, ubiquitous
    cellular coverage to both land-based and Gulf-based subscribers in
    the Gulf region. The imposition of a new regulatory structure would
    cause additional and unnecessary delay in meeting this goal. In
    addition, the record reflects that a number of carriers have been
    able to resolve their differences under the current rules. We
    believe the few changes we now make help to strike a fair balance
    between the interests of the carriers, the interest of the public,
    and the need for flexibility to deal with these issues.

**V. PROCEDURAL MATTERS**

> **A. Regulatory Flexibility Act Analysis.**

49. The Final Regulatory Flexibility Analysis for this *Report and
    Order,* as required by Section 604, of the Regulatory Flexibility
    Act of 1980, 5 U.S.C. § 604, is set forth in Appendix D.

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B.  **Paperwork Reduction Act Analysis.**

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50. The actions taken in this *Report and Order* have been analyzed with
    respect to the Paperwork Reduction Act of 1995, Pub. L. No. 104-13,
    and found to impose no new or modified reporting and record-keeping
    requirements or burdens on the public.

**VI. ORDERING CLAUSES**

51. IT IS 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), 303(c), 303(f), 303(g),
    303(r), and 332, the rule changes specified in Appendix C are
    adopted.

52. IT IS FURTHER ORDERED that, pursuant to Section 4(i) of the
    Communications Act, as amended, 47 U.S.C. § 154(i), the applications
    listed in Appendix B are dismissed.

53. IT IS FURTHER ORDERED that the Wireless Telecommunications Bureau
    will begin accepting Phase II unserved area applications for the
    Gulf of Mexico Coastal Zone sixty days after the effective date of
    the rules.

54. IT IS FURTHER ORDERED that the Petition for Rulemaking filed by
    Petroleum Communications is DENIED.

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

56. IT IS FURTHER ORDERED that this proceeding is TERMINATED.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary 

**APPENDIX A**

**MAP OF EASTERN GULF COASTAL ZONE COORDINATES**

![](media/image1.png){width="6.495833333333334in" height="8.50625in"}

**APPENDIX B**

**PHASE II AND *DE MINIMIS* EXTENSION APPLICATIONS**

The following pending Phase II applications for unserved area licenses
in the Gulf of Mexico Service Area (GMSA) and applications for *de
minimis* extensions into the GMSA will be dismissed. Any associated
pleadings relating to these applications are also dismissed.

+-----------------------------------+-----------------------------------+
| **[Cellular Block "A"             | **[Cellular Block "B"             |
| Applications]{.underline}**       | Applications]{.underline}**       |
+-----------------------------------+-----------------------------------+
| 07433-CL-MP-92                    | 10152-CL-P-306-B-93               |
|                                   |                                   |
| 07440-CL-MP-92                    | 01621-CL-MP-93                    |
|                                   |                                   |
| 01091-CL-CP-95                    | 01613-CL-MP-93                    |
|                                   |                                   |
| 01094-CL-CP-95                    | 04076-CL-MP-95                    |
|                                   |                                   |
| 01096-CL-CP-95                    | 04915-CL-MP-95                    |
|                                   |                                   |
| 01328-CL-CP-95                    | 06794-CL-MP-95                    |
|                                   |                                   |
| 01329-CL-CP-95                    | 07427-CL-MP-95                    |
|                                   |                                   |
| 02025-CL-CP-95                    | 00103-CL-MP-96                    |
|                                   |                                   |
| 02163-CL-CP-95                    | 02245-CL-MP-96                    |
|                                   |                                   |
| 02165-CL-CP-95                    | 03856-CL-P2-97                    |
|                                   |                                   |
| 04160-CL-CP-95                    | 03857-CL-P2-97                    |
|                                   |                                   |
| 05605-CL-P2-95                    | 03858-CL-P2-97                    |
|                                   |                                   |
| 05913-CL-MP-95                    | 03859-CL-MP-97                    |
|                                   |                                   |
| 06361-CL-P2-95                    | 03860-CL-MP-97                    |
|                                   |                                   |
| 01743-CL-P2-96                    |                                   |
|                                   |                                   |
| 04235-CL-P2-96                    |                                   |
|                                   |                                   |
| 04992-CL-P2-96                    |                                   |
|                                   |                                   |
| 00700-CL-P2-97                    |                                   |
|                                   |                                   |
| 02590-CL- -97                     |                                   |
|                                   |                                   |
| 02591-CL- -97                     |                                   |
|                                   |                                   |
| 02592-CL- -97                     |                                   |
|                                   |                                   |
| 02593-CL- -97                     |                                   |
|                                   |                                   |
| 02594-CL- -97                     |                                   |
|                                   |                                   |
| 02595-CL- -97                     |                                   |
|                                   |                                   |
| 02596-CL- -97                     |                                   |
|                                   |                                   |
| 02597-CL- -97                     |                                   |
|                                   |                                   |
| 02600-CL-P2-97                    |                                   |
|                                   |                                   |
| 01242-CL-MP-98                    |                                   |
|                                   |                                   |
| 01243-CL-MP-98                    |                                   |
|                                   |                                   |
| 01244-CL-MP-98                    |                                   |
|                                   |                                   |
| 01245-CL-MP-98                    |                                   |
|                                   |                                   |
| 02407-CL-P2-98                    |                                   |
+-----------------------------------+-----------------------------------+

**APPENDIX C**

FINAL RULES

Part 22 of Title 47 of the Code of federal Regulations is amended as
follows:

1.  Section 22.99 is amended by adding the following definition,
    inserted in proper position to maintain alphabetical order:

**§ 22.99 Definitions**

\* \* \* \* \*

[Gulf of Mexico Service Area (GMSA)]{.underline}. The cellular market
comprising the water area of the Gulf of Mexico bounded on the West,
North and East by the coastline. Coastline, for this purpose, means the
line of ordinary low water along that portion of the coast which is in
direct contact with the open sea, and the line marking the seaward limit
of inland waters. Inland waters include bays, historic inland waters and
waters circumscribed by a fringe of islands within the immediate
vicinity of the shoreline.

\* \* \* \* \*

2.  Section 22.911 is amended by removing the Note to paragraph (a), and
    revising paragraphs (a)(2), to read as follows:

**§ 22.911 Cellular geographic service area.**

\* \* \* \* \*

(a) \* \* \*

\(2\) For cellular systems with facilities located within the Gulf of
Mexico Service Area, the distance from a cell transmitting antenna to
its SAB along each cardinal radial is calculated as follows:

\* \* \* \* \*

3.  Section 22.946 is amended by adding a new table H-1 following
    paragraph (a) to read as follows:

**§ 22.946** **Service commencement and construction periods for
cellular systems**

\* \* \* \* \*

  -------------------------------------------------- --------------------
  **Type of cellular system**                        **Required to
                                                     commence service
                                                     in**

  The first system authorized on each channel block  36 months
  in markets 1-90                                    

  The first system authorized on each channel block  18 months
  in all other markets and any subsequent systems    
  authorized pursuant to contracts in partitioned    
  markets                                            

  The first system authorized on each channel block  No requirement
  in the Gulf of Mexico Exclusive Zone               

  All other systems                                  12 months
  -------------------------------------------------- --------------------

\* \* \* \* \*

4.  Section 22.947 is amended by revising the introductory paragraph to
    read as follows:

§ 22.947 Five-year buildout period.

Except for systems authorized in the Gulf of Mexico Exclusive Zone, the
licensee of the first cellular system authorized \* \* \*

\* \* \* \* \*

5.  Section 22.949 is amended by revising the introductory paragraph to
    read as follows:

**§ 22.949** **Unserved area licensing process.**

This section sets forth the process for licensing unserved areas in
cellular markets on channel blocks for which the five year build-out
period has expired. This process has two phases: Phase I and Phase II.
This section also sets forth the Phase II process applicable to
applications to serve the Gulf of Mexico Coastal Zone.

\* \* \* \* \*

6.  A new Section 22.950 is added to read as follows:

§ 22.950 Provision of service in the Gulf of Mexico Service Area (GMSA)

The GMSA has been divided into two areas for licensing purposes, the
Gulf of Mexico Exclusive Zone (GMEZ) and the Gulf of Mexico Coastal Zone
(GMCZ). This section describes these areas and sets forth the process
for licensing facilities in these two respective areas within the GMSA.

\(a\) The GMEZ and GMCZ are defined as follows:

\(1\) [Gulf of Mexico Exclusive Zone]{.underline}. The geographical area
within the Gulf of Mexico Service Area that lies between the coastline
line and the southern demarcation line of the Gulf of Mexico Service
Area, excluding the area comprising the Gulf of Mexico Coastal Zone.

