Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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SECOND REPORT AND ORDER, ORDER ON RECONSIDERATION, AND

SECOND FURTHER NOTICE OF PROPOSED RULEMAKING

**Adopted:** July 8, 2004 **Released:** September 2, 2004

**Comment Date:** November 17, 2004

**Reply Comment Date:** December 17, 2004

By the Commission: Chairman Powell; Commissioners Abernathy and Martin
issuing separate statements; Commissioner Adelstein approving in part,
dissenting in part, and issuing a statement; Commissioner Copps
dissenting and issuing a statement.

Table of Contents

Heading Paragraph \#

I. Introduction 1

II\. Executive Summary 4

III\. background 7

IV\. second report and order 10

A. Spectrum Leasing Arrangements 10

1\. Additional Streamlining of Procedures for Certain Categories of
Spectrum Leases 10

a\. Immediate approval of certain categories of *de facto* transfer
leases that are subject to our forbearance authority 11

\(i\) Background 11

\(ii\) Discussion 14

b\. Immediate approval of certain categories of *de facto* transfer
leases that are not subject to forbearance 38

\(i\) Background 38

\(ii\) Discussion 39

c\. Applying the immediate approval procedures to short-term *de facto*
transfer leases 42

\(i\) Background 42

\(ii\) Discussion 43

d\. Immediate processing of certain categories of spectrum manager
leases 46

\(i\) Background 46

\(ii\) Discussion 47

2\. Extending Spectrum Leasing Policies to Additional Spectrum-Based
Services 51

a\. Background 51

b\. Discussion 52

3\. Spectrum Leasing Policies Applicable to Designated
Entity/Entrepreneur Licensees 67

a\. Background 67

b\. Discussion 69

4\. Application of the *De Facto* Control Standard for Spectrum Leasing
with regard to Other Issues and Types of Arrangements 83

a\. Background 83

b\. Discussion 84

B. Policies to Facilitate Advanced Technologies 85

1\. Background 85

2\. Discussion 86

a\. Facilitating advanced technologies within existing regulatory
frameworks, including dynamic spectrum leasing arrangements 88

b\. Private commons 91

C. License Assignments and Transfers of Control 100

1\. Immediate Approval Procedures for Certain Categories of License
Assignments and Transfers of Control 100

a\. Background 100

b\. Discussion 101

2\. Extending the Streamlined Processing Policies Relating to License
Assignments and Transfers of Control to Additional Wireless Radio
Services 109

a\. Background 109

b\. Discussion 110

D. The Commission's Role in Providing Secondary Markets Information and
Facilitating Exchanges 112

1\. Background 112

2\. Discussion 113

V. order on reconsideration 116

A. Licensee Responsibility To Ensure That Spectrum Lessees Comply With
Commission Policies and Rules 116

1\. The licensee's responsibility to ensure the spectrum lessee's
compliance with Commission policies and rules 119

a\. Spectrum manager leasing arrangements 121

b\. *De facto* transfer leasing arrangements 123

2\. The licensee's responsibility to terminate a spectrum lease for
violations by the spectrum lessee 128

B. Protections for Licensees and Spectrum Lessees in the Event of
Termination of the Spectrum Lease or the License 132

1\. Procedural protections for licensees and spectrum lessees with
regard to Commission termination of a spectrum leasing arrangement 132

a\. Spectrum manager leasing arrangements 132

b\. *De facto* transfer leasing arrangements 136

2\. Protections for spectrum lessees in the event of license termination
140

C. Licensee Responsibility for Meeting Construction Obligations 144

D. Responsibility for Compliance With Cost-Sharing Obligations for
Relocation of Microwave Licensees in Broadband PCS 147

E. Miscellaneous Additional Clarifications and Revisions 150

VI\. Second FURTHER Notice of Proposed Rulemaking 159

VII\. Conclusion 166

VIII\. Procedural Matters 167

A. Comment Filing Procedures 167

B. *Ex Parte* Presentations 175

C. Final Regulatory Flexibility Analysis 176

D. Paperwork Reduction Act of 1995 Analysis 177

E. Initial Regulatory Flexibility Analysis 178

F. Contact Information 179

IX\. Ordering clauses 180

[APPENDICES]{.underline}:

Appendix A -- Commenting Parties

Appendix B -- Petitions for Reconsideration

Appendix C -- Final Rules

Appendix D -- Final Regulatory Flexibility Analysis

Appendix E -- Initial Regulatory Flexibility Analysis

# Introduction 

1.  On May 15, 2003, we took significant first steps to facilitate the
    development of secondary markets in spectrum usage rights involving
    our Wireless Radio Services when we adopted our *Report and Order
    and Further Notice of Proposed Rulemaking* (*Report and Order* and
    *Further Notice*, respectively) in this proceeding.[^1] In the
    *Report and Order*, we established policies and rules to enable
    spectrum users to gain access to licensed spectrum by entering into
    different types of spectrum leasing arrangements with licensees in
    most Wireless Radio Services.[^2] In addition, we streamlined the
    Commission's approval procedures for license assignments and
    transfers of control in most Wireless Radio Services.[^3] These
    steps advanced the general goal set forth in the Commission's
    *Secondary Markets Policy Statement*, namely that of significantly
    expanding and enhancing secondary markets to permit spectrum to flow
    more freely among users and uses in response to economic demand, to
    the extent consistent with our public interest objectives.[^4] The
    policies we implemented also were consistent with several spectrum
    policy recommendations of the *Spectrum Policy Task Force Report*,
    including allowing more flexible use of spectrum by licensees and
    other spectrum users, better defining licensees' and spectrum users'
    rights and responsibilities, enabling use of spectrum across various
    dimensions (frequency, space, and time), promoting the efficient use
    of spectrum, and providing for continued technological advances.[^5]
    In the *Further Notice*, we proposed additional measures to
    facilitate the development of spectrum leasing, and sought
    particular comment on policies that could facilitate spectrum access
    for advanced technologies.[^6]

2.  Building upon the spectrum leasing framework we established in the
    *Report and Order*, we take several additional steps in this Second
    Report and Order to further reduce regulatory delay so that spectrum
    leasing parties in our Wireless Radio Services can implement certain
    classes of spectrum leasing arrangements in a more timely fashion,
    in accord with evolving marketplace demands and customer needs. As
    with the underlying *Report and Order*, these actions take us
    further down the path toward greater reliance on the marketplace,
    thus expanding the scope of available wireless services and devices
    and enabling more efficient and dynamic use of spectrum to the
    ultimate benefit of consumers throughout the country.[^7] In
    addition, we implement policies enabling licensees and spectrum
    lessees to develop and manage "private commons" to provide more
    access to spectrum users and to take advantage of many of the
    advanced technologies that are being developed in the marketplace.
    Finally, we further streamline Commission approval procedures for
    certain classes of assignments and transfers of control in our
    Wireless Radio Services.

3.  These additional steps to facilitate the development of secondary
    markets expand upon and complement several of the Commission's major
    policy initiatives and public interest objectives. These include our
    efforts to encourage the development of broadband services for all
    Americans, promote increased facilities-based competition among
    service providers, enhance economic opportunities and access for the
    provision of communications services, and enable development of
    additional and innovative services in rural areas.

# Executive Summary

4.  In this Second Report and Order,[^8] we adopt several of the
    proposals set forth in the *Further Notice*, along with additional
    policies, to further facilitate the development of secondary markets
    in spectrum usage rights. Specifically, we --

-   Adopt immediate approval procedures for certain categories of *de
    facto* transfer spectrum leasing arrangements that do not raise
    potential public interest concerns relating to eligibility and use,
    foreign ownership, designated entity/entrepreneur matters, or
    competition;

-   Further streamline our processing of short-term *de facto* transfer
    leases by replacing the Special Temporary Authority (STA) procedures
    with these new immediate approval procedures;

-   Further streamline our processing of certain categories of spectrum
    manager leasing arrangements that do not raise potential public
    interest concerns relating to eligibility and use, foreign
    ownership, designated entity/entrepreneur matters, or competition
    (consistent with the new policies we adopt for certain categories of
    *de facto* transfer leasing arrangements);

-   Extend our spectrum leasing policies to additional Wireless Radio
    Services, including Public Safety services (so long as public safety
    licensees lease spectrum to other public safety entities or entities
    providing communications in support of public safety operations),
    Automated Maritime Telecommunications Systems (AMTS) services, and
    Multichannel Video Distribution and Data Service (MVDDS);

-   Clarify our spectrum leasing policies with regard to designated
    entity and entrepreneur licensees;

-   Clarify existing policies with regard to the use of "smart" or
    "opportunistic" use technologies in the context of secondary
    markets, including clarification that dynamic spectrum leasing
    arrangements are permitted under the spectrum leasing policies;

-   Establish a new type of secondary market arrangement that
    facilitates the development of "private commons" in licensed
    wireless radio spectrum;

-   Adopt the same immediate approval procedures for certain categories
    of license assignments and transfers of control as adopted for *de
    facto* transfer spectrum leasing arrangements; and

-   Extend our policies for streamlined processing of license
    assignments and transfers of control to all of the Wireless Radio
    Services regulated by the Wireless Telecommunications Bureau
    (Bureau).

5.  In the Order on Reconsideration,[^9] we address five petitions for
    reconsideration that we received with regard to the *Report and
    Order.* These petitions touched on a variety of issues, including
    the licensee's responsibility to ensure its spectrum lessee's
    compliance with Commission policies and rules, protections for the
    licensee or spectrum lessee in the event a spectrum lessee or a
    license is terminated, and the respective responsibilities of
    licensees and spectrum lessees regarding particular service rules.

6.  Finally, in the Second Further Notice of Proposed Rulemaking,[^10]
    we seek comment on additional steps we could take to facilitate the
    development of secondary markets in spectrum usage rights. In
    particular, we request comment on policies that would further
    enhance the development of advanced technologies. []{.mark}

# background

7.  In the *Report and Order*, we took important first steps to
    facilitate significantly broader access to valuable spectrum
    resources by enabling a wide array of facilities-based providers of
    broadband and other communications services to enter into spectrum
    leasing arrangements with Wireless Radio Service licensees.
    Specifically, we established two different spectrum leasing
    approaches based on the scope of the rights and responsibilities to
    be assumed by the spectrum lessee. Under the first leasing option --
    "spectrum manager" leasing -- we enabled parties to enter into
    spectrum leasing arrangements without prior Commission approval so
    long as the licensee retains both *de jure* control[^11] of the
    license and *de facto* control over the leased spectrum pursuant to
    the updated *de facto* control standard for leasing.[^12] Under the
    second option -- "*de facto* transfer" leasing -- we permitted
    parties, pursuant to a streamlined approval process, to enter into
    leasing arrangements whereby the licensee retains *de jure* control
    of their licenses while *de facto* control over the use of the
    leased spectrum, and associated rights and responsibilities, are
    transferred for a defined period to the spectrum lessees. Parties
    may enter into either long-term or short-term *de facto* transfer
    leases, with some variation in the policies and procedures that
    apply to each type.[^13] We also adopted streamlined Commission
    approval procedures for license assignments and transfers of control
    involving many of our Wireless Radio Services.[^14]

8.  In the *Further Notice*, we sought comment on various ways in which
    the Commission could further enhance opportunities for spectrum
    access, efficiency, and innovation by removing unnecessary
    regulatory barriers and implementing more market-oriented policies
    that would facilitate moving spectrum to its highest valued
    uses.[^15] In particular, we sought comment on whether we could
    further streamline our processing of spectrum leasing arrangements
    and license assignments and transfers of control that did not raise
    a specified set of potential public interest concerns -- relating to
    eligibility and use restrictions, foreign ownership, designated
    entity/entrepreneur issues, or competition -- that would merit
    individualized Commission review.[^16] We requested comment on
    whether our spectrum leasing policies should be extended to
    additional services,[^17] and whether other actions should be taken
    to facilitate the development of secondary markets in spectrum usage
    rights.[^18] Finally, we inquired as to what specific steps we could
    take, in the context of secondary markets, to maximize the potential
    public benefits enabled by advanced technologies, such as
    opportunistic devices.[^19]

9.  In response to the *Further Notice*, we received twenty-one (21)
    comments and ten (10) reply comments.[^20] Five parties filed
    petitions for reconsideration of the *Report and Order*, and several
    parties filed oppositions or comments in response*.*[^21]

#  second report and order

## Spectrum Leasing Arrangements

### Additional Streamlining of Procedures for Certain Categories of Spectrum Leases 

10. In the *Report and Order*, we took significant steps to develop
    spectrum leasing policies for many of our Wireless Radio Services
    and to streamline the regulatory processes applicable to parties
    that seek to enter into these types of arrangements. In the *Further
    Notice*, we proposed additional steps to further reduce unnecessary
    delay in the implementation of certain categories of spectrum
    leasing arrangements to the extent doing so would be consistent with
    meeting our statutory obligations that such transactions would be in
    the public interest.[^22] In this Second Report and Order, we adopt
    several measures to remove unnecessary delay in the implementation
    of spectrum leasing arrangements, as explained herein.

#### Immediate approval of certain categories of *de facto* transfer leases that are subject to our forbearance authority 

##### Background

11. Under current spectrum leasing policies and procedures, licensees
    and spectrum lessees may enter into both long- and short-term *de
    facto* transfer leases pursuant to streamlined application and
    approval procedures.[^23] Specifically, parties that seek to enter
    into long-term *de facto* transfer leasing arrangements submit their
    applications, which are then placed on public notice[^24] and
    subject to further individualized Commission review prior to grant.
    The applications then are approved (or denied) by the Wireless
    Telecommunications Bureau (Bureau) within twenty-one (21) days
    unless they are removed from streamlined processing for further
    review based on potential public interest concerns identified by the
    Commission or in petitions to deny.[^25] Parties that seek to enter
    into short-term *de facto* transfer leases do so pursuant to the
    same processes applicable to STAs. These applications, which are not
    placed on prior public notice, are acted upon by the Bureau within
    ten (10) days if specified conditions are met.[^26] Consistent with
    our policies for other approvals, approval of both of these types of
    *de facto* transfer lease applications also is subject to the
    Commission's reconsideration procedures.[^27]

12. In the *Further Notice*, we sought comment on whether we could
    minimize delay in the timely implementation of *de facto* transfer
    leases by eliminating unnecessary regulatory review for certain
    classes of spectrum leases. For *de facto* transfer leases subject
    to our forbearance authority under Section 10 of the Communications
    Act,[^28] we proposed to forbear, to the extent necessary, from
    requiring prior public notice and individualized Commission review
    and approval for spectrum leasing arrangements that did not raise
    any of a specified set of potential public interest concerns.[^29]

13. Specifically, we proposed that if the spectrum lessee satisfied
    certain eligibility requirements and applicable use
    restrictions,[^30] and the spectrum lease did not raise specified
    potential public interest concerns relating to foreign
    ownership,[^31] designated entity/entrepreneur,[^32] or competition
    policies,[^33] we would require only that the spectrum leasing
    parties notify the Commission of the spectrum leasing arrangement
    within 14 days of executing the lease.[^34] Once the parties
    notified the Commission of a spectrum leasing arrangement that met
    these qualifications, we proposed that the lease would be deemed
    approved as of the time that the Bureau placed it on public
    notice.[^35] Thereafter, our approval of the spectrum leasing
    arrangement would be subject to the Commission's reconsideration
    procedures. Any interested party would be entitled, consistent with
    our rules and policies concerning standing, to petition for
    reconsideration of our approval of the spectrum leasing arrangement
    within 30 days of the public notice date.[^36] Similarly, the Bureau
    would be able to reconsider the grant on its own motion within 30
    days of the public notice date, and the Commission could reconsider
    the grant on its own motion within 40 days of the public notice
    date.[^37] We also inquired whether there were additional classes of
    leases that might raise other public interest concerns for which
    prior individualized Commission review and approval would continue
    to be appropriate.[^38]

##### Discussion

14. Consistent with the broad support by commenters for the general
    forbearance proposal set forth in the *Further Notice*,[^39] we
    adopt this proposal, with certain modifications, as discussed
    herein. Under the approach we adopt, spectrum leasing parties[^40]
    that seek to enter into *de facto* transfer spectrum leases that
    qualify under this forbearance approach may file their spectrum
    lease application[^41] with the Commission, which in turn will be
    immediately approved under the procedures set forth below.[^42]
    Because we determine that *de facto* transfer leases meeting the
    specifications described below do not raise potential public
    interest concerns that would necessitate prior public notice or more
    individualized review, we believe that removing this unnecessary
    round of notice and regulatory review is appropriate, pursuant to
    our forbearance authority. This action serves the Commission's
    policy goals of facilitating secondary markets in spectrum usage
    rights by enabling parties to implement spectrum leasing
    arrangements without undue delay. At the same time, it continues to
    protect the public interest by subjecting these arrangements,
    following approval, to public notice and possible additional review
    under the Commission's reconsideration procedures should that be
    warranted.

###### Elements of *de facto* transfer leasing transactions that would not require prior public notice and individualized Commission review

15. We will permit all *de facto* transfer spectrum leases that are
    subject to the Commission's forbearance authority and that do not
    potentially raise certain specified public interest concerns to
    proceed pursuant to the application and immediate grant procedures
    set forth in Section IV.A.1.a(ii)(b), below. As discussed in this
    section, if a particular *de facto* transfer leasing arrangement
    does not raise potential concerns relating to eligibility and use
    restrictions, foreign ownership restrictions, designated
    entity/entrepreneur restrictions, or competition, we conclude, under
    our forbearance authority, that we need no longer require prior
    public notice and individualized Commission review before the
    spectrum lease may become effective.[^43] Therefore, once parties
    file a spectrum leasing application consistent with these
    requirements, it will immediately be approved under the policies and
    rules we are adopting herein, and spectrum lessees may commence
    operations as provided under the terms of the lease.[^44]

16. *Eligibility and use restrictions.* As proposed in the *Further
    Notice*, parties seeking to use the application/immediate approval
    procedures adopted under this forbearance approach for *de facto*
    transfer spectrum leases must comply, *inter alia*, with the
    applicable eligibility and use restrictions. Accordingly, we require
    that, in the spectrum leasing application submitted to the
    Commission, the spectrum lessee must certify that it meets the basic
    qualification requirements for holding the license authorization
    associated with the lease and that it will comply with all
    applicable use restrictions.[^45]

17. As discussed in the *Further Notice*, we believe that spectrum
    lessee compliance with these requirements is necessary because, in
    many services, we continue to have eligibility and use restrictions
    that were adopted in furtherance of certain public interest
    objectives.[^46] While we seek to promote licensee flexibility and
    facilitate secondary markets where appropriate, we do not intend for
    policies adopted in this proceeding to be used as a means for
    evading requirements that remain in effect for a given service.[^47]
    Having spectrum lessees certify to the Commission that they will
    comply with applicable eligibility and use restrictions will ensure
    that spectrum leasing arrangements approved under the forbearance
    approach do not undermine these policies.

18. Consistent with the policies we adopted in the *Report and Order*,
    the applicable eligibility restrictions are the same for both
    long-term and short-term *de facto* transfer leases.[^48] The
    applicable use restrictions may, however, differ depending on
    whether a long or short-term *de facto* transfer lease is
    involved.[^49] As provided in the *Report and Order*, we permit some
    additional flexibility under short-term *de facto* transfer leasing
    with respect to one particular set of use restrictions;
    specifically, we permit licensees with service authorizations that
    restrict use of spectrum to non-commercial uses to enter into
    short-term *de facto* transfer leases to allow the spectrum lessee
    to use it commercially.[^50]

19. *Foreign ownership.* As we generally proposed in the *Further
    Notice*, we determine that spectrum lessees seeking to enter into
    *de facto* transfer leases under this forbearance approach must be
    able to certify that they comply with specific requirements,
    described below, to ensure that the spectrum lease does not raise
    foreign ownership concerns under Section 310 of the Act that remain
    unaddressed prior to implementation of the lease. This approach will
    enable most *de facto* transfer leases to proceed immediately, while
    ensuring that the Commission and the Executive Branch have the
    opportunity to review any lease that may raise potential foreign
    ownership concerns prior to that spectrum lease going into effect.

20. Under the policy we are adopting, the spectrum lessee must certify
    that it is not a foreign government or representative thereof,
    consistent with the Section 310(a) requirements.[^51] Second, if the
    spectrum lease involves a common carrier radio authorization, the
    spectrum lessee must certify that it is not an alien or
    representative thereof, a corporation organized under the laws of
    any foreign government, or have more than 20 percent direct foreign
    ownership, in accord with the requirements of Sections
    310(b)(1)-(3).[^52]

21. Finally, consistent with our policies under Section 310(b)(4),[^53]
    as explained in the *Further Notice*,[^54] the spectrum lessee must
    certify either (1) that it does not have more than 25 percent
    indirect foreign ownership or (2) that it has previously obtained a
    declaratory ruling from the Commission in advance of entering into
    the subject spectrum lease that establishes that the spectrum lease
    falls within the scope of that declaratory ruling (including the
    type of service and geographic coverage area) and that there has
    been no change in foreign ownership in the meantime. We emphasize
    that the spectrum lessee is primarily and directly responsible for
    ensuring that the scope of its prior declaratory ruling covers the
    proposed lease transaction. If it does not, the spectrum lessee must
    obtain a supplemental ruling that would apply to the particular
    transaction, and must do so *prior* to filing under the new
    immediate approval procedures. For example, a spectrum lessee may
    have previously received a ruling that approved its acquisition of a
    specific group of common carrier microwave licenses, or that
    approved its acquisition of a controlling interest in a carrier that
    holds a specific group of common carrier microwave licenses. Such a
    ruling would not cover a future spectrum lease of PCS spectrum. In
    such circumstances, in order for the spectrum lessee to be able to
    satisfy the certification requirement, it must first request and
    obtain from the Commission a supplemental ruling to cover the
    spectrum leasing arrangements involving PCS spectrum.

22. We recognize that this approach could require a spectrum lessee with
    indirect foreign ownership above 25 percent to file multiple Section
    310(b)(4) requests in order to take advantage of the new immediate
    approval procedures for spectrum leases. The need to make multiple
    filings for Section 310(b)(4) approval could undercut many of the
    efficiencies provided by the new procedures. In order to minimize
    the need to request multiple Section 310(b)(4) rulings, we will
    entertain petitions for Section 310(b)(4) rulings that seek to cover
    future spectrum leasing arrangements involving spectrum for services
    and geographic coverage areas specified in the petitions. We also
    will entertain petitions that seek to cover such spectrum leases
    entered into by the petitioning carrier, as well as by wholly-owned
    subsidiaries of that carrier. However, in order to discourage the
    filing of speculative petitions, which would impose undue
    administrative burdens on Commission resources, we note that we will
    entertain petitions for such "blanket" rulings only in conjunction
    with a spectrum lease application that would be covered by the
    requested ruling. Consistent with our current practice, we will
    forward the petition for declaratory ruling to the appropriate
    Executive Branch agencies and process the application under our
    current streamlined procedures, assuming the application is
    otherwise eligible for such processing. We believe this approach
    eliminates unnecessary regulatory hurdles for carriers seeking
    maximum flexibility to expand the scope of their service offerings,
    while continuing to ensure that the Commission and the Executive
    Branch have a meaningful opportunity to review applications and
    petitions for potential harms to national security, law enforcement,
    public safety, security of critical infrastructure, foreign policy,
    and trade policy.[^55]

23. We note that because the same foreign ownership policies apply to
    both long-term and short-term *de facto* transfer leasing
    arrangements,[^56] spectrum lessees under both of these types of *de
    facto* transfer lease applications will be required to make these
    certifications.

24. *Designated entity/entrepreneur eligibility.* Because designated
    entity and entrepreneur licensees have been conferred special
    benefits (*e.g.*, bidding credits, installment payment plans, or
    participation in closed bidding) by the Commission, and because
    these licensees may enter into long-term *de facto* transfer
    spectrum leasing arrangements only so long as such arrangements are
    consistent with our policies relating to applicable transfer
    restrictions and unjust enrichment payment obligations,[^57] we
    believe it is both necessary and appropriate to retain the ability
    to review all long-term *de facto* transfer spectrum leasing
    arrangements involving designated entity or entrepreneur licensees
    to ensure compliance with applicable policies and rules, and thus
    such leasing arrangements cannot be processed under these
    procedures.[^58] As we stated in the *Further Notice*, we do not
    intend for the forbearance approach to be used as a means to evade
    Commission rules,[^59] and we believe this to be especially
    important where the rules have been implemented to fulfill our
    statutory obligations.[^60] Given, however, that we have eliminated
    all of these restrictions with regard to short-term *de facto*
    transfer leases,[^61] we determine that applications involving
    short-term *de facto* transfer leases do not raise any potential
    public interest concerns relating to our designated entity or
    entrepreneur policies that would preclude the spectrum leasing
    parties from proceeding under our forbearance approach.

25. *Competition.* In light of the Commission's competition policies for
    Wireless Radio Services, we will permit spectrum leasing parties to
    proceed under our forbearance approach so long as the *de facto*
    transfer leasing arrangement does not raise potential competition
    concerns that merit prior public notice and Commission review before
    the application is approved. Consistent with our competition
    policies, however, we will exclude from this approach, at this time,
    all long-term *de facto* transfer leases involving spectrum that (1)
    is, or may reasonably be, used to provide interconnected mobile
    voice and/or data services and (2) creates a "geographic overlap"
    with other spectrum used to provide these services in which the
    spectrum lessee holds a direct or indirect interest (of 10 percent
    or more),[^62] either as a licensee or as a spectrum lessee. Because
    the latter class of *de facto* transfer leases potentially raise
    competition concerns, they will continue to be subject to
    case-by-case review and approval under the policies we adopted in
    the *Report and Order.*[^63]

26. As we noted in the *Report and Order*, assessment of potential
    competitive effects of spectrum leasing transactions remains an
    important element of our policies to promote facilities-based
    competition and guard against the harmful effects of anticompetitive
    conduct, and we thus apply the Commission's general competition
    policies to transactions involving long-term *de facto* transfer
    spectrum leases (as well as to spectrum manager leases).[^64] The
    approach we adopt herein, pursuant to our forbearance authority, is
    designed to be consistent with our current competition policies with
    regard to Wireless Radio Services. In examining transactions for
    possible competitive harm, the Commission has primarily focused its
    efforts in recent years on services that could potentially affect
    the product market for mobile telephony, which includes
    interconnected mobile voice and/or data services.[^65] Cellular,
    broadband Personal Communications Service (PCS), and Specialized
    Mobile Radio (SMR) services currently are used to provide CMRS
    services that potentially affect the mobile telephony market, and
    expressly are subject to the Commission's competition policies set
    forth in the *2000 Biennial Review Order on CMRS Aggregation
    Limits*.[^66] In addition, spectrum in several other services may
    currently, or at some time in the future, be used to provide such
    CMRS services; these services include several services licensed
    under Part 27 of our rules[^67] -- including the Wireless
    Communications Service (WCS),[^68] Broadband Radio Service,[^69]
    Advanced Wireless Service (AWS),[^70] the upper and lower 700 MHz
    bands,[^71] and the 1390-1392 MHz, 1392-1395/1432-1435 MHz, and
    2385-2390 MHz bands[^72] -- as well as narrowband PCS,[^73] various
    paging services,[^74] and mobile satellite service where the use of
    ancillary terrestrial components (ATC) is permissible.[^75]
    Accordingly, under the policies we adopt herein, we find that
    long-term *de facto* transfer leasing transactions that involve a
    geographic overlap between or among any of these listed services,
    and are to be used to provide mobile telephony service, continue to
    merit public notice and case-by-case review by the Commission prior
    to approval.[^76] Such transactions potentially raise public
    interest concerns relating to competition, and thus will not be
    subject to our forbearance approach at this time.

27. Thus, if the spectrum leasing transaction does not involve a
    geographic overlap with spectrum held by the spectrum lessee in any
    of the particular services listed, as described above, we will
    permit the leasing arrangement to proceed without prior public
    notice or case-by-case review. We note, however, that because of the
    emergence of new technologies and the convergence of different
    services (*e.g.*, wireline and wireless services),[^77] our
    identification of those classes of spectrum leasing arrangements
    currently raising possible competitive concerns may not always
    capture that class of transactions that may raise competitive
    concerns in the future. For instance, new product markets may emerge
    through the bundling of different services, thus requiring us to
    determine whether such a new product market may raise competitive
    concerns. Alternatively, competition issues might arise if there was
    significant intermodal consolidation of services. Accordingly, as
    the Commission gains more experience with regard to these
    transactions and the kinds of competitive concerns that may arise,
    further refinements may be made to the forbearance approach we are
    adopting herein. In addition, to the extent that we determine that a
    spectrum leasing transaction raises an unanticipated potential
    competitive concern (*e.g.*, new and evolving product markets,
    intermodal consolidation), we reserve the right to reconsider the
    grant of a spectrum leasing transaction during our reconsideration
    process.

28. *Other public interest concerns.* Finally, we note that *de facto*
    transfer leasing arrangements that would require waiver of
    Commission policies or rules, or a declaratory ruling relating to
    them, may not use the streamlined processing we are adopting under
    this forbearance approach. Requests for a waiver or declaratory
    ruling implicates other potential public interest concerns
    associated with the license or spectrum leasing authorization, and
    would first need to be approved by the Commission. This policy will
    be applied with respect to both long- and short-term *de facto*
    transfer leasing arrangements.

###### Application and immediate approval procedures

29. *Application/immediate approval procedures.* Consistent with the
    general proposal set forth in the *Further Notice*, we will no
    longer require prior public notice and individualized Commission
    review of *de facto* transfer leases that meet the requirements
    specified above. Under the policies and rules adopted herein,
    parties seeking to enter into such leasing arrangements will notify
    the Commission by filing *de facto* transfer lease applications,
    which in turn will be immediately approved under the procedures we
    are adopting herein. Specifically, if the spectrum leasing parties
    file their *de facto* transfer lease application in the Universal
    Licensing System (ULS), and the application establishes the
    requisite elements explained above and are otherwise complete and
    the payment of the requisite filing fees have been confirmed,[^78]
    the Bureau will process the application and provide immediate
    approval through ULS processing. Approval will be reflected in ULS
    on the next business day after filing the application. Upon
    receiving approval, spectrum lessees will have the authority to
    commence operations under the terms of the spectrum lease.[^79] The
    Bureau also will place the approved application on public
    notice.[^80] We note that, in order to allow parties to enter into
    spectrum leasing arrangements more quickly, the immediate approval
    procedures that we are adopting vary slightly from what was proposed
    in the *Further Notice* in that approval occurs prior to the date
    that the application is placed on public notice.[^81]

30. The changes adopted to facilitate even more efficient and timely
    processing of spectrum leasing transactions meeting the requirements
    set forth in this Second Report and Order necessitate changes to the
    ULS software and will required certain database updates. We
    accordingly direct the Bureau to undertake as soon as practicable
    the necessary programming changes to implement the provisions of
    this Second Report and Order and to modify as necessary any
    licensing databases. Once ULS is updated to permit the immediate
    approval process, we further direct the Bureau to release a public
    notice notifying the public that the new procedures are available.

31. *Post-approval reconsideration procedures.* We adopt the
    reconsideration procedures set forth in the *Further Notice*.[^82]
    Accordingly, we will place the approved *de facto* transfer leases
    on a weekly informational public notice. Any interested party may
    file a petition for reconsideration within 30 days of the public
    notice date.[^83] Similarly, the Bureau will be able to reconsider
    the grant on its own motion within 30 days of the public notice
    date, and the Commission can reconsider the grant on its own motion
    within 40 days of the public notice date.[^84]

32. These reconsideration procedures are consistent with our general
    reconsideration procedures for Bureau action taken on delegated
    authority, including action approving assignments and transfers of
    control under Sections 308, 309, and 310(d).[^85] We believe that
    these reconsideration procedures provide a sufficient opportunity
    for review by interested parties, the Bureau, or the Commission of
    any *de facto* transfer lease that meets the conditions for approval
    without prior public notice or Commission review. To the extent that
    issues are raised on reconsideration regarding whether a particular
    spectrum lease complies with Commission policies and rules, the
    Bureau or Commission may deny the spectrum leasing application on
    reconsideration or take other necessary action, including requiring
    revisions to the leasing arrangement if appropriate.

33. *Other issues.* Parties will be held accountable for any
    certifications they make in the spectrum leasing applications that
    enable them to take advantage of the immediate approval procedures
    set forth herein. To the extent that the Commission determines,
    post-approval, that any certification provided on the application,
    by either the licensee or spectrum lessee, is not true, complete,
    correct, and made in good faith, the Commission will be vigilant in
    taking appropriate enforcement action, potentially including
    forfeitures or termination of the spectrum leasing arrangement.[^86]
    In addition, we note that the Commission reserves the right,
    post-approval, to correct administrative errors.[^87]

######  Compliance with forbearance requirements

34. As stated above, we determine that for all qualifying *de facto*
    transfer leases -- *i.e.*, those subject to our Section 10
    forbearance authority and satisfying the elements set forth in
    Section IV.A.1.a(ii), above -- we will forbear from the applicable
    prior public notice requirements and individualized review
    requirements of Sections 308, 309, and 310(d) of the Communications
    Act,[^88] to the extent necessary, so that these spectrum leases may
    be approved pursuant to the procedures set forth in Section
    IV.A.1.a(ii)(b), above. Our decision to forbear meets the
    requirements of Section 10 of the Act, which enables the Commission
    to forbear from applying any regulation or provision of the Act to a
    telecommunications carrier or service, or class of
    telecommunications carriers or services, in any or some of its
    geographic markets, if the following three-prong test is satisfied:
    (1) enforcement of such regulation or provision is not necessary to
    ensure that the charges, practices, classifications, or regulations
    by, for, or in connection with that telecommunications carrier or
    telecommunications service are just and reasonable and are not
    unjustly or unreasonably discriminatory; (2) enforcement of such
    regulation or provision is not necessary for the protection of
    consumers; and (3) forbearance from applying such provision or
    regulation is consistent with the public interest.[^89]

35. Examining the first prong of the forbearance test, we conclude that
    for *de facto* transfer spectrum leases meeting the elements set
    forth in Section IV.A.1.a(ii)(a), above, the prior public notice and
    individualized review requirements of Sections 309(b)[^90] and
    310(d) are not necessary to ensure that a carrier's charges,
    practices, classifications, and services are just and reasonable,
    and not unjustly or unreasonably discriminatory.[^91] Indeed, even
    when parties file applications proposing a transfer of control or
    assignment of a license, such applications do not generally contain
    information on the charges, practices, classifications, or services
    of the parties involved, and we have declined to use such
    applications as a context for regulating these issues.[^92] Because
    we do not address these issues in our review of these applications,
    retaining prior public notice and review requirements is not
    necessary to ensure that licensees' and lessees' charges, practices,
    classifications, and regulations are just and reasonable and not
    unjustly or unreasonably discriminatory. In addition, the
    eligibility, foreign ownership, and competition benchmarks we
    establish limit the types of *de facto* transfer spectrum leases
    that qualify for forbearance to those that are unlikely to raise
    concerns about the charges, practices, classifications, and services
    of the parties to the spectrum lease. Moreover, as indicated in the
    *Further Notice*, we have other existing tools at our disposal,
    including enforcement actions, to ensure that charges, practices,
    classifications, and regulations are just and reasonable and not
    unjustly or unreasonably discriminatory.[^93]

36. Similarly, in analyzing the second prong of the Section 10
    forbearance standard, we conclude that requiring prior notice and
    comment and Commission review of qualifying *de facto* transfer
    leases is not necessary for the protection of consumers. Indeed, we
    have determined that effectively functioning secondary markets will
    offer significant benefits to consumers,[^94] and we regard
    consumers as fully protected by the limitations and safeguards
    placed on the forbearance process. Our screening criteria ensure
    that forbearance procedures will only apply to spectrum leases that
    do not raise potential competitive issues, which is a core aspect of
    protecting consumers in the wireless marketplace. In addition,
    spectrum leases approved under our forbearance authority will be
    placed on public notice, enabling members of the public and other
    interested parties to raise any concerns regarding the protection of
    consumers in petitions for reconsideration.

37. With respect to the third Section 10 criterion, we believe that
    forbearing from prior public notice and Commission review of
    qualifying *de facto* transfer spectrum leases will further the
    public interest. This process will enable parties entering into
    spectrum leasing arrangements that do not raise potential public
    interest concerns to put their business plans into effect with
    reduced regulatory delay and transaction costs. This will allow
    secondary markets to work more effectively, which in turn will
    increase the efficient use of spectrum, improve access to spectrum
    by all interested parties, promote competitive market conditions,
    and increase the innovative and advanced wireless services available
    to consumers. At the same time, the limitations on spectrum leases
    that qualify for forbearance are designed to ensure that the public
    interest and our fulfillment of our statutory obligations are not in
    any way undermined.

#### Immediate approval of certain categories of *de facto* transfer leases that are not subject to forbearance

##### Background

38. As we noted in the *Further Notice*, Section 10 of the Act
    authorizes us to forbear from statutory and regulatory requirements
    only with respect to spectrum leases that involve telecommunications
    carriers and telecommunications services.[^95] Even so, we stated
    our wish to provide similar streamlined processing for spectrum
    leases involving non-telecommunications carriers as we are providing
    for spectrum leasing transactions that fall within the scope of
    Section 10. Accordingly, we sought comment on whether and how the
    Commission could structure its review of spectrum leasing
    transactions involving non-telecommunications carriers or services
    in order to minimize possible delays in processing these
    transactions.[^96]

##### Discussion

39. We will permit *de facto* transfer leases involving
    non-telecommunications providers and carriers, and thus are not
    eligible for Section 10 forbearance, to proceed under the same
    application/immediate approval policies as adopted above for *de
    facto* transfer leases subject to forbearance so long as the leasing
    parties can establish that the arrangements meet the same kinds of
    criteria as required for telecommunications providers.[^97] These
    procedures comply with the statutory requirements of Sections 308,
    309, and 310(d). In addition, our decision accords with commenters'
    support of our goal to streamline *de facto* transfer lease
    transactions involving non-telecommunications carriers in a manner
    similar to that adopted under the forbearance approach.[^98]

40. Under the policies we are adopting, so long as the parties establish
    in their *de facto* transfer lease application -- by provision of
    sufficient information and related certifications -- that the
    spectrum lessee complies with the applicable eligibility, use, and
    foreign ownership-related requirements, and does not seek a waiver
    or declaratory ruling,[^99] the Commission will immediately approve
    the application as consistent with statutory requirements and the
    public interest. As with *de facto* transfer lease applications
    filed under our forbearance approach, we will announce the grant of
    these *de facto* transfer leases involving non-telecommunications
    services in a weekly informational public notice, subject to
    reconsideration within 30 days by interested parties or the Bureau,
    and within 40 days by the Commission on its own motion.[^100]

41. Streamlined processing of qualifying spectrum leases involving
    non-telecommunications services serves the public interest and is
    necessary in order to place substantively similar wireless spectrum
    leasing transactions involving different types of licenses on a
    comparable basis and to minimize unnecessary regulatory
    discrimination. The policies and procedures we adopt are also
    consistent with the statutory requirements of Sections 308, 309, and
    310(d). First, consistent with these provisions, we continue to
    require an application and approval process. In addition, in order
    to determine whether to approve these transactions, the Commission
    requires that each application establish a distinct set of facts and
    representations concerning the particular spectrum leasing
    transaction before it will be approved. Thus, before any particular
    spectrum lease application will be approved, the Commission will
    determine, based on the particulars of that application, that all of
    the criteria relevant to establishing that the public interest would
    be served by the granting of the application have been established,
    and the statutory requirements for case-by-case review and approval
    of the application will have been satisfied.

#### Applying the immediate approval procedures to short-term *de facto* transfer leases 

##### Background

42. Under procedures adopted in the *Report and Order*, short-term *de
    facto* transfer leasing arrangements are processed in the same
    manner as STAs authorized pursuant to Section 309(f) of the
    Communications Act.[^101] Under these procedures, parties wishing to
    enter into short-term arrangements must establish through requisite
    certifications in their application that they qualify for these
    procedures and must also meet any additional requirements associated
    with our STA procedures. The Bureau then reviews the application and
    will act on the request within ten days if the specified conditions
    are met. A short-term lease can be for any term of up to 180 days;
    the parties may also renew the lease for any period of time up to
    another 180 days, but to do so they must submit another filing,
    subject to the same procedures.[^102]

##### Discussion

43. We determine that short-term *de facto* transfer leasing
    arrangements should qualify for processing under the
    application/immediate grant procedures that we are adopting for
    qualifying long-term *de facto* transfer leases.[^103] Accordingly,
    we determine to process these arrangements under the new procedures
    we are adopting, and we will no longer process them under the STA
    procedures.

44. Under the policies and rules adopted in the *Report and Order*,
    short-term *de facto* transfer leases do not raise potential public
    interest concerns relating to eligibility, use restrictions, or
    foreign ownership that would require either prior public notice or
    additional Commission review before being approved. In order to
    qualify to enter into short-term *de facto* transfer leases,
    spectrum lessees are already required, under existing policies, to
    meet the same eligibility and foreign ownership restrictions[^104]
    that we have adopted above for determining whether a long-term *de
    facto* transfer lease qualifies for the application/immediate
    approval procedures. Short-term *de facto* transfer lease applicants
    must also certify that they would comply with certain applicable use
    restrictions.[^105] In addition, we have determined that short-term
    *de facto* transfer leasing arrangements do not raise potential
    public interest concerns relating either to designated
    entity/entrepreneur or competition matters.[^106] Accordingly, these
    issues do not prevent a short-term *de facto* transfer lease
    application from qualifying for the immediate approval procedures we
    are adopting herein.

45. Eliminating the requirement that short-term *de facto* transfer
    leases be processed under the procedures applicable to STAs enables
    us to remove unnecessary regulatory requirements and simplify the
    applicable rules. First, we will no longer require short-term lease
    applicants to include a public interest statement in accordance with
    the applicable rules derived from our STA procedures.[^107] In
    addition, we will no longer require that the term of a short-term
    *de facto* transfer lease be limited to 180 days and renewable for
    up to a total of 360 days. Instead, for purposes of administrative
    efficiency and general clarity, we will simplify the application
    requirements to do away with multiple filings, and to permit parties
    to enter into a short-term *de facto* transfer lease for a term of
    up to one year (365 days) by submitting a single application.[^108]

#### Immediate processing of certain categories of spectrum manager leases 

##### Background

46. The *Report and Order* provided that parties entering into spectrum
    manager leases are required to file the leasing notification with
    the Commission within 14 days of when they execute the lease and at
    least 21 days prior to commencing operations (10 days prior if the
    lease is for one year or less).[^109] We stated that this advance
    notification was included so as to allow the Commission and the
    public some opportunity to review the leasing arrangement prior to
    it going into effect.[^110]

##### Discussion

47. Upon further consideration, we have decided to revise our policies
    for spectrum manager lease notifications to be consistent with the
    policies for *de facto* transfer leases as described in Section
    IV.A.1.a, above. Accordingly, where parties seek to enter into
    spectrum manager leases that do not raise specified potential public
    interest concerns -- *i.e.*, those relating to eligibility, use
    restrictions, foreign ownership, designated entity/entrepreneur, or
    competition -- we will permit them to commence operations under
    those leasing arrangements once they have notified the Commission of
    the lease, have made the necessary certifications to qualify for
    immediate processing, and have determined, through ULS, that the
    notification has been successfully processed.[^111] These immediate
    processing procedures for spectrum manager leases will ensure parity
    in the regulatory treatment of spectrum manager and long-term *de
    facto* transfer leasing arrangements, thus eliminating unnecessary
    delay for parties seeking to enter into similar categories of
    spectrum manager leases and minimizing the possibility that our
    regulatory policies would be a factor in potential leasing parties'
    decision-making. Our determination also grants, in part, one party's
    petition for reconsideration, in which it sought elimination of
    unnecessary delay between the time the licensee filed a spectrum
    manager lease notification and the time in which leasing parties
    could commence operation under the spectrum leasing
    arrangement.[^112]

48. We adopt these similar policies for spectrum manager leases because
    the public interest concerns relating to these leases are either
    identical or similar to those associated with long-term *de facto*
    transfer leases. In particular, the policies relating to eligibility
    and use restrictions, foreign ownership, and competition apply with
    equal force, regardless of whether the spectrum lease is a spectrum
    manager lease or a long-term *de facto* transfer lease. [^113] In
    addition, designated entity or entrepreneur licensees seeking to
    lease spectrum under spectrum manager leases are subject to certain
    restrictions associated with designated entity and entrepreneur
    policies, just as long-term *de facto* transfer leases are subject
    to certain restrictions.[^114]

49. Accordingly, under the new policies we are adopting, if the spectrum
    manager lease satisfies the same qualifying elements as required for
    long-term *de facto* transfer leases as set forth in Section
    IV.A.1.a above[^115] -- and thus does not raise potential public
    interest concerns regarding eligibility and use restrictions,
    foreign ownership restrictions, designated entity/entrepreneur
    restrictions, or competition -- we do not believe it necessary to
    review these notifications in advance of operations, and the leasing
    parties are entitled to commence operations once they have received
    the requisite confirmation through ULS.[^116] As with *de facto*
    transfer leases,[^117] spectrum manager leases that proceed pursuant
    to these immediate processing procedures are subject to
    post-notification review. Under these procedures, any interested
    party may file a petition for reconsideration within 30 days of the
    date of the public notice listing the notification as
    accepted.[^118] Similarly, the Bureau will have 30 days from the
    public notice date, and the Commission 40 days, to reconsider
    whether the spectrum manager lease is in the public interest.

50. Finally, we determine to eliminate the requirement that parties file
    their spectrum lease notifications within 14 days of execution of
    their contractual agreement. We conclude that this requirement is
    superfluous so long as parties file the lease notification within
    the time frame required by our spectrum manager lease policies,
    either under the newly streamlined procedures adopted in this order
    (for qualifying spectrum manager leases) or at least 21 days in
    advance of commencing operations (10 days in advance if the lease is
    no longer than a year). Eliminating this requirement is consistent
    with the policies we are adopting, above, for *de facto* transfer
    leases; parties filing those applications are not required to file
    their spectrum leases with the Commission within 14 days of
    execution. []{.mark}

### Extending Spectrum Leasing Policies to Additional Spectrum-Based Services

#### Background

51. In the *Further Notice*, we sought comment on whether the spectrum
    leasing policies should be extended to a variety of services that
    had been excluded from the spectrum leasing policies adopted in the
    *Report and Order.* In particular, we requested comment on whether
    such policies should be extended to the following services: Public
    Safety Radio Services (Part 90); Instructional Television Fixed
    Services (ITFS) (Part 74) and Multipoint Distribution Service (MDS)
    (Part 21); various other private wireless and Personal Radio
    Services, including certain Maritime services (Part 80),[^119]
    Aviation services (Part 87), Personal Radio services (Part
    95),[^120] and Amateur services (Part 97); various
    services/authorizations in which frequencies are "shared"; and,
    miscellaneous other services, including non-multilateration Location
    and Monitoring Service (LMS) (Part 90), Cable Television Relay
    Service (Part 78), Multichannel Video Distribution and Data Service
    (MVDDS) (Part 101), 700 MHz Guard Band (Part 27), and satellite
    services (Part 25).[^121]

#### Discussion

52. We determine that we will extend the spectrum leasing policies to
    some additional Wireless Radio Services, as identified below, but
    will not extend these policies to other services at this time, as
    explained herein.

53. *Public Safety Services.* With regard to the Public Safety Services
    in Part 90, we will permit public safety licensees with exclusive
    use rights[^122] to lease their spectrum usage rights to other
    public safety entities and entities providing communications in
    support of public safety operations.[^123] We, however, decline at
    this time to permit public safety licensees to enter into spectrum
    leasing arrangements for commercial or other non-public safety
    operations.