\(2\) [Gulf of Mexico Coastal Zone]{.underline}. The geographical area
within the Gulf of Mexico Service Area that lies between the coast line
of Florida and a line extending approximately twelve nautical miles due
south from the coastline boundary of the States of Florida and Alabama,
and continuing along the west coast of Florida at a distance of twelve
nautical miles from the shoreline. The line is defined by Great Circle
arcs connecting the following points (geographical coordinates listed as
North Latitude, West Longitude) consecutively in the order listed:

(1) 30°16'49"N 87°31'06"W (9) 28°34'41"N 82°53'38"W

(2) 30°04'35"N 87°31'06"W (10) 27°50'39"N 83°04'27"W

(3) 30°10'56"N 86°26'53"W (11) 26°24'22"N 82°23'22"W

(4) 30°03'00"N 86°00'29"W (12) 25°41'39"N 81°49'40"W

(5) 29°33'00"N 85°32'49"W (13) 24°59'02"N 81°15'04"W

(6) 29°23'21"N 85°02'06"W (14) 24°44'23"N 81°57'04"W

(7) 29°49'44"N 83°59'02"W (15) 24°32'37"N 82°02'01"W

(8) 28°54'00"N 83°05'33"W

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(a) Service Area Boundary Calculation. The service area boundary of a
    cell site located within the Gulf of Mexico Service Area is
    calculated pursuant to section 22.911(a)(2) of this chapter.
    Otherwise, the service area boundary is calculated pursuant to
    section 22.911(a)(1) or (b) of this chapter.

(b) Operation within the Gulf of Mexico Exclusive Zone (GMEZ). GMEZ
    licensees have exclusive right to provide service in the GMEZ, and
    may add, modify, or remove facilities anywhere within the GMEZ
    without prior Commission approval. There is no five-year buildout
    period for GMEZ licensees, no requirement to file system information
    update maps pursuant to 22.947 of this chapter, and no unserved area
    licensing procedure for the GMEZ.

(c) Operation within the Gulf of Mexico Coastal Zone (GMCZ). The GMCZ is
    subject to the Phase II unserved area licensing procedures set forth
    in section 22.949(b) of this chapter.

APPENDIX D

FINAL REGULATORY FLEXIBILITY ANALYSIS

1.  As required by the Regulatory Flexibility Act (RFA),[^81] an Initial
    Regulatory Flexibility Analysis (IRFA) was incorporated in the
    *Second Further Notice of Proposed Rulemaking* in WT Docket No.
    97-112 and CC Docket No. 90-6, released April 16, 1997 (*Second
    Further Notice*).[^82] The Commission sought written public comment
    on the proposals in the Second Further Notice, including comment on
    the IRFA. The comments received are discussed below. This Final
    Regulatory Flexibility Analysis (FRFA) conforms to the RFA.[^83]

> **A. Need for, and Objectives of, the Order**

2.  In this *Report and Order*, we resolve certain issues raised in the
    *Second Further Notice of Proposed Rule Making* in this proceeding,
    in which we proposed changes to our cellular service rules for the
    Gulf of Mexico Service Area (GMSA). Our decision also responds to
    the remand by the United States Court of Appeals for the District of
    Columbia Circuit in *Petroleum Communications v. FCC*,[^84] which
    was the result of an appeal of prior rules for licensing in the Gulf
    of Mexico (Gulf) adopted in the Commission's *Unserved Area Third
    Report and Order*.[^85]

3.  In the *PetroCom* decision, the D.C. Circuit reversed and remanded
    certain aspects of the unserved area rules as they applied to the
    Gulf. The Court found that the Commission had failed adequately to
    consider the distinctive nature of Gulf-based service, which relied
    on movable drilling platforms for placement of cell sites, in
    comparison to land-based service, which used stationary sites. The
    Court stated that, while it did not foreclose the possibility of a
    convincing rationale for applying a uniform standard to both Gulf
    and land-based licensees, the Commission had failed to adequately
    justify the decision in the *Unserved Area* proceeding to treat Gulf
    licensees in the same manner as land-based cellular licensees in
    light of their reliance on transitory sites.[^86] The Court remanded
    the issue and instructed the Commission to vacate the rule that
    defined the Gulf carriers' Cellular Geographic Service Areas (CGSA)
    based on their areas of actual service.[^87] The effect of the
    remand was the restoration of the original rules that defined the
    service area of the Gulf carriers as the entire GMSA, regardless of
    the location of their platform-based cell sites.

4.  Following the *PetroCom* decision, the Commission issued the *Second
    Further Notice*, in which it initiated a comprehensive reexamination
    of the cellular service rules for the Gulf.[^88] Specifically, the
    Commission proposed dividing the GMSA into a Coastal Zone and an
    Exclusive Zone.[^89] Under this proposal, the Coastal Zone would
    consist of the portion of the GMSA extending from the coastline of
    the Gulf of Mexico to the twelve-mile offshore limit, while the
    Exclusive Zone would extend from the twelve-mile limit to the
    southern boundary of the GMSA. In the Exclusive Zone, the two
    existing Gulf carriers would be able to move their offshore
    transmitters freely and to expand or modify their systems without
    being required to file additional applications, obtain prior
    Commission approval, or face competing applications for the right to
    serve the territory.[^90] In the Coastal Zone, we proposed to apply
    our Phase II unserved area licensing rules, as adopted in the
    *Competitive Bidding* *Ninth Report and Order*.[^91] Thus, within
    the Coastal Zone, any qualified applicant (including both Gulf and
    land-based carriers) would be permitted to serve unserved areas, and
    all mutually exclusive applications would be subject to competitive
    bidding procedures.

5.  In this *Report and Order*, we adopt a bifurcated approach to
    cellular licensing in the Gulf, based on the differences between the
    deployment of cellular service in the Eastern Gulf (the Florida Gulf
    coast) and the Western Gulf (the Texas, Louisiana, Mississippi, and
    Alabama Gulf Coast). In the Eastern Gulf, where there are no
    offshore oil and gas drilling platforms on which to site cellular
    facilities, we adopt our proposal to establish a Coastal Zone in
    which our cellular unserved area licensing rules will apply. In the
    Western Gulf, we find that the extensive deployment of both
    Gulf-based and land-based facilities that has occurred in the past
    few years makes adoption of our *Second Further Notice* proposal
    impractical. Instead, we conclude that cellular service in the
    Western Gulf should continue to be governed by current rules, with
    certain modifications to facilitate negotiated solutions to ongoing
    coverage conflicts between Gulf-based and land-based carriers.
    Accordingly, we establish the Gulf of Mexico Exclusive Zone,
    encompassing the Western Gulf and areas of the Eastern Gulf outside
    of the Coastal Zone, in which the Gulf carriers will have the
    exclusive right to operate.

6.  The *Second Further Notice* also requested comment regarding
    possible operations in the Gulf by Commercial Mobile Radio Services
    (CMRS) licensees for services other than cellular.[^92] Given the
    limited comment we have received on these issues, we decline to
    adopt specific licensing and service rules for the provision of
    non-cellular services in the Gulf at this time. We conclude,
    however, that the boundaries of non-cellular CMRS markets with
    market areas that are derived from the aggregation of counties (e.g.
    Economic Areas, Basic Trading Areas), are coterminous with county
    boundaries absent specific service rules to the contrary.

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

7.  Although we have received a number of comments in response to the
    *Second Further Notice,* we received only one comment in response to
    the IRFA. However, as described in Section E. below, we have
    nonetheless considered potential significant economic impacts of the
    rules on small entities.

8.  [Comments raised in response to the *Second Further Notice*
    regarding proposals that may have an impact on small
    entities]{.underline}. In response to the *Second Further Notice*,
    we received a number of comments and alternative proposals from
    land-based and Gulf-based carriers, many of which have been
    supplemented recently with *ex parte* presentations. Some commenting
    land carriers generally support our proposal to bifurcate the GMSA
    into a Coastal Zone and Exclusive Zone,[^93] while most oppose our
    proposal to use cellular unserved area licensing rules to award
    licenses in the Coastal Zone.[^94] Many of the land-based carriers
    support a proposal by ALLTEL to treat the Coastal Zone as a "buffer
    zone" extending twelve miles out to sea from the Gulf coastline.
    Within this buffer zone, ALLTEL proposes that Gulf and land carriers
    could freely extend their service area boundaries (SABs), subject to
    mandatory frequency coordination, but without protection from
    subscriber capture.[^95] In the GMSA outside the buffer zone, Gulf
    carriers would be fully protected from interference. [^96]

9.  A second alternative proposal has been advanced by PetroCom, a Gulf
    licensee, and US Cellular, an adjacent land-based licensee in
    certain markets. PetroCom and US Cellular advocate a bifurcated
    approach in the Eastern and Western Gulf. In the Eastern Gulf, they
    propose that we extend the GMSA boundary ten miles seaward from the
    shoreline, thus allowing land-based carriers in Florida to expand
    their coverage over water to that extent. In the Western Gulf,
    PetroCom and US Cellular would retain the existing GMSA boundary
    along the coastline, and for a period of five years would prohibit
    either side from expanding over that boundary without the other
    carrier's consent. After five years, their proposal would allow a
    land carrier to serve portions of the Gulf from land without consent
    from the Gulf carrier, so long as the latter was not serving that
    area, but the Gulf carrier would have the right to "reclaim" the
    area if a new or relocated drilling platform enabled it to provide
    service.[^97]

10. Another commenter, Coastel, argues that the current rules are
    sufficient to meet the Commission's objectives, and therefore
    proposes that we terminate this rulemaking without adopting new
    rules.[^98] Coastel asserts that the Gulf carriers have
    substantially expanded their coverage of the Gulf in recent years,
    eliminating gaps in coverage and providing more reliable service to
    coastal waters in the Gulf.[^99] Coastel contends that this change
    in circumstances obviates the need for further rulemaking, and
    argues that the Commission's proposals in the *Second Further
    Notice* would not reduce conflict because many issues would still
    remain to be resolved between carriers. [^100]

11. With respect to the issue of whether or not to create Gulf of Mexico
    service areas for non-cellular commercial mobile radio services
    (CMRS), a few commenters state that customers in the Gulf would
    benefit from additional CMRS options.[^101] Others, however, oppose
    the creation of additional market areas in the Gulf.[^102]
    Commenters argue that creating Gulf area licenses in other services
    would create more problems than would be solved.[^103]A few
    commenters assert that incumbent licensees with markets adjacent to
    the Gulf are already authorized to serve the Gulf\'s offshore
    areas.[^104]

12. Certain commenters also express concern over our proposal to dismiss
    all pending Phase II and *de minimis* applications. Some commenters
    object to our dismissing applications because applicants have spent
    time and resources to file the applications, and suggest that we
    process the pending applications instead.[^105]

13. Further, the two Gulf carriers argue that they should be permitted
    to site their transmitters on land.[^106] Other commenters argue
    that such sites should not be permitted, because interference and
    capture issues will likely arise if Gulf carriers are permitted to
    locate transmitters on land without the land-based carrier\'s
    consent.[^107] Commenters also generally oppose the proposal to
    adopt a "hybrid" propagation approach that would account for signals
    in the Gulf coastal region that are transmitted over both land and
    water.[^108] Commenters argue that a hybrid formula would be
    unworkable and expensive.[^109]

14. [Comment in response to the IRFA]{.underline}. In an ex parte
    submission filed on August 21, 2001, PetroCom revised its proposal
    and that of U.S. Cellular for consideration by the Commission as an
    alternative to the agency's proposed rules in this proceeding
    pursuant to the RFA.[^110] PetroCom contends that it has opposed any
    changes to the current definition of its CGSA on the Western
    (non-Florida) side of the Gulf where it has fully built out
    infrastructure providing cellular service to customers throughout
    the proposed Coastal Zone, and that such action would adversely
    impact the proposed Coastal Zone rules.[^111] PetroCom states that
    there is no factual, legal or policy reason to change the current
    rules that require it's consent to the SAB extensions of land
    carriers that cross the coastline into it's CGSA.[^112]

15. PetroCom asserts that paragraphs 64-72 of the *Second Further
    Notice* violates several RFA requirements.[^113] Among its
    assertions, PetroCom states that the Commission's IRFA does not
    describe the impact of the proposed Coastal Zone on small entities,
    and that the Commission failed to describe alternatives to the
    Coastal Zone as required by the RFA.[^114] Further, PetroCom asserts
    that the Commission failed to provide a small entity impact analysis
    with respect to the agency's proposal and an analysis of
    alternatives.[^115] Further still, PetroCom calls attention to the
    Commission's IRFA in the *Second Further Notice*, which it avers,
    contained no discussion or analysis of the 15-day reporting rule
    that was proposed in paragraph 47 which conflicts with Section 1.947
    of the rules that contains a 30-day reporting rule.[^116] PetroCom
    also asserts that the Commission's definition of a small business
    has not complied with SBA rules.[^117]

16. PetroCom states that there is nothing in the record that will
    support a finding in an FRFA that the creation of a Coastal Zone as
    proposed in the *Second Further Notice* is the best
    alternative.[^118] Further, PetroCom asserts that the alternatives
    advocated by other carriers (*see infra*) will significantly affect
    the annual revenues of the Gulf carriers.[^119] PetroCom argues
    that, among the various alternatives, its joint proposal best
    minimizes adverse impacts on small entities.[^120]

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

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17. 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 proposed rules, if adopted.[^121] The RFA generally
    defines the term "small entity" as having the same meaning as the
    terms "small business," "small organization," and "small
    governmental jurisdiction."[^122] In addition, the term "small
    business" has the same meaning as the term "small business concern"
    under the Small Business Act.[^123] 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).[^124]

18. [Cellular Licensees]{.underline}. Neither the Commission nor the SBA
    has developed a definition of small entities specific to cellular
    licensees. Therefore, the applicable definition of small entity is
    the definition under the SBA rules applicable to radiotelephone
    (wireless) companies. This provides that a small entity is a
    radiotelephone (wireless) company employing no more than 1,500
    persons.[^125] According to the Census Bureau, only twelve
    radiotelephone (wireless) firms from a total of 1,178 such firms
    which operated during 1992 had 1,000 or more employees.[^126] 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 1,758 cellular
    licenses; however, a cellular licensee may own several licenses.
    According to a recent *Telecommunications Reporting Worksheet* data,
    806 wireless telephony providers reported that they were engaged in
    the provision of either cellular service or Personal Communications
    Service (PCS) services, and Specialized Mobile Radio (SMR) telephony
    carriers, which are placed together in the data.[^127] We do not
    have data specifying the number of these carriers that are not
    independently owned and operated or have more than 1,500 employees,
    and are unable at this time to estimate with greater precision the
    number of cellular service carriers that would qualify as small
    business concerns under the SBA\'s definition. We estimate that
    there are fewer than 806 small wireless service providers that may
    be affected by these revised rules.

19. [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 Radiotelephone (Wireless) Communications companies. This
    definition provides that a small entity is a radiotelephone
    (wireless) company employing no more than 1,500 persons.[^128]
    According to the Census Bureau, only 12 radiotelephone (wireless)
    firms out of a total of 1,178 such firms which operated during 1992
    had 1,000 or more employees.[^129] If this general ratio continues
    in 2001 in the context of Phase I 220 MHz licensees, we estimate
    that nearly all such licensees are small businesses under the SBA\'s
    definition.

20. [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 criteria for defining small and very small businesses for
    purposes of determining their eligibility for special provisions
    such as bidding credits and installment payments.[^130] We have
    defined a small business as an entity that, together with its
    affiliates and controlling principals, has average gross revenues
    not exceeding \$15 million for the preceding three years. 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.[^131]
    The SBA has approved these definitions.[^132] Auctions of Phase II
    licenses commenced on September 15, 1998, and closed on October 22,
    1998.[^133] 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, 693 were
    sold.[^134] 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.[^135]

21. [700 MHz Guard Band Licenses]{.underline}. In the *700 MHz Guard
    Band Order*, we adopted criteria for defining small businesses and
    very small businesses for purposes of determining their eligibility
    for special provisions such as bidding credits and installment
    payments.[^136] We have defined a small business as an entity that,
    together with its affiliates and controlling principals, has average
    gross revenues not exceeding \$15 million for the preceding three
    years. Additionally, a very small business is defined as an entity
    that, together with its affiliates and controlling principals, has
    average gross revenues that are not more than \$3 million for the
    preceding three years. An auction of 52 Major Economic Area (MEA)
    licenses commenced on September 6, 2000, and closed on September 21,
    2000.[^137] 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.[^138]

22. [Paging]{.underline}. The Commission has adopted a two-tier
    definition of small businesses in the context of auctioning licenses
    in the Common Carrier Paging and exclusive Private Carrier Paging
    services. A small business will be defined as either (1) an entity
    that, together with its affiliates and controlling principals, has
    average gross revenues for the three preceding years of not more
    than \$3 million, or (2) an entity that, together with affiliates
    and controlling principals, has average gross revenues for the three
    preceding calendar years of not more than \$15 million. Because the
    SBA has not yet approved this definition for paging services, we
    will utilize the SBA\'s definition applicable to radiotelephone
    companies, *i.e.*, an entity employing no more than 1,500
    persons.[^139] At present, there are approximately 24,000 Private
    Paging licenses and 74,000 Common Carrier Paging licenses. According
    to a recent *Telecommunications Industry Revenue* data, 172 carriers
    reported that they were engaged in the provision of either paging or
    \"other mobile\" services, which are placed together in the
    data.[^140] We do not have data specifying the number of these
    carriers that are not independently owned and operated or have more
    than 1,500 employees, and thus are unable at this time to estimate
    with greater precision the number of paging carriers that would
    qualify as small business concerns under the SBA\'s definition.
    Consequently, we estimate that there are fewer than 172 small paging
    carriers that may be affected by the rules adopted herein. We
    estimate that the majority of private and common carrier paging
    providers would qualify as small entities under the SBA definition.