54. We will permit public safety licensees in these services to enter
    into spectrum leasing arrangements with other public safety entities
    and entities that provide communications in support of public safety
    operations, consistent with the policies we adopted last year in the
    *4.9 GHz Report and Order*. In that order, we established new
    licensing and service rules for the 4940-4990 MHz band (4.9 GHz
    band) that were designed to increase the effectiveness of public
    safety communications, foster interoperability, and further ongoing
    and future homeland security initiatives within the 4.9 GHz
    band.[^124] We believed that these objectives would be best
    accomplished by basing the eligibility criteria for being licensed
    in the 4.9 GHz band on the "public safety services" definition set
    forth in section 90.523 of our rules,[^125] which the Commission
    adopted in 1998 to implement Section 337(f)(1) of the Communications
    Act.[^126] Under this definition, "public safety services" are
    services:

```{=html}
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(A) the sole or principle purpose of which is to protect the safety of
    life, health, or property;

(B) that are provided -- (i) by State or local government entities;
    or (ii) by nongovernmental organizations that are authorized by a
    government entity whose primary mission is the provision of such
    services; and

(C) that are not made commercially available to the public.[^127]

Under this standard, nongovernmental organizations are eligible if they
obtain written approval from a state or local government entity whose
mission is the oversight or provision of public safety services.[^128]
Though we noted that utilities and pipelines were examples of potential
licensees, we did not attempt to delineate every type of nongovernmental
organization that would be eligible to be licensed in the 4.9 GHz band;
rather, we determined that traditional public safety entities are better
poised to be most knowledgeable about what other users and/or uses would
be supportive of public safety operations.[^129] We did, however,
expressly require that use of the 4.9 GHz band by entities other than
traditional public safety entities be in support of public safety, and
prohibited communications with no nexus to the safety of life, health or
property.[^130]

55. For the same reasons that we decided to permit non-traditional
    public safety entities to be licensed in the 4.9 GHz band for use in
    support of public safety operations, we now conclude that it is
    appropriate to permit public safety licensees to lease spectrum for
    such use. In addition, we believe that our decision herein to permit
    spectrum leasing among public safety entities achieves an
    appropriate balance between commenters that supported extension of
    our spectrum leasing policies to these services and those that
    expressed concern about possible abuses.[^131] Further, spectrum
    would not be used by commercial entities to the potential detriment
    of public safety operations. We believe that allowing public safety
    licensees to lease spectrum for use in support of public safety
    operations will help maximize the efficient use of spectrum among
    public safety entities by providing them incentives to lease any
    excess spectrum capacity, thus diminishing the likelihood that
    public safety entities will warehouse spectrum.[^132]

56. Our decision at this time not to permit public safety licensees in
    our Public Safety Services to lease spectrum to entities other than
    public safety entities, or entities providing communications in
    support of public safety operations, is based on the record before
    us and reflects several concerns. Most commenters strongly objected
    to allowing public safety licensees to enter into spectrum leasing
    arrangements with commercial entities, contending that such leasing
    faced possible statutory barriers or could allow potential abuses
    without implementation of certain safeguards.[^133] Two commenters
    also proposed consideration of future technological developments and
    the possibility of requiring that any leased spectrum be subject to
    "interruptible use" capacities that would enable public safety
    licensees to immediately reclaim the use of any leased spectrum for
    public safety emergencies.[^134] Since issuance of the *Further
    Notice* in this proceeding, we have released the *Cognitive Radio
    NPRM* seeking comment upon, among other things, technical issues
    relating to "smart" or cognitive radios that could enable
    implementation of "interruptible" spectrum leasing arrangements that
    could be used with regard to leasing of spectrum licensed to public
    safety entities.[^135] As our next step in this area, we intend to
    consider the technical issues raised in that proceeding, which
    appear to be important groundwork in addressing broader public
    safety spectrum leasing. []{.mark}

57. *ITFS/MMDS services.* All of the comments received in this
    docket[^136] were previously transferred to and considered in the
    *BRS/EBS Report and Order* in WT Docket No. 03-66, in which we
    comprehensively reviewed our policies and rules relating to the ITFS
    and MDS services.[^137] In that order, we converted the MDS service
    into the Broadband Radio Service and the ITFS service into the
    Educational Radio Service,[^138] and extended the secondary markets
    spectrum leasing policies to those services, but included certain
    modifications in order to maintain the educational purpose of
    ITFS.[^139] We also grandfathered pre-existing "excess capacity"
    leasing arrangements that were entered into under the previous
    ITFS-specific leasing rules.[^140] []{.mark}

58. *Maritime services.* Consistent with the spectrum leasing policies
    adopted in the *Report and Order*, we will extend the spectrum
    leasing rules to Automated Maritime Telecommunications Systems
    (AMTS) services in Part 80. As discussed by commenters that
    supported this extension,[^141] the AMTS service involves a
    geographic licensing approach similar to another Part 80 service,
    VHF Public Coast stations, which also involves exclusive use
    licenses and already is permitted to enter into spectrum leasing
    arrangements under the leasing policies pursuant to the *Report and
    Order*.[^142]

59. We do not, however, extend our spectrum leasing policies to any of
    our high seas public coast stations.[^143] No commenters supported
    extending our spectrum leasing policies to these services, and they
    differ significantly from that of VHF Public Coast and AMTS
    stations. These frequencies are allocated internationally by the
    International Telecommunication Union (ITU) to facilitate
    interoperable radio communications among vessels of all nations and
    stations on land worldwide.[^144] Flexible use is not permitted;
    instead, the ITU Radio Regulations specify how each frequency may be
    used (*i.e.*, for radiotelephone, radiotelegraph, facsimile,
    narrow-band direct printing, or data transmission).[^145] In
    addition, unlike VHF Public Coast and AMTS stations, high seas
    public coast stations are not permitted to serve units on
    land.[^146] Finally, high seas stations are licensed only on a
    site-by-site basis. The Commission declined to adopt a geographic
    licensing approach for this spectrum because of special
    considerations relating to the extensive international coordination
    required, the need to conform to changing international allocations
    and allotments, and the fact that some of the spectrum is shared
    with the Federal Government.[^147]

60. *MVDDS services.* We will extend our spectrum leasing policies to
    the MVDDS services consistent with the comments we have
    received.[^148] We conclude that licensees will have similar
    "exclusive use" rights as other licensees to whom these policies
    currently apply,[^149] and that the benefits of spectrum leasing
    should be made available to licensees and potential spectrum lessees
    in these services. Consistent with the service rules for these
    services,[^150] which permit partitioning along county lines and
    prohibit disaggregation under any license authorization, we will
    permit MVDDS licensees to lease different geographic portions
    (divided along county borders) to eligible spectrum lessees,[^151]
    but will permit only one entity, either the licensee or spectrum
    lessee, to operate in a given geographic area.[^152]

61. *Services/authorizations involving shared frequencies.* We will not
    extend spectrum leasing to shared services at this time. As we noted
    in the *Further Notice*, we had previously declined to allow leasing
    on shared frequencies because parties can readily obtain access to
    the spectrum by obtaining their own authorizations on shared
    frequencies and they are not foreclosed from applying for
    authorizations by the existence of another licensee in the same
    geographic area.[^153] Although we sought comment on whether there
    might nonetheless be reasons to extend spectrum leasing to shared
    services, commenters opposed extension of the leasing rules to
    services/authorizations involving shared frequencies services.[^154]

62. *Various Part 90 services.* We determine not to revise current
    spectrum leasing policies with regard to Part 90 services.[^155] In
    particular, we will not extend these policies to Private Land Mobile
    Radio (PLMR) stations below 470 MHz (including those with "FB8"
    status). These stations share spectrum below 470 MHz, and while
    there is some degree of "exclusivity" (because the stations are
    trunked and cannot share in the usual way), the operations
    nonetheless are still on shared spectrum often occupied by others.
    Accordingly, we determine that, consistent with our current policies
    regarding shared services/authorizations, these stations should not
    be included among those services to which the spectrum leasing
    policies apply. In addition, we do not extend our spectrum leasing
    policies to non-multilateration LMS services because licensing in
    these services is shared and non-exclusive. Entities seeking access
    to spectrum for these non-multilateration LMS uses can gain access
    to spectrum without the need to enter into spectrum leasing
    arrangements with licensees.

63. *Other services.* We decline, at this time, to extend the spectrum
    leasing policies to any additional services on which we had sought
    comment, including the 700 MHz Guard Band Service, Amateur Services,
    Personal Radio Services, Aviation Services, Cable Television Relay
    Services, and satellite services.[^156]

64. We do not believe it appropriate to extend the spectrum leasing
    policies adopted in the *Report and Order* to the Guard Band Manager
    Service. This service already has its own distinct set of policies
    and rules regarding leasing arrangements, and no commenters proposed
    replacing those policies. Accordingly, we see no reason at this time
    to replace those policies at this time. Nor do we extend spectrum
    leasing policies to the Part 97 Amateur Radio Services. An
    individual Amateur Radio licensee gains access to particular bands
    of spectrum after obtaining an operator license by successfully
    completing the relevant exam requirements for those particular
    bands.[^157] The amateur licensee must share access to the spectrum
    with all amateur operators who have also successfully passed
    examinations for the same privileges. Thus, an amateur licensee has
    no exclusive use rights with regard to the spectrum that it can
    lease to others. Moreover, a new Amateur Radio applicant is not
    precluded from applying for an authorization by the existence of
    another licensee in the same geographic area. We also do not extend
    our spectrum leasing policies to additional services among the Part
    95 Personal Radio Services. Apart from the 218-219 MHz service (to
    which spectrum leasing policies already apply[^158]), the Personal
    Radio Services are either licensed by rule and/or operate on shared
    spectrum. For example, Citizens Band Radio operators are authorized
    by rule to operate without individual licenses on any of 40 channels
    nationwide (choosing one at a time).[^159] Radio Control operators
    are authorized by rule to operate without individual licenses on any
    of the radio control channels nationwide.[^160] A General Mobile
    Radio Service (GMRS) operator must obtain a license, but operates on
    twenty-three frequencies nationwide. Thus, whether licensed by rule
    and/or operating on shared spectrum, Part 95 licensees do not have
    exclusive spectrum rights to lease to others,[^161] and entities
    seeking to gain access to such spectrum can readily do so without
    the need to enter into spectrum leasing arrangements with existing
    licensees.

65. Nor do we extend our spectrum leasing policies to our Part 87
    Aviation Services. No commenter proposed that the spectrum leasing
    policies be applied to these services. In addition, most of the
    spectrum in these services is licensed on a shared basis, and thus
    is not assigned for the exclusive use of any particular
    licensee.[^162] Finally, aviation safety concerns among the Aviation
    Services that do involve exclusive use rights -- *i.e.*,
    aeronautical advisory stations (unicoms) at uncontrolled
    airports[^163] and aeronautical enroute stations[^164] -- recommend
    against extending our spectrum leasing policies to these services.
    In particular, the Commission has determined that the licensees in
    these services should, for aviation safety purposes, be limited to
    one operator at any one location.[^165] Accordingly, we will not
    permit licensees to lease spectrum usage rights to other entities.

66. Finally, we do not extend our spectrum leasing policies applicable
    to Wireless Radio Services to two services, the Cable Television
    Relay Service and satellite services, that are administered by
    bureaus outside of the Wireless Telecommunications Bureau. No
    commenters proposed extending the spectrum leasing policies to these
    two services, and the general policies applicable to these two
    services differ, in many respects, from those administered by the
    Wireless Bureau.[^166] Accordingly, we will not extend our spectrum
    leasing policies to these two services at this time.

### Spectrum Leasing Policies Applicable to Designated Entity/Entrepreneur Licensees

#### Background

67. In the *Report and Order*, we decided that designated entity and
    entrepreneur licensees would be permitted to enter into a spectrum
    manager lease with any qualified lessee, regardless of the lessee's
    designated entity or entrepreneur eligibility, and avoid the
    application of our unjust enrichment rules and transfer
    restrictions, so long as the lease did not result in the lessee's
    becoming a "controlling interest" or affiliate of the licensee that
    would cause the licensee to lose its designated entity or
    entrepreneur eligibility under section 1.2110 of our rules.[^167] We
    further determined that, to the extent that any conflict arose
    between the revised *de facto* control standard for spectrum leasing
    arrangements as set forth in the *Report and Order* and the
    controlling interest standard in our rules for determining
    designated entity and entrepreneur eligibility, we would apply the
    latter in determining whether the licensee had maintained the
    requisite degree of ownership and control to allow it to remain
    eligible for the licenses or for other benefits such as bidding
    credits and installment payments.[^168] We also decided in the
    *Report and Order* that designated entity and entrepreneur licensees
    would be allowed to enter into long-term *de facto* transfer leasing
    arrangements subject to any existing transfer restrictions and
    unjust enrichment payment obligations.[^169]

68. In the *Further Notice*, we inquired whether we should alter the *de
    facto* transfer leasing policies adopted in the *Report and Order*
    and allow a designated entity or entrepreneur licensee to lease some
    or all of its spectrum usage rights to any entity, regardless of
    whether that entity would qualify for the same eligibility status as
    that of the licensee.[^170] We sought comment on how, if such a
    policy change were made, we could ensure continued compliance with
    our statutory obligations to prevent unjust enrichment.[^171] We
    also sought comment on whether to use the new *de facto* control
    standard, rather than the existing controlling interest standard
    (including the *Intermountain Microwave* criteria[^172]), when
    evaluating affiliation and eligibility for designated entity and
    entrepreneur benefits.[^173] We specifically asked whether this
    latter change would be consistent with the statutory objectives of
    Section 309(j).[^174]

#### Discussion

69. *Affirmation of existing rules.* We affirm the rules we established
    in the *Report and Order* for spectrum leasing by designated entity
    and entrepreneur licensees, declining requests that we provide such
    licensees with the unfettered right to lease spectrum to any entity,
    without regard to our eligibility rules for designated entities and
    entrepreneurs. As we explain below, our decision means that we will
    continue to rely on our existing attribution rules, including our
    definitions of controlling interest and affiliation, for all
    determinations of designated entity and entrepreneur eligibility.
    However, in response to suggestions that we clarify these rules, we
    provide additional guidance regarding their application.

70. We decline to adopt the suggestion of some commenters (one of which
    is also a petitioner) that we allow designated entity and
    entrepreneur licensees to lease spectrum to any entity, without
    regard to how the spectrum lease might affect the licensee's
    designated entity or entrepreneur eligibility.[^175] We believe that
    adopting such a change to our rules would contravene the
    requirements and objectives of Section 309(j) of the Act.[^176]
    Section 309(j) requires, among other things, that the Commission
    ensure that small businesses are given the opportunity to
    participate in the provision of spectrum-based services and that, to
    further this goal, it consider the use of bidding preferences.[^177]
    These statutory directives were not intended to provide generalized
    economic assistance to small businesses, but rather to facilitate
    their ability to acquire licenses, build out systems, and provide
    service.[^178] In such a way, Congress sought to promote diversity
    among service providers, as well as the rapid deployment of new
    technologies for the benefit of, among others, rural
    customers.[^179]

71. Section 309(j) also directs the Commission to prescribe
    anti-trafficking restrictions and payment schedules as necessary to
    prevent designated entity benefits from giving rise to unjust
    enrichment.[^180] If we were to allow designated entities and
    entrepreneurs to enter into spectrum manager leasing arrangements
    without considering whether the spectrum lessee had acquired an
    attributable interest in the licensee, we would run the risk that
    designated entity and entrepreneur incentives would benefit,
    indirectly, entities that do not qualify for such incentives in the
    primary market. In other words, we would be paving the way for the
    very unjust enrichment Congress wanted us to prevent. While one
    commenter argues that "\[t\]here is no reason to believe that
    Congress intended to limit designated entities to only one form of
    participation in the spectrum market -- construction and operation
    of a facilities-based network\[,\]"[^181] the legislative history of
    Section 309(j) indicates otherwise. There, Congress explains that
    the reason for imposing anti-trafficking restrictions and unjust
    enrichment payment obligations on entities that receive small
    business benefits is to deter "participation in the licensing
    process by those who have no intention of offering service to the
    public."[^182] While we believe that spectrum leasing by small
    businesses serves many policy goals, we cannot disregard Congress'
    stated intent that a licensee receiving designated entity or
    entrepreneur benefits be an entity that actually provides service
    under the license.

72. We also reject recommendations that we allow licensees to avoid
    unjust enrichment payment obligations and transfer restrictions in
    situations where the spectrum lessee will use the spectrum lease to
    serve rural areas.[^183] Only one commenter attempts to explain why
    such a recommendation would not be contraindicated by concerns about
    unjust enrichment, claiming that the Commission's "statutory
    obligations of ensuring the participation of rural telephone
    companies in the provision of advanced telecommunications services
    and ensuring the rapid deployment of new technologies, products or
    services for the benefit of the public, including those residing in
    rural areas, outweigh any risk of unjust enrichment."[^184] The
    premise of that claim -- that the Commission is statutorily required
    to ensure both the rapid deployment of service to rural areas and
    the participation of rural telephone companies in the provision of
    advanced telecommunications services -- is not supported by Section
    309(j) of the Act and has been explicitly rejected by the U.S. Court
    of Appeals for the D.C. Circuit.[^185] Rather, Section 309(j)
    requires that the Commission "seek to promote," as one of many,
    sometimes conflicting goals, the objective that service be developed
    and rapidly deployed to rural customers,[^186] and requires further
    that the Commission ensure that rural telephone companies be given
    the "opportunity" to participate in the provision of spectrum-based
    services.[^187]

73. To facilitate these ends within the context of competitive bidding,
    the Commission has provided small businesses with bidding credits
    and entrepreneurs with license set-asides, while specifically
    declining to establish an independent bidding credit for large
    telephone companies serving rural areas.[^188] When initially
    considering whether to create a separate bidding credit for rural
    telephone companies, the Commission determined that telephone
    companies providing service in rural areas do not *per se* have the
    same difficulty accessing capital as other groups, such as small
    businesses.[^189] In subsequent decisions considering this issue,
    the Commission has not changed its determination.[^190] If we
    provided small businesses and entrepreneurs with the unrestricted
    ability to enter into spectrum leasing arrangements with
    non-eligible entities planning to serve rural areas, without regard
    to our eligibility rules, we would, in effect, be allowing small
    business and entrepreneur incentives to benefit, indirectly, the
    very entities which we had expressly found no basis for assisting in
    that fashion in the primary market.[^191] We, of course, remain
    committed to promoting access to competitive advanced
    telecommunications services in rural and underserved areas and note
    that we have adopted other methods of facilitating such access in
    our *Rural Report and Order*.[^192]

74. For similar reasons, we also reject a suggestion that we lift unjust
    enrichment repayment obligations and entrepreneur transfer
    restrictions for licensees owned and controlled by Alaska Native
    Corporations and Indian tribes that lease rural area spectrum rights
    to non-eligible entities pursuant to long-term *de facto* transfer
    leasing arrangements.[^193] Indian tribes and Alaska Regional or
    Village Corporations already enjoy enhanced access to designated
    entity and entrepreneur benefits through an exclusion from our
    affiliation rules available only to them.[^194] Again, were we to
    permit such entities to enter into long-term *de facto* transfer
    leases without being subject to unjust enrichment obligations or
    entrepreneur transfer restrictions, we would effectively be allowing
    them to transfer these benefits to spectrum lessees that would not
    be able to qualify for the benefits in the primary market, and
    particularly not on such an enhanced basis. While we decline to
    adopt this specific recommendation, we note that we are considering
    various measures in our Tribal Lands proceeding to foster the
    extension of wireless telecommunications service to tribal
    lands.[^195]

75. To summarize, in affirming our rules and in declining to adopt
    proposals to the contrary, we have determined that we will continue
    to rely on our existing attribution rules, including our definitions
    of controlling interest and affiliation, for all determinations of
    whether a licensee undertaking a lease has maintained its designated
    entity and/or entrepreneur eligibility. We, nonetheless, recognize
    that further guidance on the application of those rules in the
    context of leasing might be useful. Accordingly, we offer such
    guidance below.

76. *Application of Existing Attribution Rules to Spectrum Manager
    Leasing Arrangements.* In response to requests from two commenters
    (one of which is also a petitioner),[^196] we clarify here how our
    attribution rules, including the *Intermountain Microwave* criteria,
    are applied in determining whether spectrum manager leasing
    arrangements by designated entity and entrepreneur licensees satisfy
    our eligibility requirements. We note, as a preliminary matter, that
    we expect a licensee to conduct an analysis of possible control by,
    or affiliation with, the proposed spectrum lessee before entering
    into a spectrum manager leasing arrangement and before certifying
    that the spectrum lease does not affect the licensee's continued
    designated entity or entrepreneur eligibility.[^197] That analysis
    should take into account the Commission's definitions of control and
    affiliation, which will help to determine, as they do in
    non-spectrum leasing contexts, whether the gross revenues (and, in
    the case of entrepreneurs, the total assets) of a spectrum lessee
    are to be attributed to a designated entity or entrepreneur
    licensee.[^198] Such a determination will be made by evaluating the
    licensee's Commission-regulated business in the context of a
    spectrum lessee's involvement with the licensee. For example, a
    spectrum lessee would become an attributable interest holder in the
    licensee if the lessee were to become an officer or director of the
    licensee.[^199] An attributable affiliation might also be created if
    a lease called for the licensee and spectrum lessee "to combine
    their efforts, property, money, skill and knowledge."[^200]
    Similarly, a spectrum lease might create a contractual affiliation
    between licensee and spectrum lessee if the leasing arrangement
    represented a significant portion of the licensee's day-to-day
    business operations.[^201] While one commenter suggests that a
    licensee can preserve its designated entity or entrepreneur
    eligibility simply by maintaining day-to-day control over a spectrum
    leasing business,[^202] we believe that, in order to satisfy the
    requirements of Section 309(j) of the Act and avoid unjust
    enrichment obligations or transfer restrictions, the licensee cannot
    make spectrum leasing its primary business and must, as discussed
    above, continue to provide facilities-based network services under
    its licenses.

77. In examining whether a spectrum lessee would, under a spectrum
    manager lease, become a controlling interest or affiliate of the
    licensee, the licensee should look to all of the relevant
    circumstances, including how large a portion of its total capacity
    to provide spectrum-based services would be leased, what involvement
    it would have with the spectrum lessee as a result of the spectrum
    lease, and what relationship the two parties have with one another
    apart from the lease.[^203] Referring to an example provided by one
    commenter,[^204] we conclude that a spectrum manager lease between a
    designated entity or entrepreneur licensee and a non-designated
    entity/entrepreneur spectrum lessee with a prior business
    relationship where substantially all of the spectrum capacity of the
    licensee is to be leased would cause the spectrum lessee to become
    an attributable affiliate of the licensee. Such affiliation would
    render the licensee ineligible for designated entity or entrepreneur
    benefits and, therefore, would make such a spectrum lease
    impermissible.[^205] On the other hand, a spectrum manager lease
    involving a small portion of the designated entity or entrepreneur
    licensee's spectrum capacity where no relationship existed between
    the licensee and spectrum lessee apart from the lease would likely
    be permissible. Situations falling somewhere between these two
    examples would have to be evaluated according to the individual
    circumstances involved.

78. While we direct licensees to continue to rely on our existing
    attribution rules to determine whether a proposed spectrum manager
    leasing arrangement would affect their continuing eligibility for
    designated entity or entrepreneur benefits, we recognize that
    certain of our affiliation criteria do not contemplate spectrum
    leasing and are therefore incompatible with spectrum manager leasing
    arrangements. For instance, under our attribution rules, affiliation
    generally arises where another entity shares office space,
    employees, or other facilities with a designated entity or
    entrepreneur licensee and, through these sharing arrangements, gains
    control or potential control of the licensee.[^206] In addition,
    under *Intermountain Microwave*, one indication of affiliation is
    the use by another entity of the licensee's facilities and
    equipment.[^207] However, because spectrum leasing arrangements, by
    their very nature, always involve the spectrum lessee's construction
    or use of facilities in the licensee's service area and/or operation
    of those facilities over the licensee's bandwidth, it would be
    unworkable to apply our facilities-related indicia of affiliation in
    the customary manner to spectrum leasing situations. We clarify,
    therefore, that a spectrum lessee's construction or use of
    facilities in the licensee's service area or over its bandwidth does
    not, by itself, transform the lessee into a controlling interest or
    affiliate of the licensee.[^208] On the other hand, joint use of
    office space, employees, or equipment or other facilities by the
    licensee and the spectrum lessee might indicate affiliation and
    would require an analysis of whether the spectrum lessee would,
    through such use, acquire control or potential control of the
    licensee.

79. Likewise, we clarify that the existence of spectrum manager leasing
    arrangement does not, by itself, create an "identity of interest"
    between the licensee and lessee resulting in an attributable
    affiliation under section 1.2110(c)(5)(i)(D).[^209] However, every
    designated entity or entrepreneur licensee should take care to
    examine, and we will continue to review, whether there is an
    identity of interest between the licensee and its spectrum lessee
    beyond the mere existence of the spectrum lease that confers
    attributable affiliation under our rules. For example, members of
    the same family or entities with common investments should be
    considered affiliates and treated, for purposes of attribution, as
    one person or entity.[^210] Similarly, we clarify that a spectrum
    manager leasing arrangement does not, *per se*, constitute a
    management agreement or joint marketing arrangement resulting in the
    spectrum lessee's being considered a controlling interest of the
    licensee under sections 1.2110(c)(2)(ii)(H)-(I).[^211] We,
    nonetheless, caution designated entities and entrepreneurs that
    specific provisions in spectrum manager leasing arrangements, or
    other agreements with their spectrum lessees, might constitute
    management agreements or joint marketing arrangements. As our rules
    state, "affiliation generally arises where one concern is dependent
    upon another concern for contracts and business to such a degree
    that one concern has control or potential control, of the other
    concern."[^212]

80. When entering into a spectrum manager leasing arrangement, the
    licensee must retain both *de jure* and *de facto* control over the
    leased spectrum pursuant to the updated *de facto* control standard.
    Consistent with this requirement, a designated entity or
    entrepreneur licensee cannot use this spectrum leasing vehicle to
    circumvent our attribution rules. The designated entity or
    entrepreneur must, if it wishes to undertake a spectrum manager
    lease, preserve its existing eligibility. As we have discussed, to
    do so, the designated entity or entrepreneur must evaluate and
    certify that nothing concerning its spectrum manager lease alters
    its ongoing eligibility for the benefits it has received. Leasing
    arrangements that would create a controlling interest or
    attributable affiliation that altered the designated entity or
    entrepreneur licensee's eligibility are prohibited. In lieu of using
    a spectrum manager leasing arrangement in such a situation,
    designated entities or entrepreneurs are free to undertake a *de
    facto* transfer lease, subject to the Commission's unjust enrichment
    requirements and any applicable transfer restrictions.[^213] While
    an attributable interest analysis will not provide licensees with
    the complete certainty that two commenters desire (one of which is
    also a petitioner),[^214] it is an analysis with which all
    designated entity and entrepreneur licensees should be familiar.
    Such an analysis is required whenever an auction applicant seeks
    designated entity or entrepreneur eligibility, or when a designated
    entity or entrepreneur licensee applies for license grant or to
    assign or transfer control of its authorization.

81. These clarifications should serve to allay the concern expressed by
    two commenters (one of which is also a petitioner) that our *Report
    and Order* might be interpreted as limiting designated entities and
    entrepreneurs to entering into spectrum manager leases only with
    other designated entities and entrepreneurs because we stated that
    "\[u\]nder spectrum manager leasing, we \[would\] require that
    spectrum lessees satisfy the eligibility and qualification
    requirements that are applicable to licensees under their
    authorization."[^215] While the language could conceivably refer to
    our eligibility requirements for designated entity and entrepreneur
    eligibility rather than to the general eligibility requirements in
    section 1.9020 of our rules, as one commenter acknowledges, "\[i\]t
    is clear from the context that the Commission was referring to these
    general eligibility requirements... ."[^216] Nevertheless, to avoid
    any possibility of confusion, we will also amend the language of our
    rules to clarify that, subject to the other eligibility restrictions
    set forth in the *Report and Order* and in section 1.9020(d) of our
    rules, including those discussed above, a designated entity or
    entrepreneur licensee may enter into a spectrum manager leasing
    arrangement with any spectrum lessee, regardless of the lessee's
    eligibility for designated entity or entrepreneur benefits.[^217]

82. *Application of Controlling Interest Standard to Designated Entity
    and Entrepreneur Eligibility Determinations*. Insofar as we have
    determined to continue to rely upon our existing attribution rules
    (including our definitions of controlling interest and affiliation)
    as well as existing Commission precedent for all determinations of
    designated entity and entrepreneur eligibility, we decline to follow
    recommendations that we should instead rely on the new *de facto*
    control standard adopted for leasing for our eligibility
    determinations.[^218] While three parties opine that application of
    the controlling interest standard will significantly limit the
    flexibility of designated entities and entrepreneurs to enter into
    leasing agreements;[^219] only one of these parties specifically
    responds to our question asking whether extending the *de facto*
    control standard for spectrum manager leases to all evaluations of
    affiliation and eligibility for designated entity and entrepreneur
    status would be consistent with the objectives of Section
    309(j).[^220] That party, as noted above, suggests that designated
    entities need not be limited to constructing and operating a
    facilities-based network in order to satisfy Congress' objective
    that they participate in the spectrum market.[^221] We cannot accept
    that reading of Section 309(j). As we have earlier explained,
    Congress specifically intended that, in order to prevent unjust
    enrichment, the licensee receiving designated entity benefits
    actually provide facilities-based services as authorized by its
    license.[^222]

### Application of the *De Facto* Control Standard for Spectrum Leasing with regard to Other Issues and Types of Arrangements

#### Background

83. In the *Report and Order*, we limited the application of the revised
    *de facto* control standard to the context of spectrum leasing
    arrangements,[^223] while leaving in place the existing *de facto*
    control tests -- including those based on *Intermountain Microwave*
    and other facilities-based analyses -- for designated entity and
    entrepreneur eligibility issues, management agreements, and other
    similar types of agreements. We sought comment on whether and how
    the revised *de facto* control standard should be extended to apply
    in these and any other contexts. [^224]

#### Discussion

84. Based on the record before us,[^225] we decline in this proceeding
    to extend the revised *de facto* transfer standard applicable to
    spectrum leasing arrangements to other types of arrangements outside
    the context of spectrum leasing. Although commenters supported
    applying the revised standard more broadly, there are significant
    legal and practical difficulties that commenters have failed to
    address. It is not clear from the sparse record how such a change
    would affect existing rules and policies relating to management
    agreements or other spectrum transactions, or what benefits would be
    achieved, and we are concerned that revising our rules in these
    areas may cause a host of unintended consequences or ambiguities.

## Policies to Facilitate Advanced Technologies 

### Background

85. In the *Further Notice*, we observed that the *Secondary Markets
    Policy Statement* and the *Spectrum Policy Task Force Report*
    emphasized the benefits of "smart" or "opportunistic" technologies,
    especially the potential for increased access to unused
    spectrum.[^226] In addition, the *Spectrum Policy Task Force Report*
    and the Commission's recently issued *Cognitive Radio NPRM* on the
    use of advanced technologies describe how they may enable devices to
    search across many bands, sense the level of emissions, and then
    operate in spectrum that is either not in use by other parties or
    below a certain level of emissions.[^227] The *Further Notice*
    sought comment on the use of advanced technologies in licensed bands
    in the context of secondary markets and, in particular, requested
    comment on the *Spectrum Policy Task Force Report* recommendation
    that the Commission focus on advancing and improving access to
    spectrum by opportunistic devices through a secondary markets
    approach, at least in the near term. [^228] The *Further Notice*
    also inquired as to whether the *Report and Order* provided
    sufficient flexibility for more "dynamic" leasing arrangements made
    possible by opportunistic devices.[^229]

### Discussion

86. Because we believe that smart or opportunistic technologies hold
    significant potential to promote access to and more efficient use of
    the spectrum, we clarify our existing spectrum leasing rules, and
    introduce an additional means, to help facilitate the development of
    arrangements involving the use of these new and evolving
    technologies in services for which spectrum leasing is permitted.
    Opportunistic use technologies facilitate many dynamic ways of
    sharing spectrum. For example, smart or cognitive radio devices can
    potentially sense and adapt to their spectrum environment, find and
    use spectrum in locations or during time intervals that will not
    cause interference to other users, and operate across multiple bands
    and using different protocols. Such devices may also have networking
    capability, either on a peer-to-peer (device-to-device) basis or by
    interacting with available wide-area or local-area networks.[^230]
    The spectrum access capabilities of these technologies can be
    achieved by a variety of potential cooperative approaches, such as
    secondary markets arrangements, in which users of licensed spectrum
    arrange access with licensees under mutually agreeable terms.[^231]
    With smart or cognitive radios, for example, it is possible to
    reconfigure the performance parameters of the individual devices to
    allow more opportunistic uses of the spectrum. As these capabilities
    become available on a broader basis, the Commission can facilitate
    these additional forms of spectrum access by ensuring that our
    licensing and technical rules do not inadvertently impose barriers
    to the deployment of such capabilities if and when licensees (or
    spectrum lessees) seek to take advantage of such capabilities. These
    cooperative uses of these capabilities would also complement other
    approaches to promoting spectrum access, *e.g.*, facilitating access
    for advanced technologies on an unlicensed basis. The approaches
    considered in this order are cooperative in nature -- avoiding
    placing regulatory barriers on licensees (or spectrum lessees) that
    wish to provide for opportunistic uses of spectrum pursuant to the
    terms and conditions that they set -- so long as they fall within
    the licensee's spectrum usage rights and are not inconsistent with
    applicable technical and other regulations imposed by the Commission
    to prevent harmful interference to other licensees.

87. Recognizing the variety of ways in which advanced technologies
    enhance opportunities for more parties to gain access to and share
    the use of the same spectrum, we seek to provide licensees and
    spectrum lessees the flexibility to enter into mutually beneficial
    access and use arrangements that take fuller advantage of what these
    new and innovative technologies may make possible. To that end, we
    clarify below some of the types of spectrum leasing and other
    arrangements that could allow for use of advanced technologies,
    including opportunistic devices. The value of this increased
    flexibility is reflected in the comments received on this issue.
    Commenters that addressed this issue maintained that licensees
    should be permitted to engage in dynamic spectrum leasing
    arrangements,[^232] and generally should be free to weigh the
    potential benefits and costs of allowing access to licensed
    spectrum.[^233] We also introduce an additional mechanism, which we
    call a "private commons," that will allow cooperative use
    arrangements not explicitly recognized within the Commission's
    policies or rules, and we seek comment in the Second Further Notice
    on how we can distinguish between these and other arrangements, such
    as spectrum leasing or end-user arrangements, to avoid unintended
    and unnecessary barriers to the deployment and use of advanced
    technologies.[^234]

#### Facilitating advanced technologies within existing regulatory frameworks, including dynamic spectrum leasing arrangements

88. We clarify that our spectrum leasing policies and rules permit
    parties to enter into a variety of dynamic forms of spectrum leasing
    arrangements that take advantage of the capabilities associated with
    advanced technologies.[^235] Such a clarification generally accords
    with comments we received. For example, one commenter specifically
    recommended that the Commission's secondary markets policies and
    rules be expanded to accommodate "dynamic" spectrum leasing
    arrangements, and other commenters also endorsed adoption of
    spectrum leasing policies in which licensees could take fuller
    advantage of technological advances, including opportunistic use
    devices, through secondary markets arrangements.[^236] Consistent
    with these views, we clarify that parties may enter into spectrum
    leasing arrangements in which licensees and spectrum lessees share
    use of the same spectrum, on a non-exclusive basis, during the term
    of the lease. For example, a licensee and spectrum lessee may enter
    into a spectrum manager or *de facto* transfer lease in which use of
    the same spectrum is shared with each other by employing
    opportunistic devices.[^237] In another variation, a licensee could
    enter into a spectrum manager lease with one party that has access
    to the spectrum on a priority basis, while also leasing use of the
    same spectrum to another party on a lower-priority basis, with the
    requirement that the lower-priority spectrum lessee employ
    opportunistic technology to avoid interfering with the priority
    lessee. Of course, the licensee may not lease spectrum usage rights
    that exceed the rights it currently holds and, as these examples
    illustrate, the licensee may choose to lease a more restricted
    bundle of usage rights.

89. Significantly, these arrangements could facilitate opportunistic use
    by parties operating at the same power level and under similar
    technical parameters as the licensee, or they could promote such use
    at lower power levels. We also emphasize that neither scenario would
    affect unlicensed operations to the extent they are permitted in
    that particular licensed band pursuant to Commission rules under
    Part 15.[^238] For example, as set forth in section 15.209 of the
    Commission's rules and augmented on a band-by-band basis, Part 15
    users (*e.g.,* Ultra-Wide Band operators) can operate pursuant to
    applicable technical and operational rules whether or not
    opportunistic use or other advanced technologies are employed or
    authorized by the licensee. [^239] We would also expect that new and
    innovative radiofrequency devices would be agile enough to function
    on an unlicensed basis or as part of licensed operations. Moreover,
    the examples discussed here do not provide an exhaustive list of all
    the possible arrangements that could involve the use of
    opportunistic devices and be consistent with secondary markets and
    service rules already in place. Accordingly, in the Second Further
    Notice, we seek comment on the types of additional commercial or
    sharing arrangements that would further exploit the benefits of new
    and innovative technological advances.

90. We recognize that, in some cases, under the current framework for
    spectrum manager and *de facto* transfer lease arrangements, these
    options may not be economically or technically feasible due to the
    transaction costs associated with coordinating many users in a
    single band, or many users employing advanced technologies to access
    multiple bands by frequency-hopping. Nonetheless, we do not believe
    that these should be insurmountable barriers and we concur with the
    *Spectrum Policy Task Force Report* that "a secondary markets
    approach by opportunistic devices does not necessarily require the
    prospective opportunistic user to negotiate individually with each
    affected licensee," and that band managers, clearinghouses, and
    other intermediaries could facilitate these transactions.[^240] We
    also agree with the *Spectrum Policy Task Force Report* finding that
    a "secondary market approach has significant potential to foster
    opportunistic technologies, such as agile frequency-hopping radios,
    software-defined radios, and adaptive antennas, at reasonable
    transaction costs."[^241] In short, while the existing spectrum
    leasing options may not meet all types of spectrum access needs, we
    have great confidence in the ability of market participants to find
    innovative means of enhancing spectrum access and lowering
    transaction costs, and we therefore expect the market for spectrum
    usage rights to become increasingly efficient. At the same time,
    licensees and spectrum lessees may wish to make spectrum available
    in ways not anticipated by the Commission's current rules, and such
    innovative efforts may be a driving force in promoting the
    development of advanced technologies and the efficient use of the
    spectrum. We therefore introduce a new concept under our current
    exclusive-use licensing models that may foster the experimentation
    and new uses of licensed spectrum without unnecessary regulatory
    intervention.

#### Private Commons

91. To facilitate the use of advanced technologies, and thus better
    promote access to and the efficient use of spectrum, we expand the
    spectrum licensing framework by identifying an additional option
    that may be utilized by current and future licensees and spectrum
    lessees. This concept, which we call a "private commons," will allow
    licensees and spectrum lessees to make spectrum available to
    individual users or groups of users that do not fit squarely within
    the current options for spectrum leasing or within the traditional
    end-user arrangements associated with the licensee's (or spectrum
    lessee's) subscriber-based services and network infrastructures. New
    technologies enable users, through use of advanced devices, to
    engage in a wide range of communications that do not require use of
    a licensee's (or lessee's) network infrastructure. To facilitate the
    use of these technologies, we adopt the private commons option,
    which will permit, and be restricted to, peer-to-peer communications
    between devices in a non-hierarchical network arrangement that does
    not utilize the network infrastructure of the licensee (or spectrum
    lessee).

92. The private commons option provides a cooperative mechanism for
    licensees (or lessees) to make licensed spectrum available to users
    employing these advanced technologies in a manner similar to that by
    which unlicensed users gain access to spectrum to suit their
    particular needs, and to do so without the necessity of entering
    into individual spectrum leasing arrangements under our existing
    rules. In the 2.4 GHz and 5 GHz bands, for instance, users gain
    access and use of the spectrum with specified types of low-power
    communications devices provided they comply with technical
    requirements established by the Commission and set forth in our Part
    15 rules.[^242] In these bands, users then can create their own
    networks -- such as those that are *ad hoc* or "mesh" in
    nature[^243] -- using equipment that complies with
    Commission-established requirements. The private commons option
    provides a potentially complementary access model,[^244] in which
    licensees (or spectrum lessees) would determine to make access
    available to a similar class of users, and would do so under
    technical requirements for sharing use of the licensed band
    established and managed by the licensee (or lessee).[^245] The
    nature of these types of users' access to spectrum under this
    private commons option thus differs qualitatively from the nature of
    access provided to spectrum lessees under the Commission's spectrum
    leasing policies and procedures. In the private commons, the
    licensee (or lessee) authorizes users of devices operating at
    particular technical parameters specified by the licensee (or
    lessee) to operate on the licensed frequencies, consistent with the
    applicable technical requirements and use restrictions under the
    license authorization, using peer-to-peer (device-to-device)
    technologies. In spectrum leasing arrangements, individually
    negotiated spectrum access rights are provided to entities that
    traditionally obtained licenses and that would then provide
    traditional network-based services to end-users.[^246]

93. This approach is consistent with the kinds of additional flexibility
    many commenters sought. Several commenters supported providing
    licensees the option of allowing opportunistic use of the licensed
    spectrum through secondary market mechanisms, and asserted
    advantages to empowering licensees to establish the technical
    parameters and interference rules instead of government-established
    access rules.[^247] Commenters also asserted that enabling licensees
    to determine the technical parameters of such use would minimize
    interference concerns relating to other users in the band,[^248] and
    would have the necessary incentives to be innovative and efficient
    in enabling users to access the licensed spectrum through use of
    such devices.[^249]

94. These private commons arrangements may take a variety of forms, but
    will share a number of defining characteristics, as described
    herein. The private commons option will allow for flexible uses of
    licensed spectrum rights in which the licensee or lessee does not
    necessarily offer services (in whole or part) over its own
    end-to-end physical network of base stations, mobile stations, and
    other elements. The licensee or spectrum lessee, as a manager of a
    private commons, will set terms and conditions for use in the
    private commons by users (consistent with the terms of the license
    and applicable service rules),[^250] and retain both *de facto*
    control of the use of the spectrum within the private commons and
    direct responsibility for compliance with the Commission's
    rules.[^251] And, while private commons arrangements will not be
    subject to the same notification requirements that are required by
    our spectrum leasing rules, licensees (or spectrum lessees) managing
    the commons will be required at this time to notify the Commission
    about any private commons they establish prior to users being
    permitted to operate within that private commons.

95. We anticipate at least two types of private commons that licensees
    (or spectrum lessees) could make available to individuals or groups
    of users. In the first example, a private commons could be created
    by a licensee (or spectrum lessee), which may or may not otherwise
    have a network infrastructure to provide services, by granting
    access for a fee (*e.g.*, on a transaction, usage, fixed, or other
    basis) to users who employ smart or opportunistic wireless devices
    that conform to the terms and conditions established by the licensee
    (or lessee), such as a requirement that devices operating in the
    licensed band use a particular technology, hardware, or software.
    The users' devices may be used to engage in peer-to-peer
    (device-to-device) communications, such as by becoming part of
    compatible *ad hoc* or "mesh" wireless networks.[^252] Such users
    may need access to a particular licensed spectrum band in lieu of
    (or perhaps in addition to) gaining access to other bands that may
    be more heavily used or that do not allow for the quality of service
    necessary for a particular application. This type of private commons
    might be particularly valuable to users that find existing bands
    that provide for unlicensed operations to be crowded or otherwise
    less desirable.

96. Under a second potential type of private commons arrangement, the
    licensee (or spectrum lessee) would not charge an ongoing access fee
    or otherwise have any direct relationship with the users. For
    instance, manufacturers of smart or opportunistic devices, or the
    developers of software or hardware used within such devices, may
    wish, as licensees or spectrum lessees, to provide spectrum access
    to anyone who purchases their devices, or devices with their
    hardware or software. This type of arrangement might be particularly
    effective in promoting new technologies or new uses by providing an
    opportunity for equipment developers to capitalize on their
    investments and innovations without having to get a license directly
    from the Commission, but could arrange for users of the equipment to
    access the spectrum usage rights from an existing licensee. Because
    a licensee (or spectrum lessee) could offer to private commons users
    the interference protection rights of its license, this arrangement
    could provide some additional benefits as compared with possible
    lower-powered, unlicensed operation in the same or other bands.

97. We will require licensees and spectrum lessees that seek to allow
    spectrum access on a private commons basis to notify the Commission
    of the arrangement at this time. This notification will be similar
    to, but simpler than, the notification required for spectrum manager
    leases. It would provide certain information and certifications
    regarding the general terms and conditions for spectrum access to
    users in the private commons, including the term and coverage area
    of the arrangement, general information on the technical
    requirements and the equipment that the licensee or spectrum lessee
    has approved for operation in the private commons, as well as a
    description of the types of uses that are allowed. Consistent with
    our approach to Part 15 devices, we will not require the
    notification to include specific information about each individual
    user.[^253] We examine this notification requirement, and the
    continued need for the notification, in the Second Further Notice,
    below. We also recognize the need to clearly identify the
    distinguishing elements of spectrum leases, managed private commons,
    and end-user arrangements, respectively, as means to create spectrum
    access. Accordingly, in the Second Further Notice, we seek comment
    on the specifications necessary to make such distinctions consistent
    with the Commission's regulatory and enforcement objectives, and we
    seek comment on other arrangements and regulatory changes that may
    facilitate spectrum access and that should be considered within a
    private commons framework.[^254]

98. We believe that a private commons will provide an important
    complement to the spectrum leasing policies we have already adopted
    to facilitate spectrum access, as well as to unlicensed access to
    spectrum. We expect the combination of spectrum leasing
    arrangements, private commons, and the various ways in which
    licensees currently may utilize advanced technology will further
    enhance this move towards greater spectrum access, and we are
    optimistic about the potential benefits that are likely to emerge as
    licensees and other users find more ways to promote access to and
    the efficient use of spectrum. We note that the flexibility afforded
    by a private commons may help make possible a number of new means to
    apply advanced radio technologies, including such concepts as
    "policy radio," an emerging approach that would allow use that is
    even more dynamic than that described above.[^255]

99. We also envision this approach as part of a balance between
    license-based access mechanisms, such as the spectrum leasing and
    private commons models that allow licensees and spectrum lessees to
    define access rights based on market forces, and unlicensed access
    mechanisms that allow free access by non-interfering devices