23. [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 defined "small entity" for Blocks C and F
    as an entity that has average gross revenues of less than \$40
    million in the three previous calendar years.[^141] For Block F, an
    additional classification for "very small business" was added and is
    defined as an entity that, together with their affiliates, has
    average gross revenues of not more than \$15 million for the
    preceding three calendar years.[^142] These regulations defining
    "small entity" in the context of broadband PCS auctions have been
    approved by the SBA.[^143] No small businesses within the
    SBA-approved definition bid successfully for licenses in Blocks A
    and B. There were 90 winning bidders that qualified as small
    entities in the 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.[^144] On March 23, 1999, the Commission
    reauctioned 347 C, D, E, and F Block licenses; there were 48 small
    business winning bidders. On January 26, 2001, the Commission
    completed the reauction of 422 C and F Block licenses. Of the 35
    winning bidders, 30 were small business entities. Based on this
    information, we conclude that there are approximately 261 small
    entity broadband PCS providers as defined by the SBA and the
    Commission\'s auction rules.

24. [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. At present, there have been
    no auctions held for the major trading area (MTA) and basic trading
    area (BTA) narrowband PCS licenses. The Commission anticipates a
    total of 561 MTA licenses and 2,958 BTA licenses will be awarded by
    auction. Such auctions have not yet been scheduled, however. Given
    that nearly all radiotelephone companies have no more than 1,500
    employees and that no reliable estimate of the number of prospective
    MTA and BTA narrowband licensees can be made, we assume, for
    purposes of this IRFA, that all of the licenses will be awarded to
    small entities, as that term is defined by the SBA.

25. [Specialized Mobile Radio (SMR).]{.underline} Pursuant to 47 C.F.R.
    § 90.814(b)(1), the Commission has defined "small business" 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. The SBA has approved this small business size
    standard for the 800 MHz and 900 MHz auctions. 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.

26. The auction of the 1,030 800 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. The Commission anticipates that a total of
    2,823 EA licenses will be auctioned in the lower 80 channels of the
    800 MHz SMR service. Therefore, we conclude that the number of 800
    MHz SMR geographic area licensees for the lower 80 channels that may
    ultimately be affected by these proposals could be as many as 2,823.
    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.[^145]

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

27. In this *Report and Order,* we reexamine our cellular service rules
    as they apply to the Gulf of Mexico Service Area. Our principal
    goals in this proceeding are to establish a comprehensive regulatory
    scheme that will reduce conflict between water-based and land-based
    carriers, to provide regulatory flexibility to Gulf carriers because
    of the transitory nature of water-based sites, and to provide
    reliable, seamless service to the Gulf region. We do not impose
    reporting or record keeping requirements in this *Report and Order*.

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

28. The RFA requires an agency to describe any significant alternatives
    that it has considered in 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[^146][^147]

29. [Creation of the Eastern Gulf Coastal Zone and Gulf of Mexico
    Exclusive Zone]{.underline}. The record in this proceeding
    demonstrates that different approaches toward the Eastern and
    Western Gulf are warranted. Unlike the Western Gulf, where the Gulf
    carriers have substantial offshore operations, the Eastern Gulf has
    no offshore oil or gas drilling platforms, and consequently, the
    Gulf carriers have no offshore base stations from which to provide
    service in the coastal waters off Florida. As we explain in our
    *Report and Order*, the best way to ensure that seamless cellular
    service is provided in the Eastern Gulf -- both on land and in
    coastal waters \-- is to create a Coastal Zone along the eastern
    portion of the GMSA. The current positioning of the eastern GMSA
    boundary directly along the Florida coastline does not accomplish
    this because it requires land carriers to engineer their systems to
    limit signal strength along the coast so as to avoid extending their
    coverage over water.

30. Establishing an Eastern Gulf Coastal Zone will improve cellular
    service to coastal areas by providing an opportunity for land-based
    carriers to extend their service area contours into territorial
    coastal waters, which will in turn enable them to add cell sites
    close to shore and to increase signal strength (and resulting
    coverage) from existing sites. This will not only lead to improved
    coverage of coastal communities, beach resorts, and coastal roads,
    but will also facilitate service to coastal boat traffic operating
    close to shore that can be served from land-based transmitters.

31. The remainder of the eastern half of the Gulf that is not included
    in the Eastern Gulf Coastal Zone will be designated, along with the
    entire Western Gulf, as the Gulf of Mexico Exclusive Zone. In this
    area, as proposed in the *Second Further Notice*, the Gulf carriers
    will have the unrestricted and exclusive right to operate cellular
    facilities. The Gulf carriers will have full flexibility to build,
    relocate, modify and remove offshore facilities throughout the Gulf
    of Mexico Exclusive Zone without seeking prior FCC approval or
    facing competing applications. While we do not agree with Coastel's
    position that no revisions to the rules are required, we believe
    that with relatively minor modifications, the current rules should
    provide sufficient incentives for both Gulf and land carriers to
    negotiate agreements that lead to seamless cellular coverage in
    coastal areas at competitive rates.

32. We recognize that as a result of our decision to apply unserved area
    licensing rules to the Eastern Gulf Coastal Zone, the Gulf carriers
    will no longer have the exclusive right to serve Florida coastal
    waters as part of the GMSA. We must weigh, however, not only the
    interests of the Gulf carriers, but also the interests of adjacent
    land-based carriers and, most of all, the need to provide cellular
    subscribers in the coastal region with seamless coverage by the most
    technically efficient means, whether from land or water-based sites.
    Because the Gulf carriers have no operations in the Eastern Gulf,
    our decision will not result in any reduction in cellular service or
    stranded investment in cellular facilities by the Gulf carriers.
    Moreover, given the lack of existing or planned installation of
    offshore platforms in the Eastern Gulf Coastal Zone, there is no
    likelihood that the Gulf carriers would be in a position to provide
    service there in the foreseeable future. Nonetheless, our decision
    does not preclude the Gulf carriers from seeking to provide service
    in the Coastal Zone in conformity with the unserved area licensing
    rules we are adopting for this region, either from land-based sites
    or from offshore platforms, at any point in the future should they
    become available.

33. We decline to adopt the ALLTEL proposal that the Coastal Zone be
    available for use by both Gulf and land-based carriers on a shared,
    coordinated basis. Although ALLTEL's proposal is designed to provide
    a basis for negotiated agreements, we believe the effect of this
    proposal would be to turn the Coastal Zone into a "no-man's land"
    where the prohibition against capture of a neighboring carrier's
    subscriber traffic would not apply. Moreover, by eliminating capture
    protection in a portion of the GMSA while retaining it in the CGSAs
    of the adjacent land carriers, the effect of the ALLTEL proposal
    would be to shift the protections afforded by existing rules in
    favor of the land carriers and against the Gulf carriers. We are
    concerned that adopting the ALLTEL proposal could reduce the
    incentive for land carriers to negotiate with Gulf carriers
    regarding traffic capture in the Coastal Zone. In addition, because
    the ALLTEL proposal does not provide a mechanism for settling
    frequency coordination disputes, there is a substantial likelihood
    that the Commission would be burdened with resolving such matters in
    instances where frequency coordination failed.

34. [Service Area Boundary Formula]{.underline}. In this *Report and
    Order* we conclude that we should retain the existing land-based and
    water-based SAB formulas. We conclude that the two-formula approach
    adequately accounts for the different characteristics of signal
    propagation over land and water, and are easier to use than a hybrid
    formula. Moreover, retaining the existing SAB formulas is consistent
    with our overall decision to maintain the existing relationship
    between land and Gulf carriers in the Western Gulf as the basis for
    negotiated solution of their operational conflicts.