    pursuant to regulation. We recognize that there is an ongoing and
    important debate on spectrum policy, with some parties stressing the
    merits of unlicensed and shared uses, both within a free and open
    "spectrum commons" and in licensed bands under private
    control,[^256] and other parties arguing for the merits of
    "exclusive" licensed use of spectrum.[^257] We are not here taking
    sides in that debate. Rather, we expect that existing and new
    licensees and spectrum lessees in various services and spectrum
    bands will consider the market potential of a private commons and
    other arrangements and seek opportunities to lower transaction costs
    and provide multiple avenues of spectrum access and a range of
    devices to consumers, businesses and other entities. In addition, we
    anticipate that, as unlicensed use becomes more popular, users of
    unlicensed devices that operate under the Part 15 rules may have an
    incentive to seek access to a managed private commons in licensed
    bands that may be less susceptible to overcrowding and, because of
    the benefit of interference protection, may be a way to avoid the
    potential risks associated with the "tragedy of the commons."[^258]
    Licensees and spectrum lessees in turn will have an incentive to
    provide private commons through a variety of means, with terms and
    conditions that are most valued by users. We expect these users will
    choose the most efficient means of spectrum access for their
    particular needs, considering the costs and benefits of all options,
    including private commons and unlicensed use.

## License Assignments and Transfers of Control

### Immediate Approval Procedures for Certain Categories of License Assignments and Transfers of Control

#### Background

100. In the *Report and Order*, we streamlined the regulatory process
     for transfers of control and license assignments in the same
     Wireless Radio Services covered by our new spectrum leasing
     policies. In the *Further Notice*, we proposed to take additional
     steps to remove unnecessary delay in processing certain categories
     of transfers of control and license assignments to the extent doing
     so would be consistent with our statutory obligation to determine
     whether such transactions would be in the public interest.[^259] In
     particular, we inquired whether the policies that we adopted with
     regard to *de facto* transfer leasing under our forbearance
     authority should also be applied to license assignments and
     transfers of control.[^260]

#### Discussion

101. We adopt immediate approval procedures for the same categories of
     license assignments and transfers of control involving Wireless
     Radio Services as are subject to our immediate approval procedures
     for *de facto* transfer spectrum leasing arrangements, as set forth
     in Sections IV.A.1.a and IV.A.1.b, above.[^261] This decision
     comports with the comments we received.[^262] Accordingly, we
     conclude that an application for assignment or transfer of control
     of Wireless Radio Service licenses qualifies for immediate approval
     if, consistent with our policies for *de facto* transfer leases,
     the application establishes, through required certifications, that
     the transaction does not raise any specified potential public
     interest concerns relating to eligibility and use restrictions,
     foreign ownership restrictions, designated entity/entrepreneur
     restrictions, or competition, or does not require a waiver or
     declaratory ruling.[^263] In such cases, we will not require prior
     public notice or additional individualized Commission review before
     the transaction is approved.[^264] In addition, the applications
     must not involve license authorizations that are subject to
     Commission review or investigation that potentially affects the
     status of the license authorization itself.[^265] Finally, as with
     the approach we adopt with regard to *de facto* transfer leasing,
     our approval of the license assignment or transfer of control will
     be placed on public notice, subject to reconsideration by
     interested parties or the Bureau within 30 days, and by the
     Commission within 40 days.[^266]

102. As we noted in the *Report and Order*, one of the goals in this
     proceeding is to streamline our policies relating to license
     assignments and transfers of control so as to minimize
     administrative delays, reduce transaction costs, encourage more
     efficient use of spectrum, promote spectrum fungibility, and
     otherwise facilitate the movement of spectrum toward new and higher
     valued uses.[^267] The additional streamlining of our processing of
     these specified categories of license assignments and transfers of
     control helps us to achieve these goals while at the same time
     meeting our statutory obligations, under Sections 308, 309, and
     310(d), to review license assignments and transfers of control to
     ensure that they are consistent with the public interest.

103. As with the policies we adopt regarding *de facto* transfer leases,
     we make this additional streamlining of our approval processes
     available only to those license assignments and transfers of
     control that would not raise the kinds of potential public interest
     concerns that would necessitate public notice or individualized
     review prior to granting.[^268] Thus, to the extent a particular
     application falls within those categories of assignments or
     transfers of control that potentially raise public interest
     concerns regarding eligibility and use restrictions, foreign
     ownership restrictions, designated entity/entrepreneur
     restrictions, or competition (as discussed above[^269]), or seeks
     waiver of or a declaratory ruling pertaining to Commission rules,
     we will, consistent with current requirements, continue to place
     the application on public notice (if it involves a common carrier
     license[^270]) and subject the application to more individualized
     prior review before acting on it. For applications that do not
     raise such potential public interest concerns, prior public notice
     and additional individualized review is not necessary. Such
     applications now are routinely approved, and we find that the
     resources and delay associated with such prior notice and review
     requirements are not merited when balanced against our goal of
     promoting more fluid secondary markets in spectrum rights. In
     addition, we keep in place procedures that will ensure that the
     Commission fulfills its obligation to ensure that the public
     interest is served by approval of the application. The approval of
     such applications will be announced by public notice, and
     interested parties, the Bureau, and the Commission will have
     sufficient time during the reconsideration period to review these
     transactions, as necessary, to ensure that parties have complied
     with Commission policies. In addition, if compliance issues arise
     after the reconsideration period, the Commission retains authority
     to take other action as necessary. We also note that parties are
     accountable for any certifications they make in their applications.
     If the Commission determines, following approval of an application
     under these procedures, that any such certification, by either the
     licensee, assignee, or transferee, is not true, complete, correct,
     and made in good faith, the Commission will be vigilant in taking
     appropriate action.[^271]

104. *License assignments and transfers of control subject to our
     forbearance authority.* Thus, for license assignment and transfer
     of control applications that fall within the scope of our
     forbearance authority and that meet the specified requirements
     (*i.e.*, do not raise any of the potential public interest concerns
     identified above) for immediate approval, we will forbear from
     prior public notice and additional individualized review
     requirements. We find that such forbearance satisfies each prong of
     the test under Section 10, and will serve the public interest.

105. Evaluating the first prong of the forbearance test, we conclude
     that the prior public notice and individualized Commission review
     requirements of Sections 309(b) and 310(d) are not necessary to
     ensure that a carrier's charges, practices, classifications, and
     services are just and reasonable, and not unjustly or unreasonably
     discriminatory.[^272] As we noted earlier, it is already the case,
     under current rules, that when parties file applications proposing
     a transfer of control or assignment of a license, such applications
     do not generally contain information on the charges, practices,
     classifications, or services of the parties involved, and we have
     declined to use such applications as a context for regulating these
     issues.[^273] Retaining prior public notice and review requirements
     for these applications thus is not necessary to ensure that
     licensees' and lessees' charges, practices, classifications, and
     regulations are just and reasonable and not unjustly or
     unreasonably discriminatory. And, as indicated in the *Further
     Notice*, we have other existing tools at our disposal, including
     enforcement actions, to ensure that charges, practices,
     classifications, and regulations are just and reasonable and not
     unjustly or unreasonably discriminatory.[^274]

106. In examining the second prong of the Section 10 forbearance
     standard with respect to these applications, we conclude that
     requiring prior notice and comment and Commission review is not
     necessary for the protection of consumers. As discussed above, we
     have already determined that effectively functioning secondary
     markets will offer significant benefits to consumers,[^275] and we
     believe consumers will be fully protected by the limitations and
     safeguards placed on the forbearance process. Also, given that
     protecting consumers in the wireless marketplace is a core aspect
     of our competition policies, we have limited this streamlined
     application and immediate approval process to license assignments
     and transfers of control that would not raise potential competitive
     issues. Consumers are further protected because applications
     approved under this forbearance authority will be placed on public
     notice, enabling members of the public and other interested parties
     to raise any concerns regarding the protection of consumers in
     petitions for reconsideration.

107. Finally, we conclude that forbearing from prior public notice and
     Commission review of qualifying license assignment and transfer of
     control applications will further the public interest. This
     streamlined processing will enable secondary markets to work more
     effectively, with reduced regulatory delay and transaction costs.
     This in turn will increase the efficient use of spectrum, improve
     access to spectrum by all interested parties, promote competitive
     market conditions, and increase the innovative and advanced
     wireless services available to consumers. At the same time, the
     limitations on the types of license assignments and transfer of
     control applications that qualify for forbearance are designed to
     ensure that the public interest and our fulfillment of our
     statutory obligations are not undermined.

108. *License assignments and transfers of control not subject to
     forbearance.* Similarly, we also determine that the streamlined
     approach we are adopting for qualifying license assignments and
     transfers of control involving services that are not subject to our
     forbearance authority is consistent with the statutory requirements
     of Sections 308, 309, and 310(d). Consistent with these provisions,
     we continue to require an application and approval process. In
     addition, in order to determine whether to approve these
     transactions, the Commission requires that each application
     establish a distinct set of facts and representations concerning
     the particular license assignment or transfer of control
     application before it can be approved. Thus, before any particular
     application will be approved under these immediate approval
     procedures, the Commission will have determined, based on the
     particulars of that application, that all of the criteria relevant
     to establishing that the public interest would be served by the
     granting of the application had been supplied, and the statutory
     requirements for case-by-case review and approval of the
     application will have been satisfied.

### Extending the Streamlined Processing Policies Relating to License Assignments and Transfers of Control to Additional Wireless Radio Services 

####  Background

109. In the *Report and Order*, we limited our streamlined processing
     policies relating to license assignments and transfers of control
     to include only those services to which our spectrum leasing
     policies applied.[^276] In the *Further Notice*, we inquired
     whether we should expand these streamlined processing rules to
     include additional services.[^277]

#### Discussion

110. We will apply the streamlined processing procedures adopted in the
     *Report and Order* for license assignment and transfer of control
     applications, as modified by this order for qualifying
     applications, to all license assignment and transfer of control
     applications involving Wireless Radio Services authorizations
     regulated by the Bureau.[^278] Thus, under the policies we are
     adopting herein, license assignment and transfer of control
     applications that raise potential public interest concerns (*i.e.*,
     concerns relating to eligibility and use restrictions, foreign
     ownership restrictions, designated entity/entrepreneur
     restrictions, or competition) will be processed according to the
     21-day processing procedures for license assignments and transfers
     of control set forth in the *Report and Order*, while those
     applications that qualify under the immediate approval procedures
     adopted in this order will be processed under the procedures
     adopted for license assignments and transfers of control set forth
     herein.[^279]

111. We believe that there should be parity among these Wireless Radio
     Services when it comes to processing of license assignments and
     transfers of control. This will allow licensees and
     assignees/transferees in each service to benefit from streamlined
     processing that minimizes administrative delay, reduces transaction
     costs, and otherwise generally facilitates the movement of spectrum
     toward new, higher valued uses.

## The Commission's Role in Providing Secondary Markets Information and Facilitating Exchanges

### Background

112. In the *Further Notice*, we sought comment on a variety of
     approaches the Commission could take to promote access to the
     information needed to make possible spectrum leases or exchanges of
     spectrum usage rights in the secondary market. The simplest option
     discussed was maintaining an on-line database of licensees,
     spectrum lessees, and other information.[^280] We pointed out that,
     under the spectrum leasing procedures adopted in the *Report and
     Order*, the Commission will make publicly available information
     that is contained in the required notifications and applications
     filed by spectrum leasing parties, including the identity of
     spectrum lessees, contact information, the spectrum and geographic
     area encompassed within the lease, and the term of the spectrum
     lease.[^281] We also sought comment on whether the Commission
     should collect additional information, support establishment of
     services such as listing offers to transfer, assign, or lease, or
     support the establishment of exchange mechanisms or brokering
     exchanges.[^282] Finally, we invited comment on the potential for
     independent third parties to emerge as "market-makers" that
     negotiate, broker, or otherwise facilitate spectrum leasing
     transactions.[^283] Specifically, we inquired whether the
     Commission should designate approved market-makers, whether
     requirements should be imposed relating to their operation, and
     whether it should attempt to facilitate the development of such
     market-makers.[^284]

### Discussion

113. We recognize that the Commission plays a critical role in the
     development of efficient secondary markets for spectrum usage
     rights. We believe that the spectrum leasing procedures established
     in the *Report and Order*, combined with the information made
     available through our ULS database, will help in the development of
     these secondary markets. At the same time, we recognize that it may
     be necessary to evaluate, and perhaps expand, the information made
     available by the Commission as secondary markets in spectrum usage
     rights develop.

114. With regard to the question of whether the Commission itself should
     provide additional information services to promote the development
     of secondary markets, we continue to believe that the private
     sector is better suited both to determine what types of information
     parties might demand, and to develop and maintain information on
     the licensed spectrum that might be available for use by third
     parties.[^285] Our decision is consistent with most of the comments
     we received on this question.[^286] Accordingly, while we will
     continue to collect and make available to the public the basic
     details related to spectrum licensees and lessees as provided in
     the *Report and Order*, we will not gather or provide additional
     information at this time.[^287]

115. We believe that this approach to collecting information and
     facilitating exchanges is most consistent with the Commission's
     general approach of relying on market processes where possible to
     provide needed goods and services, while supplying necessary
     information, oversight, or other critical inputs in those cases
     where government can do this most efficiently. As noted above, the
     Commission plays a key role in providing reliable information about
     the identity of licensees and the spectrum they hold.[^288]
     Determining how best to analyze and organize this information in a
     manner that meets the varying needs of licensees and potential
     spectrum lessees is a separate undertaking that, we believe, can be
     achieved more efficiently and effectively by independent
     market-makers and exchanges competing with each other to provide
     the kinds of value-added information services that different
     parties in the market may demand. For this reason, we take no
     action to establish the Commission as either a market-maker or
     exchange, nor do we take action to favor any particular type of
     private exchange mechanism.[^289] Similarly, we decline at this
     time to establish requirements for market-makers or other parties
     that may emerge to facilitate transactions. We will, however,
     continue to monitor the development of information services and
     market mechanisms in the private sector, and are prepared to
     revisit this issue at a later time if circumstances warrant.

# order on reconsideration

116. Five parties -- Blooston Rural Carriers, Cingular Wireless, First
     Avenue Networks, NTCA, and Verizon Wireless -- filed petitions for
     reconsideration seeking clarification or revision of a number of
     different issues addressed in the *Report and Order.*[^290] Four
     parties filed responses to these petitions.[^291]

117. Blooston Rural Carriers, Cingular Wireless, and NTCA each sought
     clarification of the licensee's responsibility for ensuring that
     spectrum lessees comply with Commission policies and rules,[^292]
     while Verizon Wireless sought clarification of the licensee's
     ability to terminate a spectrum lease for non-compliance by the
     lessee.[^293] Cingular Wireless and Verizon Wireless requested
     additional procedural protections for licensees and spectrum
     lessees in the event the Commission sought to terminate a spectrum
     lease,[^294] while Blooston Rural Carriers, Cingular Wireless, and
     NTCA sought additional procedural protections for spectrum lessees
     if the license was terminated, either as a result of the licensee's
     bankruptcy or for some other unanticipated reason.[^295] Blooston
     Rural Carriers also sought clarification of Commission policies
     regarding the licensee's responsibility for meeting application
     construction requirements when entering into spectrum leasing
     arrangements.[^296] And, Cingular Wireless requested clarification
     with respect to the licensee's responsibility for the cost-sharing
     obligations associated with relocation of incumbent microwave
     licensees in broadband PCS spectrum.[^297] We address these issues
     and petitions below.

118. Issues raised by two of the petitioners overlap with matters that
     we already have addressed in the Second Report and Order, above.
     First Avenue Networks recommended that we eliminate the requirement
     that parties file spectrum manager leases days in advance of being
     permitted to commence operations under the lease,[^298] an issue we
     addressed in Section IV.A.1.d, above.[^299] Cingular Wireless
     sought clarification of the Commission's policies regarding
     spectrum leasing by designated entities and entrepreneurs,[^300]
     which we have addressed in Section IV.A.4.b, above.[^301] Because
     we have already considered and addressed the substance of these
     petitions, we will not discuss them further in this section.

## Licensee Responsibility To Ensure That Spectrum Lessees Comply With Commission Policies and Rules 

### The licensee's responsibility to ensure the spectrum lessee's compliance with Commission policies and rules

#### Spectrum manager leasing arrangements

119. [Background]{.underline}. In the *Report and Order*, we provided
     that licensees in spectrum manager leasing arrangements will be
     held directly accountable for lessee violations.[^302] In addition,
     we stated that if the licensee or the Commission determines that
     there is any violation of the Commission's rules or that the
     lessee's system is causing harmful interference, the licensee must
     immediately take steps to remedy the violation, resolve the
     interference, suspend or terminate the operation of the system, or
     take other measures to prevent further harmful interference until
     the situation can be remedied.[^303] Finally, if the spectrum
     lessee refuses to resolve the interference, remedy the violation,
     or suspend or terminate operations, either at the direction of the
     licensee or by order of the Bureau or Commission, we provided that
     the licensee "must use all legal means necessary to enforce the
     order," as codified in section 1.9010(b)(1)(iii).[^304]

120. In its petition for reconsideration, Cingular Wireless contended
     that a spectrum manager licensee should not be held accountable for
     the spectrum lessee's violations of any rules if the licensee
     exercises some form of "due diligence."[^305] In their petition,
     Blooston Rural Carriers asserted that requiring that a spectrum
     manager licensee use "all legal means necessary" to ensure that a
     spectrum lessee does not continue to violate rules imposes an
     ambiguous and potentially onerous requirement on the licensee even
     if the licensee takes reasonable steps to ensure compliance; they
     requested that we clarify the provision by including a
     "reasonableness" element in the requirement.[^306]

121. [Discussion]{.underline}. We affirm the *Report and Order* in
     holding that licensees in spectrum manager leasing arrangements are
     directly responsible and accountable for violations of Commission
     policies and rules by their spectrum lessees, and thus we deny
     Cingular Wireless's petition. In entering into spectrum manager
     leasing arrangements, licensees have chosen to retain *de facto*
     control of the leased spectrum, which includes ongoing oversight
     responsibilities as well as direct accountability for ensuring
     their lessees' compliance with the rules.[^307] Spectrum lessees in
     this type of leasing arrangement are not held directly accountable,
     but instead are secondarily liable.[^308] Accordingly, holding
     spectrum manager licensees directly accountable is the only means
     of ensuring that some entity is directly accountable for compliance
     with Commission rules pertaining to the use of the leased spectrum.
     We note, however, that while licensees, as a policy and legal
     matter, will be held accountable for their lessees' compliance, the
     Commission retains discretion, based on the facts and circumstances
     regarding the licensee's exercise of its oversight
     responsibilities, as to whether and how it may proceed against the
     licensee when a spectrum lessee violates Commission policies. Thus,
     we agree with Cingular Wireless that the extent of a licensee's due
     diligence should be considered in determining the appropriate
     course of action.

122. In addition, consistent with the concerns raised by Blooston Rural
     Carriers, we modify section 1.9010(b)(1)(iii) of the Commission's
     rules by adding a reasonableness element to the provision. As
     modified, the rule will now state that the spectrum manager
     licensee must "use all reasonable legal means necessary to enforce
     compliance." This clarification should ameliorate any concern that
     the licensee would have to exhaust all legal means, no matter how
     unreasonable, to ensure its lessees' compliance. Nevertheless, we
     emphasize that licensees that enter into spectrum manager leasing
     arrangements must maintain *de facto* control over the leased
     spectrum, which includes retention of the necessary legal rights,
     and the responsibility for taking legal action when necessary, to
     enforce their lessees' compliance with Commission policies and
     rules.

#### *De facto* transfer leasing arrangements

123. [Background]{.underline}. In contrast to licensee responsibilities
     in spectrum manager leasing arrangements, we significantly limited
     licensee responsibilities in *de facto* transfer leasing
     arrangements by relieving licensees of primary and direct
     responsibility for ensuring that their lessees' operations comply
     with Commission policies and rules. We did, nonetheless, provide
     that licensees in *de facto* transfer leases retain "some residual
     responsibilities" regarding the leased spectrum. While noting that
     we were seeking to carefully limit licensee responsibilities so as
     not to impede commercially viable leasing arrangements, we also
     stated that it "may be appropriate to hold the licensee responsible
     in specific cases for ongoing violations or other egregious
     behavior on the part of the spectrum lessee about which the
     licensee has knowledge or should have knowledge."[^309]

124. In its petition, Cingular Wireless objected to stating that the
     Commission "may" hold licensees potentially responsible for
     "ongoing violations" or "egregious behavior," subject to
     forfeitures or license cancellation, contending that this standard
     is "extremely vague" and provides licensees insufficient
     guidance.[^310] Cingular Wireless sought either elimination of the
     licensee's residual responsibility with regard to *de facto*
     transfer leases or clarification of the standard to which the
     licensee would be held accountable.[^311] Blooston Rural Carriers
     objected to holding the licensee accountable for what it "should
     have known," and requested that the Commission clarify that the
     licensee will have fully discharged its oversight responsibilities
     if it includes certain express covenants in a spectrum lease; under
     such a revised standard, if a licensee becomes aware of a
     violation, the licensee would then be accountable for enforcing the
     lease terms.[^312] Finally, NTCA requested in its petition that the
     Commission not hold the licensee liable for its lessee's violations
     so long as the licensee abides by some basic guidelines; NTCA
     recommended that we establish a safe harbor for *de facto* transfer
     leasing with regard to a licensee's residual responsibilities, but
     did not elaborate on what that safe harbor would entail.[^313]

125. [Discussion]{.underline}. We affirm the *Report and Order* and deny
     the petitions for reconsideration on this issue. We believe that
     the language in the *Report and Order* achieves the right balance
     with regard to the accountability of licensees in *de facto*
     transfer leasing arrangements for the violations of Commission
     policies and rules by their spectrum lessees.

126. In the *Report and Order*, we significantly limited licensee
     responsibilities in *de facto* transfer leasing arrangements by
     relieving licensees of primary and direct responsibility for
     ensuring that their lessees' operations comply with Commission
     policies and rules. Instead, as we made clear in the *Report and
     Order*, spectrum lessees are primarily and directly responsible for
     ensuring such compliance, and we will first approach the lessee
     when we have questions about interference or other technical
     performance issues to demand that it bring its operations into
     compliance. We also have the direct authority to pursue remedies
     against lessees under Section 503(b) of the Act.[^314] Thus,
     although licensees are generally relieved of responsibility for
     their lessees' actions, they are not relieved of all responsibility
     no matter the circumstance. Given that licensees under this type of
     leasing arrangement continue to hold *de jure* control of the
     leased spectrum, as well as non-delegable duties regarding their
     license, we find that holding them potentially accountable, in
     certain limited circumstances, is commensurate with their ongoing
     responsibilities, as licensees, to the Commission.

127. As we have indicated, such potential residual accountability is
     quite circumscribed, and would only attach to ongoing violations or
     other egregious behavior by the spectrum lessees about which the
     licensee had knowledge or should have knowledge.[^315] For
     instance, our rules require that any agreement between a licensee
     and spectrum lessee must contain provisions that the spectrum
     lessee comply at all times with applicable Commission rules.[^316]
     Accordingly, to the extent that a licensee is found complicit with
     ongoing violations by the spectrum lessee about which the licensee
     is aware and does nothing to ensure compliance, we believe it is
     appropriate to hold that licensee accountable. While we would
     expect that instances in which licensees that have entered into *de
     facto* transfer leases may be held accountable for ongoing or
     egregious acts of their lessees will be quite rare indeed, we
     cannot relieve these licensees altogether, in all cases no matter
     how egregious, for responsibility for any act of their spectrum
     lessees. Finally, although we decline to adopt petitioners'
     proposals for codifying dispositive rules as to what would or would
     not constitute such ongoing violations or other egregious acts of a
     spectrum lessee for which a licensee would be held accountable, we
     do believe that the kinds of factors proposed by them could be
     relevant to our case-by-case review of whether a particular
     licensee had in fact appropriately exercised its residual,
     non-delegable duties with regard to such actions by its spectrum
     lessee.

### The licensee's responsibility to terminate a spectrum lease for violations by the spectrum lessee 

128. [Background]{.underline}. In the *Report and Order*, we required
     that the licensee always retain broad authority to terminate a
     lease if the spectrum lessee was violating Commission rules.[^317]
     Section 1.9040(a)(i) codified this policy in part, stating: "The
     spectrum lessee must comply at all times with applicable rules set
     forth in this chapter and other applicable law, and the spectrum
     leasing arrangement may be revoked, cancelled, or terminated by the
     licensee or Commission if the spectrum lessee fails to comply with
     applicable requirements."[^318]

129. In its petition, Verizon Wireless asserted that the wording of
     section 1.9040(a)(i) is overly broad, and would discourage
     potential spectrum lessees from entering into spectrum leases.
     Specifically, Verizon Wireless contended that the provision, as
     worded, could be read to allow the licensee to terminate a lease
     for the lessee's failure to comply with *any* of the Commission's
     rules or any other applicable law. Such a broad interpretation, it
     contended, could enable a licensee to claim the absolute right to
     terminate a spectrum lease even in the event of the most minor
     infraction, regardless of any agreement otherwise reached between
     the leasing parties. Verizon Wireless argued that a licensee might
     use this provision as pretext for terminating a lease when economic
     circumstances might make it no longer in the licensee's interest to
     honor the leasing arrangement. Accordingly, Verizon Wireless
     requested that we clarify that our rules do not create an absolute
     right to terminate a lease for any violation whatsoever regardless
     of the contractual terms of the spectrum lease.[^319]

130. [Discussion]{.underline}. In establishing policies that promote use
     of spectrum leasing arrangements, we have been careful to
     distinguish between the rights of licensees and spectrum lessees.
     Licenses, who always retain *de jure* control of the license and
     retain certain core obligations that cannot be delegated to
     spectrum lessees, always retain greater rights and authority over
     the license and leased spectrum than spectrum lessees. Consistent
     with these policies, we require that licensees retain broad
     authority and, as provided in section 1.9040(a)(i), that they may
     terminate a spectrum lease if the spectrum lessee violates
     Commission rules. We did not intend, however, to provide licensees
     with completely arbitrary authority to terminate a spectrum lease
     for any violation whatsoever, regardless of the contractual
     agreement between the parties. Such a broad reading of section
     1.9040(a)(i) could have a chilling effect on parties' incentives to
     enter into a spectrum lease. Accordingly, we grant Verizon
     Wireless's petition in part by clarifying our intent with regard to
     this provision.

131. We expect that leasing parties will negotiate certain terms in
     their lease agreement that delineate the circumstances under which
     the licensee would have the right to terminate the spectrum lease.
     We will not dictate the specific terms of such a provision. We
     will, however, require that those terms be consistent with the
     respective rights of licensees and spectrum lessees as defined by
     our policies and rules on spectrum manager and *de facto* transfer
     leases, respectively. As a general matter, licensees entering into
     spectrum manager leases retain both *de jure* control of the
     license and *de facto* control of the leased spectrum, and are
     directly responsible to the Commission for ensuring their lessees'
     compliance with Commission policies and rules. Accordingly, such
     licensees' retention of the contractual right to terminate spectrum
     leases for their spectrum lessees' non-compliance must be
     commensurate with the licensees' retention of *de facto* control
     over the leased spectrum and their ongoing responsibilities to the
     Commission, as spectrum manager licensees, to ensure
     compliance.[^320] As for *de facto* transfer leases, licensees
     retain *de jure* control of the license and have certain residual
     responsibilities for ensuring that spectrum lessees do not commit
     ongoing or other egregious violations, as discussed above.[^321] In
     sum, these licensees' retention of the contractual right to
     terminate a spectrum lease for lessee non-compliance must be
     commensurate with the licensees' ongoing residual responsibilities.
     Thus, as long as the licensee retains sufficient ability to ensure
     its spectrum lessee's compliance with Commission policies and
     rules, and retains the authority to terminate a spectrum leasing
     arrangement commensurate with the licensee's responsibilities under
     our policies and rules (as discussed above), the spectrum leasing
     arrangement may contain specific provisions that offer the spectrum
     lessee certain protections against the licensee's otherwise
     arbitrary termination of the spectrum lease.

## Protections for Licensees and Spectrum Lessees in the Event of Termination of the Spectrum Lease or the License

### Procedural protections for licensees and spectrum lessees with regard to Commission termination of a spectrum leasing arrangement

#### Spectrum manager leasing arrangements

132. [Background]{.underline}. Under the spectrum leasing policies we
     adopted in the *Report and Order*, leasing parties must notify the
     Commission of their spectrum manager leasing arrangement at least
     21 days before commencing operations (or, if a spectrum lease for a
     year or less, at least 10 days before commencing operations).[^322]
     As we explained in the *Report and Order*, while Commission
     approval is not required for spectrum manager leases, we determined
     that the Commission retains the authority to investigate and
     terminate a spectrum manager leasing arrangement under certain
     circumstances.[^323] Specifically, the Commission can terminate any
     spectrum manager leasing arrangement to the extent it determines,
     post-notification, that the arrangement constitutes an unauthorized
     transfer of *de facto* control under our new standard or raises
     foreign ownership, competitive, or other public interest
     concerns.[^324]

133. Cingular Wireless petitioned the Commission to adopt a policy by
     which licensees would have the procedural protections, under
     Sections 312 and 316 of the Act,[^325] including notice and
     opportunity to be heard, prior to the Commission deciding to
     terminate a spectrum manager lease.[^326]

134. [Discussion]{.underline}. We conclude that the procedural
     protections afforded licensees under Sections 312 and 316 do not
     apply to decisions by the Commission to terminate spectrum manager
     leasing arrangements. Sections 312 and 316 of the Act expressly
     apply only to revocation or modification of licenses or
     construction permits, and spectrum manager leases, which do not
     involve an authorization or permit under the Act, are neither.
     Accordingly, we deny Cingular Wireless's petition.

135. We affirm and further clarify our procedures for Commission
     examination, and possible termination, of spectrum manager leasing
     arrangements to the extent that these arrangements do not qualify
     for immediate processing under the procedures discussed above in
     the Second Report and Order.[^327] As noted above, leasing parties
     that seek to enter into spectrum manager leases pursuant to the
     policies established in the *Report and Order* (*i.e.*, those that
     do not qualify for immediate processing) must file their
     notifications at least 21 days before commencing operations (or, if
     a lease for a year or less, at least 10 days before commencing
     operations), thus giving the Commission the opportunity to review
     these arrangements prior to commencement of operations.[^328]
     Interested parties may then seek informal guidance or a formal
     determination from the Commission regarding the particular spectrum
     manager lease by means of a letter, a complaint, or a petition for
     reconsideration.[^329] To the extent the Bureau determines that the
     leasing arrangement may raise potential public interest concerns
     relating to eligibility, foreign ownership, designated entity or
     entrepreneur policies, or competition, and believes further
     investigation is necessary prior to commencement of operations
     under the spectrum manager lease, it will take whatever steps it
     deems appropriate to investigate or address those concerns,
     including notifying the licensee and possibly requiring that
     parties not commence operations under the lease until such concerns
     have been resolved.[^330] The Commission also retains the right to
     terminate any lease to the extent that it determines at any time,
     post-notification, that the arrangement constitutes an unauthorized
     transfer of control under the *de facto* control standard for
     spectrum leasing or otherwise is found to violate Commission
     policies regarding spectrum leasing.[^331] In addition, if the
     Commission determines, post-notification, that any certification
     provided in the notification, by either the licensee or spectrum
     lessee, is not true, complete, correct, and made in good faith, the
     Commission will be vigilant in taking appropriate enforcement
     action, potentially including forfeitures or termination of the
     spectrum manager leasing arrangement.[^332]

#### *De facto* transfer leasing arrangements

136. [Background]{.underline}. In the *Report and Order*, we provided
     that spectrum lessees entering into *de facto* transfer leases will
     be granted an instrument of authorization when the Commission
     approves of the leasing application, and that they will be held
     primarily and directly responsible for compliance with Commission
     policies and rules and will be subject to forfeiture proceedings
     under Section 503(b) of the Act.[^333]

137. Verizon Wireless petitioned to request that the Commission clarify
     that the spectrum lessee will be subject to the same due process
     protections as licensees with regard to the notice, forfeiture, and
     other enforcement procedures currently applicable to licensees,
     including the Commission's decision to terminate the *de facto*
     transfer spectrum leasing authorization.[^334]

138. [Discussion]{.underline}. We agree with Verizon Wireless that
     because spectrum lessees in *de facto* transfer leasing
     arrangements receive an instrument of authorization, and are
     directly accountable to the Commission and subject to forfeiture
     proceedings under Section 503(b), they are entitled to the same
     procedural protections as licensees pertaining to the forfeiture
     proceedings. Accordingly, to the extent the Commission pursues
     forfeiture actions against a *de facto* transfer spectrum lessee
     for alleged violation of Commission policies or rules, the spectrum
     lessee is entitled to the procedural protections afforded other
     holders of authorizations under Section 503(b).

139. However, we do not agree with Verizon Wireless to the extent it
     requests that spectrum lessees in *de facto* transfer leases be
     accorded the same rights as licensees in cases where the Commission
     decides to terminate the lease. Termination of a spectrum lease is
     not the equivalent of a license revocation, and thus spectrum
     lessees are not subject to the same procedural protections afforded
     licensees under Sections 312 and 316. As noted above, those
     procedural protections only apply to revocations or modifications
     of licenses or construction permits. A termination of a spectrum
     lease, in which a spectrum lessee holds temporary and subsidiary
     rights to the leased spectrum, does not rise to the level of either
     a revocation of a license or construction permit. Thus, spectrum
     lessees that gain their limited and temporary rights to access to
     spectrum through a spectrum leasing arrangement with licensees are
     not entitled to the same procedural protections, vis-à-vis the
     Commission, as a licensee that is authorized by the Commission to
     hold their authorizations.

### Protections for spectrum lessees in the event of license termination

140. [Background]{.underline}. In the *Report and Order*, we stated
     that, in the event the licensee's authorization was revoked or
     cancelled, the spectrum lessee under either a spectrum manager or
     *de facto* transfer lease arrangement would have to terminate its
     operations. As we noted, termination was necessary because the
     spectrum lessee gains access to the licensed spectrum only through
     the licensee's authorization. We recognized that termination of the
     spectrum lease might require service termination by the lessee and,
     accordingly, we stated that the Commission would take into account
     the public interest in affording a reasonable transition period to
     users of the service in order to minimize disruption to consumers,
     ongoing businesses, and other activities. In addition, we
     determined that the spectrum lessee would have no greater right to
     obtain a comparable license than any other interested
     parties.[^335]

141. Three petitioners sought additional protections for spectrum
     lessees in the event that the license is cancelled or terminated,
     or if the licensee goes bankrupt. Specifically, Cingular Wireless
     requested clarification that, in the event of an unanticipated
     license termination, a valid spectrum lease does not terminate
     simply because the license is sold, unless the lease so
     provides.[^336] Blooston Rural Carriers, meanwhile, asserted that
     the Commission should provide more protection for lessees in the
     event of licensee bankruptcy or license termination. They believed
     that merely stating that the Commission would provide a spectrum
     lessee a reasonable transition period is too vague and does not
     adequately protect the spectrum lessee's investments. Instead,
     Blooston Rural Carriers contended that, in event of bankruptcy, the
     Commission should either require the leased spectrum to be
     partitioned/disaggregated to the lessee, or require the new
     licensee to assume the lease on substantially the same terms as the
     original licensee.[^337] Finally, NTCA asserted that lack of
     certain protections for lessees is a disincentive to spectrum
     leasing, and that the Commission should provide that long-term *de
     facto* transfer lessees retain some rights if the licensee goes
     bankrupt; in particular, NTCA argued that the Commission should
     permit spectrum lessees to continue operations and take over as the
     primary licensee, or have time to gradually transition to other
     available spectrum.[^338] RTG, in reply to the latter two
     petitions, generally supported Blooston Rural Carriers' and NTCA's
     contentions.[^339]

142. [Discussion]{.underline}. Because we conclude that the *Report and
     Order* achieves the right balance respecting the rights of spectrum
     lessees with regard to the license authorization itself, in the
     event of license cancellation, we deny these petitions. Axiomatic
     to spectrum leasing is that spectrum lessees do not hold the
     underlying license authorization and that they lease spectrum usage
     rights contingent on the licensee continuing to hold that
     authorization.[^340] Since spectrum lessees do not hold the
     authorization, they do not, as spectrum lessees, have the same
     rights as licensees.[^341] Similarly, because spectrum lessees do
     not hold the license authorization, and lease spectrum only
     contingent upon the licensee continuing to hold that authorization,
     the lessees' rights to the leased spectrum terminates in the event
     the license is cancelled and from that point forward they have no
     greater rights than any other entity to the license itself.[^342]

143. While spectrum lessees are not granted special protections by the
     Commission with regard to the license itself, they are of course
     free to obtain certain appropriate contractual protections from
     licensees when they enter into spectrum leasing arrangements. For
     instance, to address the concerns that Cingular Wireless has
     raised, spectrum lessees could enter into agreements to protect
     their interests in the event the licensee sells the license.
     Similarly, the concerns raised in the petitions regarding the
     potential bankruptcy of the licensee could be addressed
     contractually by requiring the licensee to alert the spectrum
     lessee in the event the licensee begins to experience financial
     problems that may pose a risk of bankruptcy. Finally, as discussed
     above, if there is an unanticipated termination or cancellation of
     the license that requires service termination by the spectrum
     lessee, we provide spectrum lessees adequate protections by
     affording them the opportunity to obtain certain protections during
     a reasonable transition period in order to minimize disruption to
     business and other activities.[^343]

## Licensee Responsibility for Meeting Construction Obligations

144. [Background]{.underline}. The spectrum leasing rules adopted in the
     *Report and Order* permit licensees to rely on the activities of
     their lessees, if they so choose, for purposes of complying with
     the buildout obligations that are conditions of the license
     authorization. In the event that the licensee chooses to rely on
     its lessee's activities, but the lessee fails to build out, the
     Commission will enforce the rules against the licensee consistent
     with existing rules.[^344]

145. In their petition, Blooston Rural Carriers argued that the
     Commission should be more flexible regarding construction
     requirements when a licensee's failure to meet those obligations is
     jeopardized by the spectrum lessee's breach of its lease agreement
     with the licensee. They contended that strict enforcement of the
     Commission's policy would discourage spectrum leasing, and proposed
     that licensees be given a reasonable extension of buildout
     deadlines if they can show that they entered into good faith,
     arms-length leases with spectrum lessees and reasonably depended on
     the lessees to meet the applicable buildout requirements.[^345] RTG
     supported this petition.[^346]

146. [Discussion]{.underline}. We reaffirm the *Report and Order* in
     holding that meeting the applicable buildout obligations remains a
     condition of the license authorization, such that a licensee is
     ultimately responsible for meeting those requirements regardless of
     whether it seeks to rely on spectrum lessees to meet some of those
     obligations. As a condition of the license authorization, the
     licensee must remain responsible to the Commission for meeting
     these licensee obligations, and cannot escape those obligations by
     delegating them to another entity that does not hold the license.
     We note that a licensee is free to negotiate a contractual
     provision in its leasing agreement with a spectrum lessee that
     could protect the licensee against the spectrum lessee's failure to
     meet such obligations.[^347]

## Responsibility for Compliance With Cost-Sharing Obligations for Relocation of Microwave Licensees in Broadband PCS

147. [Background]{.underline}. The *Report and Order* did not directly
     address which entity, licensee or spectrum lessee, would be deemed
     the "PCS entity" for purposes of certain relocation
     responsibilities applicable in the broadband PCS services. Under
     sections 24.239 through 24.253 of the Commission's rules, which
     govern the relocation of microwave incumbents from certain
     frequencies in the 1850-1990 MHz Broadband PCS band,[^348] any "PCS
     entity" that benefits from spectrum clearance performed either by
     other PCS entities or by microwave incumbents that voluntarily
     relocate must contribute to such relocation costs.[^349]

148. In its petition, Cingular Wireless requested that we clarify
     whether, in the context of spectrum leasing and absent specific
     lease provisions to the contrary, the licensee or the spectrum
     lessee would be deemed a "PCS entity" under the microwave
     relocation rules.[^350] In reply, the Fixed Wireless Communications
     Coalition asserted that a licensee's microwave relocation
     obligations cannot be delegated to spectrum lessees under either
     the spectrum manager or the *de facto* transfer option.[^351]
     PCIA's Microwave Cost Sharing Clearinghouse, which administers the
     cost sharing plan, contended that licensees should be responsible
     for all cost-sharing obligations triggered by spectrum lessees in
     spectrum manager leases,[^352] while spectrum lessees in *de facto*
     transfer leases should assume the obligations and rights of the
     licensee under the cost sharing rules because they are akin to
     holders of partitioned or disaggregated spectrum.[^353]

149. [Discussion]{.underline}. We clarify that broadband PCS licensees
     are the "PCS entities" responsible, under sections 24.239 through
     24.253, for cost sharing obligations triggered by spectrum lessees
     under both spectrum manager and *de facto* transfer leases. Thus,
     we agree with the Fixed Wireless Communications Coalition that
     these responsibilities cannot be delegated to spectrum lessees, and
     disagree with the contention of PCIA's Microwave Cost Sharing
     Clearinghouse that spectrum lessees under *de facto* transfer
     leases are tantamount to partitionees or disaggregatees and
     therefore should be treated alike under the relocation rules.
     Spectrum lessees under *de facto* transfer leases, unlike
     partitionees and disaggregatees, are not licensees and, in
     particular, do not exercise *de jure* control over the leased
     spectrum. We find that it is reasonable to hold licensees
     responsible for the cost sharing obligations triggered by spectrum
     lessees of both spectrum manager and *de facto* transfer leases
     because licensees may attribute lessee buildout towards meeting
     their own buildout obligations.[^354] It would be incongruous to
     allow licensees to benefit from the spectrum lessees' buildout
     while allowing them to avoid cost-sharing obligations triggered by
     such buildout. Under our clarification, any party that is owed
     reimbursement under the cost-sharing rules will have direct
     recourse to the licensee.[^355] We recognize that a licensee may,
     by contract, account for a spectrum lessee's obligations to the
     licensee should the spectrum lessee trigger a reimbursement
     obligation. Finally, relocations performed by licensees and
     spectrum lessees do not trigger obligations between the parties
     under our rules, although leasing parties may account for this
     possibility by contract.

## Miscellaneous Additional Clarifications and Revisions

150. Finally, on our own motion for reconsideration of the *Report and
     Order*, we determine that the following clarifications and
     revisions are appropriate.[^356]

151. *Term of a spectrum leasing arrangement.* Under the spectrum
     leasing policies established in the *Report and Order*, we permit
     spectrum lessees to lease spectrum usage rights for any period or
     time during the term of the license. We also stated that existing
     spectrum leasing arrangements could also be renewable provided that
     the licensee obtained renewal of the underlying license
     authorization.[^357] We limit the term of spectrum leases in such a
     manner because spectrum lessees cannot have any greater right to
     the use of licensed spectrum than the licensee. Accordingly,
     although spectrum leasing parties are free to extend an existing
     spectrum leasing arrangement beyond the term of the license
     authorization if the license is renewed, no spectrum manager lease
     notification or *de facto* transfer lease application can propose a
     lease term that extends beyond the term of the license
     authorization itself. We will clarify our rules to reflect this
     policy.

152. *Leasing of excess capacity by Part 101 licensees.* We note that,
     prior to adoption of policies and rules for spectrum leasing
     arrangements, as set forth in our Part 1 subpart X rules, licensees
     in Part 101 services have been permitted to lease excess capacity,
     as set forth in section 101.603(b) for private operational fixed
     services and section 101.701 for common carriers.[^358] Nothing in
     our secondary markets rules established in the *Report and Order*
     supplants the excess capacity leasing rules for Part 101 services,
     and licensees may continue to lease excess capacity consistent with
     sections 101.603(b) and 101.701 of our rules.

153. *Loading requirements relating to certain services.* Another issue
     we wish to clarify regards channel loading requirements pertaining
     to applications for obtaining licenses in certain services, and how
     our spectrum leasing policies will be applied with respect to those
     applications. In some services, our rules require an applicant to
     demonstrate that it will "load" a channel with a certain number of
     mobile units in order to obtain exclusive use of that
     channel,[^359] or require a licensee to load a channel to full
     capacity before it can request additional spectrum.[^360] An
     applicant must demonstrate a genuine need for the number of mobile
     units for which it seeks authorization,[^361] and the uses for
     which those channels can be obtained are governed by the rules
     governing the channel in question.[^362]

154. The spectrum leasing rules do not relax or otherwise modify the
     initial eligibility requirements for any Commission license.
     Indeed, we specifically stated in the *Report and Order* that the
     spectrum leasing policies could not be used as a tool for evading
     applicable requirements that remain in effect, and that we were not
     taking any action that could lead to the evisceration of rules and
     policies that have not been directly and specifically revised by us
     in this proceeding.[^363] That is, an entity that does not qualify
     under our existing loading rules for a particular authorization
     cannot use the prospect of spectrum leasing to other entities in
     order to establish its own eligibility for that license.
     Consequently, we hereby clarify that an applicant's required
     showing of loading under our rules must consist only of that
     entity's mobile units, consistent with the rules governing the
     channel in question, rather than mobile units that would be
     operated by spectrum lessees pursuant to the spectrum leasing
     rules. Counting spectrum lessees' mobile units toward the
     applicant's initial loading would in effect make the applicant
     eligible for something it could not otherwise obtain under the
     relevant service rules. Such a result would contravene our stated
     intent in the *Report and Order*.[^364]

155. *Definition of "spectrum lessee."* We revise the definition of
     "spectrum lessee," as set forth in the under section 1.9003 of our
     rules,[^365] to state:

> *Spectrum lessee.* Any third-party entity that leases, pursuant to the
> spectrum leasing rules set forth in this subpart, certain spectrum
> usage rights held by a licensee. This term includes reference to
> third-party entities that lease spectrum usage rights as spectrum
> sublessees under spectrum subleasing arrangements.

Such a revision clarifies that spectrum lessees include spectrum lessees
that lease spectrum usage rights under spectrum subleasing arrangements.

156. *Section 1.9045(b).* We revise the language of section 1.9045(b) of
     our rules[^366] to read as follows:

> \(b\) If a licensee holds a license subject to the installment payment