35. [Placement of Transmitters]{.underline}. The Gulf carriers urge us
    to allow them to site their transmitters on land without the express
    consent of the applicable land-based licensees. We believe that a
    blanket prohibition against Gulf carriers placing their transmitters
    on land is not necessary, and we will rely on our CGSA and SAB
    extension rules to determine whether or not the placement of a
    particular transmitter is permissible.[^148] Although the Gulf
    carriers argue that this action is insufficient, we believe that
    this will provide additional flexibility that will facilitate
    contractual resolutions of the issues facing adjacent carriers along
    the Gulf of Mexico.

36. [Pending applications]{.underline}. In our *Report and Order*, we
    conclude that areas of the Eastern Gulf Coastal Zone that do not
    receive cellular service shall be defined as unserved areas and that
    Phase II competitive bidding procedures implemented for those areas.
    All unserved area applications previously filed to serve Eastern
    Gulf Coastal Zone areas are dismissed, as well as their associated
    petitions to deny. Similarly, we dismiss all pending *de minimis*
    extensions into the Gulf in this *Report and Order*. We considered
    whether or not the dismissal of pending licenses would impose
    significant additional costs or burdens on carriers. We find that
    this action will not prejudice carriers because such applicants have
    the opportunity to resubmit applications to the extent allowed under
    the new rules adopted in the *Report and Order*. We conclude that,
    in light of the passage of several years since the applications were
    filed, dismissing applications filed under superseded rules and
    allowing carriers currently serving or desiring to serve the Eastern
    Gulf Coastal Zone to submit new applications is the fairest and most
    efficient manner to license cellular service in that region.

**[Report to Congress]{.underline}:** The Commission will send a copy of
this *Report and Order*, including this FRFA, in a report to be sent to
Congress pursuant to the Small Business Regulatory Enforcement Fairness
Act of 1996.[^149] In addition, the Commission will send a copy of the
*Report and Order*, including the FRFA, to the Chief Counsel for
Advocacy of the SBA. A copy of the *Report and Order* and FRFA (or
summaries thereof) will also be published in the Federal Register.[^150]

[^1]: Cellular Service and Other Commercial Mobile Radio Services in the
    Gulf of Mexico, Amendment of Part 22 of the Commission\'s Rules to
    Provide for Filing and Processing of Applications for Unserved Areas
    in the Cellular Service and to Modify Other Cellular Rules, WT
    Docket No. 97-112 and CC Docket No. 90-6, *Second Further Notice of
    Proposed Rule Making*, 12 FCC Rcd 4578 (1997) (*Second Further
    Notice*). Although the *Second Further Notice* was adopted and
    released in 1997, it was inadvertently not published in the Federal
    Register at that time, as required under the Administrative
    Procedure Act. The *Second Further Notice* was published in the
    Federal Register on April 25, 2000. 65 Fed. Reg. 24168.

[^2]: *Petroleum Communications, Inc*. v. FCC, 22 F.3d 1164 (D.C. Cir.
    1994) (*PetroCom*).

[^3]: Amendment of Part 22 of the Commission's Rules to Provide for
    Filing and Processing of Applications for Unserved Areas in the
    Cellular Service and to Modify Other Cellular Rules, CC Docket 90-6,
    *Third Report and Order and Memorandum Opinion and Order on
    Reconsideration*, 7 FCC Rcd 7183 (1992) (*Unserved Area Third Report
    and Order*).

[^4]: *Second Further Notice*, 12 FCC Rcd at 4601, para. 63.

[^5]: *See* Section III.B., *infra.*

[^6]: Applications of Petroleum Communications, Inc. and Gulf Cellular
    Associates for New Domestic Cellular Radio Telecommunications
    Service Systems in the Gulf of Mexico*, Memorandum Opinion and
    Order,* File No. 30003-CL-P-84, Mimeo No. 6337 (CCB 1985). The
    history of the licensing and operation of cellular service in the
    Gulf of Mexico is set forth in greater detail in the *Second Further
    Notice*.

[^7]: *Id.*

[^8]: A *de minimis* extension is a relatively small overlap of a
    service area boundary (SAB) contour into a neighboring market which
    is necessary for engineering reasons to adequately serve the market
    of the licensee who proposes the extension. Great Lakes of Iowa,
    Inc*.*, *Order*, 8 FCC Rcd 5572, 5573 (1993), citing Amendment of
    Part 22 of the Commission\'s Rules to provide for filing and
    processing of applications for unserved areas in the Cellular
    Service and to modify other cellular rules in CC Docket No. 90-6*,
    First Report and Order and Memorandum Opinion and Order on
    Reconsideration*, 6 FCC Rcd 6185, n. 23 (1991). *De minimis*
    extensions generally do not become part of the licensee\'s CGSA, are
    not entitled to interference protection, and must be pulled back if
    objectionable interference occurs to adjacent licensees. Western
    Maine Cellular, Inc., *Order*, 7 FCC Rcd 8648 (1992).

[^9]: *Second Further Notice*, 12 FCC Rcd at 4578, para 2.

[^10]: The service area of each cell is the area within its SAB, which
    is calculated using propagation formulas set forth in the
    Commission's rules. 47 C.F.R. § 22.911. *See* Section III.C.,
    *infra*.

[^11]: 47 C.F.R. § 22.912.

[^12]: *PetroCom*, 22 F.3d at 1173.

[^13]: *Id.* (vacating former rule section 22.903(a), as it applied to
    the Gulf-based carriers).

[^14]: *Second Further Notice*, 12 FCC Rcd at 4578, paras. 3-4.

[^15]: *Id.* at 4589, para. 27.

[^16]: In the alternative, the boundary would be represented by a line
    defined by geographic coordinates that closely approximates the
    twelve-mile mark. *See id.*

[^17]: *Id*. In effect, the licensees would have the exclusive right to
    expand, as in section 22.947(a), 47 C.F.R. § 22.947(a), except that
    the right would continue throughout the license term rather than
    expire after a five-year buildout period.

[^18]: Implementation of Section 309(j) of the Communications Act \--
    Competitive Bidding; Amendment of Part 22 of the Commission's Rules
    to Provide for the Filing and Processing of Applications for
    Unserved Areas in the Cellular Service and to Modify Other Cellular
    Rules, *Ninth Report and Order,* 11 FCC Rcd 14769 (1996).

[^19]: ALLTEL Further Comments at 9-10; AT&T Further Reply Comments at
    2; BellSouth Further Comments at 2; Centennial Ex Parte at 2; Dobson
    Further Reply Comments at 3; GTE Further Comments at 13; and
    MobileTel Reply Comments at 2.

[^20]: Initially, many land-based carriers supported the creation of an
    Exclusive Zone but advocated extending their market boundaries to
    the boundary of the Exclusive Zone in lieu of creating a separate
    Coastal Zone. *See* AT&T Wireless Comments at 4; AT&T Wireless Reply
    Comments at 4-5; Palmer Comments at 3-4; Texas RSA Reply Comments at
    1-3; BellSouth Comments at 4; Centennial Reply Comments at 2; GTE
    Comments at 2-3; GTE Reply Comments at 3; MobileTel Comments at 2;
    MobileTel Reply Comments at 3; SBMS Comments at 9. This approach,
    according to these commenters, would be consistent with geographic
    areas established in other services and would promote regulatory
    parity among wireless services. 360º Reply Comments at 5; AT&T
    Wireless Comments at 6; Centennial Reply Comments at 2; GTE Reply
    Comments at 9-10.

[^21]: ALLTEL Further Comments at 9-10.

[^22]: According to ALLTEL and supporting commenters, this two-zone
    approach simultaneously addresses the land carriers' interest in
    providing reliable service to their customers throughout their
    licensed areas and the Gulf carriers' interest in being able to
    relocate sites without forfeiting CGSA. ALLTEL Further Comments at
    9-10; AT&T Further Reply Comments at 2; BellSouth Further Comments
    at 2; Centennial Ex Parte at 2; Dobson Further Reply Comments at 3;
    GTE Further Comments at 13; and Mobiltel Reply Comments at 2.

[^23]: Joint Comments of Petroleum Communications, Inc. and U.S.
    Cellular Corporation, dated May 15, 2000.

[^24]: *See Ex Parte* Submission of Revised Proposal as Alternative to
    Proposed Rules Pursuant to the Regulatory Flexibility Act, filed by
    PetroCom, dated August 21, 2001.

[^25]: Comments of Bachow/Coastel at 5-6; Written *Ex Parte*
    Presentation of Bachow/Coastel, L.L.C., filed April 4, 2001 at i.

[^26]: *Id.* at 8.

[^27]: Coastel Further Comments at 5-6, 16.