> program rules (*see* § 1.2110 and related service-specific rules), the
> licensee and any spectrum lessee must execute the Commission-approved
> financing documents. No licensee or potential spectrum lessee may file
> a spectrum leasing notification or application without having first
> executed such Commission-approved financing documentation. In
> addition, they must certify in the spectrum leasing notification or
> application that they have both executed such documentation.

This revision more clearly effectuates the intent of the applicable
spectrum leasing policies regarding installment payment licensees, as
set forth in the *Report and Order*, which require that each such
licensee has executed Commission-approved financing documents that
establish, in every spectrum leasing arrangement, that the licensee
bears sole responsibility to repay the entire amount of its debt
obligation(s) to the Commission, and that each such licensee and
spectrum lessee entering into a spectrum leasing arrangement with such a
licensee have included, as part of the lease agreement, all
Commission-required provisions.[^367]

157. *Requirements relating to cellular cross-interests.* The *Report
     and Order* applied the existing policies relating to cellular
     cross-interests to spectrum leasing arrangements.[^368] Because we
     have, in the *Rural Report and Order*[^369] adopted concurrently
     with this Second Report and Order, eliminated the cellular
     cross-interest rule, we also will eliminate reference in our
     spectrum leasing rules to these policies and their applicability to
     such arrangements.

158. *Spectrum leasing forms.* In the rules adopted to implement the
     *Report and Order*, we required that spectrum leasing parties file
     spectrum manager lease notifications and *de facto* transfer lease
     applications using a modified Form 603,[^370] a form previously
     used in the context of assignments of existing authorizations and
     transfers of control involving entities holding authorizations. In
     the interest of administrative efficiency, we now determine to
     create a separate filing form, FCC Form 608, that pertains
     specifically to spectrum leasing arrangements, and our rules will
     be revised to so reflect.

# Second FURTHER Notice of Proposed Rulemaking

159. [Background]{.underline}. In the Second Report and Order, above, we
     provide examples of the ways in which advanced technologies, such
     as opportunistic devices, may be utilized within the context of
     current spectrum leasing policies.[^371] We observe that these do
     not comprise an exhaustive list of all permissible ways in which
     these advanced technologies may be utilized, but instead help
     illustrate the relevant regulatory issues before the
     Commission.[^372] We recognize that, due to the transaction costs
     associated with leasing or other market factors, licensees and
     other parties may wish to utilize other types of arrangements
     involving opportunistic use of licensed spectrum. To that end, we
     adopt a "private commons" option distinct from either spectrum
     leases or other existing arrangements. As discussed above, the
     private commons option may be particularly well-suited to meet the
     unique needs of market participants that incorporate "smart" or
     "opportunistic" use technologies within their bands.

160. [Discussion]{.underline}. Because there may be many arrangements
     that would involve opportunistic use of spectrum and that would be
     consistent with Commission rules, we seek comment on additional
     ways in which licensees and spectrum lessees may enter into
     arrangements in which other users may employ advanced technologies
     to opportunistically use licensed spectrum. We wish to build on the
     examples listed in the Second Report and Order, above, to provide
     licensees, spectrum lessees, and other parties with greater
     certainty as to the types of opportunistic use arrangements that
     would be permitted.[^373] To that end, we encourage commenters to
     describe additional means to increase spectrum access, how they
     might fit within the framework of the Commission's rules, or the
     extent to which we should consider revising our rules so as to
     accommodate these uses.

161. With regard to spectrum access through spectrum leasing
     arrangements, we seek comment on additional ways in which licensees
     and spectrum lessees may utilize advanced technologies, such as
     opportunistic devices, within the context of the Commission's
     spectrum leasing policies and rules. What types of uses have not
     been addressed by the Commission but nonetheless merit
     consideration due, for example, to an ability to enhance access? We
     encourage commenters to be specific as to the nature of the
     relationship between the licensees and spectrum lessee(s) in such
     arrangements, especially with regard to their responsibility for
     compliance with Commission rules.

162. With regard to spectrum access through private commons, we seek
     comment on the potential for this approach to improve access as
     well as the regulatory distinctions that are necessary to make this
     an effective regulatory model. Does the private commons established
     in the Second Report and Order sufficiently accommodate the wide
     variety of ways in which licensees (and spectrum lessees) and other
     users may wish to enter cooperative arrangements that employ
     "smart" or "opportunistic" devices? Should the private commons be
     modified or expanded so as to better accommodate the variety of
     arrangements that may be desired by the market? For example, should
     we adopt an approach to private commons that would allow
     intermediaries to facilitate transactions with users, design and
     set up communications networks for users or provide value-added
     services or applications?[^374] Are there alternative regulatory
     constructs that might help promote such arrangements? If so, how
     should these arrangements be structured, both in terms of
     licensees' reporting requirements before the Commission and the
     nature of the licensee's relationship with opportunistic users?

163. In addition, we seek comment on the technical parameters necessary
     to distinguish private commons from spectrum leasing arrangements
     or other arrangements. For example, at what point is a licensee
     with no physical infrastructure to use the spectrum engaged in
     providing a private commons to users, as opposed to a spectrum
     leasing arrangement with spectrum lessees? To what extent should a
     licensee (or spectrum lessee) with a private commons be permitted
     to grant access to another spectrum licensee (or spectrum lessee)?
     Should a licensee with an existing physical network and subscribers
     (*e.g.*, a CMRS provider) be permitted to be a subscriber in
     another licensee's private commons? If so, what would distinguish
     such use from a spectrum leasing arrangement?

164. We seek comment on the examples of private commons set forth in the
     Second Report and Order above,[^375] as well other types of private
     commons arrangements. We also stated in the Second Report and Order
     that the licensee or spectrum lessee establishing and managing a
     private commons must retain both *de facto* control of the use of
     the spectrum within the private commons and direct responsibility
     for the users' compliance with the Commission's rules.[^376] Are
     there any additional policies or requirements that are necessary to
     clarify the nature of this control or that could help ensure
     compliance? What is an efficient way to enforce users' compliance
     with the rules? For instance, would it be appropriate to require
     users to employ smart devices that include certain technologies
     (*e.g.*, a microchip set) that would enable private commons
     managers to shut down any devices found to be causing harmful
     interference?

165. Finally, we seek comment on the appropriate notification process
     for licensees or *de facto* transfer lessees that choose to offer a
     private commons. In the Second Report and Order above, we stated
     that a licensee or spectrum lessee managing the private commons
     must notify the Commission prior to permitting users to begin
     operating within the private commons.[^377] We propose here to give
     the licensee or spectrum lessee the option of notifying the
     Commission directly or, in the alternative, providing a URL that
     posts the terms and conditions. In the event these terms and
     conditions change, the licensee would have to make this information
     available on its website or, if this is not possible, by providing
     this information directly to the Commission. Is this an efficient
     notification procedure, and are there alternative means by which
     the Commission could collect this information in a less burdensome
     manner?

# Conclusion

166. In the Second Report and Order, we take additional steps,
     consistent with the *Further Notice*, to facilitate the development
     of secondary markets in spectrum usage rights in our Wireless Radio
     Services, both in the context of spectrum leasing arrangements and
     license assignments and transfers of control. In addition, we
     address several petitions for reconsideration we received relating
     to the *Report and Order.* Finally, in the Second Further Notice of
     Proposed Rulemaking, we continue to explore additional steps that
     could further enhance secondary markets and increase the efficient
     use of spectrum and the availability to the public of innovative
     wireless services.

# Procedural Matters

## Comment Filing Procedures

167. *Comments and reply comments*. Pursuant to applicable procedures
     set forth in sections 1.415 and 1.419 of the Commission's
     rules,[^378] interested parties may file comments in response to
     the Second Further Notice of Proposed Rulemaking in **WT Docket No.
     00-230** on or before November 17, 2004, and reply comments on or
     before December 17, 2004.

168. *Form of comments*. In order to facilitate staff review of the
     record in this proceeding, parties that submit comments or reply
     comments in this proceeding are requested to provide a table of
     contents with their comments. Such a table of contents should,
     where applicable, parallel the table of contents of the Second
     Further Notice of Proposed Rulemaking*.*

169. *How to file comments.* Comments may be filed either by filing
     electronically, such as by using the Commission's Electronic
     Comment Filing System (ECFS), or by filing paper copies.[^379]

170. Parties are strongly urged file their comments using ECFS (given
     recent changes in the Commission's mail delivery system). Comments
     filed through the ECFS can be sent as an electronic file via the
     Internet to \<http://www.fcc.gov/e-file/ecfs.html\>. Only one copy
     of an electronic submission must be filed. In completing the
     transmittal screen, the electronic filer should include its full
     name, Postal Service mailing address, and the applicable docket or
     rulemaking number, **WT Docket No. 00-230**. Parties also may
     submit comments electronically by Internet e-mail. To receive
     filing instructions for e-mail comments, commenters should send an
     e-mail to ecfs@fcc.gov, and should include the following words in
     the body of the message, "get form \<your e-mail address\>." A
     sample form and directions will be sent in reply.

171. Parties who choose to file by paper may submit such filings by hand
     or messenger delivery, by U.S. Postal Service mail (First Class,
     Priority, or Express Mail), or by commercial overnight courier.
     Parties must file an original and four copies of each filing in
     **WT Docket No. 00-230**. Parties that want each Commissioner to
     receive a personal copy of their comments must file an original
     plus nine copies. If paper filings are hand-delivered or
     messenger-delivered for the Commission's Secretary, they must be
     delivered to the Commission's contractor, Natek, Inc., at 236
     Massachusetts Avenue, N.E., Suite 110, Washington, D.C. 20002-4913.
     To receive an official "Office of the Secretary" date stamp,
     documents must be addressed to Marlene H. Dortch, Secretary,
     Federal Communications Commission. (The filing hours at this
     facility are 8:00 a.m. to 7:00 p.m.) If paper filings are submitted
     by mail though the U.S. Postal Service (First Class mail, Priority
     Mail, and Express Mail), they must be sent to the Commission's
     Secretary, Marlene H. Dortch, Federal Communications Commission,
     Office of the Secretary, 445 12th Street, S.W., Washington
     D.C. 20554. If paper filings are submitted by commercial overnight
     courier (*i.e.*, by overnight delivery other than through the U.S.
     Postal Service), such as by Federal Express or United Parcel
     Service, they must be sent to the Commission's Secretary,
     Marlene H. Dortch, Federal Communications Commission, Office of the
     Secretary, 9300 East Hampton Drive, Capitol Heights, MD 20743. (The
     filing hours at this facility are 8:00 am to 5:30 pm.)[^380]

172. Parties may also file with the Commission some form of electronic
     media submission (*e.g.*, diskettes, CDs, tapes, etc.) as part of
     their filings. In order to avoid possible adverse affects on such
     media submissions (potentially caused by irradiation techniques
     used to ensure that mail is not contaminated), the Commission
     advises that they should not be sent through the U.S. Postal
     Service. Hand-delivered or messenger-delivered electronic media
     submissions should be delivered to the Commission's contractor,
     Natek, Inc., at 236 Massachusetts Avenue, N.E., Suite 110,
     Washington, D.C. 20002-4913. Electronic media sent by commercial
     overnight courier should be sent to the Commission's Secretary,
     Marlene H. Dortch, Federal Communications Commission, Office of the
     Secretary, 9300 East Hampton Drive, Capitol Heights, MD
     20743.[^381]

173. Regardless of whether parties choose to file electronically or by
     paper, they should also send one copy of any documents filed,
     either by paper or by e-mail, to each of the following: (1) Best
     Copy & Printing, Inc., Portals II, 445 12th Street, S.W., Room
     CY-B402, Washington, D.C., 20554, facsimile (202) 488-5563, or
     e-mail at fcc@bcpiweb.com; and (2) Paul Murray, Spectrum &
     Competition Policy Division, Wireless Telecommunications Bureau,
     445 12th Street, S.W., Washington, D.C., 20554, or e-mail at
     <Paul.Murray@fcc.gov>.

174. *Availability of documents*. Comments, reply comments, and *ex
     parte* submissions will be available for public inspection during
     regular business hours in the FCC Reference Information Center,
     Federal Communications Commission, 445 12th Street, S.W., Room
     CY-A257, Washington, D.C. 20554. These documents also will be
     available electronically at the Commission's Disabilities Issues
     Task Force web site, www.fcc.gov/dtf, and from the Commission's
     Electronic Comment Filing System. Documents are available
     electronically in ASCII text, Word 97, and Adobe Acrobat. Copies of
     filings in this proceeding may be obtained from Best Copy &
     Printing, Inc., Portals II, 445 12th Street, S.W., Room CY-B402,
     Washington, D.C., 20554, telephone (800) 378-3160, facsimile (202)
     488-5563, or via e-mail at fcc@bcpiweb.com. This document is also
     available in alternative formats (computer diskette, large print,
     audio cassette, and Braille). Persons who need documents in such
     formats may contact Brian Millin at (202) 418-7426, TTY (202)
     418-7365, <Brian.Millin@fcc.gov>, or send an e-mail to
     access@fcc.gov.

## *Ex Parte* Presentations

175. This is a permit-but-disclose rulemaking proceeding, subject to the
     "permit-but-disclose" requirements under section 1.1206(b) of the
     Commission's rules.[^382] *Ex parte* presentations are permissible
     if disclosed in accordance with Commission rules, except during the
     Sunshine Agenda period when presentations, *ex parte* or otherwise,
     are generally prohibited. Persons making oral *ex parte*
     presentations are reminded that a memorandum summarizing a
     presentation must contain a summary of the substance and not merely
     a listing of the subjects discussed. More than a one or two
     sentence description of the views and arguments presented is
     generally required.[^383] Additional rules pertaining to oral and
     written presentations are set forth in section 1.1206(b) of the
     Commission's rules. Parties submitting written *ex parte*
     presentations or summaries of oral *ex parte* presentations are
     urged to use the ECFS in accordance with the Commission rules
     discussed above. Parties filing paper *ex parte* submissions must
     file an original and one copy of each submission with the
     Commission's Secretary, Marlene H. Dortch, at the appropriate
     address as shown above for filings sent by either U.S. mail,
     overnight delivery, or hand or messenger delivery. Parties must
     also serve the following with either one copy of each *ex parte*
     filing via e-mail or two paper copies: (1) Best Copy & Printing,
     Inc., Portals II, 445 12th Street, S.W., Room CY-B402, Washington,
     D.C., 20554, telephone (800) 378-3160, facsimile (202) 488-5563, or
     e-mail at fcc@bcpiweb.com; and (2) Paul Murray, Spectrum &
     Competition Policy Division, Wireless Telecommunications Bureau,
     Federal Communications Commission, Washington, D.C., 20554,
     Paul.Murray@fcc.gov.

## Final Regulatory Flexibility Analysis

176. Pursuant to the Regulatory Flexibility Act,[^384] the Final
     Regulatory Flexibility Analysis (FRFA) for the Second Report and
     Order and the Order on Reconsideration is set forth in Appendix D.
     The Commission's Consumer and Governmental Affairs Bureau,
     Reference Information Center, will send a copy of the Second Report
     and Order and the Order on Reconsideration, including the Final
     Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy
     of the Small Business Administration, in accordance with the
     Regulatory Flexibility Act.

## Paperwork Reduction Act of 1995 Analysis

177. The Second Report and Order contains either a new or modified
     information collection. As part of our continuing effort to reduce
     paperwork burdens, we invite the public and other government
     agencies to take this opportunity to comment on the information
     collection contained in this Second Report and Order and Order on
     Reconsideration, as required by the Paperwork Reduction Act of
     1995, Pub. L. No. 104-13. Public and agency comments are due sixty
     dates from publication of a summary of the Second Report and Order
     and Order on Reconsideration in the Federal Register. Comments
     should address the following: (a) whether the proposed collection
     of information is necessary for the proper performance of the
     functions of the Commission, including whether the information
     shall have practical utility; (b) the accuracy of the Commission's
     burden estimates; (c) ways to enhance the quality, utility, and
     clarity of the information collected; and (d) ways to minimize the
     burden of the collection of information on respondents, including
     the use of automated collection techniques or other forms of
     information technology. A copy of any comments on the information
     collections contained herein should be submitted to Judith B.
     Herman, Federal Communications Commission, 445 12^th^ St., S.W.,
     Room 1-C804, Washington, D.C. 20554, or via the Internet to
     Judith-B.Herman@fcc.gov, and to Edward C. Springer, OMB Desk
     Officer, 10236 New Executive Office Building, 724 17^th^ St., N.W.,
     Washington, D.C. 20503, or via the Internet to
     Edward.Springer@omb.eop.gov.

## Initial Regulatory Flexibility Analysis

178. As required by the Regulatory Flexibility Act,[^385] the Commission
     has prepared an Initial Regulatory Flexibility Analysis (IRFA) of
     the possible impact on small entities of the proposals in the
     Second Further Notice of Proposed Rulemaking (Second Further
     Notice). The IRFA is set forth in Appendix E. Written public
     comments are requested on the IRFA. These comments must be filed in
     accordance with the same filing deadlines for comments on the
     Second Further Notice, and have a separate and distinct heading
     designating them as responses to the IRFA. The Commission's
     Consumer and Governmental Affairs Bureau, Reference Information
     Center, will send a copy of the Second Further Notice, including
     the IRFA, to the Chief Counsel for Advocacy of the Small Business
     Administration, in accordance with the Regulatory Flexibility
     Act.[^386]

## Contact Information

179. The Wireless Telecommunications Bureau contact for this proceeding
     is Paul Murray at (202) 418-0688, Paul.Murray@fcc.gov. Press
     inquires should be directed to Lauren Patrich, Wireless
     Telecommunications Bureau, at (202) 418-0654, TTY at (202)
     418-7233, or e-mail at Lauren.Patrich@fcc.gov.

# Ordering clauses

180. Pursuant to Sections 1, 4(i), 8, 9, 10, 301, 303(r), 308, 309, 310,
     332, and 503 of the Communications Act of 1934, as amended, 47
     U.S.C. 151, 154(i), 158, 159, 160, 301, 303(r), 308, 309, 310, 332,
     and 503, IT IS ORDERED THAT this Second Report and Order and Order
     on Reconsideration and the policies set forth herein are ADOPTED,
     and that Parts 1, 24, and 90 of the Commission's rules, 47 C.F.R.
     Parts 1, 24, and 90, are AMENDED, as specified in Appendix C, to
     revise rules and procedures to further facilitate spectrum leasing
     arrangements under the policies enunciated in Sections IV.A and V
     of the Second Report and Order and Order on Reconsideration, to
     establish rules and procedures applicable to private commons
     arrangements under the policies enunciated in Section IV.B, and to
     further streamline the processing of license assignment and
     transfer of control applications under the policies enunciated in
     Section IV.C of the Second Report and Order, effective sixty days
     after publication in the Federal Register. The information
     collections contained in the rules set forth in Appendix C will
     become effective following OMB approval; the Commission will
     publish a document at a later date establishing the effective date
     of those rules. In addition, the immediate approval and processing
     procedures set forth in sections IV.A and IV.C of the Second Report
     and Order will become effective following Commission implementation
     of necessary software changes to the Commission's Universal
     Licensing System and any necessary database updates; the Wireless
     Telecommunications Bureau shall release a public notice advising
     the public once these procedures have been implemented and are
     available to the public.

181. IT IS FURTHER ORDERED THAT, pursuant to Section 5(c) of the
     Communications Act of 1934, as amended, 47 U.S.C. § 5(c), the
     Wireless Telecommunications Bureau and the Office of the Managing
     Director ARE GRANTED DELEGATED AUTHORITY to implement the policies
     set forth in this Second Report and Order, including, but not
     limited to, the development and implementation of the revised forms
     necessary to implement the policies adopted in this Second Report
     and Order and the rules set forth in Appendix C hereto.

182. IT IS FURTHER ORDERED that, pursuant to Sections 4(i), 5(b),
     5(c)(1), and 303(r) of the Communications Act of 1934, as amended,
     47 U.S.C. Sections 154(i), 155(b), 155(c)(1), and 303(r), Blooston
     Rural Carrier's Petition for Partial Reconsideration and/or
     Clarification is GRANTED IN PART and DENIED in all other respects.

183. IT IS FURTHER ORDERED that, pursuant to Sections 4(i), 5(b),
     5(c)(1), and 303(r) of the Communications Act of 1934, as amended,
     47 U.S.C. Sections 154(i), 155(b), 155(c)(1), and 303(r), Cingular
     Wireless' Petition for Reconsideration and Clarification is GRANTED
     IN PART and DENIED in all other respects.

184. IT IS FURTHER ORDERED that, pursuant to Sections 4(i), 5(b),
     5(c)(1), and 303(r) of the Communications Act of 1934, as amended,
     47 U.S.C. Sections 154(i), 155(b), 155(c)(1), and 303(r), First
     Avenue Network's Petition for Reconsideration is GRANTED IN PART
     and DENIED in all other respects.

185. IT IS FURTHER ORDERED that, pursuant to Sections 4(i), 5(b),
     5(c)(1), and 303(r) of the Communications Act of 1934, as amended,
     47 U.S.C. Sections 154(i), 155(b), 155(c)(1), and 303(r), NTCA's
     Petition for Partial Reconsideration is DENIED.

186. IT IS FURTHER ORDERED that, pursuant to Sections 4(i), 5(b),
     5(c)(1), and 303(r) of the Communications Act of 1934, as amended,
     47 U.S.C. Sections 154(i), 155(b), 155(c)(1), and 303(r), Verizon
     Wireless's Petition for Reconsideration and Clarification is
     GRANTED IN PART and DENIED in all other respects.

187. IT IS FURTHER ORDERED THAT, pursuant to the authority contained in
     Sections 1, 4(i), and 303(r) of the Communications Act of 1934, as
     amended, 47 U.S.C. §§ 151, 154(i), and 303(r), the Second Further
     Notice of Proposed Rulemaking is hereby ADOPTED.

188. IT IS FURTHER ORDERED THAT the Commission's Consumer Information
     Bureau, Reference Information Center, SHALL SEND a copy of the
     Second Report and Order, Order on Reconsideration, and the Second
     Further Notice of Proposed Rulemaking, including the Final
     Regulatory Flexibility Analysis and the Initial Regulatory
     Flexibility Analysis, to the Chief Counsel for Advocacy of the
     Small Business Administration.

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

**APPENDIX A -- COMMENTING PARTIES**

**(WT Docket No. 00-230)**

## Comments

(1) American Mobile Telecommunications Association (AMTA)

(2) Association of Public Safety Communications Officials (APSCO)

(3) AT&T Wireless Services, Inc. (AT&T Wireless)

(4) BellSouth Corporation and BellSouth Wireless Cable, Inc. (BellSouth)

(5) Blooston Law Firm (Blooston Rural Carriers)

(6) Cantor Fitzgerald Telecom Services, LLC (Cantor Fitzgerald Telecom)

(7) Cellular Telecommunications and Internet Association (CTIA)

(8) Center for Wireless Network Security (WiNSeC)

(9) Cingular Wireless LLC (Cingular Wireless)

(10) Mobex Communications, Inc. (Mobex)

(11) National ITFS Association and Catholic Television Network (National
     ITFS Association)

(12) Nextel Communications, Inc. (Nextel Communications)

(13) PCIA (late filed)

(14) Rural Telecommunications Group (RTG)

(15) Salmon PCS, LLC (Salmon PCS)

(16) SBC Communications, Inc. (SBC)

(17) Spectrum Market, LLC (Spectrum Market)

(18) Sprint

(19) Verizon Wireless

(20) Winstar Communications, LLC (Winstar)

(21) Wireless Communications Association International, Inc. (WCA)

## Reply Comments

(1) Blooston Rural Carriers

(2) Boeing Company (Boeing)

(3) Cantor Fitzgerald Telecom

(4) Industrial Telecommunications Association, Inc. (ITA)

(5) National Association of Manufacturers and MRFAC, Inc.

(6) National ITFS Association

(7) Nextel Partners, Inc. (Nextel Partners)

(8) Paging Systems, Inc. (Paging Systems)

(9) St. Clair County, Illinois (St. Clair)

(10) T-Mobile USA, Inc. (T-Mobile)

(11) Winstar

## *Ex Parte* Comments

(1) Council Tree *Ex Parte* Comments

(2) MDS America *Ex Parte* Comments

(3) Salmon PCS *Ex Parte* letter (filed March 9, 2004)

APPENDIX B -- PETITIONS FOR RECONSIDERATION

**A. Petitions For Reconsideration**

(1) Blooston Rural Carriers Petition for Partial Reconsideration and/or
    Clarification (Blooston Rural Carriers Petition)

(2) Cingular Wireless Petition for Reconsideration and Clarification
    (Cingular Wireless Petition)

(3) First Avenue Networks Petition for Reconsideration (First Avenue
    Networks Petition)

(4) National Telecommunications Cooperative Association Petition for
    Partial Reconsideration (NTCA Petition)

(5) Verizon Wireless Petition for Reconsideration and Clarification
    (Verizon Wireless Petition)

**B. Oppositions and Replies**

(1) Salmon PCS (Salmon PCS Petition Reply)

(2) RTG (RTG Petition Reply)

(3) Fixed Wireless Communications Coalition (Fixed Wireless
    Communications Coalition Opposition)

(4) Microwave Cost Sharing Clearinghouse *Ex Parte* letter (dated March
    25, 2004)

**APPENDIX C -- FINAL RULES**

For the reasons discussed above, the Federal Communications Commission
amends title 47 of the Code of Federal Regulations, Parts 1 and 27, as
follows:

**PART 1 -- PRACTICE AND PROCEDURE**

1\. The authority citation for Part 1 continues to read as follows:

Authority: 47 U.S.C. 151, 154(i), 154(j), 155, 225, 303(r), 309 and
325(e).

2\. Amend § 1.913 by revising paragraph (a)(3), adding paragraph (a)(5),
revising the first sentence of the introductory paragraph of (b), and
revising the introductory sentence in paragraph (d)(1), to read as
follows:

[§ 1.913 Application and notification forms; electronic and manual
filing.]{.underline}

\(a\) \* \* \*

\(3\) *FCC Form 603, Application for Assignment of Authorization or
Transfer of Control.* FCC Form 603 is used by applicants and licensees
to apply for Commission consent to assignments of existing
authorizations, to apply for Commission consent to transfer control of
entities holding authorizations, to notify the Commission of the
consummation of assignments or transfers, and to request extensions of
time for consummation of assignments or transfers. It is also used for
Commission consent to partial assignments of authorization, including
partitioning and disaggregation.

\* \* \* \* \*

\(5\) *FCC Form 608, Notification or Application for Spectrum Leasing
Arrangement.* FCC Form 608 is used by licensees and spectrum lessees
(*see* § 1.9003) to notify the Commission regarding spectrum manager
leasing arrangements and to apply for Commission consent for *de facto*
transfer leasing arrangements pursuant to the rules set forth in part 1,
subpart X. It is also used to notify the Commission if a licensee or
spectrum lessee establishes a private commons (*see* § 1.9080).

\* \* \* \* \*

\(b\) *Electronic filing.* Except as specified in paragraph (d) of this
section or elsewhere in this chapter, all applications and other filings
using FCC Forms 601 through 608 or associated schedules must be filed
electronically in accordance with the electronic filing instructions
provided by ULS. \* \* \*

\* \* \* \* \*

\(d\) *Manual filing.* (1) ULS Forms 601, 603, 605, and 608 may be filed
manually or electronically by applicants and licensees in the following
services:

\* \* \* \* \*

3\. Amend § 1.948 by revising paragraph (j) to read as follows:

[§ 1.948 Assignment of authorization or transfer of control,
notification of consummation.]{.underline}

\* \* \* \* \*

\(j\) *Processing of applications.* Applications for assignment of
authorization or transfer of control relating to the Wireless Radio
Services will be processed pursuant either to general approval
procedures or the immediate approval procedures, as discussed herein.

(1) *General approval procedures*. Applications will be processed
    pursuant to the general approval procedures set forth in this
    paragraph unless they are submitted and qualify for the immediate
    approval procedures set forth in paragraph (j)(2) of this section.

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(i) To be accepted for filing under these general approval procedures,
    the application must be sufficiently complete and contain all
    necessary information and certifications requested on the applicable
    form, FCC Form 603, including any information and certifications
    (including those of the proposed assignee or transferee relating to
    eligibility, basic qualifications, and foreign ownership) required
    by the rules of this chapter and any rules pertaining to the
    specific service for which the application is filed, and must
    include payment of the required application fee(s) (*see* § 1.1102).

(ii) Once accepted for filing, the application will be placed on public
     notice, except no prior public notice will be required for
     applications involving authorizations in the Private Wireless
     Services, as specified in § 1.933(d)(9).

(iii) Petitions to deny filed in accordance with section 309(d) of the
      Communications Act must comply with the provisions of § 1.939,
      except that such petitions must be filed no later than 14 days
      following the date of the public notice listing the application as
      accepted for filing.

(iv) No later than 21 days following the date of the public notice
     listing an application as accepted for filing, the Wireless
     Telecommunications Bureau (Bureau) will affirmatively consent to
     the application, deny the application, or determine to subject the
     application to further review. For applications for which no prior
     public notice is required, the Bureau will affirmatively consent to
     the application, deny the application, or determine to subject the
     application to further review no later than 21 days following the
     date on which the application has been filed, if filed
     electronically, and any required application fee has been paid
     (*see* § 1.1102); if filed manually, the Bureau will affirmatively
     consent to the application, deny the application, or determine to
     subject the application to further review no later than 21 days
     after the necessary data in the manually filed application is
     entered into ULS.

(v) If the Bureau determines to subject the application to further
    review, it will issue a public notice so indicating. Within 90 days
    following the date of that public notice, the Bureau will either
    take action upon the application or provide public notice that an
    additional 90-day period for review is needed.

(vi) Consent to the application is not deemed granted until the Bureau
     affirmatively acts upon the application.

(vii) Grant of consent to the application will be reflected in a public
      notice (*see* § 1.933(a)) promptly issued after the grant.

(viii) If any petition to deny is filed, and the Bureau grants the
       application, the Bureau will deny the petition(s) and issue a
       concise statement of the reason(s) for denial, disposing of all
       substantive issues raised in the petition(s).

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(2) *Immediate approval procedures.* Applications that meet the
    requirements of paragraph (j)(2)(i) of this section qualify for the
    immediate approval procedures set forth in this paragraph.

    i.  To qualify for the immediate approval procedures, the
        application must be sufficiently complete, contain all necessary
        information and certifications (including those relating to
        eligibility, basic qualifications, and foreign ownership), and
        include payment of the requisite application fee(s), as required
        for an application processed under the general approval
        procedures set forth in paragraph (j)(1) of this section, and
        also must establish, through certifications, that the following
        additional qualifications are met:

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(A) The license does not involve spectrum licensed in a Wireless Radio
    Service that may be used to provide interconnected mobile voice
    and/or data services under the applicable service rules and that
    would, if assigned or transferred, create a geographic overlap with
    spectrum in any licensed Wireless Radio Service (including the same
    service) in which the proposed assignee or transferee already holds
    a direct or indirect interest of 10% or more (*see* § 1.2112),
    either as a licensee or a spectrum lessee, and that could be used by
    the assignee or transferee to provide interconnected mobile voice
    and/or data services;

(B) The licensee is not a designated entity or entrepreneur subject to
    unjust enrichment requirements and/or transfer restrictions under
    applicable Commission rules (*see* §§ 1.2110 and 1.2111, and §§
    24.709, 24.714, and 24.839 of this chapter); and,

(C) The assignment or transfer of control does not require a waiver of,
    or declaratory ruling pertaining to, any applicable Commission
    rules, and there is no pending issue as to whether the license is
    subject to revocation, cancellation, or termination by the
    Commission.

    i.  Provided that the application establishes that it meets all of
        the requisite elements to qualify for these immediate approval
        procedures, consent to the assignment or transfer of control
        will be reflected in ULS. If the application is filed
        electronically, consent will be reflected in ULS on the next
        business day after the filing of the application; if filed
        manually, consent will be reflected in ULS on the next business
        day after the necessary data in the manually filed application
        is entered into ULS. Consent to the application is not deemed
        granted until the Bureau affirmatively acts upon the
        application.

    ii. Grant of consent to the application under these immediate
        approval procedures will be reflected in a public notice (*see*
        § 1.933(a)) promptly issued after the grant, and is subject to
        reconsideration (*see* §§ 1.106(f), 1.108, 1.113).

4\. Amend § 1.2003 by revising the paragraph entitled "FCC 603," and
adding a paragraph entitled "FCC 608," to read as follows:

**[§ 1.2003 Applications affected.]{.underline}**

\* \* \* \* \*

FCC 603 Wireless Telecommunications Bureau Application for Assignment of
Authorization and Transfer of Control;

\* \* \* \* \*

FCC 608 Notification or Application for Spectrum Leasing Arrangement;

\* \* \* \* \*

5\. Amend § 1.9001(a) to read as follows:

**[§ 1.9001 Purpose and scope.]{.underline}**

\(a\) The purpose of part 1, subpart X is to implement policies and
rules pertaining to spectrum leasing arrangements between licensees in
the services identified in this subpart and spectrum lessees. This
subpart also implements policies for private commons arrangements. These
policies and rules also implicate other Commission rule parts, including
parts 1, 2, 20, 22, 24, 26, 27, 80, 90, 95, and 101 of title 47, chapter
I of the Code of Federal Regulations.

\* \* \* \* \*

6\. Amend § 1.9003 by removing the definition of "FCC Form 603" and
replacing it with the definition of "FCC Form 608," revising the
definition of "Long-term de facto transfer leasing arrangement," adding
the new definition "Private commons," and revising the definitions of
"Short-term de facto transfer leasing arrangement" and "Spectrum
lessee," to read as follows:

[§ 1.9003 Definitions.]{.underline}

\* \* \* \* \*

*FCC Form 608.* FCC Form 608 is the form to be used by licensees and
spectrum lessees that enter into spectrum leasing arrangements pursuant
to the rules set forth in this subpart. Parties are required to submit
this form electronically when entering into spectrum leasing
arrangements under this subpart, except that licensees falling within
the provisions of § 1.913(d) of this part may file the form either
electronically or manually.

*Long-term de facto transfer leasing arrangement.* A long-term *de
facto* transfer leasing arrangement is a *de facto* transfer leasing
arrangement that has an individual term, or series of combined terms, of
more than one year.

*Private commons.* A "private commons" arrangement is an arrangement,
distinct from a spectrum leasing arrangement but permitted in the same
services for which spectrum leasing arrangements are allowed, in which a
licensee or spectrum lessee makes certain spectrum usage rights under a
particular license authorization available to a class of third-party
users employing advanced communications technologies that involve
peer-to-peer (device-to-device) communications and that do not involve
use of the licensee's or spectrum lessee's end-to-end physical network
infrastructure (*e.g.*, base stations, mobile stations, or other related
elements).

*Short-term de facto transfer leasing arrangement.* A short-term *de
facto* transfer leasing arrangement is a *de facto* transfer leasing
arrangement that has an individual or combined term of not longer than
one year.

\* \* \* \* \*

*Spectrum lessee.* Any third-party entity that leases, pursuant to the
spectrum leasing rules set forth in this subpart, certain spectrum usage
rights held by a licensee. This term includes reference to third-party
entities that lease spectrum usage rights as spectrum sublessees under
spectrum subleasing arrangements.

\* \* \* \* \*

7\. Amend § 1.9005 as follows:

a\. Redesignate paragraphs (r) through (dd) as paragraphs (u) through
(gg), respectively;

b\. Redesignate paragraph (q) as new paragraph (r);

c\. Add new paragraphs (q), (s), and (t);

d\. Revise newly designated paragraphs (ff) and (gg); and,

d\. Add new paragraph (hh).

[§ 1.9005 Included services.]{.underline}

\* \* \* \* \*

\(q\) The Advanced Wireless Services (part 27 of this chapter);

\* \* \* \* \*

\(s\) The Automated Maritime Telecommunications Systems service (Part 80
of this chapter);

\(t\) The Public Safety Radio Services (part 90 of this chapter);

\* \* \* \* \*

(ff) The Private Operational Fixed Point-to-Point Microwave Service
(part 101 of this chapter);

(gg) The Common Carrier Fixed Point-to-Point Microwave Service (part 101
of this chapter); and,

(hh) The Multipoint Video Distribution and Data Service (part 101 of
this chapter).

\* \* \* \* \*

8\. Amend § 1.9010 by revising the last sentence of paragraph
(b)(1)(iii), and by revising paragraph (b)(2)(i), to read as follows:

[§ 1.9010 *De facto* control standard for spectrum leasing
arrangements.]{.underline}

\* \* \* \* \*

\(b\) \* \* \*

(1) \* \* \*

\(iii\) \* \* \* If the spectrum lessee refuses to resolve the
interference, remedy the violation, or suspend or terminate operations,
either at the direction of the licensee or by order of the Commission,
the licensee must use all reasonable legal means necessary to enforce
compliance.

\(2\) \* \* \*

\(i\) The licensee must file the necessary notification with the
Commission, as required under § 1.9020(e).

\* \* \* \* \*

9\. Amend § 1.9020 as follows:

a\. Revise paragraph (a) by adding a new sentence at the end of the
paragraph;

[]{.mark}

b\. Revise paragraphs (d)(2)(i) and (d)(4);

c\. Remove paragraph (d)(6), and redesignate paragraphs (d)(7) through
(d)(9) as paragraphs (d)(6) through (d)(8), respectively;

d\. Revise paragraph (e);

e\. Redesignate paragraphs (f) through (l) as paragraphs (g) through
(m), respectively;

f\. Add new paragraph (f);

g\. Revise newly designated paragraphs (h)(1), (h)(2), (i), and (j);

h\. Revise the last sentence of newly designated paragraph (l); and,

i\. Revise newly designated paragraph (m).

[§ 1.9020 Spectrum manager leasing arrangements.]{.underline}

\(a\) **\* \* \*** The term of a spectrum manager leasing arrangement
may be no longer than the term of the license authorization.

\* \* \* \* \*

\(d\) \* \* \*

\(2\) \* \* \* (i) The spectrum lessee must meet the same eligibility
and qualification requirements that are applicable to the licensee under
its license authorization, with the following exceptions. A spectrum
lessee entering into a spectrum leasing arrangement involving a licensee
in the Educational Broadband Service (*see* § 27.1201 of this chapter)
is not required to comply with the eligibility requirements pertaining
to such a licensee so long as the spectrum lessee meets the other
eligibility and qualification requirements applicable to Part 27
services (*see* § 27.12 of this chapter). A spectrum lessee entering
into a spectrum leasing arrangement involving a licensee in the Public
Safety Radio Services (*see* part 90, subpart B and § 90.311(a)(1)(i) of
this chapter) is not required to comply with the eligibility
requirements pertaining to such a licensee so long as the spectrum
lessee is an entity providing communications in support of public safety
operations (*see* § 90.523(b) of this chapter).

\* \* \* \* \*

\(4\) *Designated entity/entrepreneur rules.* A licensee that holds a
license pursuant to small business and/or entrepreneur provisions (*see*
§ 1.2110 and § 24.709 of this chapter) and continues to be subject to
unjust enrichment requirements (*see* § 1.2111 and § 24.714 of this
chapter) and/or transfer restrictions (*see* § 24.839 of this chapter)
may enter into a spectrum manager leasing arrangement with a spectrum
lessee, regardless of whether the spectrum lessee meets the Commission's
designated entity eligibility requirements (*see* § 1.2110) or its
entrepreneur eligibility requirements to hold certain C and F block
licenses in the broadband personal communications services (*see* §
1.2110 and § 24.709 of this chapter), so long as the spectrum manager
leasing arrangement does not result in the spectrum lessee's becoming a
"controlling interest" or "affiliate" (*see* § 1.2110) of the licensee
such that the licensee would lose its eligibility as a designated entity
or entrepreneur. To the extent there is any conflict between the revised
*de facto* control standard for spectrum leasing arrangements, as set
forth in this subpart, and the definition of controlling interest
(including its *de facto* control standard) set forth in § 1.2110, the
latter definition governs for determining whether the licensee has
maintained the requisite degree of ownership and control to allow it to
remain eligible for the license or for other benefits such as bidding
credits and installment payments.

\* \* \* \* \*

\(e\) *Notifications regarding spectrum manager leasing arrangements.* A
licensee that seeks to enter into a spectrum manager leasing arrangement
must notify the Commission of the arrangement in advance of the spectrum
lessee's commencement of operations. The spectrum manager lease
notification will be processed pursuant either to the general
notification procedures or the immediate processing procedures, as set
forth herein. The licensee must submit the notification to the
Commission by electronic filing using the Universal Licensing System
(ULS) and FCC Form 608, except that a licensee falling within the
provisions of § 1.913(d) may file the notification either electronically
or manually.

\(1\) *General notification procedures.* Notifications of spectrum
manager leasing arrangements will be processed pursuant the general
notification procedures set forth in this paragraph unless they are
submitted and qualify for the immediate processing procedures set forth
in paragraph (e)(2) of this section.

\(i\) To be accepted under these general notification procedures, the
notification must be sufficiently complete and contain all information
and certifications requested on the applicable form, FCC Form 608,
including any information and certifications (including those of the
spectrum lessee relating to eligibility, basic qualifications, and
foreign ownership) required by the rules in this chapter and any rules
pertaining to the specific service for which the notification is filed.
No application fees are required for the filing of a spectrum manager
leasing notification.

\(ii\) The licensee must submit such notification at least 21 days in
advance of commencing operations unless the arrangement is for a term of
one year or less, in which case the licensee must provide notification
to the Commission at least ten (10) days in advance of operation. If the
licensee and spectrum lessee thereafter seek to extend this leasing
arrangement for an additional term beyond the initial term, the licensee
must provide the Commission with notification of the new spectrum
leasing arrangement at least 21 days in advance of operation under the
extended term.

\(iii\) A notification filed pursuant to these general notification
procedures will be placed on an informational public notice on a weekly
basis (*see* § 1.933(a)) once accepted, and is subject to
reconsideration (*see* §§ 1.106(f), 1.108, 1.113).

(2) *Immediate processing procedures.* Notifications that meet the
    requirements of paragraph (e)(2)(i) of this section qualify for the
    immediate processing procedures.

\(i\) To qualify for these immediate processing procedures, the
notification must be sufficiently complete and contain all necessary
information and certifications (including those relating to eligibility,
basic qualifications, and foreign ownership) required for notifications
processed under the general notification procedures set forth in
paragraph (e)(1)(i) of this section, and also must establish, through
certifications, that the following additional qualifications are met:

A.  The license does not involve spectrum licensed in a Wireless Radio
    Service that may be used to provide interconnected mobile voice
    and/or data services under the applicable service rules and that
    would, if the spectrum leasing arrangement were consummated, create
    a geographic overlap with spectrum in any licensed Wireless Service
    (including the same service) in which the proposed spectrum lessee
    already holds a direct or indirect interest of 10% or more (*see* §
    1.2112), either as a licensee or a spectrum lessee, and that could
    be used by the spectrum lessee to provide interconnected mobile
    voice and/or data services;

B.  The licensee is not a designated entity or entrepreneur subject to
    unjust enrichment requirements and/or transfer restrictions under
    applicable Commission rules (*see* §§ 1.2110 and 1.2111, and §§
    24.709, 24.714, and 24.839 of this chapter); and,

C.  The spectrum leasing arrangement does not require a waiver of, or
    declaratory ruling pertaining to, any applicable Commission rules.

\(ii\) Provided that the notification establishes that the proposed
spectrum manager leasing arrangement meets all of the requisite elements
to qualify for these immediate processing procedures, ULS will reflect
that the notification has been accepted. If a qualifying notification is
filed electronically, the acceptance will be reflected in ULS on the
next business day after filing of the notification; if filed manually,
the acceptance will be reflected in ULS on the next business day after
the necessary data from the manually filed notification is entered into
ULS. Once the notification has been accepted, as reflected in ULS, the
spectrum lessee may commence operations under the spectrum leasing
arrangement, consistent with the term of the arrangement.

\(iii\) A notification filed pursuant to these immediate processing
procedures will be placed on an informational public notice on a weekly
basis (*see* § 1.933(a)) once accepted, and is subject to
reconsideration (*see* §§ 1.106(f), 1.108, 1.113).

\(f\) *Effective date of a spectrum manager leasing arrangement.* The
spectrum manager leasing arrangement will be deemed effective in the
Commission's records, and for purposes of the application of the rules
set forth in this section, as of the beginning date of the term as
specified in the spectrum leasing notification.

\* \* \* \* \*

\(h\) *Expiration, extension, or termination of a spectrum leasing
arrangement.* (1) Absent Commission termination or except as provided in
paragraph (h)(2) or (h)(3) of this section, a spectrum leasing
arrangement entered into pursuant to this section will expire on the
termination date set forth in the spectrum leasing notification.

\(2\) A spectrum leasing arrangement may be extended beyond the initial
term set forth in the spectrum leasing notification provided that the
licensee notifies the Commission of the extension in advance of
operation under the extended term and does so pursuant to the general
notification procedures or immediate processing procedures set forth in
this section, whichever is applicable. If the general notification
procedures are applicable, the licensee must notify the Commission at
least 21 days in advance of operation under the extended term.

\* \* \* \* \*

\(i\) *Assignment of a spectrum leasing arrangement.* The spectrum
lessee may assign its spectrum leasing arrangement to another entity
provided that the licensee has agreed to such an assignment, is in
privity with the assignee, and notifies the Commission before the
consummation of the assignment, pursuant to the applicable notification
procedures set forth in this section. In the case of a non-substantial
(*pro forma*) assignment that falls within the class of *pro forma*
transactions for which prior Commission approval would not be required
under § 1.948(c)(1), the licensee must file notification of the
assignment with the Commission, using FCC Form 608 and providing any
necessary updates of ownership information, within 30 days of its
completion. The Commission will place information related to the
assignment, whether substantial or *pro forma*, on public notice.

\(j\) *Transfer of control of a spectrum lessee.* The licensee must
notify the Commission of any transfer of control of a spectrum lessee
before the consummation of the transfer of control, pursuant to the
applicable notification procedures of this section. In the case of a
non-substantial (*pro forma*) transfer of control that falls within the
class of *pro forma* transactions for which prior Commission approval
would not be required under § 1.948(c)(1), the licensee must file
notification of the transfer of control with the Commission, using FCC
Form 608 and providing any necessary updates of ownership information,
within 30 days of its completion. The Commission will place information
related to the transfer of control, whether substantial or *pro forma*,
on public notice.

\* \* \* \* \*

\(l\) \* \* \* The licensee must submit a notification regarding the
spectrum subleasing arrangement in accordance with the applicable
notification procedures set forth in this section.

\(m\) *Renewal*. Although the term of a spectrum manager leasing
arrangement may not be longer than the term of a license authorization,
a licensee and spectrum lessee that have entered into an arrangement
whose term continues to the end of the current term of the license
authorization may, contingent on the Commission's grant of the license
renewal, renew the spectrum leasing arrangement to extend into the term
of the renewed license authorization. The Commission must be notified of
the renewal of the spectrum leasing arrangement at the same time that
the licensee submits its application for license renewal (*see* §
1.949). The spectrum lessee may operate under the extended term, without
further action by the Commission, until such time as the Commission
shall make a final determination with respect to the renewal of the
license authorization and the extension of the spectrum leasing
arrangement into the term of the renewed license authorization.

10\. Revise § 1.9030 as follows:

a\. In paragraph (a), revise the last sentence, and add a new sentence
following that sentence;

b\. Revise paragraph (d)(2)(i);

c\. Remove paragraph (d)(6), and redesignate paragraphs (d)(7) through
(d)(9) as paragraphs (d)(6) through (d)(8), respectively;

d\. Revise newly designated paragraph (d)(8);

e\. Revise paragraph (e);

f\. Redesignate paragraphs (f) through (k) as paragraphs (g) through
(l), respectively;

g\. Add new paragraph (f); and,

h\. Revise newly designated paragraphs (g)(1), (g)(2), (h), (i), and
(l).

[§ 1.9030 Long-term *de facto* transfer leasing
arrangements.]{.underline}

(a) \* \* \* A "long-term" *de facto* transfer leasing arrangement has
    an individual term, or series of combined terms, of more than one
    year. The term of a long-term *de facto* transfer leasing
    arrangement may be no longer than the term of the license
    authorization.

\* \* \* \* \*

\(d\) \* \* \*

\(2\) \* \* \* (i) The spectrum lessee must meet the same eligibility
and qualification requirements that are applicable to the licensee under
its license authorization. A spectrum lessee entering into a spectrum
leasing arrangement involving a licensee in the Educational Broadband
Service (*see* § 27.1201 of this chapter) is not required to comply with
the eligibility requirements pertaining to such a licensee so long as
the spectrum lessee meets the other eligibility and qualification
requirements applicable to Part 27 services (*see* § 27.12 of this
chapter). A spectrum lessee entering into a spectrum leasing arrangement
involving a licensee in the Public Safety Radio Services (*see* part 90,
subpart B and § 90.311(a)(1)(i) of this chapter) is not required to
comply with the eligibility requirements pertaining to such a licensee
so long as the spectrum lessee is an entity providing communications in
support of public safety operations (*see* § 90.523(b) of this chapter).

\* \* \* \* \*

\(8\) *E911 requirements.* To the extent the licensee is required to
meet E911 obligations (*see* § 20.18 of this chapter), the spectrum
lessee is required to meet those obligations with respect to the
spectrum leased under the spectrum leasing arrangement insofar as the
spectrum lessee's operations are encompassed within the E911
obligations.

\(e\) *Applications for long-term de facto transfer leasing
arrangements.* Applications for long-term *de facto* transfer leasing
arrangements will be processed either pursuant to the general approval
procedures or the immediate approval procedures, as discussed herein.
Spectrum leasing parties must submit the application by electronic
filing using ULS and FCC Form 608, and obtain Commission consent prior
to consummating the transfer of *de facto* control of the leased
spectrum, except that parties falling within the provisions of §
1.913(d) may file the application either electronically or manually.

\(1\) *General approval procedures*. Applications for long-term *de
facto* transfer leasing arrangements will be processed pursuant to the
general approval procedures set forth in this paragraph unless they are
submitted and qualify for the immediate approval procedures set forth in
paragraph (e)(2) of this section.

(i) To be accepted for filing under these general approval procedures,
    the application must be sufficiently complete and contain all
    information and certifications requested on the applicable form, FCC
    Form 608, including any information and certifications (including
    those of the spectrum lessee relating to eligibility, basic
    qualifications, and foreign ownership) required by the rules in this
    chapter and any rules pertaining to the specific service for which
    the application is filed. In addition, the spectrum leasing
    application must include payment of the required application fee(s);
    for purposes of determining the applicable application fee(s), the
    application will be treated as a transfer of control (*see*
    § 1.1102).

(ii) Once accepted for filing, the application will be placed on public
     notice, except no prior public notice will be required for
     applications involving authorizations in the Private Wireless
     Services, as specified in § 1.933(d)(9).

(iii) Petitions to deny filed in accordance with section 309(d) of the
      Communications Act must comply with the provisions of § 1.939,
      except that such petitions must be filed no later than 14 days
      following the date of the public notice listing the application as
      accepted for filing.

(iv) No later than 21 days following the date of the public notice
     listing an application as accepted for filing, the Wireless
     Telecommunications Bureau (Bureau) will affirmatively consent to
     the application, deny the application, or determine to subject to
     the application to further review. For applications for which no
     prior public notice is required, the Bureau will affirmatively
     consent to the application, deny the application, or determine to
     subject the application to further review no later than 21 days
     following the date on which the application has been filed and any
     required application fee has been paid (*see* § 1.1102).

(v) If the Bureau determines to subject the application to further
    review, it will issue a public notice so indicating. Within 90 days
    following the date of that public notice, the Bureau will either
    take action upon the application or provide public notice that an
    additional 90-day period for review is needed.

(vi) Consent to the application is not deemed granted until the Bureau
     affirmatively acts upon the application.

(vii) Grant of consent to the application will be reflected in a public
      notice (*see* § 1.933(a)) promptly issued after the grant, and is
      subject to reconsideration (*see* §§ 1.106(f), 1.108, 1.113).

(viii) If any petition to deny is filed, and the Bureau grants the
       application, the Bureau will deny the petition(s) and issue a
       concise statement of the reason(s) for denial, disposing of all
       substantive issues raised in the petition(s).

\(2\) *Immediate approval procedures.* Applications that meet the
requirements of paragraph (e)(1)(i) of this section qualify for the
immediate approval procedures.

\(i\) To qualify for the immediate approval procedures, the application
must be sufficiently complete, contain all necessary information and
certifications (including those relating to eligibility, basic
qualifications, and foreign ownership), and include payment of the
requisite application fee(s), as required for an application processed
under the general approval procedures set forth in paragraph (e)(1)(i)
of this section, and also must establish, through certifications, that
the following additional qualifications are met:

\(A\) The license does not involve spectrum licensed in a Wireless Radio
Service that may be used to provide interconnected mobile voice and/or
data services under the applicable service rules and that would, if the
spectrum leasing arrangement were consummated, create a geographic
overlap with spectrum in any licensed Wireless Service (including the
same service) in which the proposed spectrum lessee already holds a
direct or indirect interest of 10% or more (*see* § 1.2112), either as a
licensee or a spectrum lessee, and that could be used by the spectrum
lessee to provide interconnected mobile voice and/or data services;

\(B\) The licensee is not a designated entity or entrepreneur subject to
unjust enrichment requirements and/or transfer restrictions under
applicable Commission rules (*see* §§ 1.2110 and 1.2111, and §§ 24.709,
24.714, and 24.839 of this chapter); and,

\(C\) The spectrum leasing arrangement does not require a waiver of, or
declaratory ruling pertaining to, any applicable Commission rules.

\(ii\) Provided that the application establishes that it meets all of
the requisite elements to qualify for these immediate approval
procedures, consent to the *de facto* transfer spectrum leasing
arrangement will be reflected in ULS. If the application is filed
electronically, consent will be reflected in ULS on the next business
day after filing of the application; if filed manually, consent will be
reflected in ULS on the next business day after the necessary data from
the manually filed application is entered into ULS. Consent to the
application is not deemed granted until the Bureau affirmatively acts
upon the application, as reflected in ULS.

\(iii\) Grant of consent to the application under these immediate
approval procedures will be reflected in a public notice (*see*
§ 1.933(a)) promptly issued after grant, and is subject to
reconsideration (*see* §§ 1.106(f), 1.108, 1.113).

\(f\) *Effective date of a de facto transfer leasing arrangement.* If
the Commission consents to the *de facto* transfer leasing arrangement,
the *de facto* transfer leasing arrangement will be deemed effective in
the Commission's records, and for purposes of the application of the
rules set forth in this section, on the date set forth in the
application. If the Commission consents to the arrangement after that
specified date, the spectrum leasing application will become effective
on the date of the Commission affirmative consent.

\(g\) *Expiration, extension, or termination of spectrum leasing
arrangement.* (1) Except as provided in paragraph (g)(2) or (g)(3) of
this section, a spectrum leasing arrangement entered into pursuant to
this section will expire on the termination date set forth in the
application. \* \* \*

\(2\) A spectrum leasing arrangement may be extended beyond the initial
term set forth in the spectrum leasing application pursuant to the
applicable application procedures set forth in §1.9030(e). Where there
is pending before the Commission at the date of termination of the
spectrum leasing arrangement a proper and timely application seeking to
extend the arrangement, the parties may continue to operate under the
original spectrum leasing arrangement without further action by the
Commission until such time as the Commission shall make a final
determination with respect to the application.

\* \* \* \* \*

\(h\) *Assignment of spectrum leasing arrangement.* The spectrum lessee
may assign its lease to another entity provided that the licensee has
agreed to such an assignment, there is privity between the licensee and
the assignee, and the assignment is approved by the Commission pursuant
to the same application and approval procedures set forth in this
section. In the case of a non-substantial (*pro forma*) assignment that
falls within the class of *pro forma* transactions for which prior
Commission approval would not be required under § 1.948(c)(1), the
parties involved in the assignment must file notification of the
assignment with the Commission, using FCC Form 608 and providing any
necessary updates of ownership information, within 30 days of its
completion. The Commission will place information related to the
assignment, whether substantial or *pro forma*, on public notice.

\(i\) *Transfer of control of a spectrum lessee.* A spectrum lessee
seeking to transfer of control must obtain Commission consent using the
same application and Commission consent procedures set forth in this
section. In the case of a non-substantial (*pro forma*) transfer of
control that falls within the class of *pro forma* transactions for
which prior Commission approval would not be required under
§ 1.948(c)(1), the parties involved in the transfer of control must file
notification of the transfer of control with the Commission, using FCC
Form 608 and providing any necessary updates of ownership information,
within 30 days of its completion. The Commission will place information
related to the transfer of control, whether substantial or *pro forma*,
on public notice.

\* \* \* \* \*

\(l\) *Renewal*. Although the term of a long-term *de facto* transfer
spectrum leasing arrangement may not be longer than the term of a
license authorization, a licensee and spectrum lessee that have entered
into an arrangement whose term continues to the end of the current term
of the license authorization may, contingent on the Commission's grant
of the license renewal, extend the spectrum leasing arrangement into the
term of the renewed license authorization. The Commission must be
notified of the renewal of the spectrum leasing arrangement at the same
time that the licensee submits its application for license renewal
(*see* § 1.949). The spectrum lessee may operate under the extended
term, without further action by the Commission, until such time as the
Commission shall make a final determination with respect to the renewal
of the license authorization and the extension of the spectrum leasing
arrangement into the term of the renewed license authorization.
[]{.mark}

11\. Amend § 1.9035 as follows:

a\. In paragraph (a), revise the last sentence, and add a new sentence
following that sentence;

b\. Remove paragraph (d)(4) and redesignate paragraph (d)(5) as
paragraph (d)(4);

c\. Revise paragraph (e);

d\. Redesignate paragraphs (f) through (m) as paragraphs (g) through
(n), respectively;

e\. Add new paragraph (f);

f\. Revise newly designated paragraphs (g)(1), (h)(1), (h)(2), (i)(1),
and (i)(2);

g\. Revise newly designated paragraph (j) by replacing the phrase "§
1.9030(g)" with the phrase "§ 1.9030(h)";

h\. Revise newly designated paragraph (k) by replacing the phrase "§
1.9030(h)" with the phrase "§ 1.9030(i)";

i\. Revise newly designated paragraph (l) by replacing the phrase "§
1.9030(i)" with the phrase "§ 1.9030(j)"; and,

j\. Revise newly designated paragraph (n).

**[§ 1.9035 Short-term *de facto* transfer leasing
arrangements.]{.underline}**

(a) \* \* \* A "short-term" *de facto* transfer leasing arrangement has
    an individual or combined term of not longer than one year. The term
    of a short-term *de facto* transfer leasing arrangement may be no
    longer than the term of the license authorization.

\* \* \* \* \* []{.mark}

\(e\) *Spectrum leasing application.* Short-term *de facto* transfer
leasing arrangements will be processed pursuant to immediate approval
procedures, as discussed herein. Parties entering into a short-term *de
facto* transfer leasing arrangement are required to file an electronic
application with the Commission, using FCC Form 608, and obtain
Commission consent prior to consummating the transfer of *de facto*
control of the leased spectrum, except that parties falling within the
provisions of § 1.913(d) may file the application either electronically
or manually.

\(1\) To be accepted for filing under these immediate approval
procedures, the application must be sufficiently complete and contain
all information and certifications requested on the applicable form, FCC
Form 608, including any information and certifications (including those
relating to the spectrum lessee relating to eligibility, basic
qualifications, and foreign ownership) required by the rules of this
chapter and any rules pertaining to the specific service for which the
application is required. In addition, the application must include
payment of the required application fee; for purposes of determining the
applicable application fee, the application will be treated as a
transfer of control (*see* § 1.1102). Finally, the spectrum leasing
arrangement must not require a waiver of, or declaratory ruling,
pertaining to any applicable Commission rules.

\(2\) Provided that the application establishes that it meets all of the
requisite elements to qualify for these immediate approval procedures,
consent to the short-term *de facto* transfer spectrum leasing
arrangement will be reflected in ULS. If the application is filed
electronically, consent will be reflected in ULS on the next business
day after filing of the application; if filed manually, consent will be
reflected in ULS on the next business day after the necessary data from
the manually filed application is entered into ULS. Consent to the
application is not deemed granted until the Bureau affirmatively acts
upon the application, as reflected in ULS.

\(3\) Grant of consent to the application under these procedures will be
reflected in a public notice (*see* § 1.933(a)) promptly issued after
grant, and is subject to reconsideration (*see* §§ 1.106(f), 1.108,
1.113).

\(f\) *Effective date of spectrum leasing arrangement.* The spectrum
leasing arrangement will be deemed effective in the Commission's
records, and for purposes of the application of the rules set forth in
this section, on the date set forth in the application. If the
Commission consents to the arrangement after that specified date, the
spectrum leasing application will become effective on the date of the
Commission affirmative consent.

\(g\) *Restrictions on the use of short-term* *de facto* *transfer
leasing arrangements*. (1) The licensee and spectrum lessee are not
permitted to use the special rules and expedited procedures applicable
to short-term *de facto* transfer leasing arrangements for arrangements
that in fact will exceed one year, or that the parties reasonably expect
to exceed one year.

\* \* \* \* \*

\(h\) *Expiration, extension, or termination of the spectrum leasing
arrangement*. (1) Except as provided in paragraph (h)(2) or (h)(3) of
this section, a spectrum leasing arrangement entered into pursuant to
this section will expire on the termination date set forth in the
short-term *de facto* transfer leasing arrangement. The Commission's
approval of the short-term *de facto* transfer leasing application
includes consent to return the leased spectrum to the licensee at the
end of the term of the spectrum leasing arrangement.

\(2\) Upon proper application (*see* paragraph (e) of this section), a
short-term *de facto* transfer leasing arrangement may be extended
beyond the initial term set forth in the application provided that the
initial term and extension(s) together would not result in a leasing
arrangement that exceeds a total of one year.

\* \* \* \* \*

\(i\) *Conversion of a short-term spectrum leasing arrangement into a
long-term de facto transfer leasing arrangement.* (1) In the event the
licensee and spectrum lessee involved in a short-term *de facto*
transfer leasing arrangement seek to extend the spectrum leasing
arrangement beyond the one-year limit for short-term *de facto* transfer
leasing arrangements, the parties may do so provided that they meet the
conditions set forth in paragraphs (i)(2) and (i)(3) of this section.

\(2\) If a licensee that holds a license that continues to be subject to
transfer restrictions and/or requirements relating to unjust enrichment
pursuant to the Commission's small business and/or entrepreneur
provisions (*see* § 1.2110 of this part and § 24.709 of this chapter)
seeks to extend a short-term *de facto* transfer leasing arrangement
with its spectrum lessee (or related entities, as determined pursuant to
§ 1.2110(b)(2)) beyond one year, it may convert its arrangement into a
long-term *de facto* transfer spectrum leasing arrangement provided that
it complies with the procedures for entering into a long-term *de facto*
transfer leasing arrangement and that it pays any unjust enrichment that
would have been owed had the licensee filed a long-term *de facto*
transfer spectrum leasing application at the time it applied for the
initial short-term *de facto* transfer leasing arrangement.

\* \* \* \* \*

\(n\) *Renewal.* The rule applicable with regard to long-term *de facto*
transfer leasing arrangements (*see* § 1.9030(l)) applies in the same
manner to short-term *de facto* transfer leasing arrangements, except
that the renewal of the short-term *de facto* transfer leasing
arrangement to extend into the term of the renewed license authorization
cannot enable the combined terms of the short-term *de facto* transfer
leasing arrangements to exceed one year. The Commission must be notified
of the renewal of the spectrum leasing arrangement at the same time that
the licensee submits its application for license renewal (*see* §
1.949).

\* \* \* \* \*

12\. Amend § 1.9045 by revising paragraph (b) to read as follows:

**[§ 1.9045 Requirements for spectrum leasing arrangements entered into
by licensees participating in the installment payment
program.]{.underline}**

\* \* \* \* \*

\(b\) If a licensee holds a license subject to the installment payment
program rules (*see* § 1.2110 and related service-specific rules), the
licensee and any spectrum lessee must execute the Commission-approved
financing documents. No licensee or potential spectrum lessee may file a
spectrum leasing notification or application without having first
executed such Commission-approved financing documentation. In addition,
they must certify in the spectrum leasing notification or application
that they have both executed such documentation.

\* \* \* \* \*

13\. Add § 1.9048 to read as follows:

**[§ 1.9048 Special provisions relating to spectrum leasing arrangements
involving licensees in the Public Safety Radio Services.]{.underline}**

Licensees in the Public Safety Radio Services (*see* part 90, subpart B
and § 90.311(a)(1)(i) of this chapter) may enter into spectrum leasing
arrangements with other public safety entities eligible for such a
license authorization as well as with entities providing communications
in support of public safety operations (*see* § 90.523(b) of this
chapter).

14\. Add § 1.9080 to read as follows:

**[§ 1.9080 Private commons.]{.underline}**

a.  *Overview.* A "private commons" arrangement is an arrangement,
    distinct from a spectrum leasing arrangement but permitted in the
    same services for which spectrum leasing arrangements are allowed,
    in which a licensee or spectrum lessee makes certain spectrum usage
    rights under a particular license authorization available to a class
    of third-party users employing advanced communications technologies
    that involve peer-to-peer (device-to-device) communications and that
    do not involve use of the licensee's or spectrum lessee's end-to-end
    physical network infrastructure (*e.g.*, base stations, mobile
    stations, or other related elements). In a private commons
    arrangement, the licensee or spectrum lessee authorizes users of
    certain communications devices employing particular technical
    parameters, as specified by the licensee or spectrum lessee, to
    operate under the license authorization. A private commons
    arrangement differs from a spectrum leasing arrangement in that,
    unlike spectrum leasing arrangements, a private commons arrangement
    does not involve individually negotiated spectrum access rights with
    entities that seek to provide network-based services to end-users. A
    private commons arrangement does not affect unlicensed operations in
    a particular licensed band to the extent that they are permitted
    pursuant to Part 15.

b.  *Licensee/spectrum lessee responsibilities.* As the manager of any
    private commons, the licensee or spectrum lessee:

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(1) Establishes the technical and operating terms and conditions of use
    by users of the private commons, including those relating to the
    types of communications devices that may be used within the private
    commons, consistent with the terms and conditions of the underlying
    license authorization;

(2) Retains *de facto* control of the use of spectrum by users within
    the private commons, including maintaining reasonable oversight over
    the users' use of the spectrum in the private commons so as to
    ensure that the use of the spectrum, and communications equipment
    employed, comply with all applicable technical and service rules
    (including requirements relating to radiofrequency radiation) and
    maintaining the ability to ensure such compliance; and,

(3) Retains direct responsibility for ensuring that the users of the
    private commons, and the equipment employed, comply with all
    applicable technical and service rules, including requirements
    relating to radiofrequency radiation and requirements relating to
    interference.

    a.  *Notification requirements.* Prior to permitting users to
        commence operations within a private commons, the licensee or
        spectrum lessee must notify the Commission, using FCC Form 608,
        that it is establishing a private commons arrangement. This
        notification must include information that describes: the
        location(s) or coverage area(s) of the private commons under the
        license authorization; the term of the arrangement; the general
        terms and conditions for users that would be gaining spectrum
        access to the private commons; the technical requirements and
        equipment that the licensee or spectrum lessee has approved for
        use within the private commons; and, the types of communications
        uses that are to be allowed within the private commons.

**PART 24 -- PERSONAL COMMUNICATIONS SERVICES**

15\. The authority citation for Part 24 continues to read as follows:

Authority: 47 U.S.C. 154, 301, 302, 303, 309 and 332.

16\. Revise § 24.239 by adding the following sentence at the end of the
paragraph, to read as follows:

**[§ 24.239 Cost-sharing requirements for broadband PCS.]{.underline}**

\* \* \* If a licensee in the Broadband PCS Service enters into a
spectrum leasing arrangement (as set forth in part 1, subpart X of this
chapter) and the spectrum lessee triggers a cost-sharing obligation, the
licensee is the PCS entity responsible for satisfying the cost-sharing
obligations under §§ 24.239 through 24.253 of this chapter.

PART 90 -- PRIVATE LAND MOBILE RADIO SERVICES

[]{.mark}

17\. The authority citation for Part 90 continues to read as follows:

Authority: 47 U.S.C. 154(i), 161, 303(g), 303(r), and 332(c)(7).

18\. Amend § 90.20 by adding a new paragraph (h) to read as follows:

\(h\) *Spectrum leasing arrangements.* Notwithstanding any other
provisions of this paragraph to the contrary, licensees in the Public
Safety Radio Services (*see* part 90, subpart B of this chapter) may
enter into spectrum leasing arrangements (*see* part 1, subpart X of
this chapter) with entities providing communications in support of
public safety operations.

**APPENDIX D -- FINAL REGULATORY FLEXIBILITY ANALYSIS**

1.  As required by the Regulatory Flexibility Act of 1980, as amended
    (RFA),[^387] an Initial Regulatory Flexibility Analysis (IRFA) was
    incorporated in the *Further Notice*.[^388] The Commission sought
    written public comment on the proposals in the *Further Notice*,
    including comment on the IRFA. This present Final Regulatory
    Flexibility Analysis (FRFA) conforms to the RFA.[^389]

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A.  **Need for, and Objectives of, the Second Report and Order and Order
    on Reconsideration**

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189. In the Second Report and Order[^390] and the Order on
     Reconsideration,[^391] we build on the framework established in the
     *Report and Order*, in which we adopted policies, rules, and
     procedures designed to facilitate the ability of many Wireless
     Radio Services licensees, including many small businesses, to lease
     spectrum usage rights and to transfer and assign licenses to third
     parties. In this Second Report and Order, we take additional steps
     to further reduce regulatory delay so that spectrum leasing parties
     in our Wireless Radio Services can implement certain classes of
     spectrum leasing arrangements and can transfer and assign licenses
     in a more timely fashion, in accordance with evolving marketplace
     demands and customer needs. In the Order on Reconsideration, we
     address a variety of issues addressed in the *Report and Order*,
     including the respective responsibilities of licensees and spectrum
     lessees regarding particular service rules.

190. As with the underlying *Report and Order*, these actions take us
     further down the path toward greater reliance on the marketplace,
     thus expanding the scope of available wireless services and devices
     and enabling more efficient and dynamic use of spectrum to the
     ultimate benefit of consumers throughout the country.[^392] The
     steps taken in the Second Report and Order and in the Order on
     Reconsideration to facilitate the development of secondary markets
     in wireless spectrum expand upon and complement several of the
     Commission's major policy initiatives and public interest
     objectives. These include our efforts to encourage the development
     of broadband services for all Americans, promote increased
     facilities-based competition among service providers, enhance
     economic opportunities and access for the provision of
     communications services by designated entities,[^393] and enable
     development of additional and innovative services in rural areas.

191. [Second Report and Order]{.underline}*.* Consistent with the
     proposals set forth in the *Further Notice*, the Second Report and
     Order further streamlines our processing of certain classes of
     spectrum leasing transactions -- both *de facto* transfer and
     spectrum manager leases -- by adopting immediate processing
     procedures (*i.e*., overnight processing through the Universal
     Licensing System (ULS)) for transactions that do not raise certain
     specified potential public interest concerns.[^394] Thus, leasing
     parties submitting qualifying spectrum leasing transactions will be
     able to proceed immediately with implementation of their spectrum
     leases, instead of having to wait 21 days[^395] (10 days if a
     short-term lease), as required under existing spectrum leasing
     rules for both *de facto* transfer and spectrum manager
     leases.[^396]

192. With respect to both long-term and short-term *de facto* transfer
     leasing, we adopt immediate approval procedures for certain
     categories of *de facto* transfer leasing arrangements that do not
     raise potential public interest concerns relating to eligibility
     and use, foreign ownership, designated entity/entrepreneur matters,
     or competition.[^397] For transactions that involve
     telecommunications carriers subject to the Commission's Section 10
     forbearance authority, the Second Report and Order forbears from
     the 21-day prior public notice requirements (10 days for short-term
     *de facto* transfer spectrum leasing).[^398] For transactions that
     do not involve telecommunications carriers (and thus are not
     subject to forbearance), we permit spectrum leases to proceed under
     the immediate approval procedures because their applications
     establishes all of the requisite elements necessary for determining
     that approval is consistent with the public interest.[^399] The
     Second Report and Order also adopts similar immediate processing
     for qualifying spectrum manager lease notifications.[^400]
     Post-approval reconsideration procedures (for *de facto* transfer
     leases) and post-notification reconsideration procedures (for
     spectrum manager leases) apply, providing interested parties an
     opportunity to seek reconsideration, and similarly providing the
     Wireless Telecommunications Bureau (Bureau) 30 days, and the
     Commission 40 days, to reconsider whether the spectrum leasing is
     in the public interest. The Bureau (or Commission) also retains the
     right to take appropriate action for any false certifications that
     leasing parties make in their application or notification.[^401]

193. The Second Report and Order affirms and further clarifies the
     policy set forth in the *Report and Order* that permits designated
     entity (DE) and entrepreneur licensees to enter into spectrum
     manager leases with any entity, but only provided that the lease
     does not cause the DE or entrepreneur licensee to lose its
     eligibility under the applicable Commission policies and
     rules.[^402] DE and entrepreneur licensees must therefore undertake
     the same kind of determination required when evaluating eligibility
     for auctions or license transfers prior to certifying that their
     spectrum leasing arrangement is in compliance with our rules.
     Because spectrum leasing arrangements entered into by DE and
     entrepreneur licensees are not subject to the immediate processing
     procedures, the Commission will have the ability to review, on a
     case-by-case basis, any leasing certification that it believes
     gives rise to a question of the licensee's continued eligibility.

194. Also, the Second Report and Order extends spectrum leasing policies
     to three additional services. Specifically, it permits public
     safety licensees in the Part 90 Radio Safety Pool to lease spectrum
     to other public safety entities and to entities that provide
     communications in support of public safety operations. In addition,
     it extends the spectrum leasing policies to the Multichannel Video
     Distribution and Data Service (MVDDS) and Automated Maritime
     Communications Systems (AMTS) Services in which licensees hold
     exclusive use rights. It does not, however, extend the spectrum
     leasing policies to other wireless radio services that involve
     sharing of the authorizations or to services in which the spectrum
     leasing policies might undermine policies related to the underlying
     authorization.[^403]

195. Furthermore, the Second Report and Order establishes the new
     regulatory concept of a "private commons" that would be available
     to individual users or groups of users that do not fit squarely
     within the current options for spectrum leasing or within
     traditional end-user models associated with subscriber-based
     services and network architectures. The private commons option is
     similar to "public" commons of the kind associated with the current
     uses and applications of unlicensed devices under Part 15 rules,
     except that it would involve licensed spectrum in which the
     licensee (or spectrum lessee) would not necessarily offer services
     over its own end-to-end physical network of base stations, mobile
     stations, and other elements; as manager of the commons, the
     licensee (or lessee) sets the terms and conditions for users,
     notifies the Commission about the private commons prior to users'
     operations, and retains direct responsibility for users' compliance
     with the rules.[^404]

196. In addition, the Second Report and Order extends immediate approval
     procedures for certain classes of license assignments and transfers
     of control. The order adopts the same immediate approval procedures
     for license assignments and transfer of control transactions that
     would not raise specified public interest concerns (*i.e*., those
     relating to eligibility and use, foreign ownership, designated
     entity, or competition), consistent with the policies adopted in
     the order for *de facto* transfer leases.[^405] The Second Report
     and Order also extends the applicable streamlined approval
     procedures -- either the immediate approval or 21-day streamlined
     approval (or longer if additional review is necessary) -- to all
     wireless radio services regulated by the Bureau, regardless of
     whether spectrum leasing is permitted.[^406]

197. Finally, in the Second Report and Order we conclude that the
     information already provided by spectrum leasing parties when they
     file applications or notifications relating to entering into
     spectrum leasing arrangements is sufficient for enabling secondary
     markets the development of efficient markets in spectrum usage
     rights. Accordingly, we determine that we will not, at this time,
     require the spectrum leasing parties to provide the Commission with
     any additional information than that already required under
     existing rules. We also decline, at this time, to take action to
     establish the Commission as either a market-maker or exchange.

198. [Order on Reconsideration]{.underline}*.* In the Order on
     Reconsideration, we address five petitions for reconsideration that
     we received with regard to the *Report and Order*. These petitions
     touched on a variety of issues, including the licensee's
     responsibility to ensure its spectrum lessee's compliance with
     Commission policies and rules, protections for the licensee or
     spectrum lessee in the event a spectrum lease or a license is
     terminated, and the respective responsibilities of licensees and
     spectrum lessees regarding particular service rules. In the Order
     on Reconsideration, we provide additional clarification to our
     spectrum leasing policies and rules.[^407]

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

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199. [Second Report and Order]{.underline}. We received no comments in
     response to the previous IRFA. We note, however that several
     commenting parties that represent small entities or rural carriers
     expressed support for the Commission's efforts to provide
     additional streamlining of our processing of certain categories of
     spectrum leasing arrangements and license assignments and transfers
     of control.

200. For instance, the Rural Telecommunications Group (RTG) supported
     additional streamlining of Commission processing of certain classes
     of spectrum leasing arrangements and licensee transfer and
     assignments. It asserted that such a process would help stimulate
     secondary market transactions by substantially lowering the cost of
     such transactions and decreasing the time in which such
     transactions may be completed.[^408] Similarly, Blooston Rural
     Carriers supported the Commission's general proposal, set forth in
     the *Further Notice*, to remove unnecessary regulatory barriers to
     the development of secondary markets,[^409] and believed that the
     kinds of rules proposed, and ultimately adopted in the Second
     Report and Order, would further facilitate broader access to
     spectrum resources. In addition, Blooston Rural Carriers supported
     that Commission's decision to forbear from certain categories of
     spectrum leases and assignments, stating that such forbearance
     would beneficially affect a significant number of arrangements
     without undermining the Commission's public interest
     objectives.[^410]

201. In addition to these general observations, we inquired in the
     *Further Notice* whether the Commission should alter the *de facto*
     transfer leasing policies adopted in the *Report and Order* and
     allow a designated entity or entrepreneur licensee to lease some or
     all of its spectrum usage rights to any entity, regardless of
     whether that entity would qualify for the same eligibility status
     as that of the licensee.[^411] In particular, the we sought comment
     on how, if such a policy change were made, the Commission could
     ensure continued compliance with our statutory obligations to
     prevent unjust enrichment.[^412] We also sought comment on whether
     to use the new *de facto* control standard, rather than the
     existing controlling interest standard (including the
     *Intermountain Microwave* criteria[^413]), when evaluating
     affiliation and eligibility for designated entity and entrepreneur
     benefits.[^414] We specifically asked whether this latter change
     would be consistent with the statutory objectives of Section
     309(j).[^415]

202. Some commenters, including AT&T Wireless, Cingular Wireless (which
     also is a petitioner), Council Tree, and Salmon PCS, suggested that
     the Commission should permit designated entity and entrepreneur
     licensees to enter into spectrum leasing arrangements with any
     entity, regardless of how that arrangement might affect the
     licensee's designated entity or entrepreneur eligibility. One of
     these commenters, Council Tree, further suggested that the
     Commission should eliminate unjust enrichment obligations and
     entrepreneur transfer restrictions for licensees owned and
     controlled by Alaska Native Corporations and Indian tribes. These
     commenters argued generally that designated entity and entrepreneur
     licensees should benefit from the same flexibility with regard to
     entering into spectrum leasing arrangements as any other licensees.
     [^416] In addition, while two commenters acknowledged the
     importance of ensuring the spectrum leasing by designated entity
     and entrepreneur licensees did not undermine the Commission's
     designated entity or entrepreneur policies, Blooston Rural Carriers
     and RTG recommended that if such licensees enter into spectrum
     leasing arrangements that serve rural areas, they should not be
     subject to any unjust enrichment obligations or transfer
     restrictions. They generally contended that such a result would be
     consistent with the purpose of those policies to promote services
     in rural communities. [^417]

203. The Commission devoted significant consideration to the
     applicability of its designated entity qualification rules to
     potential spectrum lessees seeking access to spectrum licensed to
     designated entities, as well as the applicability of its unjust
     enrichment policies. Reaching a decision on these issues required a
     balancing of complex competing considerations. The Commission
     concluded, however, that its statutory obligations under Section
     309(j) of the Communications Act[^418] and its goals to promote
     opportunities for designated entities (which includes a significant
     number of small businesses) would be better served by affirming,
     but clarifying, its designated entity and unjust enrichment
     policies adopted in the *Report and Order* in the context of
     spectrum leases involving both spectrum manager leasing
     arrangements and long-term *de facto* transfer leasing
     arrangements.[^419]

204. [Order on Reconsideration]{.underline}. Five parties petitioned the
     Commission seeking revision or clarification of the *Report and
     Order* on several particular issues pertaining to the spectrum
     leasing policies that were adopted. These included Cingular
     Wireless' and NTCA's petitions for clarification of the licensee's
     responsibility for ensuring that spectrum lessees comply with
     Commission policies and rules,[^420] Verizon Wireless' petition for
     Cingular Wireless' and Verizon Wireless' petitions for
     clarification of the licensee's ability to terminate a spectrum
     lease for non-compliance by the lessee,[^421] Blooston Rural
     Carriers' petition for clarification of Commission policies
     regarding the licensee's responsibility for meeting application
     construction requirements when entering into spectrum leasing
     arrangements,[^422] and Cingular Wireless's petition for
     clarification with respect to the licensee's responsibility for the
     cost-sharing obligations associated with relocation of incumbent
     microwave licensees in broadband PCS spectrum.[^423] Four parties,
     requested additional procedural protections for licensees and
     spectrum lessees. Specifically, Cingular Wireless and Verizon
     Wireless sought additional protections for licensees in the event
     the Commission sought to terminate a spectrum lease,[^424] while
     Blooston Rural Carriers, Cingular Wireless, and NTCA requested
     additional procedural protections for spectrum lessees if the
     license was terminated, either as a result of the licensee's
     bankruptcy or for some other unanticipated reason.[^425] In the
     Order on Reconsideration, the Commission generally affirmed, and
     further clarified, the spectrum leasing policies adopted in the
     *Report and Order* with regard to these issues*.*[^426] None of
     these petitioners noted that revisions or clarifications should be
     made in order to better accommodate the needs of small businesses.

205. In addition, as noted above, Cingular Wireless petitioned the
     Commission, requesting that it permit designated entity and
     entrepreneur licensees to enter into spectrum leasing arrangements
     with any entity, regardless of how that arrangement might affect
     the licensee's designated entity or entrepreneur eligibility.
     Because this issue was addressed in the Second Report and Order, it
     will not be discussed again here.

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

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206. The RFA directs agencies to provide a description of, and, where
     feasible, an estimate of, the number of small entities that may be
     affected by the rules adopted herein.[^427] The RFA generally
     defines the term "small entity" as having the same meaning as the
     terms "small business," "small organization," and "small
     governmental jurisdiction."[^428] In addition, the term "small
     business" has the same meaning as the term "small business concern"
     under the Small Business Act.[^429] 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).[^430]

207. In the following paragraphs, we further describe and estimate the
     number of small entity licensees that may be affected by the rules
     we adopt in the Second Report and Order. Since this rulemaking
     proceeding applies to multiple services, we will analyze the number
     of small entities affected on a service-by-service basis. Because
     we have adopted streamlined processing procedures for all license
     assignment and transfer of control applications involving Wireless
     Radio Services authorizations regulated by the Bureau, we describe
     all of the services regulated by the Bureau.

208. As adopted, the Second Report and Order will further streamline the
     processing of certain spectrum leasing arrangements and license
     assignments and transfers of control, as well as create new
     opportunities and obligations for three additional Wireless Radio
     Services licensees to enter into spectrum leasing arrangements with
     third parties. When identifying small entities that could be
     affected by our new rules, we provide information describing
     auctions results, including the number of small entities that are
     winning bidders. We note, however, that the number of winning
     bidders that qualify as small businesses at the close of an auction
     does not necessarily reflect the total number of small entities
     currently in a particular service. The Commission does not
     generally require that applicants provide business size
     information, except in the context of an assignment or transfer of
     control application where unjust enrichment issues are
     implicated.[^431]

209. **Cellular Licensees.** The SBA has developed a small business size
     standard for small businesses in the category "Cellular and Other
     Wireless Telecommunications."[^432] Under that SBA category, a
     business is small if it has 1,500 or fewer employees.[^433]
     According to the Bureau of the Census, only twelve firms out of a
     total of 977 cellular and other wireless telecommunications firms
     that operated for the entire year in 1997 had 1,000 or more
     employees.[^434] Therefore, even if all twelve of these firms were
     cellular telephone companies, nearly all cellular carriers are
     small businesses under the SBA's definition.

210. **220 MHz Radio Service -- Phase I Licensees.** The 220 MHz service
     has both Phase I and Phase II licenses. Phase I licensing was
     conducted by lotteries in 1992 and 1993. There are approximately
     1,515 such non‑nationwide licensees and four nationwide licensees
     currently authorized to operate in the 220 MHz band. The Commission
     has not developed a definition of small entities specifically
     applicable to such incumbent 220 MHz Phase I licensees. To estimate
     the number of such licensees that are small businesses, we apply
     the small business size standard under the SBA rules applicable to
     "Cellular and Other Wireless Telecommunications" companies. This
     category provides that a small business is a wireless company
     employing no more than 1,500 persons.[^435] According to the Census
     Bureau data for 1997, only twelve firms out of a total of 977 such
     firms that operated for the entire year in 1997, had 1,000 or more
     employees.[^436] If this general ratio continues in the context of
     Phase I 220 MHz licensees, the Commission estimates that nearly all
     such licensees are small businesses under the SBA's small business
     standard.

211. **220 MHz Radio Service -- Phase II Licensees.** The 220 MHz
     service has both Phase I and Phase II licenses. The Phase II 220
     MHz service is subject to spectrum auctions. In the *220 MHz Third
     Report and Order*, we adopted a small business size standard for
     defining "small" and "very small" businesses for purposes of
     determining their eligibility for special provisions such as
     bidding credits and installment payments.[^437] This small business
     standard indicates that a "small business" is an entity that,
     together with its affiliates and controlling principals, has
     average gross revenues not exceeding \$15 million for the preceding
     three years.[^438] 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.[^439] The SBA has approved these small size
     standards.[^440] Auctions of Phase II licenses commenced on
     September 15, 1998, and closed on October 22, 1998.[^441] 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.[^442] Thirty-nine small
     businesses won 373 licenses in the first 220 MHz auction. A second
     auction included 225 licenses: 216 EA licenses and 9 EAG licenses.
     Fourteen companies claiming small business status won 158
     licenses.[^443] A third auction included four licenses: 2 BEA
     licenses and 2 EAG licenses in the 220 MHz Service. No small or
     very small business won any of these licenses.[^444]

212. **Lower 700 MHz Band Licenses.** We adopted criteria for defining
     three groups of small businesses for purposes of determining their
     eligibility for special provisions such as bidding credits.[^445]
     We have defined a small business as an entity that, together with
     its affiliates and controlling principals, has average gross
     revenues not exceeding \$40 million for the preceding three
     years.[^446] A very small business is defined as an entity that,
     together with its affiliates and controlling principals, has
     average gross revenues that are not more than \$15 million for the
     preceding three years.[^447] Additionally, the lower 700 MHz
     Service has a third category of small business status that may be
     claimed for Metropolitan/Rural Service Area (MSA/RSA) licenses. The
     third category is entrepreneur, which is defined as an entity that,
     together with its affiliates and controlling principals, has
     average gross revenues that are not more than \$3 million for the
     preceding three years.[^448] The SBA has approved these small size
     standards.[^449] An auction of 740 licenses (one license in each of
     the 734 MSAs/RSAs and one license in each of the six Economic Area
     Groupings (EAGs)) commenced on August 27, 2002, and closed on
     September 18, 2002. Of the 740 licenses available for auction, 484
     licenses were sold to 102 winning bidders. Seventy-two of the
     winning bidders claimed small business, very small business or
     entrepreneur status and won a total of 329 licenses. [^450] A
     second auction commenced on May 28, 2003, and closed on June 13,
     2003, and included 256 licenses: 5 EAG licenses and 476 CMA
     licenses.[^451] Seventeen winning bidders claimed small or very
     small business status and won sixty licenses, and nine winning
     bidders claimed entrepreneur status and won 154 licenses.[^452]

213. **Upper 700 MHz Band Licenses.** The Commission released a *Report
     and Order*, authorizing service in the upper 700 MHz band.[^453]
     This auction, previously scheduled for January 13, 2003, has been
     postponed.[^454]

214. **Paging.** In the *Paging* *Second Report and Order*, we adopted a
     size standard for "small businesses" for purposes of determining
     their eligibility for special provisions such as bidding credits
     and installment payments.[^455] A small business is an entity that,
     together with its affiliates and controlling principals, has
     average gross revenues not exceeding \$15 million for the preceding
     three years.[^456] The SBA has approved this definition.[^457] An
     auction of Metropolitan Economic Area (MEA) licenses commenced on
     February 24, 2000, and closed on March 2, 2000. Of the 2,499
     licenses auctioned, 985 were sold.[^458] Fifty-seven companies
     claiming small business status won 440 licenses.[^459] An auction
     of Metropolitan Economic Area (MEA) and Economic Area (EA) licenses
     commenced on October 30, 2001, and closed on December 5, 2001. Of
     the 15,514 licenses auctioned, 5,323 were sold.[^460] 132 companies
     claiming small business status purchased 3,724 licenses. A third
     auction, consisting of 8,874 licenses in each of 175 EAs and 1,328
     licenses in all but three of the 51 MEAs commenced on May 13, 2003,
     and closed on May 28, 2003. Seventy-seven bidders claiming small or
     very small business status won 2,093 licenses.[^461] Currently,
     there are approximately 24,000 Private Paging site-specific
     licenses and 74,000 Common Carrier Paging licenses. According to
     the most recent *Trends in Telephone Service,* 608 private and
     common carriers reported that they were engaged in the provision of
     either paging or "other mobile" services.[^462] Of these, we
     estimate that 589 are small, under the SBA-approved small business
     size standard.[^463] We estimate that the majority of private and
     common carrier paging providers would qualify as small entities
     under the SBA definition.

215. **Broadband Personal Communications Service (PCS).** The broadband
     PCS spectrum is divided into six frequency blocks designated A
     through F, and the Commission has held auctions for each block. The
     Commission has created a small business size standard for Blocks C
     and F as an entity that has average gross revenues of less than
     \$40 million in the three previous calendar years.[^464] For Block
     F, an additional small business size standard for "very small
     business" was added and is defined as an entity that, together with
     its affiliates, has average gross revenues of not more than \$15
     million for the preceding three calendar years.[^465] These small
     business size standards, in the context of broadband PCS auctions,
     have been approved by the SBA.[^466] No small businesses within the
     SBA-approved small business size standards bid successfully for
     licenses in Blocks A and B. There were 90 winning bidders that
     qualified as small entities in the Block C auctions. A total of 93
     "small" and "very small" business bidders won approximately 40
     percent of the 1,479 licenses for Blocks D, E, and F.[^467] On
     March 23, 1999, the Commission reauctioned 155 C, D, E, and F Block
     licenses; there were 113 small business winning bidders.[^468]

216. **Narrowband PCS.** The Commission held an auction for Narrowband
     PCS licenses that commenced on July 25, 1994, and closed on July
     29, 1994. A second commenced on October 26, 1994 and closed on
     November 8, 1994. For purposes of the first two Narrowband PCS
     auctions, "small businesses" were entities with average gross
     revenues for the prior three calendar years of \$40 million or
     less.[^469] Through these auctions, the Commission awarded a total
     of forty-one licenses, 11 of which were obtained by four small
     businesses.[^470] To ensure meaningful participation by small
     business entities in future auctions, the Commission adopted a
     two-tiered small business size standard in the *Narrowband PCS
     Second Report and Order*.[^471] A "small business" is an entity
     that, together with affiliates and controlling interests, has
     average gross revenues for the three preceding years of not more
     than \$40 million.[^472] A "very small business" is an entity that,
     together with affiliates and controlling interests, has average
     gross revenues for the three preceding years of not more than \$15
     million.[^473] The SBA has approved these small business size
     standards.[^474] A third auction commenced on October 3, 2001 and
     closed on October 16, 2001. Here, five bidders won 317 (MTA and
     nationwide) licenses.[^475] Three of these claimed status as a
     small or very small entity and won 311 licenses.

217. **Specialized Mobile Radio (SMR)**. The Commission awards "small
     entity" bidding credits in auctions for Specialized Mobile Radio
     (SMR) geographic area licenses in the 800 MHz and 900 MHz bands to
     firms that had revenues of no more than \$15 million in each of the
     three previous calendar years.[^476] The Commission awards "very
     small entity" bidding credits to firms that had revenues of no more
     than \$3 million in each of the three previous calendar
     years.[^477] The SBA has approved these small business size
     standards for the 900 MHz Service.[^478] The Commission has held
     auctions for geographic area licenses in the 800 MHz and 900 MHz
     bands. The 900 MHz SMR auction began on December 5, 1995, and
     closed on April 15, 1996. Sixty bidders claiming that they
     qualified as small businesses under the \$15 million size standard
     won 263 geographic area licenses in the 900 MHz SMR band. The 800
     MHz SMR auction for the upper 200 channels began on October 28,
     1997, and was completed on December 8, 1997. Ten bidders claiming
     that they qualified as small businesses under the \$15 million size
     standard won 38 geographic area licenses for the upper 200 channels
     in the 800 MHz SMR band.[^479] A second auction for the 800 MHz
     band was held on January 10, 2002 and closed on January 17, 2002
     and included 23 BEA licenses. One bidder claiming small business
     status won five licenses.[^480]

218. The auction of the 1,050 800 MHz SMR geographic area licenses for
     the General Category channels began on August 16, 2000, and was
     completed on September 1, 2000. Eleven bidders won 108 geographic
     area licenses for the General Category channels in the 800 MHz SMR
     band qualified as small businesses under the \$15 million size
     standard. In an auction completed on December 5, 2000, a total of
     2,800 Economic Area licenses in the lower 80 channels of the 800
     MHz SMR service were sold. Of the 22 winning bidders, 19 claimed
     "small business" status and won 129 licenses. Thus, combining all
     three auctions, 40 winning bidders for geographic licenses in the
     800 MHz SMR band claimed status as small business.

219. In addition, there are numerous incumbent site-by-site SMR
     licensees and licensees with extended implementation authorizations
     in the 800 and 900 MHz bands. We do not know how many firms provide
     800 MHz or 900 MHz geographic area SMR pursuant to extended
     implementation authorizations, nor how many of these providers have
     annual revenues of no more than \$15 million. One firm has over
     \$15 million in revenues. We assume, for purposes of this analysis,
     that all of the remaining existing extended implementation
     authorizations are held by small entities, as that small business
     size standard is established by the SBA.

220. **Private Land Mobile Radio (PLMR).** PLMR systems serve an
     essential role in a range of industrial, business, land
     transportation, and public safety activities. These radios are used
     by companies of all sizes operating in all U.S. business
     categories, and are often used in support of the licensee's primary
     (non-telecommunications) business operations. For the purpose of
     determining whether a licensee of a PLMR system is a small business
     as defined by the SBA, we could use the definition for "Cellular
     and Other Wireless Telecommunications." This definition provides
     that a small entity is any such entity employing no more than 1,500
     persons.[^481] The commission does not require PLMR licensees to
     disclose information about number of employees, so the Commission
     does not have information that could be used to determine how many
     PLMR licensees constitute small entities under this definition.
     Moreover, because PMLR licensees generally are not in the business
     of providing cellular or other wireless telecommunications services
     but instead use the licensed facilities in support of other
     business activities, we are not certain that the Cellular and Other
     Wireless Telecommunications category is appropriate for determining
     how many PLMR licensees are small entities for this analysis.
     Rather, it may be more appropriate to assess PLMR licensees under
     the standards applied to the particular industry subsector to which
     the licensee belongs.[^482]

221. **Fixed Microwave Services.** Fixed microwave services include
     common carrier,[^483] private-operational fixed,[^484] and
     broadcast auxiliary radio services.[^485] Currently, there are
     approximately 22,015 common carrier fixed licensees and 61,670
     private operational-fixed licensees and broadcast auxiliary radio
     licensees in the microwave services. The Commission has not yet
     defined a small business with respect to microwave services. For
     purposes of this FRFA, we will use the SBA\'s definition applicable
     to "Cellular and Other Wireless Telecommunications" companies --
     that is, an entity with no more than 1,500 persons.[^486] The
     Commission does not have data specifying the number of these
     licensees that have more than 1,500 employees, and thus is unable
     at this time to estimate with greater precision the number of fixed
     microwave service licensees that would qualify as small business
     concerns under the SBA's small business size standard.
     Consequently, the Commission estimates that there are 22,015 or
     fewer small common carrier fixed licensees and 61,670 or fewer
     small private operational-fixed licensees and small broadcast
     auxiliary radio licensees in the microwave services that may be
     affected by the rules and policies adopted herein. The Commission
     notes, however, that the common carrier microwave fixed licensee
     category includes some large entities.

222. **Wireless Communications Services.** This service can be used for
     fixed, mobile, radiolocation, and digital audio broadcasting
     satellite uses. The Commission defined "small business" for the
     wireless communications services (WCS) auction as an entity with
     average gross revenues of \$40 million for each of the three
     preceding years, and a "very small business" as an entity with
     average gross revenues of \$15 million for each of the three
     preceding years.[^487] The SBA has approved these
     definitions.[^488] The FCC auctioned geographic area licenses in
     the WCS service. In the auction, which commenced on April 15, 1997
     and closed on April 25, 1997, there were seven bidders that won 31
     licenses that qualified as very small business entities, and one
     bidder that won one license that qualified as a small business
     entity. An auction for one license in the 1670-1674 MHz band
     commenced on April 30, 2003 and closed the same day. One license
     was awarded. The winning bidder was not a small entity.

223. **39 GHz Service.** The Commission defines "small entity" for 39
     GHz licenses as an entity that has average gross revenues of less
     than \$40 million in the three previous calendar years.[^489] "Very
     small business" is defined as an entity that, together with its
     affiliates, has average gross revenues of not more than \$15
     million for the preceding three calendar years.[^490] The SBA has
     approved these definitions.[^491] The auction of the 2,173 39 GHz
     licenses began on April 12, 2000, and closed on May 8, 2000. The 18
     bidders who claimed small business status won 849 licenses.

224. **Local Multipoint Distribution Service.** An auction of the 986
     Local Multipoint Distribution Service (LMDS) licenses began on
     February 18, 1998, and closed on March 25, 1998. The Commission
     defined "small entity" for LMDS licenses as an entity that has
     average gross revenues of less than \$40 million in the three
     previous calendar years.[^492] An additional classification for
     "very small business" was added and is defined as an entity that,
     together with its affiliates, has average gross revenues of not
     more than \$15 million for the preceding three calendar
     years.[^493] These regulations defining "small entity" in the
     context of LMDS auctions have been approved by the SBA.[^494] There
     were 93 winning bidders that qualified as small entities in the
     LMDS auctions. A total of 93 small and very small business bidders
     won approximately 277 A Block licenses and 387 B Block licenses. On
     March 27, 1999, the Commission re-auctioned 161 licenses; there
     were 32 small and very small business winning bidders that won 119
     licenses.

225. **218-219 MHz Service.** The first auction of 218-219 MHz
     (previously referred to as the Interactive and Video Data Service
     or IVDS) spectrum resulted in 178 entities winning licenses for 594
     Metropolitan Statistical Areas (MSAs).[^495] Of the 594 licenses,
     567 were won by 167 entities qualifying as a small business. For
     that auction, we defined a small business as an entity that,
     together with its affiliates, has no more than a \$6 million net
     worth and, after federal income taxes (excluding any carry over
     losses), has no more than \$2 million in annual profits each year