[^28]: On July 12, 2001, the U.S. Department of the Interior\'s Minerals
    Management Service issued a proposed Notice of Sale regarding a
    Federal natural gas and oil lease sale in the Eastern Gulf of
    Mexico, to be conducted in December 2001. *See Notice of
    Availability of the Proposed Notice of Sale for Outer Continental
    Shelf Oil and Gas Lease Sale 181 in the Eastern Gulf of Mexico*, 66
    Fed. Reg. 36592 (2001). This lease sale would not lead to any
    potential Gulf carrier sites within the Coastal Zone as the sale
    area involved encompasses areas at least 100 miles away from the
    Florida coastline.

[^29]: Joint Comments of PetroCom and U.S. Cellular at 6.

[^30]: For discussion of the Western Gulf, *see* paras. 21-34, *infra*.

[^31]: *Second Further Notice*, 12 FCC Rcd at 4580, para. 32. As
    proposed in the *Second Further Notice*, we will define the 12-mile
    Coastal Zone boundary by reference to a small number of specified
    coordinates in order to simplify application of these rules for
    licensees and applicants. The coordinates are listed in section
    22.950, and a map of these coordinates in the Eastern Gulf Coastal
    Zone is attached at Appendix A.

[^32]: Amendment of the Commission's Rules to Establish Part 27, the
    Wireless Communications Service, *Report and Order*, 12 FCC Rcd
    10735, para. 58 (1997).

[^33]: One U.S. nautical mile is equal to 6,080 feet or 1,853
    kilometers.

[^34]: Applicants wishing to serve the Eastern Gulf Coastal Zone must
    file an application in accordance with our cellular Phase II
    unserved area licensing rules. For example, a land-based carrier
    that proposes to construct new facilities along the Florida coast
    must file a Phase II cellular unserved area application if the
    proposed facilities produce a SAB contour extension into the Eastern
    Gulf Coastal Zone. Likewise, a Gulf-based carrier that wishes to
    extend coverage into the Eastern Gulf Coastal Zone must file a Phase
    II application. If any such applications are granted, the contour
    extension will be incorporated into that licensee's CGSA.

[^35]: *See e.g.* Petition to Deny, filed by Petroleum Communications,
    dated September 9, 1992 (opposing *de minimis* extension by
    Galveston Cellular Telephone Company, for KNKA676).

[^36]: *See, e.g.,* Wireless Telecommunications Bureau Grants Special
    Temporary Authority to ALLTEL Corporation Allowing Improvements in
    Cellular Coverage in Coastal Florida, *Public Notice*, 15 FCC Rcd
    6907 (WTB 1999).

[^37]: *See* licensing records for Call Signs KNKA412 (Coastel) and
    KNKA411 (PetroCom).

[^38]: BellSouth Comments at 3,7; BellSouth Further Comments at 1; 360°
    Communications Comments at 3-5; 360° Communications Reply Comments
    at 2-3; GTE July 2, 1997 Comments at 4, n.3, 6; GTE August 4, 1997
    Comments at 4-6; AT&T Further Reply Comments at 1-2; MobileTel
    Further Reply Comments at 1.

[^39]: Coastel Reply Comments at 25; Coastel Further Comments at 6-7.

[^40]: *See, e.g.,* GTE Reply Comments at 6; GTE Further Comments at
    8-10; PetroCom Reply Comments at 3. *See also* Bachow/Coastel,
    L.L.C., v. GTE Wireless of the South, Inc., File No.
    WB/ENF-F-98-005, *Order on Reconsideration*, FCC 01-161 (rel. May
    14, 2001). At boundaries between adjacent carriers, calls made by
    one carrier's customer from that carrier's home territory may be
    "captured" by the adjacent carrier if the adjacent carrier's signal
    is stronger at the location where the customer is making the call.
    In that event, the customer is charged by the adjacent carrier as a
    roamer and subject to greater fees, even though the customer placed
    the call in his or her home territory.

[^41]: *See,* *e.g.,* ALLTEL February 28, 2001 *Ex Parte* Filing at Att.
    4; GTE Further Comments at 8-10; Verizon April 2, 2001 *Ex Parte*
    Filing at 1-2. According to the land carriers, roaming rates charged
    by Gulf carriers can be as high as \$3.00 per minute. ALLTEL
    February 28, 2001 Ex Parte Filing at Att. 4.

[^42]: ^?^ *See e.g.* Coastel Further Reply Comments at 7-9; PetroCom
    Further Reply Comments at 5-6; PetroCom March 1, 2001 *Ex Parte*
    Filing at 1-2; PetroCom January 8, 2001 *Ex Parte* Filing at Att. 1,
    Att. 3.

[^43]: *Second Further Notice*, 12 FCC Rcd at 4594, paras. 36, 41.

[^44]: *See* paras. 9-10, *supra.*

[^45]: *Second Further Notice*, 12 FCC Rcd at 4588, para. 26.

[^46]: *See* Further Comments of Bachow/Coastel, L.L.C., dated May 15,
    2000 (stating that Coastel doubled the number of its sites in the
    Gulf between 1997 and 2000); licensing records for Call Signs
    KNKA412 and KNKA411.

[^47]: PetroCom states that it has either co-location or extension
    agreements in Houston/Galveston, Corpus Christi,
    Beaumont-Port-Arthur, Texas RSA No. 16, and Texas RSA No. 20 with
    land-based A-side carriers. PetroCom January 8, 2001 *Ex Parte*
    Filing at Att. 2.

[^48]: For example, under certain collocation agreements, the land
    carriers own facilities for which PetroCom contributes construction
    costs. The antennas of a collocated site are configured to keep a
    signal strength equal to PetroCom's system at the coastline
    boundary. The land carriers provide switching services for the
    origination and termination of calls, including calls in the Gulf
    areas, as well as switching services for authorized roamers, which
    include Gulf subscribers. PetroCom pays the land carriers per-minute
    charges for switching and roaming services, and land carriers pay
    PetroCom a per-minute charge whenever a land carrier subscriber uses
    PetroCom's system. *See* PetroCom *Ex Parte* filing, dated March 1,
    2001.

[^49]: *See* Letter from Glenn S. Rabin, Vice President Federal
    Regulatory Affairs, ALLTEL Corporation, and Steven J. Hamrick,
    Counsel for Bachow/Coastel, L.L.C., to Magalie Roman Salas,
    Secretary, Federal Communications Commission, dated July 16, 2001.
    As a result of their agreement, ALLTEL and Coastel jointly requested
    dismissal of four pending ALLTEL applications, three pending Coastel
    applications, and related petitions and pleadings, with respect to
    service in the Gulf. *See* Joint Motion for Dismissal and Approval
    of Settlement Agreement, filed by ALLTEL and Coastel, August 22,
    2001, at 2-4 (file nos. 00004996022, 0000223356, 0000125728,
    0000105772, 0000188467, 0000113774, 0000160419). Their request was
    granted on September 27, 2001. *See* "Wireless Telecommunications
    Bureau Approves Settlement Agreement between Bachow/Coastel, L.L.C.
    and ALLTEL Illinois Limited Partnership," *Public Notice*, 16 FCC
    Rcd 17084 (WTB 2001).

[^50]: For example, if a land-based carrier increased its effective
    radiated power to provide a stronger signal at the coastline \--
    which would be allowed under the ALLTEL proposal -- it would benefit
    substantially on land because capture of its customers would be
    reduced inland from the coastline, but the land-based carrier would
    have little incentive to negotiate to reduce capture in the Coastal
    Zone because most of its customers would not benefit from such
    protection.

[^51]: *Second Further Notice*, 12 FCC Rcd at 4597, para. 50.

[^52]: We reiterate that we will no longer prohibit land-based sites for
    the Gulf carriers, relying solely on our SAB extension rules to
    determine whether such sites will be permitted.

[^53]: *Unserved Area Third Report and Order*, 7 FCC Rcd at 7184, paras.
    5-6. Prior to the adoption of the cellular unserved area rules, the
    CGSA was the area defined by the licensee as the area it intended to
    serve. The Commission used the median 39 dBu field strength contour
    to represent reliable service. The Commission required applicants to
    identify the 39 dBu contour or contours within their CGSAs, and
    within which the applicant would provide reliable cellular service.
    Former rule section 22.903 required that the combined 39 dBu
    contours of all base stations of a licensee must cover at least 75%
    of the licensee's total CGSA. The Gulf carriers, however, were not
    required to comply with the 75% coverage requirement. *See*
    Amendment of the Commission\'s Rules for Rural Cellular Service, CC
    Docket 85-388, *Second Report and Order*, 2 FCC Rcd 2306,
    *modified,* Amendment of the Commission\'s Rules for Rural Cellular
    Service, CC Docket 85-388, *Order on Reconsideration of Second
    Report and Order*, 4 FCC Rcd 5377, 5379-5380 (1989); Amendment of
    the Commission\'s Rules for Rural Cellular Service, CC Docket
    85-388, *Fifth Report and Order*, 3 FCC Rcd 6401 (1988). In the
    *Unserved Area Second Report and Order*, the Commission adopted a
    mathematical formula which approximated the 32 dBu contour which was
    believed to be the minimum strength required for reliable cellular
    service. The Commission also required that the CGSAs of carriers be
    drawn back to be coterminous with their actual areas of service. In
    the *Unserved Area Third Report and Order*, the Commission set out a
    separate mathematical formula applicable to the Gulf of Mexico
    service area.

[^54]: The water formula adopted by the Commission was based on
    measurement data submitted by PetroCom.

[^55]: *Second Further Notice*, 12 FCC Rcd at 4593, para. 38.

[^56]: *See* Application of Petroleum Comms., Inc. to Construct a
    Developmental Cellular Radio Telephone System in the Gulf of Mexico,
    *Memorandum Opinion and Order*, 54 Rad. Reg. 2d (P&F) 1020 (1983);
    Applications of Petroleum Comms., Inc. and Gulf Star Comms., Inc.,
    and Fluor Engineers, Inc., for Authority to Construct Cellular Radio
    Telecommunications Systems in the Gulf of Mexico, *Memorandum
    Opinion and Order on Reconsideration*, 56 Rad. Reg. 2d (P&F) 1651
    (1984).

[^57]: *See* Applications of Petroleum Comms., Inc., and Gulf Cellular
    for New Domestic Cellular Radio Telecommunications Service Systems
    in the Gulf of Mexico, File No. 30003-CL-P-84, *Order on
    Reconsideration*, 1 FCC Rcd 511 (1986); Applications of Petroleum
    Comms., Inc., and Gulf Cellular for New Domestic Cellular Radio
    Telecommunications Service Systems in the Gulf of Mexico, File No.
    30003-CL-P-84, *Order on Reconsideration*, 2 FCC Rcd 3695 (1987).

[^58]: *Second Further Notice*, 12 FCC Rcd at 4593-4594, para. 40. *See*
    47 C.F.R. § 22.912. Section 22.912 provides that a SAB extension
    outside of a licensee's CGSA and into an adjacent market is
    permissible if the extension is *de minimis* or if the extension
    results from a contract with applicants or other licensees to allow
    SAB extensions into their CGSAs.

[^59]: *Second Further Notice*, 12 FCC Rcd at 4587, para. 22.

[^60]: *Id.* at 4588-4589, para. 26.

[^61]: *Id.* at 4594, para. 41.

[^62]: *Id.*

[^63]: *Id.* at 4598, para. 56.

[^64]: *Second Further Notice*, 12 FCC Rcd at 4601, para. 63.

[^65]: *Id.* at 4599-4601, paras. 58-63.

[^66]: Stratos Offshore Services Further Comments at 3-10.

[^67]: DW Communications Further Comments at 8-15.

[^68]: Sprint Further Comments at 1-7; Verizon Wireless Comments at 1-5.

[^69]: Amendment of the Commission's Rules to Establish Part 27, the
    Wireless Communications Service, *Report and Order*, 12 FCC Rcd
    10735 (1997).

[^70]: Amendment of the Commission's Rules Regarding Multiple Address
    Systems, WT Docket No. 97-81, *Memorandum Opinion and Order*, FCC
    01-171 (rel. May 29, 2001).

[^71]: In The Matter Of Service Rules For The 746-764 And 776-794 MHz
    Bands, and Revisions To Part 27 Of The Commission\'s Rules, WT
    Docket No. 99-168, *Second Report and Order*, 15 FCC Rcd 5299
    (2000).

[^72]: Amendment to Parts 1, 2, 87, and 101 of the Commission's Rules To
    License Fixed Services at 24 GHz, WT Docket No. 99-327, *Order on
    Reconsideration*, FCC 01-151 (rel. May 17, 2001).

[^73]: In the Matter of Service Rules for the 746-764 and 776-794 MHz
    Bands, and Revisions to Part 27 of the Commission's Rules, WT Docket
    No. 99-168, *First Report and Order*, 15 FCC Rcd 8634 (2000).

[^74]: The Commission recently created a Gulf licensing area with
    respect to the 698-746 MHz band \["Channels 52-59"\] and is
    considering a Gulf market in 4.9 GHz. *See e.g.* In the Matter of
    Reallocation and Service Rules for the 698-746 MHz Spectrum Band
    (Television Channels 52-59), GN Docket No. 01-74; *Report and
    Order*, FCC 01-364 (release pending).

[^75]: For example, MTAs, BTAs, and EAs are all based on county
    boundaries. The distance that the boundaries of coastal counties
    extend over water varies by state. The county boundaries of Texas
    and Florida extend three marine leagues (nine nautical miles) out
    from the water line, the county boundary of Louisiana extends three
    imperial nautical miles (imperial nautical mile = 6080.2 feet) into
    the Gulf, and all other states\' boundaries extend three nautical
    miles (approximately 3.3 statute miles) from the baseline into the
    Gulf.

[^76]: *See* Letter from Kenneth W. Burnley, Myers Keller Communications
    Law Group, to David Furth, Federal Communications Commission, dated
    February 21, 1997.

[^77]: *See, e.g.,* call signs KNRU807-KNRU822.

[^78]: *See Second Further Notice*, 12 FCC Rcd at 4600, para. 62. We
    also sought comment on whether to create an 800 MHz SMR Gulf
    geographic licensing area. *Id.*

[^79]: PetroCom opposed creation of an SMR geographic Gulf licensing
    area, as did Nextel and AMTA. *See* AMTA Comments at 6; Nextel
    Comments at 3-4; PetroCom Comments at 18-19; Nextel Reply Comments
    at 2-4; PetroCom Reply Comments at 25. API and SOSCo (now Stratos)
    supported the idea. API Comments at 7-8; SOSCo Comments at 5; SOSCo
    Reply Comments at 6. In a January 2000 petition for reconsideration
    in the 800 MHz SMR proceeding, PetroCom reversed its prior position
    and sought the creation of a Gulf licensing area in the Lower 800
    MHz SMR band prior to the auction of EA licenses in that band. *See*
    Petition for Reconsideration, PR Docket No. 93-144, filed by
    Petroleum Communications, Inc., on January 19, 2000. We received no
    comments on the petition. After the auction had occurred, we
    dismissed the petition, noting the pendency of this proceeding.
    *See* Amendment of Part 90 of the Commission's Rules to Facilitate
    Future Development of SMR Systems in the 800 MHz Frequency Band, PR
    Docket No. 93-144, *Third Order on Reconsideration*, 16 FCC Rcd 2866
    (2001). In light of the lack of comments and the time that has
    elapsed since PetroCom filed the petition, we conclude that the
    record does not support taking action in this proceeding based on
    PetroCom's request.

[^80]:

[^81]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et. seq*.,
    has been amended by the Contract With America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of
    the CWAAA is the Small Business Regulatory Enforcement Fairness Act
    of 1996 (SBREFA).

[^82]: Cellular Service and Other Commercial Mobile Radio Services in
    the Gulf of Mexico, WT Docket No. 97-112; Amendment of Part 22 of
    the Commission\'s Rules to Provide for Filing and Processing of
    Applications for Unserved Areas in the Cellular Service and to
    Modify Other Cellular Rules, CC Docket No. 90-6, *Second Further
    Notice of Proposed Rule Making*, 12 FCC Rcd 4578 (1997) (*Second
    Further Notice*). Although the *Second Further Notice* was adopted
    and released in 1997, it was inadvertently not published in the
    Federal Register at that time, as required under the Administrative
    Procedure Act. The *Second Further Notice* was published in the
    Federal Register on April 25, 2000. 65 Fed. Reg. 24168. The IRFA was
    inadvertently not published in the Federal Register at the time, as
    required by the RFA. The IRFA was published in the Federal Register
    on September 26, 2000, 65 Fed. Reg. 57798.

[^83]: *See* 5 U.S.C. § 604.

[^84]: *Petroleum Communications, Inc. v. FCC*, 22 F.3d 1164 (D.C. Cir.
    1994) (*PetroCom*).

[^85]: Amendment of Part 22 of the Commission's Rules to Provide for
    Filing and Processing of Applications for Unserved Areas in the
    Cellular Service and to Modify Other Cellular Rules, CC Docket 90-6,
    *Third Report and Order and Memorandum Opinion and Order on
    Reconsideration*, 7 FCC Rcd 7183 (1992) (*Unserved Area Third Report
    and Order*).