     for the previous two years.[^496] In the *218-219 MHz Report and
     Order and Memorandum Opinion and Order*, we defined a small
     business as an entity that, together with its affiliates and
     persons or entities that hold interests in such an entity and their
     affiliates, has average annual gross revenues not exceeding \$15
     million for the preceding three years.[^497] A very small business
     is defined as an entity that, together with its affiliates and
     persons or entities that hold interests in such an entity and its
     affiliates, has average annual gross revenues not exceeding \$3
     million for the preceding three years.[^498] The SBA has approved
     of these definitions.[^499] At this time, we cannot estimate the
     number of licenses that will be won by entities qualifying as small
     or very small businesses under our rules in future auctions of
     218-219 MHz spectrum. Given the success of small businesses in the
     previous auction, and the prevalence of small businesses in the
     subscription television services and message communications
     industries, we assume for purposes of this FRFA that in future
     auctions, many, and perhaps all, of the licenses may be awarded to
     small businesses.

226. **Location and Monitoring Service (LMS).** Multilateration LMS
     systems use non-voice radio techniques to determine the location
     and status of mobile radio units. For purposes of auctioning LMS
     licenses, the Commission has defined "small business" as an entity
     that, together with controlling interests and affiliates, has
     average annual gross revenues for the preceding three years not
     exceeding \$15 million.[^500] A "very small business" is defined as
     an entity that, together with controlling interests and affiliates,
     has average annual gross revenues for the preceding three years not
     exceeding \$3 million.[^501] These definitions have been approved
     by the SBA.[^502] An auction for LMS licenses commenced on February
     23, 1999, and closed on March 5, 1999. Of the 528 licenses
     auctioned, 289 licenses were sold to four small businesses. We
     cannot accurately predict the number of remaining licenses that
     could be awarded to small entities in future LMS auctions.

227. **Rural Radiotelephone Service**. We use the SBA definition
     applicable to cellular and other wireless telecommunication
     companies, *i.e.*, an entity employing no more than 1,500
     persons.[^503] There are approximately 1,000 licensees in the Rural
     Radiotelephone Service, and the Commission estimates that there are
     1,000 or fewer small entity licensees in the Rural Radiotelephone
     Service that may be affected by the rules and policies adopted
     herein.

228. **Air-Ground Radiotelephone Service.** We use the SBA definition
     applicable to cellular and other wireless telecommunication
     companies, *i.e.*, an entity employing no more than 1,500
     persons.[^504] There are approximately 100 licensees in the
     Air-Ground Radiotelephone Service, and the Commission estimates
     that almost all of them qualify as small entities under the SBA
     definition.

229. **Offshore Radiotelephone Service.** This service operates on
     several ultra high frequency (UHF) TV broadcast channels that are
     not used for TV broadcasting in the coastal area of the states
     bordering the Gulf of Mexico. At present, there are approximately
     55 licensees in this service. We use the SBA definition applicable
     to cellular and other wireless telecommunication companies, *i.e.*,
     an entity employing no more than 1,500 persons.[^505] The
     Commission is unable at this time to estimate the number of
     licensees that would qualify as small entities under the SBA
     definition. The Commission assumes, for purposes of this FRFA, that
     all of the 55 licensees are small entities, as that term is defined
     by the SBA.

230. **Multiple Address Systems (MAS).** Entities using MAS spectrum, in
     general, fall into two categories: (1) those using the spectrum for
     profit-based uses, and (2) those using the spectrum for private
     internal uses. With respect to the first category, the Commission
     defines "small entity" for MAS licenses as an entity that has
     average gross revenues of less than \$15 million in the three
     previous calendar years.[^506] "Very small business" is defined as
     an entity that, together with its affiliates, has average gross
     revenues of not more than \$3 million for the preceding three
     calendar years.[^507] The SBA has approved of these
     definitions.[^508] The majority of these entities will most likely
     be licensed in bands where the Commission has implemented a
     geographic area licensing approach that would require the use of
     competitive bidding procedures to resolve mutually exclusive
     applications. The Commission's licensing database indicates that,
     as of January 20, 1999, there were a total of 8,670 MAS station
     authorizations. Of these, 260 authorizations were associated with
     common carrier service. In addition, an auction for 5,104 MAS
     licenses in 176 EAs began November 14, 2001, and closed on November
     27, 2001.[^509] Seven winning bidders claimed status as small or
     very small businesses and won 611 licenses.

231. With respect to the second category, which consists of entities
     that use, or seek to use, MAS spectrum to accommodate their own
     internal communications needs, we note that MAS serves an essential
     role in a range of industrial, safety, business, and land
     transportation activities. MAS radios are used by companies of all
     sizes, operating in virtually all U.S. business categories, and by
     all types of public safety entities. For the majority of private
     internal users, the definitions developed by the SBA would be more
     appropriate. The applicable definition of small entity in this
     instance appears to be the "Cellular and Other Wireless
     Telecommunications" definition under the SBA rules. This definition
     provides that a small entity is any entity employing no more than
     1,500 persons.[^510] The Commission's licensing database indicates
     that, as of January 20, 1999, of the 8,670 total MAS station
     authorizations, 8,410 authorizations were for private radio
     service, and of these, 1,433 were for private land mobile radio
     service.

232. **Incumbent 24 GHz Licensees**. The rules that we adopt could
     affect incumbent licensees who were relocated to the 24 GHz band
     from the 18 GHz band, and applicants who wish to provide services
     in the 24 GHz band. The Commission did not develop a definition of
     small entities applicable to existing licensees in the 24 GHz band.
     Therefore, the applicable definition of small entity is the
     definition under the SBA rules for "Cellular and Other Wireless
     Telecommunications." This definition provides that a small entity
     is any entity employing no more than 1,500 persons.[^511] We
     believe that there are only two licensees in the 24 GHz band that
     were relocated from the 18 GHz band, Teligent[^512] and TRW, Inc.
     It is our understanding that Teligent and its related companies
     have less than 1,500 employees, though this may change in the
     future. TRW is not a small entity. Thus, only one incumbent
     licensee in the 24 GHz band is a small business entity.

233. **Future 24 GHz Licensees**. With respect to new applicants in the
     24 GHz band, we have defined "small business" as an entity that,
     together with controlling interests and affiliates, has average
     annual gross revenues for the three preceding years not exceeding
     \$15 million.[^513] "Very small business" in the 24 GHz band is
     defined as an entity that, together with controlling interests and
     affiliates, has average gross revenues not exceeding \$3 million
     for the preceding three years.[^514] The SBA has approved these
     definitions.[^515] The Commission will not know how many licensees
     will be small or very small businesses until the auction, if
     required, is held.

234. **700 MHz Guard Band Licenses.** In the *700 MHz Guard Band Order*,
     we adopted size standards for "small businesses" and "very small
     businesses" for purposes of determining their eligibility for
     special provisions such as bidding credits and installment
     payments.[^516] A small business in this service is an entity that,
     together with its affiliates and controlling principals, has
     average gross revenues not exceeding \$40 million for the preceding
     three years.[^517] Additionally, a "very small business" is an
     entity that, together with its affiliates and controlling
     principals, has average gross revenues that are not more than \$15
     million for the preceding three years.[^518] SBA approval of these
     definitions is not requires.[^519] An auction of 52 Major Economic
     Area (MEA) licenses commenced on September 6, 2000, can closed on
     September 21, 2000.[^520] Of the 104 licenses auctioned, 96
     licenses were sold to nine 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.[^521]

235. **Broadband Radio Service (formerly Multipoint Distribution
     Service) and Educational Broadband Service (formerly Instructional
     Television Fixed Service)**. Multichannel Multipoint Distribution
     Service (MMDS) systems, often referred to as "wireless cable,"
     transmit video programming to subscribers using the microwave
     frequencies of the Multipoint Distribution Service (MDS) and
     Instructional Television Fixed Service (ITFS).[^522] In its
     recently issued *BRS/EBS Report and Order* in WT Docket No. 03-66,
     the Commission comprehensively reviewed our policies and rules
     relating to the ITFS and MDS services, and replacing the Multipoint
     Distribution Service (MDS) with the Broadband Radio Service and
     Instructional Television Fixed Service (ITFS) with the Educational
     Broadband Service.[^523] In connection with the 1996 MDS auction,
     the Commission defined "small business" as an entity that, together
     with its affiliates, has average gross annual revenues that are not
     more than \$40 million for the preceding three calendar
     years.[^524] The SBA has approved of this standard.[^525] The MDS
     auction resulted in 67 successful bidders obtaining licensing
     opportunities for 493 Basic Trading Areas (BTAs).[^526] Of the 67
     auction winners, 61 claimed status as a small business. At this
     time, we estimate that of the 61 small business MDS auction
     winners, 48 remain small business licensees. In addition to the 48
     small businesses that hold BTA authorizations, there are
     approximately 392 incumbent MDS licensees that have gross revenues
     that are not more than \$40 million and are thus considered small
     entities.[^527]

236. In addition, the SBA has developed a small business size standard
     for Cable and Other Program Distribution,[^528] which includes all
     such companies generating \$12.5 million or less in annual
     receipts.[^529] According to Census Bureau data for 1997, there
     were a total of 1,311 firms in this category, total, that had
     operated for the entire year.[^530] Of this total, 1,180 firms had
     annual receipts of under \$10 million, and an additional 52 firms
     had receipts of \$10 million or more but less than \$25
     million.[^531] Consequently, we estimate that the majority of
     providers in this service category are small businesses that may be
     affected by the rules and policies in the Second Report and Order.

237. Finally, while SBA approval for a Commission-defined small business
     size standard applicable to ITFS is pending, educational
     institutions are included in this analysis as small entities.[^532]
     There are currently 2,032 ITFS licensees, and all but 100 of these
     licenses are held by educational institutions. Thus, we tentatively
     conclude that at least 1,932 ITFS licensees are small businesses.

238. **Multichannel Video Distribution and Data Service.** MVDDS is a
     terrestrial fixed microwave service operating in the 12.2-12.7 GHz
     band. Licenses in this service were auctioned in January 2004, with
     10 winning bidders for 192 licenses. Eight of these 10 winning
     bidders claimed small businesses status for 144 of these
     licenses.[^533]

239. **Aviation and Marine Services.** Small businesses in the aviation
     and marine radio services use a very high frequency (VHF) marine or
     aircraft radio and, as appropriate, an emergency
     position-indicating radio beacon (and/or radar) or an emergency
     locator transmitter. The Commission has not developed a small
     business size standard specifically applicable to these small
     businesses. For purposes of this analysis, the Commission uses the
     SBA small business size standard for the category "Cellular and
     Other Telecommunications," which is 1,500 or fewer employees.[^534]
     Most applicants for recreational licenses are individuals.
     Approximately 581,000 ship station licensees and 131,000 aircraft
     station licensees operate domestically and are not subject to the
     radio carriage requirements of any statute or treaty. For purposes
     of our evaluations in this analysis, we estimate that there are up
     to approximately 712,000 licensees that are small businesses (or
     individuals) under the SBA standard. In addition, between December
     3, 1998 and December 14, 1998, the Commission held an auction of 42
     VHF Public Coast licenses in the 157.1875-157.4500 MHz (ship
     transmit) and 161.775-162.0125 MHz (coast transmit) bands. For
     purposes of the auction, the Commission defined a "small" business
     as an entity that, together with controlling interests and
     affiliates, has average gross revenues for the preceding three
     years not to exceed \$15 million dollars. In addition, a "very
     small" business is one that, together with controlling interests
     and affiliates, has average gross revenues for the preceding three
     years not to exceed \$3 million dollars.[^535] There are
     approximately 10,672 licensees in the Marine Coast Service, and the
     Commission estimates that almost all of them qualify as "small"
     businesses under the above special small business size standards.

240. **Public Safety Radio Services.** Public Safety radio services
     include police, fire, local government, forestry conservation,
     highway maintenance, and emergency medical services.[^536] There
     are a total of approximately 127,540 licensees in these services.
     Governmental entities[^537] as well as private businesses comprise
     the licensees for these services. All governmental entities with
     populations of less than 50,000 fall within the definition of a
     small entity.[^538]

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

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241. The projected reporting, recordkeeping, and other compliance
     requirements resulting from the Second Report and Order and the
     Order on Reconsideration will apply to all entities in the same
     manner, consistent with the approach we adopted in the *Report and
     Order*.[^539] We believe that applying the same rules equally to
     all entities helps to promote fairness in the spectrum leasing
     process, as well in the license assignment and transfer of control
     process, and we do not believe that the costs and/or administrative
     burdens associated with the rules, as revised for certain classes
     of spectrum leasing and license transfer and assignment
     transactions will disproportionately or unduly burden small
     entities. The revisions we adopt today should benefit small
     entities by giving them more information, more flexibility, and
     more options for gaining access to valuable wireless spectrum.

242. [Immediate processing procedures for qualifying
     transactions]{.underline}. One of our goals is to further
     streamline Commission processing of certain spectrum leasing
     arrangements and of license assignment and transfer of control
     applications in order to minimize administrative delays, reduce
     transaction costs, encourage more efficient use of spectrum, and
     otherwise facilitate the movement of spectrum toward new and higher
     valued uses.[^540] Additional streamlining, including adoption of
     immediate processing procedures for certain categories of these
     transactions that do not raise specified potential public interest
     concerns, helps us to achieve these goals while at the same time
     meeting our statutory obligations, under Sections 308, 309, and
     310(d), to review license assignments and transfers of control to
     ensure that they are consistent with the public interest.[^541]

243. Under the rules adopted in the Second Report and Order, parties
     seeking to benefit from the Commission's immediate processing
     procedures for spectrum leasing arrangements and for license
     transfers and assignments must submit filings with the Commission
     using our Universal Licensing System (ULS), just as such filings
     were required under the procedures adopted in the underlying
     *Report and Order*.[^542] In order to qualify for such immediate
     processing under these new procedures, we require parties to make
     certain additional certifications.[^543] Otherwise, the reporting
     requirements are not substantially different that those already
     required when parties seek to enter into spectrum leasing
     arrangements, as already established under the underlying *Report
     and Order*. If parties qualify, they benefit by having their
     arrangements processed immediately, and thus have less delay in
     gaining access to the spectrum by implementing the transactions.

244. [Extending spectrum leasing policies to additional spectrum-based
     services]{.underline}. We extend the spectrum leasing policies to
     permit public safety licensees in the Part 90 Radio Safety Pool to
     lease spectrum to other public safety entities and to entities that
     provide communications in support of public safety operations. We
     also extend the spectrum leasing policies to two other services in
     which licensees hold exclusive use rights, the Multichannel Video
     Distribution and Data Services (MVDDS) and the Automated Maritime
     Communications Systems (AMTS) Services. The reporting requirements
     for these services is no different from the reporting requirements
     already required for all other services to which our spectrum
     leasing policies apply.

245. [Adoption of the "private commons" option]{.underline}. In the
     Second Report and Order, we adopt the private commons option under
     which licensees and spectrum lessees may make licensed spectrum
     available to individuals or groups of users employing certain
     advanced wireless technologies in a manner similar to that by which
     unlicensed users gain access to spectrum, and to do so without the
     need for entering into individual spectrum leasing arrangements.
     While we do require that licensees or spectrum lessees that
     establish a private commons to notify the Commission, we do not
     require the same amount of information as required for spectrum
     leasing arrangements.

246. [Immediate approval procedures for certain categories of license
     assignment and transfer of control applications]{.underline}. We
     adopt streamlined application processes for license assignments and
     transfers of control involving Wireless Radio similar to those we
     have adopted for *de facto* transfer spectrum leasing arrangements.
     As with *de facto* transfer leasing arrangements, in order to
     qualify for such immediate processing under these new procedures,
     we require parties to make certain additional certifications.[^544]
     Otherwise, the reporting requirements are not substantially
     different that those already required when parties seek to enter
     into spectrum leasing arrangements.

247. [Extending the streamlined processing policies relating to license
     assignments and transfers of control to additional wireless
     services]{.underline}. We also determine to apply the streamlined
     processing procedures adopted in the *Report and Order* for license
     assignments and transfer of control applications, as well as the
     immediate approval processing for qualifying transactions as
     adopted in this Second Report and Order, to all of the Wireless
     Radio Services authorizations regulated by the Bureau. Thus, while
     new services now may benefit from more streamlined processing of
     license transfer and assignment applications, the reporting
     requirements do not differ from those already required for
     licensees and assignees/transferees under the policies established
     in the *Report and Order.*

248. [Order on Reconsideration]{.underline}. In the Order on
     Reconsideration, we generally affirm the spectrum leasing policies
     and rules established in the underlying *Report and Order*, and do
     not impose any additional reporting requirements on licensees and
     spectrum lessees.

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

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249. The RFA requires an agency to describe any significant alternatives
     that it considered in reaching its final decision, 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."[^545]

250. [Immediate processing of certain categories *de facto* transfer
     leasing arrangements]{.underline}*.* *See* Second Report and Order,
     paras. 11-45. Consistent with the broad support by commenters,
     [^546] we generally adopt the forbearance proposal set forth in the
     *Further Notice* with a few modifications. We do not anticipate any
     adverse impact on small entities as a result of our decision to
     adopt immediate processing of certain categories of spectrum
     leasing arrangements, both *de facto* transfer leases and spectrum
     manager leases.

251. In particular, we permit all *de facto* transfer leases involving
     telecommunications services that are subject to the Commission's
     forbearance authority to proceed pursuant to the application and
     immediate grant procedures set forth in the Second Report and
     Order. *See* Report and Order at paras. 11-36. In particular, we
     require that, in the spectrum leasing application submitted to the
     Commission, the spectrum lessee must make certain additional
     certifications (*e.g.*, those in which the spectrum leasing
     arrangement involves license authorizations that permit
     interconnected mobile voice and/ore data services) in order to
     qualify for immediate approval processing (in lieu of the general
     21-day processing procedures under the rules adopted in the *Report
     and Order*).[^547] Consistent with the general proposal set forth
     in the *Further Notice*, we will no longer require prior public
     notice and individualized Commission review of these leases that
     meet the requirements specified above. Specifically, if the
     spectrum leasing parties file their *de facto* transfer lease
     application in the Universal Licensing System (ULS), and the
     application established the requisite elements explained above, and
     are otherwise complete, the Bureau will process the application and
     provide immediate approval through ULS processing, reflected on the
     next business day after filing the application. We believe that
     forbearing from pubic notice and additional Commission review of
     the qualifying *de facto* transfer spectrum leasing arrangements
     that do not raise potential public interest concerns, is consistent
     with the public interest and will benefit all entities, including
     small entities, by allowing them gain immediate access to spectrum
     to implement their business plans with reduced regulatory delay and
     transaction costs.

252. We also permit *de facto* transfer leases that involve spectrum
     leasing arrangements not subject to forbearance to proceed under
     the same application/immediate approval policies as adopted above
     for *de facto* transfer leases subject to forbearance, so long as
     the leasing parties can establish that the arrangements are
     consistent with the public interest because they establish the same
     specified qualifications. *See* Report and Order at paras. 37-40.
     As above, permitting entities that seek to enter into these leasing
     arrangements that qualify for immediate approval serves to benefit
     all such entities, including small entities.

253. In addition, we revise our rules for processing short-term *de
     facto* transfer leases so that they may be approved pursuant to the
     immediate approval procedures. Because such short-term *de facto*
     transfer leasing arrangements, under the policies applicable to
     them, would qualify for immediate approval processing because they
     do not potential public interest concerns that merit prior public
     notice or additional review, we no longer will require such
     applications to be processed pursuant to our Special Temporary
     Authority (STA) 10-day review procedures. These immediate
     processing procedures benefit all entities entering into short-term
     *de facto* transfer leases, including small entities.

254. [Immediate processing of certain categories of spectrum manager
     leasing arrangements]{.underline}. *See* Second Report and Order at
     paras. 46-50. We also revise our policies for spectrum manager
     lease notifications to be consistent with the policies for *de
     facto* transfer leases as described above. Accordingly, where
     parties seek to enter into spectrum manager leases that do not
     raise specified potential public interest concerns (*e.g.*,
     potential competition concerns), we will permit them to commence
     operations under those leasing arrangements once they have notified
     the Commission of the lease, and have made the necessary
     certifications to qualify for immediate processing. If the spectrum
     manager lease satisfies the qualifying elements, we do not believe
     it necessary to review these notifications in advance of
     operations. The immediate processing procedures adopted for these
     qualifying spectrum manager leases will benefit all entities that
     qualify, including small entities, and will facilitate more rapid
     and efficient use of wireless radio spectrum.

255. [Extending spectrum leasing policies to additional spectrum-based
     services]{.underline}. *See* Second Report and Order at paras.
     51-66. We extend the spectrum leasing policies to permit public
     safety licensees in the Part 90 Radio Safety Pool to lease spectrum
     to other public safety entities and to entities that provide
     communications in support of public safety operations. We also
     extend the spectrum leasing policies to two other services in which
     licensees hold exclusive use rights, the Multichannel Video
     Distribution and Data Services (MVDDS) and the Automated Maritime
     Communications Systems (AMTS) Services. For these public safety
     licensees, we facilitate more efficient and effective use of public
     safety communications, foster interoperability, and further our
     various homeland security initiatives. For MVDDS and AMTS, we
     permit the same benefits of spectrum leasing to be extended to
     these services as well. Extension of our spectrum leasing policies
     in these services will benefit all entities in these services, both
     small and large.

256. [Clarification of the spectrum leasing policies applicable to
     designated entity and entrepreneur licensees]{.underline}. *See*
     Second Report and Order at paras. 67-82. We affirm and clarify the
     rules established in the *Report and Order* for spectrum leasing by
     designated entity and entrepreneur licensees. On so doing, we
     decline requests that we choose an alternative providing such
     licensees with the right to lease spectrum to any entity, without
     regard to our eligibility rules for designated entities and
     entrepreneurs. Although a few commenters suggest that we adopt the
     alternative policy, we believe that adopting such a change would
     contravene the requirements and objectives of Section 309(j) of the
     Act.[^548] Under Section 309(j), Congress sought to promote
     diversity among service providers, as well as the rapid deployment
     of new technologies for the benefit of, among others, rural
     customers. If we allow designated entities and entrepreneurs to
     enter into spectrum manager leasing arrangements without
     considering whether the spectrum lessee acquires an interest in the
     licensee, we run the risk that entities that do not qualify for
     such incentives in the primary market will be unjustly enriched.

257. We also reject recommendations that we allow licensees to maintain
     their designated entity and/or entrepreneur eligibility without the
     imposition of unjust enrichment payment obligations and transfer
     restrictions in situations where the spectrum lessee will use the
     lease to serve rural areas.[^549] The Commission is not required to
     ensure both the rapid deployment of service to telecommunications
     service to rural areas and the participation of rural telephone
     companies. Section 309(j) only requires that the Commission seek to
     promote the objective that service be developed and rapidly
     deployed to rural customers and only ensure that rural telephone
     companies are given the opportunity to participate. The Commission
     has provided small businesses with bidding credits and
     entrepreneurs with license set-asides in order for them to have the
     opportunity to participate in the provision of spectrum based
     services. The Commission has determined that telephone companies
     providing service in rural areas do not have per se the same
     difficulty accessing capital as other groups and allowing
     unrestricted ability to lease to non-eligible entities planning to
     serve rural areas would be allowing the larger entities to benefit
     indirectly from small businesses. []{.mark}

258. [Clarification that "dynamic" spectrum leasing arrangements are
     permitted]{.underline}. *See* Second Report and Order at paras.
     85-88. We clarify that our spectrum leasing policies and rules
     permit spectrum leasing parties to enter into a variety of dynamic
     forms of spectrum leasing arrangements that take advantage of the
     capabilities associated with advanced technologies. Thus, spectrum
     leasing parties may enter into spectrum leasing arrangements in
     which licensees and spectrum lessees share use of the same
     spectrum, on a non-exclusive basis, during the term of the spectrum
     lease. For example, a licensee and spectrum lessee may enter into a
     spectrum manager or *de facto* transfer lease in which use of the
     same spectrum is shared with each other by employing opportunistic
     devices. In another variation, a licensee could enter into a
     spectrum manager lease with one party that has access to the
     spectrum on a priority basis, while also leasing use of the same
     spectrum to another party on a lower-priority basis, with the
     requirement that the lower-priority spectrum lessee employ
     opportunistic technology to avoid interfering with the priority
     lessee. Both small and large entities will benefit from these
     dynamic leasing arrangements.

259. [Adoption of the "private commons" option]{.underline}. *See*
     Second Report and Order at paras. 90-99. We adopt the private
     commons option in the Second Report and Order to facilitate the use
     of advanced technologies and thus better promote access to and the
     efficient use of spectrum. The private commons option will allow
     licensees or spectrum lessees to make spectrum available to
     individual users or groups of users that may not fit squarely
     within the current options for spectrum leasing or within the
     traditional models associated with subscriber-based services and
     network architectures. The private commons would be similar to
     "public" commons of the kind associated with the current uses and
     applications of unlicensed devices under Part 15 rules, except that
     is would involve licensed spectrum in which the licensee (or
     lessee) would not necessarily offer services over its own
     end-to-end physical network of base stations, mobile stations, and
     other elements. As manager of the commons, the licensee (or lessee)
     would set terms and conditions for users, retain direct
     responsibility for users' compliance with the rules, and notify the
     Commission about the private commons prior to users' operations.
     The private commons option will help small (and large) entities by
     allowing for more flexible uses of licensed spectrum to incorporate
     new means of implementing advanced technologies and provides an
     important complement to the spectrum leasing policies we have
     already adopted to facilitate spectrum access.

260. [Immediate approval procedures for certain categories of license
     assignment and transfer of control applications]{.underline}. *See*
     Second Report and Order at paras. 98-104. We adopt streamlined
     application processes for license assignments and transfers of
     control involving Wireless Radio similar to those we have adopted
     for *de facto* transfer spectrum leasing arrangements. This policy
     will help all entities, including small entities, by reducing
     transaction costs, minimizing administrative delay, and encouraging
     more efficient use of spectrum.

261. [Extending the streamlined processing policies relating to license
     assignments and transfers of control to additional wireless
     services]{.underline}. *See* Second Report and Order at paras.
     109-110. We will apply the streamlined processing procedures
     adopted in the *Report and Order* for license assignments and
     transfer of control applications, as well as the immediate approval
     processing for qualifying transactions as adopted in this Second
     Report and Order, to all of the Wireless Radio Services
     authorizations regulated by the Bureau, This decision enables all
     license transfers and assignments involving these Wireless Radio
     Services, not just those Wireless Radio Services for which spectrum
     leasing is permitted, to benefit from streamlined processing or
     immediate processing, whichever is applicable. This ensures that an
     addition set of Wireless Radio Services licensees, both small
     entities and large ones, may now take advantage of these procedures
     that minimize administrative delays and reduce transaction costs.

262. [Clarification of spectrum leasing policies and rules in the Order
     on Reconsideration]{.underline}. *See* Order on Reconsideration at
     paras. 116-157. The Order on Reconsideration addresses petitions
     that seek clarification on a variety of issues, including: (1) the
     licensee's responsibility to ensure its spectrum lessee's
     compliance with Commission policies and rules; (2) protections for
     the licensee or spectrum lessee in the event of a spectrum lease or
     a license is terminated; and (3) the respective responsibilities of
     licensees and spectrum lessees regarding particular service rules.
     As a general matter, the Order on Reconsideration affirms and
     further clarifies the policies adopted in the underlying *Report
     and Order*. We do not anticipate any adverse impact on small
     entities as a result of this action. Our approach here should
     benefit small entities by reducing regulatory uncertainty and
     further enhancing the development of a more robust secondary
     markets and access to spectrum.

**[Report to Congress]{.underline}:** The Commission will send a copy of
the Second Report and Order and the Order on Reconsideration, including
this FRFA, in a report to be sent to Congress pursuant to the
Congressional Review Act.[^550] In addition, the Commission will send a
copy of the Second Report and Order and the Order on Reconsideration,
including this FRFA, to the Chief Counsel for Advocacy of the Small
Business Administration. A copy of the Second Report and Order, Order on
Reconsideration, and the FRFA (or summaries thereof) will also be
published in the Federal Register.[^551]

IT IS FURTHER ORDERED that the Commission's Consumer and Governmental
Affairs Bureau, Reference Information Center, SHALL SEND a copy of this
Second Report and Order and the Order on Reconsideration, including the
FRFA, to the Chief Counsel for Advocacy of the Small Business
Administration.

**APPENDIX E -- INITIAL REGULATORY FLEXIBILITY ANALYSIS**

1.  As required by the Regulatory Flexibility Act of 1980, as amended
    (RFA),[^552] the Commission has prepared this present Initial
    Regulatory Flexibility Analysis (IRFA) of the possible significant
    economic impact on a substantial number of small entities by the
    policies and rules proposed in this Second Further Notice of
    Proposed Rulemaking (Second Further Notice).[^553] Written public
    comments are requested on this IRFA. Comments must be identified as
    responses to the IRFA and must be filed by the deadlines for
    comments on the Further Notice provided in paragraph 167 of the
    item. The Commission will send a copy of the Second Further Notice,
    including this IRFA, to the Chief Counsel for Advocacy of the Small
    Business Administration (SBA).[^554] In addition, the Second Further
    Notice and IRFA (or summaries thereof) will be published in the
    Federal Register.[^555]

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A.  **Need for, and Objectives of, the Proposed Rules**

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263. In the Second Report and Order, we adopt changes that further
     facilitate the leasing of spectrum usage rights and enhancing the
     functioning of the secondary spectrum marketplace generally.
     However, we believe that there may be additional measures that we
     might take to improve efficiency and promote access to a secondary
     spectrum market in order to ensure the greatest benefit to spectrum
     users and consumers. Thus, in the Second Further Notice, we seek
     comment on evaluating additional policies that could facilitate the
     development of advanced technologies through secondary market
     arrangements, such as spectrum leasing and private commons, and
     obtaining further clarification regarding the private commons
     options. We discuss the potential impact of these on small entities
     in the paragraphs that follow.

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B.  **Legal Basis**

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264. The potential actions on which comment is sought in this Second
     Further Notice would be authorized under Sections 1, 4(i), and
     303(r) of the Communications Act of 1934, as amended, 47 U.S.C. §§
     151, 154(i), and 303(r).

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

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265. The RFA directs agencies to provide a description of, and, where
     feasible, an estimate of, the number of small entities that may be
     affected by the rules adopted herein.[^556] The RFA generally
     defines the term "small entity" as having the same meaning as the
     terms "small business," "small organization," and "small
     governmental jurisdiction."[^557] In addition, the term "small
     business" has the same meaning as the term "small business concern"
     under the Small Business Act.[^558] 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).[^559]

266. In the following paragraphs, we further describe and estimate the
     number of small entity licensees that may be affected by the rules
     we propose in the Second Further Notice. Since this rulemaking
     proceeding applies to multiple services, we will analyze the number
     of small entities affected on a service-by-service basis.

267. As adopted, the Second Report and Order will create new
     opportunities and obligations for Wireless Radio Service s
     licensees and other entities that may lease spectrum usage rights
     from these licensees. When identifying small entities that could be
     affected by our new rules, we provide information describing
     auctions results, including the number of small entities that aware
     winning bidders. We not, however, that the number of winning
     bidders that qualify as small businesses at the close of an auction
     does not necessarily reflect the total number of small entities
     currently in a particular service. The Commission does not
     generally require that applicants provide business size
     information, except in the context of an assignment or transfer of
     control application where unjust enrichment issues are implicated.
     Consequently, to assist the Commission in analyzing the total
     number of potentially affected small entities, we requested
     commenters to estimate the number of small entities that may be
     affected by any rule changes resulting from this Second Further
     Notice.

268. In the Second Further Notice, we seek comment on possible further
     refinements to our existing policies and rules for spectrum leasing
     arrangements and for private commons arrangements. If any revisions
     were adopted, such revisions potentially could affect small entity
     licensees holding licenses in the Wireless Radio Services
     identified below.

269. **Cellular Licensees.** The SBA has developed a small business size
     standard for small businesses in the category "Cellular and Other
     Wireless Telecommunications."[^560] Under that SBA category, a
     business is small if it has 1,500 or fewer employees.[^561]
     According to the Bureau of the Census, only twelve firms out of a
     total of 977 cellular and other wireless telecommunications firms
     that operated for the entire year in 1997 had 1,000 or more
     employees.[^562] Therefore, even if all twelve of these firms were
     cellular telephone companies, nearly all cellular carriers are
     small businesses under the SBA's definition.

270. **220 MHz Radio Service -- Phase I Licensees.** The 220 MHz service
     has both Phase I and Phase II licenses. Phase I licensing was
     conducted by lotteries in 1992 and 1993. There are approximately
     1,515 such non‑nationwide licensees and four nationwide licensees
     currently authorized to operate in the 220 MHz band. The Commission
     has not developed a definition of small entities specifically
     applicable to such incumbent 220 MHz Phase I licensees. To estimate
     the number of such licensees that are small businesses, we apply
     the small business size standard under the SBA rules applicable to
     "Cellular and Other Wireless Telecommunications" companies. This
     category provides that a small business is a wireless company
     employing no more than 1,500 persons.[^563] According to the Census
     Bureau data for 1997, only twelve firms out of a total of 977 such
     firms that operated for the entire year in 1997, had 1,000 or more
     employees.[^564] If this general ratio continues in the context of
     Phase I 220 MHz licensees, the Commission estimates that nearly all
     such licensees are small businesses under the SBA's small business
     standard.

271. **220 MHz Radio Service -- Phase II Licensees.** The 220 MHz
     service has both Phase I and Phase II licenses. The Phase II 220
     MHz service is subject to spectrum auctions. In the *220 MHz Third
     Report and Order*, we adopted a small business size standard for
     defining "small" and "very small" businesses for purposes of
     determining their eligibility for special provisions such as
     bidding credits and installment payments.[^565] This small business
     standard indicates that a "small business" is an entity that,
     together with its affiliates and controlling principals, has
     average gross revenues not exceeding \$15 million for the preceding
     three years.[^566] 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.[^567] The SBA has approved these small size
     standards.[^568] Auctions of Phase II licenses commenced on
     September 15, 1998, and closed on October 22, 1998.[^569] 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.[^570] Thirty-nine small
     businesses won 373 licenses in the first 220 MHz auction. A second
     auction included 225 licenses: 216 EA licenses and 9 EAG licenses.
     Fourteen companies claiming small business status won 158
     licenses.[^571] A third auction included four licenses: 2 BEA
     licenses and 2 EAG licenses in the 220 MHz Service. No small or
     very small business won any of these licenses.[^572]

272. **Lower 700 MHz Band Licenses.** We adopted criteria for defining
     three groups of small businesses for purposes of determining their
     eligibility for special provisions such as bidding credits.[^573]
     We have defined a small business as an entity that, together with
     its affiliates and controlling principals, has average gross
     revenues not exceeding \$40 million for the preceding three
     years.[^574] A very small business is defined as an entity that,
     together with its affiliates and controlling principals, has
     average gross revenues that are not more than \$15 million for the
     preceding three years.[^575] Additionally, the lower 700 MHz
     Service has a third category of small business status that may be
     claimed for Metropolitan/Rural Service Area (MSA/RSA) licenses. The
     third category is entrepreneur, which is defined as an entity that,
     together with its affiliates and controlling principals, has
     average gross revenues that are not more than \$3 million for the
     preceding three years.[^576] The SBA has approved these small size
     standards.[^577] An auction of 740 licenses (one license in each of
     the 734 MSAs/RSAs and one license in each of the six Economic Area
     Groupings (EAGs)) commenced on August 27, 2002, and closed on
     September 18, 2002. Of the 740 licenses available for auction, 484
     licenses were sold to 102 winning bidders. Seventy-two of the
     winning bidders claimed small business, very small business or
     entrepreneur status and won a total of 329 licenses. [^578] A
     second auction commenced on May 28, 2003, and closed on June 13,
     2003, and included 256 licenses: 5 EAG licenses and 476 CMA
     licenses.[^579] Seventeen winning bidders claimed small or very
     small business status and won sixty licenses, and nine winning
     bidders claimed entrepreneur status and won 154 licenses.[^580]

273. **Upper 700 MHz Band Licenses.** The Commission released a *Report
     and Order*, authorizing service in the upper 700 MHz band.[^581]
     This auction, previously scheduled for January 13, 2003, has been
     postponed.[^582]

274. **Paging.** In the *Paging* *Second Report and Order*, we adopted a
     size standard for "small businesses" for purposes of determining
     their eligibility for special provisions such as bidding credits
     and installment payments.[^583] A small business is an entity that,
     together with its affiliates and controlling principals, has
     average gross revenues not exceeding \$15 million for the preceding
     three years.[^584] The SBA has approved this definition.[^585] An
     auction of Metropolitan Economic Area (MEA) licenses commenced on
     February 24, 2000, and closed on March 2, 2000. Of the 2,499
     licenses auctioned, 985 were sold.[^586] Fifty-seven companies
     claiming small business status won 440 licenses.[^587] An auction
     of Metropolitan Economic Area (MEA) and Economic Area (EA) licenses
     commenced on October 30, 2001, and closed on December 5, 2001. Of
     the 15,514 licenses auctioned, 5,323 were sold.[^588] 132 companies
     claiming small business status purchased 3,724 licenses. A third
     auction, consisting of 8,874 licenses in each of 175 EAs and 1,328
     licenses in all but three of the 51 MEAs commenced on May 13, 2003,
     and closed on May 28, 2003. Seventy-seven bidders claiming small or
     very small business status won 2,093 licenses.[^589] Currently,
     there are approximately 24,000 Private Paging site-specific
     licenses and 74,000 Common Carrier Paging licenses. According to
     the most recent *Trends in Telephone Service,* 608 private and
     common carriers reported that they were engaged in the provision of
     either paging or "other mobile" services.[^590] Of these, we
     estimate that 589 are small, under the SBA-approved small business
     size standard.[^591] We estimate that the majority of private and
     common carrier paging providers would qualify as small entities
     under the SBA definition.

275. **Broadband Personal Communications Service (PCS).** The broadband
     PCS spectrum is divided into six frequency blocks designated A
     through F, and the Commission has held auctions for each block. The
     Commission has created a small business size standard for Blocks C
     and F as an entity that has average gross revenues of less than
     \$40 million in the three previous calendar years.[^592] For Block
     F, an additional small business size standard for "very small
     business" was added and is defined as an entity that, together with
     its affiliates, has average gross revenues of not more than \$15
     million for the preceding three calendar years.[^593] These small
     business size standards, in the context of broadband PCS auctions,
     have been approved by the SBA.[^594] No small businesses within the
     SBA-approved small business size standards bid successfully for
     licenses in Blocks A and B. There were 90 winning bidders that
     qualified as small entities in the Block C auctions. A total of 93
     "small" and "very small" business bidders won approximately 40
     percent of the 1,479 licenses for Blocks D, E, and F.[^595] On
     March 23, 1999, the Commission reauctioned 155 C, D, E, and F Block
     licenses; there were 113 small business winning bidders.[^596]

276. **Narrowband PCS.** The Commission held an auction for Narrowband
     PCS licenses that commenced on July 25, 1994, and closed on July
     29, 1994. A second commenced on October 26, 1994 and closed on
     November 8, 1994. For purposes of the first two Narrowband PCS
     auctions, "small businesses" were entities with average gross
     revenues for the prior three calendar years of \$40 million or
     less.[^597] Through these auctions, the Commission awarded a total
     of forty-one licenses, 11 of which were obtained by four small
     businesses.[^598] To ensure meaningful participation by small
     business entities in future auctions, the Commission adopted a
     two-tiered small business size standard in the *Narrowband PCS
     Second Report and Order*.[^599] A "small business" is an entity
     that, together with affiliates and controlling interests, has
     average gross revenues for the three preceding years of not more
     than \$40 million.[^600] A "very small business" is an entity that,
     together with affiliates and controlling interests, has average
     gross revenues for the three preceding years of not more than \$15
     million.[^601] The SBA has approved these small business size
     standards.[^602] A third auction commenced on October 3, 2001 and
     closed on October 16, 2001. Here, five bidders won 317 (MTA and
     nationwide) licenses.[^603] Three of these claimed status as a
     small or very small entity and won 311 licenses.

277. **Specialized Mobile Radio (SMR)**. The Commission awards "small
     entity" bidding credits in auctions for Specialized Mobile Radio
     (SMR) geographic area licenses in the 800 MHz and 900 MHz bands to
     firms that had revenues of no more than \$15 million in each of the
     three previous calendar years.[^604] The Commission awards "very
     small entity" bidding credits to firms that had revenues of no more
     than \$3 million in each of the three previous calendar
     years.[^605] The SBA has approved these small business size
     standards for the 900 MHz Service.[^606] The Commission has held
     auctions for geographic area licenses in the 800 MHz and 900 MHz
     bands. The 900 MHz SMR auction began on December 5, 1995, and
     closed on April 15, 1996. Sixty bidders claiming that they
     qualified as small businesses under the \$15 million size standard
     won 263 geographic area licenses in the 900 MHz SMR band. The 800
     MHz SMR auction for the upper 200 channels began on October 28,
     1997, and was completed on December 8, 1997. Ten bidders claiming
     that they qualified as small businesses under the \$15 million size
     standard won 38 geographic area licenses for the upper 200 channels
     in the 800 MHz SMR band.[^607] A second auction for the 800 MHz
     band was held on January 10, 2002 and closed on January 17, 2002
     and included 23 BEA licenses. One bidder claiming small business
     status won five licenses.[^608]

278. The auction of the 1,050 800 MHz SMR geographic area licenses for
     the General Category channels began on August 16, 2000, and was
     completed on September 1, 2000. Eleven bidders won 108 geographic
     area licenses for the General Category channels in the 800 MHz SMR
     band qualified as small businesses under the \$15 million size
     standard. In an auction completed on December 5, 2000, a total of
     2,800 Economic Area licenses in the lower 80 channels of the 800
     MHz SMR service were sold. Of the 22 winning bidders, 19 claimed
     "small business" status and won 129 licenses. Thus, combining all
     three auctions, 40 winning bidders for geographic licenses in the
     800 MHz SMR band claimed status as small business.

279. In addition, there are numerous incumbent site-by-site SMR
     licensees and licensees with extended implementation authorizations
     in the 800 and 900 MHz bands. We do not know how many firms provide
     800 MHz or 900 MHz geographic area SMR pursuant to extended
     implementation authorizations, nor how many of these providers have
     annual revenues of no more than \$15 million. One firm has over
     \$15 million in revenues. We assume, for purposes of this analysis,
     that all of the remaining existing extended implementation
     authorizations are held by small entities, as that small business
     size standard is established by the SBA.

280. **Private Land Mobile Radio (PLMR).** PLMR systems serve an
     essential role in a range of industrial, business, land
     transportation, and public safety activities. These radios are used
     by companies of all sizes operating in all U.S. business
     categories, and are often used in support of the licensee's primary
     (non-telecommunications) business operations. For the purpose of
     determining whether a licensee of a PLMR system is a small business
     as defined by the SBA, we could use the definition for "Cellular
     and Other Wireless Telecommunications." This definition provides
     that a small entity is any such entity employing no more than 1,500
     persons.[^609] The commission does not require PLMR licensees to
     disclose information about number of employees, so the Commission
     does not have information that could be used to determine how many
     PLMR licensees constitute small entities under this definition.
     Moreover, because PMLR licensees generally are not in the business
     of providing cellular or other wireless telecommunications services
     but instead use the licensed facilities in support of other
     business activities, we are not certain that the Cellular and Other
     Wireless Telecommunications category is appropriate for determining
     how many PLMR licensees are small entities for this analysis.
     Rather, it may be more appropriate to assess PLMR licensees under
     the standards applied to the particular industry subsector to which
     the licensee belongs.[^610]

281. **Fixed Microwave Services.** Fixed microwave services include
     common carrier,[^611] private-operational fixed,[^612] and
     broadcast auxiliary radio services.[^613] Currently, there are
     approximately 22,015 common carrier fixed licensees and 61,670
     private operational-fixed licensees and broadcast auxiliary radio
     licensees in the microwave services. The Commission has not yet
     defined a small business with respect to microwave services. For
     purposes of this FRFA, we will use the SBA\'s definition applicable
     to "Cellular and Other Wireless Telecommunications"
     companies---that is, an entity with no more than 1,500
     persons.[^614] The Commission does not have data specifying the
     number of these licensees that have more than 1,500 employees, and
     thus is unable at this time to estimate with greater precision the
     number of fixed microwave service licensees that would qualify as
     small business concerns under the SBA's small business size
     standard. Consequently, the Commission estimates that there are
     22,015 or fewer small common carrier fixed licensees and 61,670 or
     fewer small private operational-fixed licensees and small broadcast
     auxiliary radio licensees in the microwave services that may be
     affected by the rules and policies adopted herein. The Commission
     notes, however, that the common carrier microwave fixed licensee
     category includes some large entities.

282. **Wireless Communications Services.** This service can be used for
     fixed, mobile, radiolocation, and digital audio broadcasting
     satellite uses. The Commission defined "small business" for the
     wireless communications services (WCS) auction as an entity with
     average gross revenues of \$40 million for each of the three
     preceding years, and a "very small business" as an entity with
     average gross revenues of \$15 million for each of the three
     preceding years.[^615] The SBA has approved these
     definitions.[^616] The FCC auctioned geographic area licenses in
     the WCS service. In the auction, which commenced on April 15, 1997
     and closed on April 25, 1997, there were seven bidders that won 31
     licenses that qualified as very small business entities, and one
     bidder that won one license that qualified as a small business
     entity. An auction for one license in the 1670-1674 MHz band
     commenced on April 30, 2003 and closed the same day. One license
     was awarded. The winning bidder was not a small entity.

283. **39 GHz Service.** The Commission defines "small entity" for 39
     GHz licenses as an entity that has average gross revenues of less
     than \$40 million in the three previous calendar years.[^617] "Very
     small business" is defined as an entity that, together with its
     affiliates, has average gross revenues of not more than \$15
     million for the preceding three calendar years.[^618] The SBA has
     approved these definitions.[^619] The auction of the 2,173 39 GHz
     licenses began on April 12, 2000, and closed on May 8, 2000. The 18
     bidders who claimed small business status won 849 licenses.

284. **Local Multipoint Distribution Service.** An auction of the 986
     Local Multipoint Distribution Service (LMDS) licenses began on
     February 18, 1998, and closed on March 25, 1998. The Commission
     defined "small entity" for LMDS licenses as an entity that has
     average gross revenues of less than \$40 million in the three
     previous calendar years.[^620] An additional classification for
     "very small business" was added and is defined as an entity that,
     together with its affiliates, has average gross revenues of not
     more than \$15 million for the preceding three calendar
     years.[^621] These regulations defining "small entity" in the
     context of LMDS auctions have been approved by the SBA.[^622] There
     were 93 winning bidders that qualified as small entities in the
     LMDS auctions. A total of 93 small and very small business bidders
     won approximately 277 A Block licenses and 387 B Block licenses. On
     March 27, 1999, the Commission re-auctioned 161 licenses; there
     were 32 small and very small business winning bidders that won 119
     licenses.

285. **218-219 MHz Service.** The first auction of 218-219 MHz
     (previously referred to as the Interactive and Video Data Service
     or IVDS) spectrum resulted in 178 entities winning licenses for 594
     Metropolitan Statistical Areas (MSAs).[^623] Of the 594 licenses,
     567 were won by 167 entities qualifying as a small business. For
     that auction, we defined a small business as an entity that,
     together with its affiliates, has no more than a \$6 million net
     worth and, after federal income taxes (excluding any carry over
     losses), has no more than \$2 million in annual profits each year
     for the previous two years.[^624] In the *218-219 MHz Report and
     Order and Memorandum Opinion and Order*, we defined a small
     business as an entity that, together with its affiliates and
     persons or entities that hold interests in such an entity and their
     affiliates, has average annual gross revenues not exceeding \$15
     million for the preceding three years.[^625] A very small business
     is defined as an entity that, together with its affiliates and
     persons or entities that hold interests in such an entity and its
     affiliates, has average annual gross revenues not exceeding \$3
     million for the preceding three years.[^626] The SBA has approved
     of these definitions.[^627] At this time, we cannot estimate the
     number of licenses that will be won by entities qualifying as small
     or very small businesses under our rules in future auctions of
     218-219 MHz spectrum. Given the success of small businesses in the
     previous auction, and the prevalence of small businesses in the
     subscription television services and message communications
     industries, we assume for purposes of this IRFA that in future
     auctions, many, and perhaps all, of the licenses may be awarded to
     small businesses.

286. **Location and Monitoring Service (LMS)**: Multilateration LMS
     systems use non-voice radio techniques to determine the location
     and status of mobile radio units. For purposes of auctioning LMS
     licenses, the Commission has defined "small business" as an entity
     that, together with controlling interests and affiliates, has
     average annual gross revenues for the preceding three years not
     exceeding \$15 million.[^628] A "very small business" is defined as
     an entity that, together with controlling interests and affiliates,
     has average annual gross revenues for the preceding three years not
     exceeding \$3 million.[^629] These definitions have been approved
     by the SBA.[^630] An auction for LMS licenses commenced on February
     23, 1999, and closed on March 5, 1999. Of the 528 licenses
     auctioned, 289 licenses were sold to four small businesses. We
     cannot accurately predict the number of remaining licenses that
     could be awarded to small entities in future LMS auctions.

287. **Rural Radiotelephone Service**. We use the SBA definition
     applicable to cellular and other wireless telecommunication
     companies, *i.e.*, an entity employing no more than 1,500
     persons.[^631] There are approximately 1,000 licensees in the Rural
     Radiotelephone Service, and the Commission estimates that there are
     1,000 or fewer small entity licensees in the Rural Radiotelephone
     Service that may be affected by the rules and policies adopted
     herein.

288. **Air-Ground Radiotelephone Service.** We use the SBA definition
     applicable to cellular and other wireless telecommunication
     companies, *i.e.*, an entity employing no more than 1,500
     persons.[^632] There are approximately 100 licensees in the
     Air-Ground Radiotelephone Service, and the Commission estimates
     that almost all of them qualify as small entities under the SBA
     definition.

289. **Offshore Radiotelephone Service.** This service operates on
     several ultra high frequency (UHF) TV broadcast channels that are
     not used for TV broadcasting in the coastal area of the states
     bordering the Gulf of Mexico. At present, there are approximately
     55 licensees in this service. We use the SBA definition applicable
     to cellular and other wireless telecommunication companies, *i.e.*,
     an entity employing no more than 1,500 persons.[^633] The
     Commission is unable at this time to estimate the number of
     licensees that would qualify as small entities under the SBA
     definition. The Commission assumes, for purposes of this FRFA, that
     all of the 55 licensees are small entities, as that term is defined
     by the SBA.

290. **Multiple Address Systems (MAS).** Entities using MAS spectrum, in
     general, fall into two categories: (1) those using the spectrum for
     profit-based uses, and (2) those using the spectrum for private
     internal uses. With respect to the first category, the Commission
     defines "small entity" for MAS licenses as an entity that has
     average gross revenues of less than \$15 million in the three
     previous calendar years.[^634] "Very small business" is defined as
     an entity that, together with its affiliates, has average gross
     revenues of not more than \$3 million for the preceding three
     calendar years.[^635] The SBA has approved of these
     definitions.[^636] The majority of these entities will most likely
     be licensed in bands where the Commission has implemented a
     geographic area licensing approach that would require the use of
     competitive bidding procedures to resolve mutually exclusive
     applications. The Commission's licensing database indicates that,
     as of January 20, 1999, there were a total of 8,670 MAS station
     authorizations. Of these, 260 authorizations were associated with
     common carrier service. In addition, an auction for 5,104 MAS
     licenses in 176 EAs began November 14, 2001, and closed on November
     27, 2001.[^637] Seven winning bidders claimed status as small or
     very small businesses and won 611 licenses.

291. With respect to the second category, which consists of entities
     that use, or seek to use, MAS spectrum to accommodate their own
     internal communications needs, we note that MAS serves an essential
     role in a range of industrial, safety, business, and land
     transportation activities. MAS radios are used by companies of all
     sizes, operating in virtually all U.S. business categories, and by
     all types of public safety entities. For the majority of private
     internal users, the definitions developed by the SBA would be more
     appropriate. The applicable definition of small entity in this
     instance appears to be the "Cellular and Other Wireless
     Telecommunications" definition under the SBA rules. This definition
     provides that a small entity is any entity employing no more than
     1,500 persons.[^638] The Commission's licensing database indicates
     that, as of January 20, 1999, of the 8,670 total MAS station
     authorizations, 8,410 authorizations were for private radio
     service, and of these, 1,433 were for private land mobile radio
     service.

292. **Incumbent 24 GHz Licensees**. The rules that we adopt could
     affect incumbent licensees who were relocated to the 24 GHz band
     from the 18 GHz band, and applicants who wish to provide services
     in the 24 GHz band. The Commission did not develop a definition of
     small entities applicable to existing licensees in the 24 GHz band.
     Therefore, the applicable definition of small entity is the
     definition under the SBA rules for "Cellular and Other Wireless
     Telecommunications." This definition provides that a small entity
     is any entity employing no more than 1,500 persons.[^639] We
     believe that there are only two licensees in the 24 GHz band that
     were relocated from the 18 GHz band, Teligent[^640] and TRW, Inc.
     It is our understanding that Teligent and its related companies
     have less than 1,500 employees, though this may change in the
     future. TRW is not a small entity. Thus, only one incumbent
     licensee in the 24 GHz band is a small business entity.

293. **Future 24 GHz Licensees**. With respect to new applicants in the
     24 GHz band, we have defined "small business" as an entity that,
     together with controlling interests and affiliates, has average
     annual gross revenues for the three preceding years not exceeding
     \$15 million.[^641] "Very small business" in the 24 GHz band is
     defined as an entity that, together with controlling interests and
     affiliates, has average gross revenues not exceeding \$3 million
     for the preceding three years.[^642] The SBA has approved these
     definitions.[^643] The Commission will not know how many licensees
     will be small or very small businesses until the auction, if
     required, is held.

294. **700 MHz Guard Band Licenses.** In the *700 MHz Guard Band Order*,
     we adopted size standards for "small businesses" and "very small
     businesses" for purposes of determining their eligibility for
     special provisions such as bidding credits and installment
     payments.[^644] A small business in this service is an entity that,
     together with its affiliates and controlling principals, has
     average gross revenues not exceeding \$40 million for the preceding
     three years.[^645] Additionally, a "very small business" is an
     entity that, together with its affiliates and controlling
     principals, has average gross revenues that are not more than \$15
     million for the preceding three years.[^646] SBA approval of these
     definitions is not requires.[^647] An auction of 52 Major Economic
     Area (MEA) licenses commenced on September 6, 2000, can closed on
     September 21, 2000.[^648] Of the 104 licenses auctioned, 96
     licenses were sold to nine 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.[^649]

295. **Broadband Radio Service (formerly Multipoint Distribution
     Service) and Educational Broadband Service (formerly Instructional
     Television Fixed Service)**. Multichannel Multipoint Distribution
     Service (MMDS) systems, often referred to as "wireless cable,"
     transmit video programming to subscribers using the microwave
     frequencies of the Multipoint Distribution Service (MDS) and
     Instructional Television Fixed Service (ITFS).[^650] In its
     recently issued *BRS/EBS Report and Order* in WT Docket No. 03-66,
     the Commission comprehensively reviewed our policies and rules
     relating to the ITFS and MDS services, and replacing the Multipoint
     Distribution Service (MDS) with the Broadband Radio Service and
     Instructional Television Fixed Service (ITFS) with the Educational
     Broadband Service.[^651] In connection with the 1996 MDS auction,
     the Commission defined "small business" as an entity that, together
     with its affiliates, has average gross annual revenues that are not
     more than \$40 million for the preceding three calendar
     years.[^652] The SBA has approved of this standard.[^653] The MDS
     auction resulted in 67 successful bidders obtaining licensing
     opportunities for 493 Basic Trading Areas (BTAs).[^654] Of the 67
     auction winners, 61 claimed status as a small business. At this
     time, we estimate that of the 61 small business MDS auction
     winners, 48 remain small business licensees. In addition to the 48
     small businesses that hold BTA authorizations, there are
     approximately 392 incumbent MDS licensees that have gross revenues
     that are not more than \$40 million and are thus considered small
     entities.[^655]

296. In addition, the SBA has developed a small business size standard
     for Cable and Other Program Distribution,[^656] which includes all
     such companies generating \$12.5 million or less in annual
     receipts.[^657] According to Census Bureau data for 1997, there
     were a total of 1,311 firms in this category, total, that had
     operated for the entire year.[^658] Of this total, 1,180 firms had
     annual receipts of under \$10 million, and an additional 52 firms
     had receipts of \$10 million or more but less than \$25
     million.[^659] Consequently, we estimate that the majority of
     providers in this service category are small businesses that may be
     affected by the rules and policies in the Second Further Notice.

297. **Multichannel Video Distribution and Data Service.** MVDDS is a
     terrestrial fixed microwave service operating in the 12.2-12.7 GHz
     band. Licenses in this service were auctioned in January 2004, with
     10 winning bidders for 192 licenses. Eight of these 10 winning
     bidders claimed small businesses status for 144 of these
     licenses.[^660]

298. **Aviation and Marine Services.** Small businesses in the aviation
     and marine radio services use a very high frequency (VHF) marine or
     aircraft radio and, as appropriate, an emergency
     position-indicating radio beacon (and/or radar) or an emergency
     locator transmitter. The Commission has not developed a small
     business size standard specifically applicable to these small
     businesses. For purposes of this analysis, the Commission uses the
     SBA small business size standard for the category "Cellular and
     Other Telecommunications," which is 1,500 or fewer employees.[^661]
     Most applicants for recreational licenses are individuals.
     Approximately 581,000 ship station licensees and 131,000 aircraft
     station licensees operate domestically and are not subject to the
     radio carriage requirements of any statute or treaty. For purposes
     of our evaluations in this analysis, we estimate that there are up
     to approximately 712,000 licensees that are small businesses (or
     individuals) under the SBA standard. In addition, between December
     3, 1998 and December 14, 1998, the Commission held an auction of 42
     VHF Public Coast licenses in the 157.1875-157.4500 MHz (ship
     transmit) and 161.775-162.0125 MHz (coast transmit) bands. For
     purposes of the auction, the Commission defined a "small" business
     as an entity that, together with controlling interests and
     affiliates, has average gross revenues for the preceding three
     years not to exceed \$15 million dollars. In addition, a "very
     small" business is one that, together with controlling interests
     and affiliates, has average gross revenues for the preceding three
     years not to exceed \$3 million dollars.[^662] There are
     approximately 10,672 licensees in the Marine Coast Service, and the
     Commission estimates that almost all of them qualify as "small"
     businesses under the above special small business size standards.

299. **Public Safety Radio Services.** Public Safety radio services
     include police, fire, local government, forestry conservation,
     highway maintenance, and emergency medical services.[^663] There
     are a total of approximately 127,540 licensees in these services.
     Governmental entities[^664] as well as private businesses comprise
     the licensees for these services. All governmental entities with
     populations of less than 50,000 fall within the definition of a
     small entity.[^665]

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

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300. The policies and proposals set forth in the Second Report and Order
     impact a number of Commission licensees and spectrum lessees in
     various wireless services. The Second Further Notice explores ways
     in which licensees and spectrum lessees may enter into arrangements
     in which advanced technologies are opportunistically employed. The
     Second Further Notice and seeks to provide parties with greater
     certainty as to the types of opportunistic use arrangements that
     would be permitted while fitting into the framework of the
     Commission's current rules.

301. Our proposals in the Second Report and Order to implement certain
     advanced technologies necessarily implicates potential reporting,
     recordkeeping and compliance requirements for licensees and
     spectrum lessees, including: (1) retention of lease agreements; (2)
     reporting of spectrum leasing terms to the Commission; (3) licensee
     and lessee compliance with the Commission's technical and service
     rules; (4) licensee filings with the Commission on behalf of the
     lessee; (5) licensee verification of lessee compliance with
     Commission rules; (6) license supervision of a lessee's adherence
     to the Commission's rules and policies; and (7) the leasing of
     spectrum by entities designated as "small business" or "very small
     business" under the Commission's rules. Licensees and spectrum
     lessees may retain or hire outside professionals (e.g., legal and
     engineering staff) to draft lease arrangements, provide consulting
     services, maintain records and comply with applicable Commission
     rules. They also may employ existing or new employees to be
     responsible for reporting, recordkeeping, and other compliance
     requirements.

302. The Second Further Notice also explores what steps the Commission
     should take to further enhance secondary markets and increase the
     efficient use of spectrum and the availability to the public of
     innovative wireless services. The Second Further Notice does not
     propose any specific reporting, recordkeeping or compliance
     requirements in these matters. We are open to comment on what, if
     any, requirements we should impose if we adopt these proposals.

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

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303. The RFA requires and agency to describe any significant,
     specifically small business alternatives that it has considered in
     reaching its proposed approach, which may include the following
     four alternatives (among others): "(1) the establishment of
     differing compliance or reporting requirements or timetables that
     take into account the resources available to small entities; (2)
     the clarification, consolidation, or simplification of compliance
     or reporting requirements under the rule for small entities; (3)
     the use of performance, rather than design, standards; and (4) and
     exemption from coverage of the rule, or any part thereof, for small
     entities."[^666]

304. Regarding our inquiry on ways to facilitate further development of
     advanced technologies, *see* Second Further Notice, paras. 158-164,
     we do not anticipate any adverse impact on small entities. In fact,
     small (and large) entities should benefit from the reduction in
     transaction costs associated with leasing and the availability of
     other types of arrangements involving opportunistic use of licensed
     spectrum. We encourage comments on ways in which others may employ
     advanced technologies to opportunistically use licensed spectrum.
     Specifically, commenters should propose additional means to
     increase spectrum access and how that would fit into the rules and
     policies already established by the Commission. We do not believe
     that a revision of our rules would adversely impact small entities.

305. With regard to spectrum access through spectrum leasing
     arrangements, we seek comment on additional ways in which licensees
     and spectrum lessees may utilize advanced technologies, such as
     opportunistic devices, within the context of the Commission's
     spectrum leasing policies and rules. *See* Second Further Notice at
     para. 160. We do not anticipate that any rules we adopt in this
     area would adversely impact small entities. We believe that small
     and large entities will benefit from increased access to spectrum
     and the utilization of advanced technologies.

306. With regard to spectrum access through private commons, we seek
     comment on the potential for this approach to improve access as
     well as the regulatory distinctions that are necessary to make this
     an effective regulatory model. *See* Second Further Notice at
     para.161. We do not anticipate any adverse impact on small
     entities. We believe that both small and large entities that make
     use of "smart" or "opportunistic" technologies within their bands
     will benefit from the private commons option because this approach
     is designed to minimize some of the transaction costs associated
     with leasing or other market factors.

307. In addition, we seek comment on the technical parameters necessary
     to distinguish private commons from spectrum leasing arrangements
     or other arrangements. *See* Second Further Notice at para 162. We
     do not anticipate any adverse impact on small entities as a result
     of setting these parameters. We believe that setting these
     parameters will benefit both small and large entities by reducing
     regulatory uncertainty and encouraging spectrum use.

308. We also seek comment on the examples of private commons set forth
     in the Second Report and Order, as well as other types of private
     commons arrangements. *See* Second Further Notice at para. 163. As
     stated in the Second Report and Order, licensee or spectrum lessees
     establishing a private commons retains direct responsibility for
     compliance with the Commission's rules. We encourage comment on
     whether there are any additional policies or requirements that
     could help ensure compliance. We do not anticipate any adverse
     impact on small entities as a result of establishing further
     compliance guidelines. We believe that establishing further
     compliance guidelines all entities, including small entities, will
     benefit from the additional control over their spectrum.

309. Finally, we seek comment on the appropriate notification process
     for licensees or spectrum lessees that choose to offer a private
     commons. *See* Second Further Notice at para. 164. In the Second
     Report and Order we stated that a licensee or spectrum lessee
     managing the private commons must notify the Commission prior to
     permitting users to begin operating within the private commons. In
     the Second Further Notice, we propose to give the licensee or
     spectrum lessee the option of notifying the Commission directly or,
     in the alternative, providing a URL that posts the terms and
     conditions. We believe that this procedure will benefit all
     entities, including small entities, by taking an additional step
     toward increasing the efficient use of spectrum.

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F.  **Federal Rules that May Duplicate, Overlap, or Conflict with the
    Proposed Rules**

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310. None.

311. IT IS FURTHER ORDERED that the Commission's Consumer and
     Governmental Affairs Bureau, Reference Information Center, SHALL
     SEND a copy of this Second Further Notice, including the Initial
     Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy
     of the Small Business Administration.

**SEPARATE STATEMENT OF**

**CHAIRMAN MICHAEL K. POWELL**

*Re:* Promoting Efficient Use of Spectrum Through Elimination of
Barriers to the Development of Secondary Markets, *Second Report and
Order, Order on Reconsideration, and Second Further Notice of Proposed
Rulemaking* (WT Docket No. 00-230)

Last May, the Commission took an ambitious and pro-competitive step by
creating secondary markets, placing a greater emphasis on allowing
parties to lease their spectrum rights to third parties better
positioned to utilize the spectrum in the most efficient manner. Today's
Order further enhances these secondary markets by removing unnecessary
regulatory roadblocks.

By setting forth expedited approval procedures for leasing transactions
that are in the public interest, consumers in rural areas and nationwide
will receive the benefits of inexpensive wireless services more rapidly.
In addition, by streamlining secondary market transactions we remove
unnecessary regulatory barriers that may be hindering the development of
currently under-utilized spectrum. Additionally, our new rules will
allow potential entrants greater opportunities to obtain much needed
spectrum and create an environment where they can tailor their services
according to consumers' needs.

I fully support the changes adopted today because they will encourage
dynamic spectrum leasing and further the Commission's goal of making
available communications services to all Americans, in the most rapid
and efficient manner.

**SEPARATE STATEMENT OF**

**COMMISSIONER KATHLEEN Q. ABERNATHY**

*Re:* Promoting Efficient Use of the Spectrum Through Elimination of
Barriers to the Development of Secondary Markets, *Second Report and
Order, Order on Reconsideration, and Second Further Notice of Proposed
Rulemaking*, WT Docket No. 00-230

Last May, the Commission took an important and innovative step forward
when we adopted basic rules to enable facilities-based providers of
broadband and other communications services to lease wireless radio
spectrum from licensees. Fostering such secondary markets for unused
spectrum furthers our overall spectrum management responsibility by
ensuring that spectrum is utilized efficiently. What's more, everyone
benefits. Lessors are able to monetize unused portions of their spectrum
grants. Lessees gain entry to previously unavailable markets. And, most
importantly, consumers gain access to a greater range of wireless
services -- when and where they need them, including in rural areas.

With this Second Report and Order and Further Notice of Proposed
Rulemaking, we mark our further progress in the development of flexible
and fair secondary spectrum markets. An important part of today's order
is to streamline our processing rules governing spectrum leases and
other applications, and to provide increased clarity. Streamlining will
enable greater speed-to-market for new technologies and services.

As I have stated before, an open, market-based regulatory approach is
the best way to ensure the health of our industry and the robustness of
its consumer offerings. Already, we have seen promising activity in the
secondary markets for spectrum; in less than five months, at least 54
spectrum leasing applications have been filed. As the markets mature --
and as we continue to maintain an open, market-based regulatory approach
-- I anticipate even greater reliance on our secondary-markets system.
We will continue to examine ways to improve our rules governing
secondary-spectrum markets through our second Further Notice of Proposed
Rulemaking and I look forward to reviewing the record and taking
additional steps to ensure the efficient use of the spectrum resource.

STATEMENT OF COMMISSIONER

MICHAEL J. COPPS

Dissenting

*Re:* Promoting Efficient Use of the Spectrum Through Elimination of
Barriers to the Development of Secondary Markets, *Second Report and
Order, Order on Reconsideration, and Second Further Notice of Proposed
Rulemaking*, WT Docket No. 00-230

I continue to believe that a well-regulated secondary market in spectrum
could lead to more efficient and intensive use of spectrum, and, with
new technologies like software designed radio, could assist in bringing
innovative spectrum uses to the public. Yet I run into the same problem
here that I did last year with the earlier secondary markets item: while
there may be policy justification for some of this, there is no legal
justification. I believe approval of this item contravenes Section
310(d) of the Communications Act.

In Section 310(d), Congress makes clear that no "station license *[or
any rights thereunder]{.underline}* shall be transferred, assigned or
disposed of in any manner . . . except upon application to the
Commission and upon finding by the Commission that the public interest,
convenience, and necessity will be served thereby." But the Commission's
ever-expanding secondary market's policies allow licensees to transfer a
significant right -- the right to control the spectrum on a day-to-day
basis -- without applying to the Commission and without the requirement
of any Commission finding that such transfer serves the public interest.

My dissent to the original Secondary Markets Order includes my full
legal argument on this point and I won't repeat it here. But because I
believe that the Commission's overall scheme is disallowed by the
Communications Act, I will dissent.

**SEPARATE STATEMENT OF**

**COMMISSIONER KEVIN J. MARTIN**

*Re:* Promoting Efficient Use of the Spectrum Through Elimination of
Barriers to the Development of Secondary Markets, *Second Report and
Order, Order on Reconsideration, and Second Further Notice of Proposed
Rulemaking*, WT Docket No. 00-230

In May of last year, we took the first major steps to facilitate the
development of secondary markets in spectrum. In that First Report and
Order, we adopted a new regime for spectrum leases, allowing leases for
which there is no change in *de facto* control to proceed without prior
Commission approval and allowing other leases to use a streamlined
approval process. We also adopted a streamlined approval process for
transfers and assignments of licenses. Our goal was to legitimize fully
market transactions in spectrum and to reduce associated transaction
costs.

Today's item builds on that framework, further reducing transaction
costs and regulatory delay. Among other things, we adopt even more
streamlined approval procedures for spectrum leases, assignments, and
transfers that do not raise public interest concerns. We also expand the
reach of our rules to additional wireless radio services. I believe that
these changes will encourage secondary markets to flourish.

Together, our secondary markets rules create new opportunities for
licensees with under-utilized spectrum, to the benefit of consumers. A
carrier with a business plan that calls for serving only the most
densely populated portions of its service area now has every incentive
to lease or transfer the balance of their spectrum to an entrepreneur.
When cognitive radios and frequency-agile technologies are introduced to
the mix, the opportunities multiply.

Additionally, our secondary markets rules offer the promise of greater
wireless deployment in rural America. For example, a carrier with a
nationwide license can, with reduced transaction costs, lease or sell
spectrum to rural carriers to build networks in rural areas. Rural
carriers thus have the potential to obtain spectrum and build networks
suited to their particular geography, while at the same time enabling
the national carrier to develop partners to fill out its footprint.

For all of these reasons, I am pleased to support this item.

**STATEMENT OF**

**COMMISSIONER JONATHAN S. ADELSTEIN**

**APPROVING IN PART, DISSENTING IN PART**

*Re:* Promoting Efficient Use of the Spectrum Through Elimination of
Barriers to the Development of Secondary Markets, *Second Report and
Order, Order on Reconsideration, and Second Further Notice of Proposed
Rulemaking*, WT Docket No. 00-230

Less than a year ago, the Commission adopted its First Report and Order
establishing new policies and rules for secondary market spectrum
leasing. In that Order, we achieved an important balance between a
market that encourages and nurtures new technologies and spectrum use
and one that does not diminish the Commission's ultimate control over
the spectrum. Our decision today is an important follow-up to the steps
we took last year and generally continues to maintain the balance that I
believe is an essential element of good spectrum policy.

I support most of our Order because it acknowledges the importance of
secondary markets and takes additional steps to further their
development. The Order builds on our initial spectrum leasing framework
for secondary markets emphasizing spectrum facilitation and innovation.
It promotes our ultimate goal of a robust secondary market.

I strongly believe that secondary markets offer significant
opportunities for effective and efficient spectrum use. Secondary
markets hold a great deal of promise for the entire nation and
particularly for rural areas. By removing burdensome regulatory
obstacles, we get the spectrum into the hands of the people who are
willing and ready to use it.

I also am pleased to see that the Commission has identified additional
avenues for licensees and lessees to use the spectrum. Non-traditional
approaches to spectrum facilitation, like the private commons, open the
door to more users -- which in turn leads to new services. As long as
the Commission maintains the right balance, non-traditional approaches
can potentially increase the development of secondary markets.

However, I am forced to dissent from a portion of this item because I
fear the majority loses its balance in adopting so-called "immediate
approval" procedures for certain license transfers and assignments. I am
not convinced that there is such a problem with our streamlined transfer
and assignment rules and procedures that would warrant a determination
to forbear from requiring prior notification for certain transfers and
assignments. Indeed, the current procedures with the 21-day waiting
period have only been in place for six months. More importantly, though,
I think our forbearance analysis falls short here. One of the
Commission's bedrock obligations is spectrum management, and I am just
not convinced that it is in the public interest for us to forbear from a
prior review of all license assignments and transfer of control. The
public interest prong of our forbearance analysis is a high bar, and I
do not believe that we have developed anywhere near the record to meet
it.

In the future, as we move forward to develop our policies for secondary
markets we need to maintain the balance between Commission authority and
market-based access opportunities. As long as the scales remain equal, I
believe that secondary markets will only continue to thrive.

[^1]: *See generally* Promoting Efficient Use of Spectrum Through
    Elimination of Barriers to the Development of Secondary Markets,
    *Report and Order and Further Notice of Proposed Rulemaking*, 18 FCC
    Rcd 20604 (2003) (*Report and Order* and *Further Notice*,
    respectively), *Erratum*, 18 FCC Rcd 24817 (2003). By "spectrum
    usage rights," we refer to the terms, conditions, and period of use
    conferred under a license. *See Report and Order* at ¶ 1.

[^2]: *See generally id.* at ¶¶ 1-194.

[^3]: *See generally id.* at ¶¶ 195-203.

[^4]: *See generally* Principles for Promoting Efficient Use of Spectrum
    By Encouraging the Development of Secondary Markets, *Policy
    Statement*, 15 FCC Rcd 24178 (2000) (*Secondary Markets Policy
    Statement*).

[^5]: *See generally* Spectrum Policy Task Force, ET Docket No. 02-135,
    *Report* (rel. Nov. 2002) (*Spectrum Policy Task Force Report*) at
    pp. 4, 16-23. This report is available at http://www.fcc.gov/sptf.

[^6]: *See generally Further Notice* at ¶¶ 213-323.

[^7]: *See generally Report and Order* at ¶¶ 2, 32-189.

[^8]: *See* Section IV, *infra.*

[^9]: *See* Section V, *infra.*

[^10]: *See* Section VI, *infra.*

[^11]: *De jure* control means legal control, or control as a matter of
    law. Typically, ownership of more than 50 percent of the voting
    stock of a corporate licensee evidences *de jure* control. *See
    generally* In re Application of Fox Television Stations, Inc.,
    *Memorandum Opinion and Order*, 10 FCC Rcd 8452, 8513-14 ¶¶ 151-153
    (1995).

[^12]: *See generally Report and Order* at ¶¶ 82-125, 182-189. As
    explained more fully in the *Report and Order*, we adopted a new,
    more flexible *de facto* control standard that applies to spectrum
    leasing arrangements. *See id.* at ¶¶ 51-70.

[^13]: *See generally id.* at ¶¶ 82-92, 126-189.

[^14]: *See generally id.* at ¶¶ 195-203.

[^15]: *See generally Further Notice* at ¶¶ 213-323.

[^16]: *See id.* at ¶¶ 237-287.

[^17]: *See id.* at ¶¶ 288-313.

[^18]: *See generally id.* at ¶¶ 221-229 (achieving a more efficient
    spectrum marketplace), 315-319 (applying the new *de facto* control
    standard for spectrum leasing to other types of arrangements),
    320-323 (considering the effect of secondary markets policies on
    designated entity and entrepreneur policies).

[^19]: *See id.* at ¶¶ 230-236.

[^20]: *See* AMTA Comments; APCO Comments; AT&T Wireless Comments and
    Reply Comments; BellSouth Comments; Boeing Reply Comments; Blooston
    Rural Carriers Comments; Cantor Fitzgerald Telecom Comments and
    Reply Comments; Cingular Wireless Comments; CTIA Comments; ITA Reply
    Comments; Mobex Comments; NAM/MRFAC Reply Comments; National ITFS
    Association Comments and Reply Comments; Nextel Communications
    Comments; Nextel Partners Reply Comments; PCIA Comments; Paging
    Systems Reply Comments; RTG Comments; Salmon PCS Comments; SBC
    Comments; Spectrum Market Comments; Sprint Comments; St. Clair
    County Reply Comments; T-Mobile Reply Comments; Verizon Wireless
    Comments; WCA Comments; WiNSeC Comments; Winstar Comments and Reply
    Comments. We also received *ex parte* comments from three parties.
    *See* Council Tree *Ex Parte* Comments; MDS America *Ex Parte*
    Comments; Salmon PCS *Ex Parte* Comments.

[^21]: *See* Blooston Rural Carriers Petition for Partial
    Reconsideration and/or Clarification; Cingular Wireless Petition for
    Reconsideration and Clarification; First Avenue Networks Petition
    for Reconsideration; NTCA Petition for Partial Reconsideration;
    Verizon Wireless Petition for Reconsideration and Clarification. In
    response, we received reply comments from Salmon PCS and RTG, an
    opposition was filed by the Fixed Wireless Communications Coalition,
    and an *ex parte* letter filed by PCIA's Microwave Cost Sharing
    Clearinghouse. *See generally* Salmon PCS Petition Reply Comments;
    RTG Petition Reply Comments (dated Feb. 13, 2004); Fixed Wireless
    Communications Coalition Opposition to Petition for Reconsideration;
    Letter to Katherine Harris, Deputy Chief, Mobility Division, from
    Eric W. DeSilva, Counsel to PCIA's Microwave Cost Sharing
    Clearinghouse (dated Mar. 25, 2004).

[^22]: *See generally Further Notice* at ¶¶ 237-240.

[^23]: *See generally Report and Order* at ¶¶ 150-154.

[^24]: The Wireless Telecommunications Bureau places these spectrum
    leasing applications on weekly public notices. We note that all *de
    facto* transfer spectrum leasing arrangements that fall within the
    scope of our forbearance authority -- *i.e.*, those that involve
    licensees that are telecommunications carriers, as defined under the
    Act, or otherwise provide commercial radio services (CMRS) or common
    carrier-based services -- generally are subject to the requirement,
    pursuant to Section 309(b), that the application be placed on public
    notice prior to grant. *See* 47 U.S.C. § 309(b). Those applications
    not statutorily subject to this requirement are placed on an
    "informational" public notice.

[^25]: As the Commission indicated in the *Report and Order*, these
    concerns might include foreign ownership or competition concerns, or
    other concerns requiring further review, such as those raised by
    petitions to deny (where such petitions are permitted under Section
    309(d) of the Act). *See Report and Order* at ¶¶ 151-152; 47 U.S.C.
    §§ 309(b)-(d).

[^26]: *Report and Order* at ¶ 181.

[^27]: *See id.* at ¶ 152; *see generally* 47 C.F.R. § 1.101 *et seq.*
    (rules pertaining to petitions for reconsideration of actions taken
    on delegated authority).

[^28]: 47 U.S.C. § 160(a). As we noted in the *Further Notice*, our
    forbearance authority under Section 10 of the Communications Act
    applies to *de facto* transfer spectrum leases involving licensees
    that are telecommunications carriers, or that otherwise provide
    commercial mobile radio service and common carrier-based services.
    *See Further Notice* at ¶ 242.

[^29]: *See id.* at ¶¶ 244, 246-265, 268. In particular, we proposed to
    forbear from the requirements of Sections 308, 309, and 310(d) of
    the Communications Act to the extent necessary to permit the
    Commission to process notification filings regarding certain
    categories of *de facto* transfer leases without 30 days prior
    public notice and without prior Commission review and consent. *Id.*
    at ¶¶ 244, 246.

[^30]: In the *Further Notice*, we proposed to forbear from requiring
    prior approval of *de facto* transfer spectrum leases provided,
    among other things, that the spectrum lessee certifies in the
    spectrum lease filing that it meets the basic qualification
    requirements for holding the license authorization associated with
    the lease, and that it would comply with all applicable use
    restrictions. *See id.* at ¶¶ 247-250. Thus, for example, a lessee
    would be required to have the requisite character qualifications and
    to be able to certify its compliance under the Anti-Drug Abuse Act
    of 1988. *See* 21 U.S.C. § 862; 47 C.F.R. § 1.2001 *et seq.*

[^31]: We proposed to forbear from requiring prior Commission review of
    *de facto* transfer spectrum leases so long as such leases would
    not, among other things, raise certain specified potential foreign
    ownership concerns. *See Further Notice* at ¶¶ 251-253.

[^32]: *See id.* at ¶¶ 266, 268. Noting that designated entity and
    entrepreneur licensees had received special benefits (*e.g.*,
    bidding credits, installment payment plans, or closed bidding
    licenses) from the Commission and that, as a result, would continue
    to remain subject to any applicable eligibility and use restrictions
    when leasing to spectrum lessees, we sought general comment on how
    our forbearance proposal would address spectrum leasing by
    designated entity and entrepreneur licensees. *See id.* at ¶¶ 266,
    268.

[^33]: We sought comment in the *Further Notice* on possible benchmarks
    or safe harbors that would allow certain classes of *de facto*
    transfer leases that would not pose any significant risk to our
    competition policies to proceed without prior public notice and
    Commission review. *Id.* at ¶¶ 257-262. Specifically, we proposed to
    establish benchmarks that considered the competitive effects on both
    the input and output markets. *Id.* at ¶ 258 & n.454.

[^34]: *Id.* at ¶ 266. Under the proposal set forth in the *Further
    Notice*, both spectrum leasing parties would be involved in filing
    the application. *Id.* This is consistent with current requirements
    pertaining to *de facto* transfer spectrum leasing applications.
    *See Report and Order* at ¶ 151.

[^35]: *Further Notice* at ¶ 266.

[^36]: *Id.* at ¶ 268; *see* 47 U.S.C. § 405; 47 C.F.R. § 1.106(b).

[^37]: *Further Notice* at ¶ 268; *see* 47 C.F.R. §§ 1.108, 1.117. We
    also noted that, should information be brought to our attention at
    some later date suggesting that the parties to a spectrum lease
    implemented pursuant to this proposed forbearance option had not
    complied with the requirements and conditions we adopt for such
    action, the Commission could initiate a formal or informal
    investigation. *Further Notice* at ¶ 268 n.461; *see* 47 C.F.R.
    §§ 1.80, 1.89, 1.91, 1.92.

[^38]: *Further Notice* at ¶¶ 263-265.

[^39]: All parties commenting on the forbearance proposal supported the
    Commission's general approach. *See, e.g.*, Blooston Rural Carriers
    Comments at 11-12; Cantor Fitzgerald Telecom Comments at 2; CTIA
    Comments at 2-4; Nextel Communications Comments at 6-9; Nextel
    Partners Reply Comments at 8; PCIA Comments at 5; RTG Comments at
    2-5; SBC Comments at 7-10; Spectrum Market Comments at 4; T-Mobile
    Reply Comments at 6-8; WCA Comments at 11-15; Winstar Comments at 2.
    Some commenters recommended certain revisions to the particular
    elements proposed, as discussed more fully below.

[^40]: Spectrum leasing parties include licensees and spectrum lessees.
    The term "spectrum lessee," as used throughout this report, includes
    spectrum lessees and spectrum sublessees that have entered into
    spectrum subleasing arrangements as permitted under our spectrum
    leasing policies and rules.

[^41]: Because we determine to require that the *de facto* transfer
    spectrum leasing arrangements be approved, we use the term
    "application" instead of the term "notification" used in the
    *Further Notice.*

[^42]: As we explain more fully below, under the immediate approval
    process, spectrum leasing parties must submit qualifying
    applications and include the requisite filing fees. The Bureau will
    then process the application overnight and, provided that the
    payment of the requisite filing fees have been confirmed, indicate
    in our Universal Licensing System (ULS) that the application has
    been approved. *See* Section IV.A.1.a(ii)(b), *infra.*

[^43]: If spectrum leasing parties do not qualify for this type of
    processing, they must proceed pursuant to the streamlined 21-day
    process set forth in the *Report and Order*. *See Report and Order*
    at ¶¶ 151-154.

[^44]: Thus, if the spectrum leasing parties indicate on the application
    that, under the terms of the lease, the spectrum lessee will
    commence the spectrum lease as of the date that the Commission
    approves the arrangement, then that will be the date on which the
    Commission's policies and rules regarding *de facto* transfer leases
    will be applied with regard to the leased spectrum. If, however, the
    spectrum leasing parties have indicated in the lease application
    that commencement is due to occur at some later date, then the date
    indicated will apply.

[^45]: We note that only a few commented on this proposal, with most
    providing general support for it. *See, e.g.*, Blooston Rural
    Carriers Comments at 12; RTG Comments at 2-3. Only one commenter
    opposed such restrictions. *See* AT&T Wireless Comments at 6.

[^46]: *Further Notice* at ¶ 248.

[^47]: *Id.*

[^48]: *See Report and Order* at ¶ 143 (eligibility requirements
    applicable to long-term *de facto* transfer leases), ¶ 174
    (eligibility requirements applicable to short-term *de facto*
    transfer leases); 47 C.F.R. §§ 1.9030(d)(2), 1.9035(d)(1).

[^49]: *See Report and Order* at ¶ 144 (use restrictions applicable to
    long-term *de facto* transfer leases), ¶ 175 (use restrictions
    applicable to short-term *de facto* transfer leases); 47 C.F.R. §§
    1.9030(d)(3), 1.9035(d)(1).

[^50]: *Report and Order* at ¶ 175; 47 C.F.R. § 1.9035(d)(1).

[^51]: 47 U.S.C. § 310(a).

[^52]: *Id.* § 310(b)(1)-(3).

[^53]: *Id.* § 310(b)(4).

[^54]: As noted in the *Further Notice*, we have traditionally conducted
    our Section 310(b)(4) public interest analysis of indirect foreign
    ownership in excess of 25 percent in the context of specific
    applications (whether for a new authorization or in connection with
    a transfer of control or license assignment) involving an entity
    with such ownership or in response to a request for declaratory
    ruling. *See, e.g.*, Lockheed Martin Global Telecommunications,
    Comsat Corporation, and Comsat General Corporation, Applications for
    Assignment of Section 214 Authorizations, Private Land Mobile Radio
    Licenses, Experimental Licenses, and Earth Station Licenses and
    Petition for Declaratory Ruling Pursuant to Section 310(b)(4) of the
    Communications Act, *Order and Authorization*, 16 FCC Rcd 22897
    (2001), *Erratum*, 17 FCC Rcd 2147 (2002), *recon. denied*, 17 FCC
    Rcd 14030 (2002). Moreover, under the *Foreign Participation Order*,
    we treat different classes of foreign ownership differently,
    depending upon whether the applicant is from a WTO-member country or
    a non-WTO-member country. *See Foreign Participation Order*, 12 FCC
    Rcd at 23902-23903 ¶¶ 26-27. Under the current standard, an
    applicant that demonstrates more than 25 percent indirect foreign
    ownership attributable to entities from WTO member countries is
    entitled to a presumption that no competitive concerns are raised by
    the proposed investment, subject to Commission consideration of any
    relevant factors and evidence that might tend to rebut the
    presumption. *See, e.g.,* General Electric Capital Corporation and
    SES Global, S.A., *Order and Authorization*, 16 FCC Rcd 17575, 17579
    ¶ 30 (IB & WTB 2001); *see also Foreign Participation Order*, 12 FCC
    Rcd at 23913-23915 ¶¶ 50-53, 23940 ¶¶ 111-112. We do not presume,
    however, that indirect foreign investment from WTO-member countries
    poses no national security, law enforcement, foreign policy, or
    trade concerns, and accord deference to the expertise of Executive
    Branch agencies in identifying and interpreting these issues of
    concern in the context of particular applications and petitions for
    declaratory ruling under Section 310(b)(4). *See Foreign
    Participation Order*, 12 FCC Rcd at 23919-23920 ¶¶ 63-64. In
    contrast, an applicant that demonstrates more than 25 percent
    indirect foreign ownership attributable to entities from non-WTO
    member countries does not receive the favorable presumption and must
    meet the more demanding effective competitive opportunities test.
    *See id.* at 23946 ¶ 131.

[^55]: One commenter, T-Mobile, recommended that the Commission include
    in the forbearance approach those leases in which either (i) the
    proposed lessee has obtained a declaratory ruling for foreign
    ownership above 25 percent or (ii) the 100 percent direct or
    indirect parent of the lessee has obtained such a declaratory
    ruling. T-Mobile Comments at 2-4. T-Mobile made the same
    recommendation with respect to our forbearance proposal for
    applications to assign or transfer control of wireless licenses.
    *Id*. We find that the approach we adopt here strikes the optimum
    balance between the concerns raised by T-Mobile, reducing
    transaction costs, including unnecessary regulatory delay, and the
    concerns raised by the Executive Branch in numerous licensing
    proceedings before the Commission. *See, e.g.*, Applications of
    Vodafone AirTouch, plc., and Bell Atlantic Corporation, For Consent
    to Transfer of Control or Assignment of Licenses and Authorizations,
    *Memorandum Opinion and Order*, 15 FCC Rcd 16507 (WTB/IB 2000);
    Application of VoiceStream Wireless Corporation, Powertel, Inc.,
    Transferors, and Deutsche Telekom AG, Transferee, *Memorandum
    Opinion and Order*, 16 FCC Rcd 9779 (2001); Lockheed Martin Global
    Telecommunications, Comsat Corporation, and Comsat General
    Corporation, Assignor, and Telenor Satellite Mobile Services, Inc.,
    and Telenor Satellite, Inc., Assignee, *Order and Authorization*, 16
    FCC Rcd 22897 (2001); Space Station System Licensee, Inc. (Assignor)
    and Iridium Constellation LLC (Assignee) et al., *Memorandum
    Opinion, Order and Authorization*, 17 FCC Rcd 2271 (IB 2002); Global
    Crossing, Ltd. (Debtor-in-Possession), Transferor, and GC
    Acquisition Limited, Transferee, *Order and Authorization*, 18 FCC
    Rcd 20301 (IB/WCB/WTB 2003) (*recon. pending*).

[^56]: *See Report and Order* at ¶¶ 110, 143; 47 C.F.R. §§
    1.9020(d)(2)(ii), 1.9030(d)(2)(ii).

[^57]: *See Report and Order* at ¶ 145; see also the discussion in
    Section IV.A.4, below.

[^58]: Our decision not to forbear with regard to this class of spectrum
    leases is consistent with the Commission's determination not to
    forbear from prior notice and individualized approval requirements
    with regard to *pro forma* transactions involving designated entity
    and entrepreneur licensees. *See* Federal Communications Bar
    Association's Petition for Forbearance from Section 310(d) of the
    Communications Act Regarding Non-Substantial Assignments of Wireless
    Licenses and Transfers of Control Involving Telecommunications
    Carriers, *Memorandum Opinion and Order*, 13 FCC Rcd 6293, 6307-6308
    ¶¶ 25-26 (1998) (*Pro Forma Forbearance Order*).

[^59]: *Further Notice* at ¶ 248. While several commenters sought either
    modification or elimination of restrictions on spectrum leasing by
    designated entity and entrepreneur licensees, none recommended how
    the Commission should address eligibility-related restrictions in
    the context of the forbearance proposal in the event certain
    restrictions remained in place. *See* AT&T Wireless Comments at 6-9;
    Blooston Rural Carriers Comments at 3-5; Cingular Wireless Comments
    at 2-8; RTG Comments at 5-7. We discuss these comments more fully in
    Section IV.A.4, below, where we provide additional clarification on
    how the designated entity and entrepreneur policies will be applied
    in the context of spectrum leasing.

[^60]: *See generally Report and Order* at ¶¶ 237-238, 240, 245, 248,
    251, 257, 263.

[^61]: *Id.* at ¶ 176; 47 C.F.R. § 1.9035(d)(2).

[^62]: For the purpose of implementing this requirement, we define these
    direct or indirect interests in the same manner as defined pursuant
    to existing rules for wireless licensees under Part 1. In
    particular, a lessee must disclose whether it has a 10 percent
    direct or indirect interest in an entity, as defined in Section
    1.2112 of our rules. *See* 47 C.F.R. § 1.2112; *see also* 47 C.F.R.
    §§ 1.919 (ownership information relating to Wireless Radio Service
    licensees and applicants); 1.948 (ownership reporting requirements
    for transfers and assignments); *cf. Report and Order* at ¶¶ 119
    (requiring spectrum lessees under spectrum manager leases to
    disclose, in the lease notification, whether they already hold
    direct or indirect interests, of 10 percent or more, in 10 MHz or
    more of certain CMRS spectrum in a particular geographic area,
    either as a licensee or spectrum lessee), 147 (requiring spectrum
    lessees under long-term *de facto* transfer leases to disclose, in
    the lease application, whether they already hold direct or indirect
    interests, of 10 percent or more, in 10 MHz or more of certain CMRS
    spectrum in a particular geographic area, either as a licensee or
    spectrum lessee).

[^63]: *See Report and Order* at ¶ 147 (citing ¶¶ 116-119 of the *Report
    and Order*). This is spectrum that the Commission has licensed with
    a mobile allocation and corresponding service rules; it is suitable
    for the provision of mobile telephony services on the basis of its
    physical properties, the state of equipment technology, and the
    relevant interference rights and obligations.

[^64]: *See Report and Order* at ¶¶ 116-119 (applying the Commission's
    competition policies to spectrum manager leases), 147 (applying the
    Commission's competition policies to long-term *de facto* transfer
    leases).

[^65]: *See, e.g.*, 2000 Biennial Regulatory Review -- Spectrum
    Aggregation Limits for Commercial Mobile Radio Services, *Report and
    Order*, 16 FCC Rcd 22668 (2001) (*2000 Biennial Review Order on CMRS
    Aggregation Limits*).

[^66]: *See generally id.* In that order, the Commission noted that it
    would continue to have an obligation to guard against potential
    anticompetitive effects that might result from entities aggregating
    control over spectrum. *See generally id.*, 16 FCC Rcd at
    22681-22693 ¶¶ 30-46, 22695-22696 ¶¶ 54-55, 22699-22700 ¶¶ 62-65. We
    note, however, that the cellular cross-interest rules were
    eliminated in the *Rural Report and Order* adopted concurrently with
    this Second Report and Order. *See* Facilitating the Provision of
    Spectrum-Based Services to Rural Areas and Promoting Opportunities
    for Rural Telephone Companies To Provide Spectrum-Based Services, WT
    Docket No. 02-381; 2000 Biennial Regulatory Review Spectrum
    Aggregation Limits For Commercial Mobile Radio Services, WT Docket
    No. 01-14; Increasing Flexibility to Promote Access to and the
    Efficient and Intensive Use of Spectrum and the Widespread
    Deployment of Wireless Services, and to Facilitate Capital
    Formation, WT Docket No. 03-202, *Report and Order and Further
    Notice of Proposed Rulemaking*, FCC 04-166 (rel. Aug. \_\_, 2004)
    (*Rural Report and Order*). Accordingly, we will revise our spectrum
    leasing rules to reflect elimination of these rules in the context
    of spectrum leasing arrangements, as discussed below. *See* para.
    157, *infra*.

[^67]: *See generally* 47 C.F.R. Part 27. Each of the Part 27 services
    listed here may provide mobile telephony services. *See* 47 C.F.R.
    §§ 27.2, 2.106 (allocation in these services includes a mobile
    allocation).

[^68]: *See generally* 47 C.F.R. Part 27 subpart E. The licensed
    spectrum in the WCS band includes the 2305-2320 MHz and 2345-2360
    MHz bands, and may be used to provide mobile telephony services.
    *See* 47 C.F.R. §§ 27.2, 2.106 (allocation in these services
    includes a mobile allocation).

[^69]: 47 C.F.R. Part 27 subpart M. Pursuant to the Commission's
    competition policies, the Wireless Telecommunications Bureau and
    Media Bureau have recently examined transactions involving the
    assignment of MDS and ITFS licenses to determine whether potential
    competitive concerns were raised. *See* Applications to Assign
    Wireless Licenses from WorldCom, Inc. (Debtor in Possession) to
    Nextel Spectrum Acquisition Corp., *Memorandum Opinion and Order*,
    19 FCC Rcd 6232, 6244 ¶ 29 (2004) (WTB and MB) (determining that the
    potential benefits of the transaction outweighed any potential
    competitive harm, and the that the transaction was in the public
    interest).

[^70]: *See generally* 47 C.F.R. Part 27 (including rules applicable to
    AWS). The licensed spectrum in these bands may be used to provide
    mobile telephony services. *See* 47 C.F.R. §§ 27.2, 2.106
    (allocation in these services includes a mobile allocation). The
    Commission adopted the AWS service rules in 2003. *See* Service
    Rules for Advanced Wireless Services in the 1.7GHz and 21.GHz Bands,
    *Report and Order*, 18 FCC Rcd 25162 (2003). We note, too, that we
    determined to extend the spectrum leasing policies and rules adopted
    in the *Report and Order* to the AWS band. *See id.* at 25173-25174
    ¶ 26. As part of this Second Report and Order and Order on
    Reconsideration, we will revise our Part 1 subpart X rules
    applicable to spectrum leasing arrangements to reflect that AWS is
    one of the included services.

[^71]: 47 C.F.R. Part 27 subparts F, H. The licensed spectrum in these
    bands may be used to provide mobile telephony services. *See* 47
    C.F.R. §§ 27.2, 2.106 (allocation in these services includes a
    mobile allocation).

[^72]: 47 C.F.R. Part 27 subparts I, J, K. These bands may be used to
    provide mobile telephony services. *See* 47 C.F.R. §§ 27.802,
    27.902, 27.1002.

[^73]: 47 C.F.R. § Part 24 subpart D. Operators may provide mobile
    telephony services on spectrum in the narrowband PCS band. *See* 47
    C.F.R. § 24.3.

[^74]: These would involve certain frequencies in the Paging and Radio
    Telephone Service. *See* 47 C.F.R. §§ 20.561 (providing for one-way
    or two-way mobile operation on certain VHF and UHF channels); 22.651
    (providing for trunked mobile operation on 470-512 MHz channels in
    New York-Northern New Jersey and Houston).

[^75]: 47 C.F.R. § 25.143(i)-(k).

[^76]: We have already determined that short-term *de facto* transfer
    spectrum leasing arrangements, which are by definition only
    temporary arrangements, do not raise potential competitive harm and
    thus are not subject to the Commission's competition policies. *See
    Report and Order* at ¶ 178.

[^77]: For instance, in the future we anticipate significant advances in
    voice over Internet Protocol (VoIP) and the provision of broadband
    services over power line systems. *See generally* In the Matter of
    IP-Enabled Services, *Notice of Proposed Rulemaking*, 19 FCC Rcd
    4863 (2004); Carrier Current Systems, including Broadband over Power
    Line Systems, *Notice of Proposed Rulemaking*, 19 FCC Rcd 3335
    (2004).

[^78]: *See Report and Order* at nn. 318, 356 (noting that, as part of a
    complete application, spectrum leasing parties must submit the
    requisite filing fees).

[^79]: Thus, operations under a *de facto* transfer spectrum lease could
    commence immediately upon approval provided, of course, that the
    parties have established that time as the date that the spectrum
    lease commences.

[^80]: The Bureau will also send a letter to the spectrum leasing