[^86]: *PetroCom*, 22 F.3d at 1173.

[^87]: *Id.* (vacating former rule section 22.903(a), as it applied to
    the Gulf carriers).

[^88]: *Second Further Notice*, 12 FCC Rcd at 4578, paras. 3-4.

[^89]: *Id.* at 4589, para. 27.

[^90]: *Id*.

[^91]: Implementation of Section 309(j) of the Communications Act \--
    Competitive Bidding; Amendment of Part 22 of the Commission's Rules
    to Provide for the Filing and Processing of Applications for
    Unserved Areas in the Cellular Service and to Modify Other Cellular
    Rules, *Ninth Report and Order,* 11 FCC Rcd 14769 (1996).

[^92]: *Second Further Notice*, 12 FCC Rcd at 4601, para. 63.

[^93]: ALLTEL Further Comments at 9-10; AT&T Further Reply Comments at
    2; BellSouth Further Comments at 2; Centennial Ex Parte at 2; Dobson
    Further Reply Comments at 3; GTE Further Comments at 13; and
    MobilTel Reply Comments at 2.

[^94]: Initially, many land-based carriers supported the creation of an
    Exclusive Zone but advocated extending their market boundaries to
    the boundary of the Exclusive Zone in lieu of creating a separate
    Coastal Zone. *See* AT&T Wireless Comments at 4; AT&T Wireless Reply
    Comments at 4-5; Palmer Comments at 3-4; Texas RSA Reply Comments at
    1-3; BellSouth Comments at 4; Centennial Reply Comments at 2; GTE
    Comments at 2-3; GTE Reply Comments at 3; MobileTel Comments at 2;
    MobileTel Reply Comments at 3; SBMS Comments at 9. This approach,
    according to these commenters, would be consistent with geographic
    areas established in other services and would promote regulatory
    parity among wireless services. 360º Reply Comments at 5; AT&T
    Wireless Comments at 6; Centennial Reply Comments at 2; GTE Reply
    Comments at 9-10.

[^95]: ALLTEL Further Comments at 9-10.

[^96]: According to ALLTEL and supporting commenters, this two-zone
    approach simultaneously addresses the land carriers' interest in
    providing reliable service to their customers throughout their
    licensed areas and the Gulf carriers' interest in being able to
    relocate sites without forfeiting CGSA. ALLTEL Further Comments at
    9-10; AT&T Further Reply Comments at 2; BellSouth Further Comments
    at 2; Centennial Ex Parte at 2; Dobson Further Reply Comments at 3;
    GTE Further Comments at 13; and MobilTel Reply Comments at 2.

[^97]: PetroCom and US Cellular also propose that certain non-mutually
    exclusive Phase II applications to serve coastal waters should be
    granted.

[^98]: Comments of Bachow/Coastel at 5-6; Written *Ex Parte*
    Presentation of Bachow/Coastel, L.L.C., filed April 4, 2001 at i.

[^99]: *Id.* at 8.

[^100]: Coastel Further Comments at 5-6, 16.

[^101]: *See e.g.* ProNet Comments at 3; SOSCo Comments at 4; API Reply
    Comments at 4-5; Stratos Offshore Services Further Comments at 3-10.

[^102]: *See e.g.* BellSouth Reply Comments at 2-3; Nextel Reply
    Comments at 3; Sprint PCS Reply Comments at 2-3.

[^103]: DW Communications Further Comments at 8-15.

[^104]: *See e.g.* BellSouth Reply Comments at 2-3; Sprint PCS Reply
    Comments at 2; Sprint Further Comments at 1-7; Verizon Wireless
    Comments at 1-5.

[^105]: *See e.g.* Centennial Reply Comments at 8-9; Radiofone Comments
    at 8; PetroCom and US Cellular Joint Comments.

[^106]: *See e.g.* Coastel Comments at 25; Coastel Reply Comments at 24;
    PetroCom Comments at 13-14.

[^107]: *See e.g.* 360° Communications Comments at 10; AT&T Wireless
    Comments at 7; MobileTel Comments at 6; Palmer Comments at 12; AT&T
    Wireless Reply Comments at 7; BellSouth Reply Comments at 7-8; SBMS
    Reply Comments at 4.

[^108]: *See e.g.* 360° Communications Comments at 7; AT&T Wireless
    Comments at 10; Palmer Comments at 10; Vanguard Comments at 5;
    Coastel Reply Comments at 18-19.

[^109]: *See e.g.* 360° Communications Comments at Attachment A, 3-4.
    360° Communications argues that the hybrid formula would have to
    determine where the land/water boundaries exist and that the only
    way to do that in predictive models is through the use of digital
    topography data. 360º argues that use of the hybrid formula would
    place an undue burden upon carriers because the digital topography
    data is extremely expensive.

[^110]: *See* *Ex Parte* Submission of Revised Proposal as Alternative
    to Proposed Rules Pursuant to the Regulatory Flexibility Act of
    PetroCom at 1, filed August 21, 2001.

[^111]: *Id*. at 3-4.

[^112]: *Id*. at 4.

[^113]: *Id*. at 4-5.

[^114]: *Id*. at 5-6.

[^115]: *Id*.

[^116]: *Id*.

[^117]: *Id.* at 6.

[^118]: *Id.*

[^119]: *Id.* at 7-8.

[^120]: *Id.* at 10-11.

[^121]: 5 U.S.C. § 603(b)(3).

[^122]: 5 U.S.C. § 601(6).

[^123]: 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."

[^124]: 15 U.S.C. § 632.

[^125]: 13 C.F.R. § 121.201, NAICS code 513322.

[^126]: *1992 Census, Series UC92-S-1*, at Table 5, NAICS code 513322.

[^127]: *Trends in Telephone Service*, Table 16.3 (December 2000).

[^128]: 13 C.F.R. § 121.201, NAICS code 513322.

[^129]: U.S. Bureau of the Census, U.S. Department of Commerce, 1992
    Census of Transportation, Communications, and Utilities, UC92‑S‑1,
    Subject Series, Establishment and Firm Size, Table 5, Employment
    Size of Firms; 1992, NAICS codes 513321, 513322, and 51333.

[^130]: *220 MHz Third Report and Order*, 12 FCC Rcd 10943, 11068‑70, at
    paras. 291‑295 (1997).

[^131]: *Id.* at 11068‑69, para. 291.

[^132]: *See* Letter to D. Phythyon, Chief, WirelessTelecommunications
    Bureau (FCC) from A. Alvarez, Administrator, SBA, dated January 6,
    1998.

[^133]: *See generally* \"220 MHz Service Auction Closes,\" *Public
    Notice*, 14 FCC Rcd 605 (1998).

[^134]: "FCC Announces It is Prepared to Grant 654 Phase II 220 MHz
    Licenses After Final Payment is Made,\" *Public Notice*, 14 FCC Rcd
    1085 (1999).

[^135]: "Phase II 220 MHz Service Spectrum Auction Closes," *Public
    Notice*, 14 FCC Rcd 11218 (1999).

[^136]: *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).

[^137]: *See generally* "220 MHz Service Auction Closes," *Public
    Notice*, Report No. WT 98-36 (WTB, rel. October 23, 1998).

[^138]: "700 MHz Guard Bands Auction Closes," *Public Notice*, 16 FCC
    Rcd 4590.

[^139]: 13 C.F.R. § 121.201, SIC code 4812.

[^140]: *Trends in Telephone Service*, Table 19.3 (February 19, 1999).

[^141]: *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).

[^142]: *See* *id.* at para. 60.

[^143]: *See*, *e.g*[.]{.underline}, Implementation of Section 309(j) of
    the Communications Act \-- Competitive Bidding, PP Docket
    No. 93-253, *Fifth Report and Order*, 9 FCC Rcd 5532, 5581-84
    (1994).

[^144]: FCC News, *Broadband PCS, D, E and F Block Auction Closes*, No.
    71744 (rel. January 14, 1997).

[^145]: 47 C.F.R. § 90.814(b)(1).

[^146]: ^.^

[^147]: 5 U.S.C. § 603 (c).

[^148]: *See* 47 C.F.R. § 22.912. Section 22.912 provides that a SAB
    extension outside of a licensee's CGSA and into an adjacent market
    is permissible if the extension is *de minimis* or if the extension
    results from a contract with applicants or other licensees to allow
    SAB extensions into their CGSAs.

[^149]: *See* 5 U.S.C. § 801(a)(1)(A).

[^150]: *See* 5 U.S.C. § 604(b).