    parties, by U.S. mail, indicating that the application was
    sufficiently complete and has been granted on the basis of, and in
    reliance on, the information and certifications supplied.

[^81]: In the *Further Notice*, we had proposed that the spectrum
    leasing filing would be "deemed approved" at the time it was placed
    on public notice. *Further Notice* at ¶ 266. []{.mark}

[^82]: *See id.* at ¶ 268.

[^83]: *See* 47 C.F.R. § 1.106(f). We note that the Commission employs
    similar reconsideration procedures for applications involving *pro
    forma* license assignments and transfers of control; as with the
    procedures adopted here, interested parties may file a petition for
    reconsideration within 30 days of the time the notice of the *pro
    forma* transaction is placed on public notice. *See Pro Forma
    Forbearance Order*, 13 FCC Rcd at 6312 ¶ 36.

[^84]: *See* 47 C.F.R. §§ 1.108, 1.113.

[^85]: *See generally* 47 C.F.R. §§ 1.101-1.120 (Part 1 rules relating
    to petitions for reconsideration and review of actions taken on
    delegated authority and by the Commission).

[^86]: We note that this is consistent with general Commission policies.

[^87]: *See, e.g., American Trucking Ass'n v. Frisco Transportation
    Co.*, 358 U.S. 133, 145-146 (1958) (acknowledging an agency's
    ability to correct administrative errors; the Court stated that
    "\[t\]o hold otherwise would be to say that once an error has been
    done the agency is powerless to take remedial steps"); *Chlorine
    Institute v. OSHA*, 613 F.2d 120, 123 (5^th^ Cir.) *cert. den.*, 449
    U.S. 826 (1980).

[^88]: Section 309(b) requires a 30-day notice and comment period for
    authorizations involving common carrier services, while Section
    310(d) requires review and approval for transfers of *de facto*
    control relating to license authorizations. *See generally* 47
    U.S.C. §§ 309(b), 310(d). We note that in the *Report and Order*, we
    have already exercised limited forbearance with regard to the 30-day
    notice and comment period for *de facto* transfer leases by reducing
    the comment period to 14 days. *Report and Order* at ¶ 151. We also
    reduced the review period to 21 days, unless the Commission
    determined to removed the application from this streamlined
    processing for additional review. *Report and Order* at ¶ 151.

[^89]: 47 U.S.C. § 160(a). In determining whether forbearance is
    consistent with the public interest, the Commission must consider
    whether forbearance will promote competitive market conditions,
    including whether it will enhance competition among
    telecommunications service providers. *See* 47 U.S.C. § 160(b). If
    the Commission determines that forbearance will promote competition
    among providers of telecommunications services, that determination
    may be the basis for finding that forbearance is in the public
    interest. *See* 47 U.S.C. § 160(b).

[^90]: Long-term *de facto* transfer leases that are subject to our
    forbearance authority include leases involving common carrier
    services. Section 309(b) generally provides that applications
    involving transfers of substantial control are to be placed on
    public notice for at least 30 days in advance of being granted.
    *See* 47 U.S.C. § 309(b). Short-term *de facto* transfer leases are
    not, under existing policies, subject to this 30-day prior public
    notice requirement because the applications are processed under STA
    procedures set forth in Section 309(e); we note that, in this Second
    Report and Order, we replace the STA procedures used for short-term
    *de facto* transfer leases, as explained in Section IV.A.1.c, below.

[^91]: We have already determined, in the *Report and Order*, that a
    full 30-day public notice period is not required for any *de facto*
    transfer lease applications. *Report and Order* at ¶¶ 155-159
    (reducing the public notice requirement to 21 days).

[^92]: *See* Craig O. McCaw, *Memorandum Opinion and Order*, 9 FCC Rcd
    5836, 5880-5881 ¶ 76 (1994), *aff'd sub nom. SBC Communications,
    Inc. v. FCC*, 56 F.3d 1484 (D.C. Cir. 1995), *recon. in part*, 10
    FCC Rcd 11786 (1995).

[^93]: *See Further Notice* at ¶ 271.

[^94]: *See Report and Order* at ¶¶ 32, 39-45; *see generally Secondary
    Markets Policy Statement*, 15 FCC Rcd 24178.

[^95]: *Further Notice* at ¶ 275.

[^96]: *Id.* at ¶¶ 275-277. We also noted that, as a practical matter,
    many licenses that are beyond the scope of Section 10 are not
    subject to the statutory requirement of 30 days public notice prior
    to Commission approval, which applies only to common carrier and
    broadcast licenses. *See* 47 U.S.C. § 309(b). Section 310(d) does,
    however, require prior Commission review and approval of all
    transaction applications involving non-common carrier and
    non-broadcast licenses (just as it does for applications involving
    common carrier and broadcast licenses that are subject to our
    forbearance authority). *Further Notice* at ¶ 276; *see generally*
    47 U.S.C. §§ 308, 309, 310(d).

[^97]: *See* paras. 15-28, *supra.*

[^98]: All of the comments we received on this issue supported our
    efforts to streamline spectrum lease transactions involving
    non-telecommunications carriers in the manner similar to what we are
    adopting under the forbearance approach. *See, e.g.*, Blooston Rural
    Carriers Comments at 12-13 (providing general support for the
    Commission's goals); Nextel Communications Comments at 7-9; WCA
    Comments at 13-15. One commenter recommended that the Commission
    take an approach similar to that it has taken for Section 214
    applications. *See* WCA Comments at 13-15.

[^99]: *See* paras. 15-28, *supra*. Because licenses in
    non-telecommunications services generally are not auctioned, and
    thus would not implicate our designated entity or entrepreneur
    policies, we need not be concerned about restrictions and potential
    public interest concerns associated with these policies regarding
    spectrum leasing by designated entity or entrepreneur licensees.
    *See* para. 24. Similarly, because spectrum leasing in
    non-telecommunications services would not involve the kind of CMRS
    spectrum implicated by our competition policies (see the discussion
    in paras. 25-26, above), we are not concerned about potential public
    interest concerns relating to competition that would necessitate
    prior review of these spectrum leases.

[^100]: *See* para. 31, *supra*; *see also* 47 C.F.R. §§ 1.101 *et seq.*
    (rules relating to petitions for reconsideration of actions taken on
    delegated authority).

[^101]: *Report and Order* at ¶¶ 163-164, 181.

[^102]: *Id.* at ¶ 181.

[^103]: *See generally* Section IV.A.1.a, *supra.*

[^104]: *Report and Order* at ¶ 174.

[^105]: We note that for short-term *de facto* transfer leasing
    arrangements, certain eligibility and use restrictions applicable to
    long-term *de facto* transfer leasing arrangements do not apply.
    *See Report and Order* at ¶ 175.

[^106]: *See id.* at ¶¶ 176 (the designated entity and entrepreneur
    policies are not applied with respect to short-term *de facto*
    transfer leases), 178 (competition policies are not applied with
    respect to short-term *de facto* transfer leases).

[^107]: *See* 47 C.F.R. §§ 1.931(a)(1) (STA procedures for Wireless
    Telecommunications Services), 1.931(b)(3) (STA procedures for
    Private Wireless Services).

[^108]: These short-term *de facto* transfer leases may be renewed so
    long as the combined term of the application and any renewal(s) does
    not exceed one year. We note that the remainder of the policies
    applicable to short-term *de facto* transfer leases, as set forth in
    the *Report and Order*, will remain in place for the reasons
    established therein. *See generally Report and Order* at ¶¶ 166-180.

[^109]: *Id.* at ¶ 124; *see also* 47 C.F.R. § 1.9020(e).

[^110]: *Report and Order* at ¶ 124.

[^111]: The spectrum leasing parties will be able to determine whether
    the notification has been successfully processed, through ULS, in
    the same manner they would determine whether a *de facto* transfer
    lease application has been approved, as set forth in para. 29,
    *supra.* Specifically, if the parties file a spectrum manager lease
    notification in ULS that establishes, through the information
    provided and related certifications, that they qualify for this
    processing method, ULS will reflect, on the next business day, that
    the notification was sufficiently complete and accepted for this
    processing on the basis of, and in reliance on, the information and
    certifications supplied. The spectrum lease notification will then
    be placed on public notice.

[^112]: *See* First Avenue Networks Petition for Reconsideration at 1-4.
    First Avenue Networks asserted that it was capable of providing
    wireless broadband connections within three days of signing a lease
    and contended that the current rules unnecessarily delayed its
    prompt delivery of service to its customers. Accordingly, it
    recommended that we eliminate the requirement that the Commission be
    notified of spectrum manager leases days in advance of permitting
    parties to commence operations under the spectrum leasing
    arrangement. *See id.*

[^113]: *See Report and Order* at ¶¶ 109-11 (eligibility and foreign
    ownership requirements for spectrum manager leases), 112 (use
    restrictions for spectrum manager leases), 116-119 (competition
    policies relating to spectrum manager leases), 143 (eligibility and
    foreign ownership requirements for long-term *de facto* transfer
    leases), 144 (use restrictions for long-term *de facto* transfer
    leases), 147 (competition policies relating to long-term *de facto*
    transfer leases). We note that short-term *de facto* transfer
    leasing arrangements are not always subject to the same policies as
    spectrum manager leasing arrangements. With regard to these
    particular issues, short-term *de facto* leases are not subject to
    the same use restrictions or competition policies as spectrum
    manager leases. *Compare id.* at ¶¶ 112 (use restrictions applicable
    to spectrum manager leases) and 116-119 (competition policies
    applicable to spectrum manager leases) *with* ¶¶ 175 (exemption of
    short-term *de facto* transfer leases from certain use restrictions)
    and 178 (exemption of short-term *de facto* transfer leases from
    competition policies), respectively.

[^114]: *See id.* at ¶¶ 113 (spectrum manager leases), 145 (long-term
    *de facto* transfer leases). While these restrictions differ
    depending on whether a spectrum manager or long-term *de facto*
    transfer lease is involved, both types of spectrum leases trigger
    potential public interest considerations that warrant providing the
    Commission an opportunity to review the leases prior to commencement
    of operations.

[^115]: *See* Section IV.A.1.a, above.

[^116]: To the extent, however, that the spectrum manager leasing
    arrangements do not qualify for immediate processing because they
    potentially raise public interest concerns in any of these
    enunciated areas, then we believe it continues to be appropriate for
    the Commission and the public to have the opportunity to review the
    leases prior to parties commencing operations, consistent with the
    *Report and Order*. *See Report and Order* at ¶¶ 124-125. We also
    provide additional clarification regarding the Commission's
    opportunity to review these spectrum manager leases in the Order on
    Reconsideration, below. *See* Section V.B.1.a, *infra.*

[^117]: *See* paras. 30, 39, 43, *supra.*

[^118]: This is the date in which the Bureau announces acceptance of the
    spectrum manager lease notification.

[^119]: We note that licensees in the VHF Public Coast services, Part 80
    subpart J, already may enter into spectrum leasing arrangements
    under the *Report and Order*. *Report and Order* at ¶ 84; 47 C.F.R.
    § 1.9005(o).

[^120]: We have already permitted licensees in the 218-219 MHz Service,
    Part 95 subpart F, to enter into spectrum leasing arrangements under
    the *Report and Order*. *Report and Order* at ¶ 84; 47 C.F.R. §
    1.9005(u).

[^121]: *See generally Further Notice* at ¶¶ 288-314.

[^122]: To the extent that licensees are sharing spectrum, they are not
    permitted to enter into spectrum leasing arrangements with other
    entities.

[^123]: In this section, we are only discussing public safety licensees
    authorized under Part 90 rules. *See* 47 C.F.R. Part 90 subpart B; §
    90.311(a)(1)(i). We already permit Part 101 licensees (including
    public safety licensees) to lease spectrum under the rules adopted
    in the *Report and Order. See Report and Order* at ¶ 84 & n.181.

[^124]: *See* The 4.9 GHz Band Transferred from Federal Government Use,
    *Memorandum Opinion and Order*, 18 FCC Rcd 9152, 9158 ¶ 16 (2003)
    (*4.9 GHz Report and Order*).

[^125]: *Id.* at 9158-59 ¶ 16 (citing 47 C.F.R. § 90.523); *see also* 47
    C.F.R. § 90.1203(a).

[^126]: 47 U.S.C. § 337(f)(1).

[^127]: 47 C.F.R. § 90.523.

[^128]: *4.9 GHz Report and Order*, 18 FCC Rcd at 9159 ¶ 17 (citing 47
    C.F.R. § 90.523(a)).

[^129]: *Id.* at 9159-60 ¶¶ 17-19.

[^130]: *Id.* at 9162-63 ¶¶ 22-23.

[^131]: As noted above, two commenters supported providing public safety
    licensees additional flexibility to lease spectrum to other
    entities. *See* ITA Reply Comments at 9-10 (support for permitting
    public safety entities to lease spectrum to other entities eligible
    under private land mobile entities that are eligible under Part 90
    services); St. Clair County Reply Comments at 2-3 (general support
    for permitting public safety entities to lease spectrum to
    commercial entities).

[^132]: Additionally, we note that applicable buildout requirements also
    act as constraints against spectrum warehousing. *See, e.g.*, 47
    C.F.R. §§ 90.155(a), (b).

[^133]: *See* APCO Comments at 1-6; CTIA Comments at 4-5; SBC Comments
    at 13; Winstar Comments at 3; ITA Reply Comments at 9-10. For
    instance, one commenter representing public safety officials
    expressed "grave concerns" about potential harm that might result if
    public safety entities were to lease spectrum on a commercial basis.
    It pointed out possible significant statutory barriers to such
    leasing involving spectrum 700 MHz band on the grounds that Section
    337 of the Act might effectively preclude making such spectrum
    commercially available. This commenter also was concerned that while
    most public safety entities would act responsibly when leasing
    spectrum, some agencies might by pressured by cash-strapped state
    and local governments to lease more and more spectrum capacity,
    potentially to the detriment of public safety operational
    requirements, or they could be become "fronts" for commercial
    entities. *See* APCO Comments at 1-6. Another commenter opposed
    leasing by public safety entities on the grounds that they might
    warehouse spectrum. *See* CTIA Comments at 4-5. Two commenters
    supported providing public safety licensees greater flexibility to
    lease spectrum to others. *See* ITA Reply Comments at 9-10 (support
    for permitting public safety entities to lease spectrum to other
    entities eligible under private land mobile entities that are
    eligible under Part 90 services); St. Clair County Reply Comments at
    2-3 (general support for permitting public safety entities to lease
    spectrum to commercial entities).

[^134]: One commenter recommended that any spectrum leasing of public
    safety channels should be subject to strict rules that ensure that
    the substantial majority of the public safety system is in fact used
    for public safety purposes, and that by public safety licensees can
    effectively reclaim the use of the spectrum, such as through newly
    developed cognitive radio capacity, when necessary. *See* APCO
    Comments at 1-6. Another commenter focused on possible future
    technological developments that would assist in developing
    appropriate leasing policies for public safety licensees, including
    "interruptible use" capacities that would enable public safety
    licensees to immediately reclaim the use of any leased spectrum for
    public safety emergencies. *See generally* WiNSec Comments.

[^135]: *See Cognitive Radio NPRM*, 18 FCC Rcd at 26878-26883 ¶¶ 51-67.

[^136]: We received comments from several parties on spectrum leasing
    involving the ITFS and MDS services. *See* BellSouth Comments at
    6-10; National ITFS Association/Catholic Television Network Comments
    at 1-9 and Reply Comments at 1-3; SBC Comments at 12-13; Spectrum
    Market LLC Comments at 4-5; Sprint Comments at 4-6; WCA Comments at
    1-8.

[^137]: *See* Amendment of Parts 1, 21, 73, 74 and 101 of the
    Commission's Rules to Facilitate the Provision of Fixed and Mobile
    Broadband Access, Educational and Other Advanced Services in the
    2150-2162 and 2500-2690 MHz Bands, *Report and Order and Further
    Notice of Proposed Rulemaking*, FCC 04-145 (rel. July 29, 2004)
    (*BRS/EBS Report and Order*). As we noted in the *Further Notice*,
    there are unique policies associated with ITFS licensees'
    educational purposes, and the services have already developed their
    own approach to excess capacity leasing. *See Further Notice* at ¶¶
    307-08.

[^138]: *See generally BRS/EBS Report and Order.*

[^139]: *See id.* at ¶¶ 177-181.

[^140]: *See id.* at ¶ 181.

[^141]: We received comments from three parties that supported extending
    our spectrum leasing policies to the AMTS services. They asserted
    that to do so would be consistent with our earlier decision, in the
    *Report and Order*, to permit VHF Public Coast Station licensees to
    enter into spectrum leasing arrangements. *See* AMTA Comments at
    3-4; Mobex Comments at 2-5; Paging Systems Reply Comments at 2-4.

[^142]: *Report and Order* at ¶ 84 & n.183. Also, we note that the
    Commission has previously stated that the licensing of incumbent
    site-based AMTS stations are akin to geographic licensing in many
    respects because the licensing of each system was tied to fixed
    geographic features (coastlines and waterways). *See* Regionet
    Wireless License, LLC, *Order*, 15 FCC Rcd 16119, 16122 ¶ 7 (2000).

[^143]: *See* 47 C.F.R. §§ 80.357(b), 80.361, 80.363(a)(2),
    80.371(a)-(b).

[^144]: *See generally* Amendment of the Commission's Rules Concerning
    Maritime Communications, *Second Memorandum Opinion and Order and
    Fifth Report and Order*, 17 FCC Rcd 6685, 6687 ¶ 4 (2002) (*Public
    Coast Fifth Report and Order*). We note, too, that while VHF Public
    Coast and AMTS stations use frequencies in the very high frequency
    band, high seas public coast stations use much lower frequencies,
    which enables them to serve vessels hundreds or even thousands of
    miles from land. *See generally id.*

[^145]: *See Public Coast Fifth Report and Order*, 17 FCC Rcd at 6710 ¶
    56, 6716-17 ¶ 75.

[^146]: *See* Amendment of the Commission's Rules Concerning Maritime
    Communications, *Second Report and Order and Second Further Notice
    of Proposed Rule Making*, PR Docket No. 92-257, 12 FCC Rcd 16949,
    17020 (1997); 47 C.F.R. § 80.123; *see also* Technology for
    Communications International, *Order*, 14 FCC Rcd 16173, 16176-77 ¶
    8 (WTB PSPWD 1999) (denying a request for a waiver to permit a high
    seas public coast station to serve units on land, and explaining
    that, because of the propagation characteristics of HF signals,
    interference to international communications is a possibility
    associated with service to units on land using HF frequencies not
    presented by VHF land mobile service).

[^147]: *Public Coast Fifth Report and Order*, 17 FCC Rcd at 6711-12 ¶
    59, 6713-14 ¶¶ 64-66.

[^148]: *See* MDS America *Ex Parte* Comments at 2-4.

[^149]: *See Report and Order* at ¶ 84.

[^150]: Consistent with our general spectrum leasing policies, any
    spectrum leasing arrangement involving these services must comply
    with the underlying service rules.

[^151]: *See* 47 C.F.R. § 101.1412 (MVDDS eligibility restrictions for
    cable operators).

[^152]: The MVDDS service rules permit licensees to partition along
    county borders but prohibit spectrum disaggregation. *See* 47 C.F.R.
    §§ 101.1405, 101.1415. *See also* Amendment of Parts 2 and 25 of the
    Commission's Rules to Permit Operation of NGSO FSS Systems
    Co-Frequency with GSO and Terrestrial Systems in the Ku-Band
    Frequency Range; Amendment of the Commission's Rules to Authorize
    Subsidiary Terrestrial Use of the 12.2-12.7 GHz Band by Direct
    Broadcast Satellite Licensees and Their Affiliates; and Applications
    of Broadwave USA, PDC Broadband Corporation, and Satellite
    Receivers, Ltd., to Provide a Fixed Service in the 12.2-12.7 GHz
    Band, *Memorandum Opinion and Order and Second Report and Order*, 17
    FCC Rcd 9614, 9685-9687 ¶¶ 180-184 (2002). The Commission limited
    partitioning to county lines because three ubiquitous services would
    be sharing the spectrum, in addition to point-to-point facilities
    that required protection, *id.* at 9686 ¶ 181, and it declined to
    permit disaggregation because the complexity and problems associated
    with effectively engineering and solving the potential interference
    problems, including difficulty in determining which licensee is
    causing interference problem, warrant keeping the number of
    licensees responsible and the number of total transmitters low to
    comport with the Commission's goal of promoting shared use of the
    band and protecting Direct Broadcast Service (DBS) operations. *Id.*
    at 9687 ¶ 184.

[^153]: *See Further Notice* at ¶ 305.

[^154]: Two parties commented on extending spectrum leasing to
    services/authorizations involving shared frequencies. Both opposed
    spectrum leasing in these services. One contended that there was no
    need for spectrum leasing since entities seeking access to spectrum
    in these bands can always come to the Commission and for a nominal
    fee obtain licenses involving available spectrum. *See* ITA Reply
    Comments at 7-8. Another urged that spectrum leasing not be extended
    to shared spectrum until progress had been achieved with regard to
    pending proceedings concerning refarming of these bands; it also
    expressed concern about the potentially complex frequency
    coordination processes that would ensue. *See* NAM/MRFAC Reply
    Comments at 3-6.

[^155]: We received two comments pertaining to spectrum leasing in our
    Part 90 services. One commenter requested that the Private Land
    Mobile Radio (PLMR) stations below 470 MHz with "FB8 status" should
    be included among those services permitted to enter into spectrum
    leasing arrangements. It contended that this would be consistent
    with the inclusion, in the *Report and Order*, of the Part 90
    services above 470 MHz. *See* ITA Reply Comments at 7-10. As noted
    by ITA, we included the Part 90 services about 470 MHz among the
    services permitted to lease spectrum under the policies adopted in
    the *Report and Order*. *Report and Order* at ¶ 84 n.181; 47 C.F.R.
    § 1.9005(t). In addition, it recommended that B/ILT licensees should
    be able to lease to public safety entities.^?^ ITA Reply Comments at
    9. The other commenter opposed any revisions that would allow
    Business and Industrial/Land Transportation (B/ILT) licensees to
    lease to commercial entities, expressing concern about potential
    harmful interference. *See* Boeing Reply Comments at 2-6.

[^156]: One commenter recommended extending our spectrum leasing
    policies to these services, but provided no rationale for so doing.
    *See* Winstar Comments at 2.

[^157]: *See* 47 C.F.R. §§ 97.501, 97.101(b); *see also Further Notice*
    at ¶ 301.

[^158]: We note that the *Report and Order* permitted spectrum leasing
    by one Personal Radio Service, the 218-219 MHz service, in which
    licensees have exclusive use of the licensed spectrum. *See Report
    and Order* at ¶ 84 & n.183.

[^159]: *See* 47 C.F.R. Part 95 subpart D.

[^160]: *See* 47 C.F.R. Part 95 subpart C.

[^161]: *See* 47 C.F.R. §95.7(a) (General Mobile Radio Service).

[^162]: 47 C.F.R. § 87.41(b). We note that automatic weather observation
    station, automatic surface observation station, and automatic
    terminal information station operate on a shared basis, not on an
    exclusive use basis. While only one automatic weather observation
    station, automatic surface observation station, or automatic
    terminal information station will be licensed at an airport, these
    stations do not operate on dedicated spectrum, but instead generally
    are assigned frequencies available for air traffic control
    operations. 47 C.F.R. §§ 87.527(c), 87.529.

[^163]: Unicom transmissions are limited to the necessities of safe and
    expeditious operation of aircraft. *See* 47 C.F.R. § 87.261(a).
    "Uncontrolled airports" are those that do not have a control tower,
    a control tower remote communications outlet, or an FAA flight
    service station that effectively controls traffic at that airport.
    47 C.F.R. § 87.215(b); *see also* Review of Part 87 of the
    Commission's Rules Concerning the Aviation Radio Service, *Report
    and Order and Further Notice of Proposed Rule Making*, 18 FCC Rcd
    21432, 21459-60 n.211 (2003) (*Part 87 Report and Order*).

[^164]: 47 C.F.R. § 87.213(b). Aeronautical enroute stations provide
    operational control communications to aircraft along domestic or
    international air routes. *See* 47 C.F.R. § 87.261(a). Operational
    control communications include the safe, efficient and economical
    operation of aircraft, such as fuel, weather, position reports,
    aircraft performance, and essential services and supplies. Public
    correspondence is prohibited. *Id.*

[^165]: At uncontrolled airports, unicoms (which are assigned only one
    frequency) are often the only available source of critical
    safety-related information regarding runway, wind, or weather
    conditions. *See* 47 C.F.R. § 87.217(a); *Part 87 Report and Order*,
    18 FCC Rcd at 21460 ¶ 56. The Commission limits unicoms to
    one-per-uncontrolled-airport for safety reasons. *See* Amendment of
    Part 87 of the Rules to Provide a Summary Procedure for Processing
    Mutually Exclusive Applications in the Aviation Services, *Order*,
    60 Rad. Reg. 2d 251, at ¶ 2 (1986). As for aeronautical enroute
    stations, large trunk air carriers use these stations to maintain
    reliable communications between each aircraft and the appropriate
    dispatch office, while small airlines and large commercial aircraft
    operators use them to maintain flight-following systems. *See
    generally Part 87 Report and Order*, 18 FCC Rcd at 21441 ¶ 17. The
    Commission recently reviewed its aeronautical enroute station
    licensing rules, and concluded that the public interest, including
    aviation safety, is best served by authorizing only one operator at
    a location. *See id.* at 21442-43 ¶¶ 22-23.

[^166]: We also note that there already exists a robust secondary market
    for parties seeking to gain access to spectrum in our satellite
    services. We adopted rules to encourage the development of a
    secondary market for certain satellite operators in the *First Space
    Station Reform Order*. *See* Amendment of the Commission's Space
    Station Licensing Rules and Policies, *First Report and Order*, 18
    FCC Rcd 10760 (2003) (*First Space Station Reform Order*). In that
    order, we adopted a procedure applicable to non-geostationary orbit
    (NGSO) and geostationary orbit, mobile satellite service (GSO MSS)
    satellite system operators under which the Commission issues
    licenses by dividing the available spectrum equally among the
    qualified applicants in a processing round. *See id.* at 10776 ¶ 29.
    We also eliminated the anti-trafficking rule for satellite operators
    to enable NGSO and GSO MSS licensees to buy and sell spectrum to
    each other in a secondary market after licenses are issued. We noted
    that secondary markets can provide benefits to satellite users and
    consumers not only through the outright transfer of licenses, but
    also through partial redistribution or transfer of unused spectrum.
    By encouraging satellite licensees to sell unused spectrum to other
    parties willing to put the spectrum into use, we allow parties
    flexibility to transfer satellite bandwidth to more efficient uses
    in response to changing market conditions and consumer demands, and
    we allow marketplace forces to determine which companies succeed.
    *Id.* at 10842-43 ¶ 218 (citing *Secondary Markets Policy
    Statement*, 15 FCC Rcd at 24182 ¶ 11). []{.mark}

[^167]: *Report and Order* at ¶ 113; 47 C.F.R. § 1.9020(d)(4); *see id.*
    § 1.2110(b), (c). In this context, the term "entrepreneur" refers to
    an entity eligible to hold certain broadband personal communications
    services C and F block licenses won in closed bidding. *See* *id.*
    §§ 1.2110 and 24.709.

[^168]: *Report and Order* at ¶ 113; 47 C.F.R. § 1.9020(d)(4).

[^169]: *Report and Order* at ¶ 145.

[^170]: *Further Notice* at ¶ 323.

[^171]: *Id.*

[^172]: *See* *Intermountain Microwave*, 12 FCC 2d 559 (1963); *see also
    Report and Order* at ¶¶ 3, 10, 60; Matter of Amendment of Part 1 of
    the Commission's rules -- Competitive Bidding Procedures, *Order on
    Reconsideration of the Third Report and Order, Fifth Report and
    Order, and Fourth Further Notice of Proposed Rule Making*, 15 FCC
    Rcd 15293, 15324 ¶ 61 (2000) (*Part 1 Fifth Report and Order*).

[^173]: *Further Notice* at ¶ 317.

[^174]: *Id.*

[^175]: *See* AT&T Wireless Comments at 8-9; Cingular Wireless Comments
    at ii, 2-4, 6-8; Cingular Wireless Petition at 2-4; Salmon PCS
    Comments at 8-11; *see also* Blooston Comments at 2-5 (Commission
    should allow "small business licensees \[to\] lease their spectrum
    without jeopardizing eligibility status or entitlement to bidding
    credits if the spectrum user actually provides service to a rural
    area"); Council Tree *Ex Parte* Comments at 14-17 (Commission should
    lift unjust enrichment repayment obligations and entrepreneur
    transfer restrictions, if not for all long-term *de facto* transfer
    leasing arrangements, then "for entities owned and controlled by
    Alaska Native Corporations or Indian tribes when rural area spectrum
    rights are involved"); Salmon PCS Petition Reply Comments at 9-14.
    In declining to adopt the suggestions proffered by these parties, we
    specifically are denying Cingular Wireless' petition for
    reconsideration on these issues.

[^176]: 47 U.S.C. § 309(j).

[^177]: *Id.* § 309(j)(4).

[^178]: *See* H.R. Rep. No. 103-111, at 257-58 (1993) (Conference
    Agreement adopted House provisions, in relevant part, with
    amendments. H.R. Conf. Rep. No. 103-213, at 483 (1993).).

[^179]: *See* 47 U.S.C. § 309(j)(3).

[^180]: *Id.* § 309(j)(4)(E); *see also id.* § 309(j)(3)(C).

[^181]: *See* AT&T Wireless Comments at 9.

[^182]: H.R. Rep. No. 103-111, at 257-58 (1993) (Conference Agreement
    adopted House provisions, in relevant part, with amendments. H.R.
    Conf. Rep. No. 103-213, at 483 (1993).).

[^183]: *See* Blooston Rural Carriers Comments at 3-5; Council Tree *Ex
    Parte* Comments at ii, 3, 14-17; RTG Comments at 5-7.

[^184]: *See* Blooston Rural Carriers Comments at 5.

[^185]: *Melcher v. FCC*, 134 F.3d 1143, 1154-55 (D.C. Cir. 1998).

[^186]: 47 U.S.C. § 309(j)(3)(A).

[^187]: *Id.* § 309(j)(4)(D).

[^188]: *See* Reallocation and Service rules for the 698-746 MHz
    Spectrum Band (Television Channels 52-59), *Report and Order*, 17
    FCC Rcd 1022, 1090-91, n.505 and accompanying text (2002); *see
    also* Amendment of Parts 21 and 74 of the Commission's Rules With
    Regard to Filing Procedures in the Multipoint Distribution Service
    and in the Instructional Television Fixed Service, MM Docket No.
    94-131, and Implementation of Section 309(j) of the Communications
    Act -- Competitive Bidding, PP Docket No. 93-253, *Report and
    Order*, 10 FCC Rcd 9589, 9664-65 ¶ 176 (1995).

[^189]: *See* Implementation of Section 309(j) of the Communications Act
    -- Competitive Bidding, *Fifth Memorandum Opinion and Order*, 10 FCC
    Rcd 403, 457-58 ¶ 100 (1994).

[^190]: *See, e.g.*, Amendment of the Commission's rules to Establish
    New Personal Communications Services, Narrowband PCS, GEN Docket No.
    90-314, ET Docket No. 92-100, Implementation of Section 309(j) of
    the Communications Act -- Competitive Bidding, PR docket No. 93-253,
    *Second Report and Order and Second Further Notice of Proposed Rule
    Making*, 15 FCC Rcd 10456, 10476-77 ¶ 41 (2000); Amendments to Parts
    1, 2, 87 and 101 of the Commission's Rules to License Fixed Services
    at 24 GHz, *Report and Order*, 15 FCC Rcd 16934, 16968-69 ¶ 81; *see
    also Part 1 Fifth Report and Order*, 15 FCC Rcd at 15320-21 ¶ 52;
    Revision of Part 22 and Part 90 of the Commission's rules to
    Facilitate Future Development of Paging Systems, WT Docket No.
    96-18, Implementation of Section 309(j) of the Communications Act --
    Competitive Bidding, PR docket No. 93-253, *Memorandum Opinion and
    Order on Reconsideration and Third Report and Order*, 14 FCC Rcd
    10030, 10091-92 ¶ 114 (1999).

[^191]: Our reasoning here applies equally to spectrum manager and
    long-term *de facto* transfer leasing arrangements. []{.mark}

[^192]: *See generally Rural Report and Order.* We further note that we
    recently facilitated licensing to rural telecommunications companies
    by modifying our controlling interest and attribution rules for
    rural telephone cooperatives. *See* Amendment of Part 1 of the
    Commission's Rules -- Competitive Bidding Procedures, *Second Order
    on Reconsideration of the Third Report and Order and Order on
    Reconsideration of the Fifth Report and Order*, 18 FCC Rcd 10180,
    10186-95 ¶¶ 10-20 (2003); 47 C.F.R. § 1.2110(b)(3)(iii).

[^193]: *See* Council Tree *Ex Parte* Comments at ii, 3, 14-17.

[^194]: *See* 47 C.F.R. § 1.2110(c)(5)(xi) ("*Exclusion from affiliation
    coverage.* For purposes of this section, Indian tribes or Alaska
    Regional or Village Corporations . . . or entities owned and
    controlled by such tribes or corporations, are not considered
    affiliates of an applicant (or licensee) that is owned and
    controlled by such tribes, corporations or entitles, and that
    otherwise complies with the requirements of this section. . . .").
    Further, we offer a separate bidding credit to licensees that serve
    qualifying tribal lands. *Id.* § 1.2110(f)(3).

[^195]: *See* Extending Wireless Telecommunications Services to Tribal
    Lands, *Second Report and Order and Second Further Notice of
    Proposed Rulemaking*, 18 FCC Rcd 4775 (2003).

[^196]: *See* Cingular Wireless Comments at 7-8; Cingular Wireless
    Petition at 3-4; Salmon PCS Comments at 4-5, 8.

[^197]: Each licensee notifying the Commission about a spectrum manager
    lease involving a license still subject to entrepreneur transfer
    restrictions or potentially subject to unjust enrichment obligations
    must certify that the lease does not affect the licensee's
    continuing eligibility to hold a license won in closed bidding or to
    retain bidding credit or installment payment benefits. *Report and
    Order* at ¶ 113; *see* *generally* 47 C.F.R. § 1.9020(e). The
    Commission retains the right to investigate the veracity of such
    certification, post-notification, and to terminate a spectrum
    manager leasing arrangement if it determines that the arrangement
    raises significant public interest concerns. *Report and Order* at ¶
    12; 47 C.F.R. § 1.9020(f).

[^198]: *See* 47 C.F.R § 1.2110(c)(2), (c)(5).

[^199]: *See id.* § 1.2110(c)(2)(ii)(F).

[^200]: *See id.* § 1.2110(c)(5)(x).

[^201]: *See id.* § 1.2110(c)(5)(ix).

[^202]: Salmon PCS Petition Reply Comments at 10-11; *see also* AT&T
    Wireless Comments at 9.

[^203]: We remind licensees that a change in that relationship
    subsequent to filing the spectrum manager lease notification could
    also adversely affect their ongoing eligibility for entrepreneur or
    designated entity benefits.

[^204]: Salmon PCS Petition Reply Comments at 6-8.

[^205]: We note that even a spectrum manager lease between two
    designated entities or entrepreneurs might give rise to questions of
    eligibility, if affiliation between the licensee and spectrum lessee
    were the result.

[^206]: 47 C.F.R. § 1.2110(c)(5)(viii).

[^207]: *Intermountain Microwave*, 12 FCC 2d 559 (1963); *see Part 1
    Fifth Report and Order*, 15 FCC Rcd at 15324 ¶ 61 (incorporating the
    *Intermountain Microwave* principles of control into section 1.2110
    of the Commission's rules).

[^208]: We clarify further that the licensee need not exert
    facilities-based control over the leased operations in order to
    maintain its designated entity or entrepreneur eligibility, except
    to the extent required by the *de facto* control standard for
    spectrum leasing arrangements. *See Report and Order* ¶ 65; 47
    C.F.R. § 1.9010.

[^209]: *See* 47 C.F.R. § 1.2110(c)(5)(i)(D).

[^210]: *See id.* § 1.2110(c)(5)(iii).

[^211]: *Id.* § 1.2110(c)(2)(ii)(H)-(I).

[^212]: *Id.* § 1.2110(c)(5)(ix).

[^213]: *See Report and Order* at ¶ 145.

[^214]: *See* Cingular Wireless Comments at 13-14; Salmon PCS Comments
    at 4-5, 7-8; *see also* Cingular Wireless Petition at 2-3. To the
    extent the clarification we provide herein is not consistent with
    the clarification sought by Cingular Wireless in its petition for
    reconsideration, we deny that petition.

[^215]: *See* Cingular Wireless Comments at 4-5 (citing *Report and
    Order* ¶ 109); Cingular Wireless Petition at 4-6; Salmon PCS
    Petition Reply Comments at 8. The language of paragraph 109 of the
    *Report and Order* is reproduced with a few stylistic changes at
    section 1.9020(d)(2)(i). *See* 47 C.F.R. § 1.9020(d)(2)(i).

[^216]: Cingular Wireless Comments at 5; Cingular Wireless Petition at
    4-5.

[^217]: *See* 47 C.F.R. § 1.9020(d)(4), as amended in Appendix C herein.
    Because the clarification we provide herein is partially consistent
    with the recommendation for clarification made by Cingular Wireless
    in its petition for reconsideration, we grant that petition in part
    on this issue.

[^218]: *See* AT&T Wireless Comments at 7-8; Cingular Wireless Comments
    at iii, 1, 12-14; Salmon PCS Comments at 8-11.

[^219]: *See* AT&T Wireless Comments at 8-9; Cingular Wireless Comments
    at 7-8; Salmon PCS Comments at ii, 4, 8, 10; Salmon PCS Petition
    Reply Comments at 9-11.

[^220]: *See* AT&T Wireless Comments at 9.

[^221]: *Id.*

[^222]: *See* H.R. Rep. No. 103-111, at 257-58 (1993) (Conference
    Agreement adopted House provisions, in relevant part, with
    amendments. H.R. Conf. Rep. No. 103-213, at 483 (1993).).

[^223]: *Report and Order* at ¶¶ 51-53.

[^224]: *Further Notice* at ¶¶ 315-319.

[^225]: Three commenters recommended that the new standard be applied to
    management agreements, without explaining how such a revision would
    impact existing policies concerning management agreements or why
    such revisions would be appropriate. AT&T Wireless Comments at 7-8;
    Cingular Wireless Comments at 12-14; Nextel Partners Reply Comments
    at 9. One of these also suggested that the new standard be applied
    when determining whether the licensee or spectrum lessee had control
    over the leased spectrum for purposes of determining whether
    potential competitive concerns were raised with regard to the
    arrangement. AT&T Wireless Comments at 8. Another suggested that the
    new standard to be applied to "all spectrum transactions" without
    elaboration. Nextel Partners Reply Comments at 9.

[^226]: *Further Notice* at ¶¶ 230-231. *See also Secondary Markets
    Policy Statement* at ¶¶ 6, 37; *Spectrum Policy Task Force Report*
    at 13-14, 55-58.

[^227]: *See Spectrum Policy Task Force Report* at 13-14, 27-30;
    *Cognitive Radio NPRM*, 18 FCC Rcd 26859.

[^228]: *Further Notice* at ¶¶ 233-236.

[^229]: *Id.* at ¶ 236. In the *Further Notice*, we used the term
    "smart" and "opportunistic" devices interchangeably. *Id.* at ¶ 231.
    The *Spectrum Policy Task Force Report* uses terms interchangeably
    as well. *Spectrum Policy Task Force Report* at 14. In the
    *Cognitive Radio NPRM*, we generally refer to these types of devices
    as cognitive radios. *See generally Cognitive Radio NPRM*, 18 FCC
    Rcd 26859.

[^230]: We discussed the potential technical capabilities of such
    cognitive radio in more detail in the *Cognitive Radio NPRM. See
    generally id.*, 18 FCC Rcd at 26866-26870 ¶¶ 20-32.

[^231]: While a secondary markets approach to promoting access to
    licensed spectrum is largely market-based and cooperative, other
    policy options to promoting such access are possible, including some
    that are not primarily based on cooperation among private actors and
    that may spring from Commission regulations. For example, in two
    proceedings currently before the Commission, we discuss a range of
    policy options, including cooperative approaches as well as the use
    of licensed spectrum without the licensee's consent. *See Cognitive
    Radio NPRM*, 18 FCC Rcd 26859; Establishment of an Interference
    Temperature Metric to Quantify and Manage Interference and to Expand
    Available Unlicensed Operation in Certain Fixed, Mobile and
    Satellite Frequency Bands, 18 FCC Rcd 25309 (2003).

[^232]: Verizon Wireless Comments at 5.

[^233]: *See* Blooston Rural Carriers Comments at 10; Cingular Wireless
    Comments at 8-9; CTIA Comments at 5-6; Nextel Partners Reply
    Comments at 10; SBC Comments at 6-7; Sprint Comments at 3-4;
    T-Mobile Reply Comments at 5-6; Verizon Wireless Comments at 4-5;
    WCA Comments at 8-9. Many of these commenters also argued that
    opportunistic use should not occur in licensed bands without the
    consent of the licensee.

[^234]: We are separately considering in the Cognitive Radio proceeding
    issues involved in the authorization of cognitive radio equipment,
    whether used in conjunction with licensed access to spectrum or
    under Part 15. *See generally Cognitive Radio NPRM*, 18 FCC Rcd
    26859.

[^235]: We also note that the Commission's existing rules allow
    providers of wireless network infrastructures, such as CMRS and
    other providers, to employ opportunistic devices and other advanced
    technologies so as to better serve existing subscribers or offer
    services to additional subscribers within a licensed band.
    Similarly, a licensee with a private network may employ
    opportunistic devices to enhance communications among users on its
    network. *See id.*, 18 FCC Rcd at 26863 ¶ 11.

[^236]: *See* Verizon Wireless Comments at 5. *See generally* Blooston
    Rural Carriers Comments at 10; Cingular Wireless Comments at 8-9;
    CTIA Comments at 5-6; Nextel Partners Reply Comments at 10; SBC
    Comments at 6-7; Sprint Comments at 3-4; T-Mobile Reply Comments at
    5-6; Verizon Wireless Comments at 4-5; WCA Comments at 8-9.

[^237]: An example of such an arrangement would be a cellular licensee
    that leases to a manufacturer of low-power opportunistic devices for
    use of the licensed spectrum on a non-interfering basis.

[^238]: Although several commenters contended that opportunistic use
    should not occur in licensed bands without the consent of the
    licensee, *see* note 233 *supra*, we note that the Commission will
    generally continue to consider the benefits of Part 15 access on a
    band-by-band basis.

[^239]: Under sections 15.205 and 15.209 of the Commission's rules,
    unlicensed devices are permitted to operate at very low power levels
    in all bands except certain specified restricted bands. 47 C.F.R. §§
    15.205, 15.209.

[^240]: *Spectrum Policy Task Force Report* at 57.

[^241]: *Id.*

[^242]: *See* 47 C.F.R. § 15.249.

[^243]: *See generally Cognitive Radio NPRM*, 18 FCC Rcd at 26888-26889
    ¶¶ 77-80.

[^244]: Consistent with our discussion of dynamic leasing arrangements,
    the general ability of a licensee to deploy a private commons model
    is not intended to, and does not, overturn rights under Part 15, as
    it exists or as amended, to operate in a band or limit the
    Commission's ability to implement new underlay approaches when
    considering particular bands. For instance, a licensee could not, as
    its own technical condition, restrict the emission limits of devices
    in a private commons to a level below the level authorized for that
    band under the Commission's Part 15 rules for unlicensed devices,
    such as UWB devices, and thereby eliminate the opportunity for such
    devices to use that spectrum.

[^245]: Such technical requirements, of course, would have to be
    consistent with all of the Commission's technical rules applicable
    to the service or band at issue for preventing interference to other
    licensees.

[^246]: We note that the private commons option is not designed to
    provide a potential means to evade Commission policies and rules
    applicable to spectrum leasing arrangements, as set forth in the
    *Report and Order.* *See* para. 90, *supra*.

[^247]: *See* Cingular Wireless Comments at 8-10; CTIA Comments at 5-6;
    SBC Comments at 6; Sprint Comments at 3 (supporting the provision of
    access to licensed spectrum by "opportunistic" third parties through
    secondary markets mechanisms); WCA Comments at 9. *See also* Stuart
    Minor Benjamin, *Spectrum Abundance and the Choice Between Private
    and Public Control*, 78 N.Y.U. L. Rev. 2007 (2003).

[^248]: *See* Nextel Partners Reply Comments at 10; Verizon Comments at
    4.

[^249]: *See* Cingular Wireless Comments at iii; T-Mobile Reply Comments
    at 5.

[^250]: As with spectrum leases, the spectrum usage rights in a private
    commons cannot exceed the rights granted the licensee in the first
    instance.

[^251]: Thus, as with a licensee under a spectrum manager leasing
    arrangement that retains *de facto* control (under the revised *de
    facto* control standard for spectrum leasing) and direct
    responsibility for its spectrum lessee's compliance, so too the
    licensee or spectrum lessee acting as the private commons manager
    must retain *de facto* control and direct responsibility for users
    of the private commons. And, as with spectrum leasing arrangements,
    the licensee or spectrum lessee retains the right to terminate the
    private commons arrangement.

[^252]: *See Cognitive Radio NPRM*, 18 FCC Rcd at 26888-26889 ¶¶ 77-80.
    These types of peer-to-peer communications made possible by advanced
    technologies, *see generally id.*, are thus distinct from the
    traditional, hierarchical end-to-end physical network
    infrastructures (*e.g.*, base stations, mobile stations, or related
    elements) operated by licensees and spectrum lessees.

[^253]: As discussed herein, the kind of users and uses expected in a
    private commons are akin to those involved with unlicensed uses, and
    we do not require that the Commission be informed of the identity of
    each such device user even though such use occurs in licensed bands.
    *See generally* 47 C.F.R. Part 15 (permitting unlicensed users to
    operate in licensed bands). Also, because the licensee or spectrum
    lessee always retains *de facto* control over the use of the
    spectrum in the private commons, users share certain similarities
    with end-users about whom the Commission does not know the identity.
    Accordingly, the policies that led us to require that we be notified
    of the identity of spectrum lessees, such as potential foreign
    ownership or competition concerns, *see generally Report and Order*
    at ¶¶ 100-125, 133-159 (requiring that the Commission be informed of
    the identity of the spectrum lessee and determining, among other
    things, that spectrum leasing arrangements potentially raised
    foreign ownership and competition concerns), do not apply with
    regard to users in a private commons. []{.mark}

[^254]: We invite licensees or spectrum lessees uncertain as to whether
    the arrangements they contemplate constitutes a private commons to
    seek informal or formal guidance from the Commission during the
    pendancy of the Second Further Notice of Proposed Rulemaking.

[^255]: These include emerging cognitive radio technologies that allow
    multiple users to share use of the same spectrum through adaptive
    techniques that enable users to avoid conflicts in terms of time,
    frequency, code, and other signal characteristics, such as those
    being developed by the Defense Advanced Research Projects Agency
    (DARPA). DARPA's goals are to enable an increase by a factor of ten
    in usage of typical spectrum, and is aiming to develop technology
    that is applicable not only to the military, but also could be
    applied for civil use. *See generally*
    http://[www.darpa.mil/ato/programs/XG](http://www.darpa.mil/ato/programs/XG)/rfc_vision.pdf
    (discussion of DARPA's "neXt Generation" (XG) program).

[^256]: *See, e.g.,* Yochai Benkler,*Overcoming Agoraphobia; Building
    the Commons of the Digitally Networked Environment*, 11 Harv. J. L.
    & Tech. 287 (1998); Benkler, *Some Economics of Wireless
    Communications*, 16 Harv. J. L. & Tech. 25 (2002); Lawrence Lessig,
    *The Future of Ideas: The Fate of the Commons in a Connected World*,
    New York: Random House (2002); Lawrence Lessig, *Commons and Code*,
    9 Fordham Intell. Prop. Media & Ent. L. J. 405 (1999); Kevin
    Werbach, *Supercommons: Towards a Unified Theory of Wireless
    Communications*, 82 Tex. L. Rev. 863 (2004).

[^257]: *See* Stuart Minor Benjamin, *Spectrum Abundance and the Choice
    Between Private and Public Control*, 78 N.Y.U. L. Rev. 2007 (2003);
    Thomas Hazlett, *The Wireless Craze, the Unlimited Bandwidth Myth,
    the Spectrum Auction Faux Pas, and the Punchline to Ronald Coase's
    'Big Joke': An Essay on Airwave Allocation Policy*," 14 Harv. J. L.
    & Tech 335 (2001).

[^258]: *See* Garrett Hardin, *The Tragedy of the Commons*, Science 162:
    1243-1248 (1968).

[^259]: *See generally Further Notice* at ¶¶ 237-240.

[^260]: *Id.* at ¶¶ 240, 278-287.

[^261]: *See* Sections IV.A.1.a and IV.A.1.b, *supra.* We also note
    that, as with immediate processing of *de facto* transfer leases,
    changes must be made with regard to ULS in order to implement
    immediate processing of license assignments and transfers of
    control. *See* para. 30, *supra.* Thus, we direct the Bureau to
    undertake as soon as practicable the necessary programming changes
    to implement the provisions of this Second Report and Order and to
    modify as necessary any licensing databases. Once ULS is updated to
    permit the immediate approval process, we further direct the Bureau
    to release a public notice notifying the public that the new
    procedures are available. *See id.*

[^262]: All commenting parties supported applying the same forbearance
    approach adopted for *de facto* transfer leases to license
    assignments and transfers of control. *See, e.g.*, CTIA Comments at
    3-4; SBC Comments at 7-10; T-Mobile Reply Comments at 6-8; WCA
    Comments at 11-15.

[^263]: That is, parties to a license assignment or transfer of control
    application would qualify for immediate approval processing only
    insofar as the they establish the same qualifications for the
    application as is required of the licensee and spectrum lessee in a
    *de facto* transfer lease application that would be subject to
    immediate approval. *See* Section IV.A.1.a(ii), *supra.*

[^264]: *See id.*

[^265]: If there is a pending question as to whether the license is
    subject to revocation, cancellation, or termination (*e.g.*, where
    the initial construction requirements for a site-based license may
    have not been met, as required under our rules (*e.g.*, sections
    90.155, 90.631(e)), or where there has been a permanent
    discontinuation of services, in contravention of our rules (*e.g.*,
    sections 90.157, 90.631(f)), we determine that a license assignment
    or transfer of control cannot proceed under these procedures. *See,
    e.g.*, 47 C.F.R. §§ 90.155, 90.157, 90.631(e)-(f).

[^266]: *See* para. 31, *supra.* To the extent a license assignment or
    transfer of control involving a Wireless Radio Service does not
    qualify for this streamlined application/immediate grant processing,
    we will process the application pursuant to the procedures we
    adopted in the *Report and Order.* *See Report and Order* at ¶¶
    197-198. Once received, the applications will be placed on public
    notice (if required by the service involved). They will then be
    reviewed and approved by the Commission within twenty-one (21) days
    unless they are removed from this processing because of the need for
    further investigation or consideration, or if they are denied, for
    raising potential public interest concerns identified by the
    Commission or in petitions to deny. *Id.*

[^267]: *See Report and Order* at ¶ 195; *see also Secondary Markets
    Policy Statement*, 15 FCC Rcd 24178 ¶ 1, 24181 ¶ 9, 24182-24183 ¶
    12, 24185-24186 ¶¶ 18-20, 24191 ¶ 32, 24192 ¶ 34 (2000); Principles
    for Reallocation of Spectrum to Encourage the Development of
    Telecommunications Technologies for the New Millennium, *Policy
    Statement*, 14 FCC Rcd 19868, 19872 ¶ 13 (1999) (*Policy Statement
    on Principles for Spectrum Allocation*). In addition, we note that
    the *Spectrum Policy Task Force* supported the need for the
    Commission to identify ways in which it can streamline its
    regulatory processes in order to facilitate a range of secondary
    market activities -- spectrum leasing as well as other transactions,
    whether transfers of control of licensees or assignment of licenses,
    in whole or in part. *See Spectrum Policy Task Force Report* at 15,
    57.

[^268]: We note that the procedures we are adopting in this Second
    Report and Order do not revise existing Commission policies
    pertaining to *pro forma* or involuntary transactions.

[^269]: *See* paras. 15-28, *supra* (identifying categories of
    transactions involving *de facto* transfer spectrum leasing
    arrangements that would not be subject to the forbearance approach
    outlined in this Second Report and Order).

[^270]: We note that the 30-day notice and comment period under Section
    309(b) applies to common carrier licenses but not to Private Mobile
    Radio Services (PMRS) licenses. *See* 47 U.S.C. § 309(b)-(c).

[^271]: Earlier in this Second Report and Order we similarly discussed
    spectrum leasing parties' accountability for their certifications
    when seeking to avail themselves of immediate approval procedures
    for *de facto* transfer lease applications. *See* para. 33, above.

[^272]: We have already determined, in the *Report and Order*, that a
    full 30-day public notice period is not required for any *de facto*
    transfer lease applications. *Report and Order* at ¶¶ 155-159
    (reducing the public notice requirement to 21 days).

[^273]: *See* Craig O. McCaw, *Memorandum Opinion and Order*, 9 FCC Rcd
    5836, 5880-5881 ¶ 76 (1994), *aff'd sub nom. SBC Communications,
    Inc. v. FCC*, 56 F.3d 1484 (D.C. Cir. 1995), *recon. in part*, 10
    FCC Rcd 11786 (1995).

[^274]: *Further Notice* at ¶ 271.

[^275]: *See* para. 36, *supra*; *see also Report and Order* at ¶¶ 32,
    39-45.

[^276]: *Report and Order* at ¶ 196; *see also* 47 C.F.R. §§ 1.948(j),
    1.9005.

[^277]: *Further Notice* at ¶ 314.

[^278]: Accordingly, all license assignment and transfer of control
    applications for Wireless Radio Services governed by section 1.948
    and that must use FCC Form 603, with the exception of the Broadcast
    Auxiliary Service, are now subject to streamlined approval
    processing or immediate approval processing.

[^279]: *See* Section IV.C.1.b, *supra.* We note that many of these
    services, by virtue of the applicable rules, do not raise potential
    public interest concerns pertaining to designated
    entity/entrepreneur restrictions or competition.

[^280]: *Further Notice* at ¶ 224.

[^281]: *Report and Order* at ¶¶ 124, 153; *Further Notice* at ¶ 224.

[^282]: *Further Notice* at ¶¶ 225-226.

[^283]: *Id.* at ¶ 227.

[^284]: *Id.* at ¶ 228.

[^285]: *Id.* at ¶ 226.

[^286]: Almost all commenting parties opposed requiring additional
    information-gathering by the Commission. *See* AT&T Wireless
    Comments at 2-4; Blooston Rural Carriers Comments at 9-10; Cingular
    Wireless Comments at 14-15; CTIA Comments at 6; Nextel
    Communications Comments at 3-6; Nextel Partners Reply Comments at
    6-7; PCIA Comments at 4-5; SBC Comments at 2-4; Sprint Comments at
    6-7; Verizon Wireless Comments at 2-3; WCA Comments at 10-11;
    T-Mobile Reply Comments at 6. They asserted that, in the event
    additional mechanisms are needed, private entities would provide
    them. Several commenters asserted that the Commission nonetheless
    had a key role to play in maintaining the quality of information in
    its ULS database. *See* Blooston Rural Carriers Comments at 8;
    Nextel Communications Comments at 3; Nextel Partners Reply Comments
    at 6; SBC Comments at 3-4; Verizon Wireless Comments at 2.

[^287]: *Report and Order* at ¶¶ 124, 153. As noted in the *Report and
    Order*, we require spectrum leasing parties to provide, among other
    things: information on the identity of the spectrum lessee; the
    specific spectrum being leased (in terms of amount, frequency, and
    geographic area involved), including the call sign affected by the
    lease; the term of the spectrum lease; and, certifications regarding
    the spectrum lessee's basic qualifications, eligibility, and other
    matters required under the applicable spectrum leasing policies.
    *Id*. at ¶¶ 124, 153.

[^288]: We note, too, that not only are our ULS database files available
    for review, but they can also be downloaded by the public and
    customized to address varying needs.

[^289]: There was little support for the Commission taking any
    additional action with regard to promoting the development of
    market-makers. Only one party recommended that the Commission
    designate an entity to perform market-making functions, such as
    verifying the financial viability of parties and providing
    guaranteed funds transfers. *See* Cantor Fitzgerald Telecom Comments
    at 3-4. In addition, one commenter recommended that the Commission
    take steps to "fertilize" the development of market-makers,
    suggesting that the Commission join with NTIA to host a "Spectrum
    Market Makers Conference" annually for the next three years. Winstar
    Comments at 2. No commenter recommended that the Commission assume
    the role of broker or market-maker.

[^290]: *See* Blooston Rural Carriers Petition for Partial
    Reconsideration and/or Clarification; Cingular Wireless Petition for
    Reconsideration and Clarification; First Avenue Networks Petition
    for Reconsideration; NTCA Petition for Partial Reconsideration;
    Verizon Wireless Petition for Reconsideration and Clarification.

[^291]: We received reply comments from Salmon PCS and RTG, an
    opposition from the Fixed Wireless Communications Coalition, and an
    *ex parte* letter from PCIA's Microwave Cost Sharing Clearinghouse.
    *See* Salmon PCS Petition Reply Comments; RTG Petition Reply
    Comments (dated Feb. 13, 2004); Fixed Wireless Communications
    Coalition Opposition to Petition for Reconsideration; Letter to
    Katherine Harris, Deputy Chief, Mobility Division, from Eric W.
    DeSilva, Counsel to PCIA's Microwave Cost Sharing Clearinghouse
    (dated Mar. 25, 2004).

[^292]: Blooston Rural Carriers Petition at 2-4, 9-11; Cingular Wireless
    Petition at 6-8; NTCA Petition at 2-3.

[^293]: Verizon Petition at 1-3.

[^294]: Cingular Wireless Petition at 8-9 (seeking additional
    protections for licensees in the context of spectrum manager
    leases); Verizon Wireless Petition at 2-3 (seeking additional
    protections for spectrum lessees in the context of *de facto*
    transfer leases).

[^295]: Blooston Rural Carriers Petition at 4-7; Cingular Wireless
    Petition at 8-9; NTCA Petition at 3-4.

[^296]: Blooston Rural Carriers Petition at 7-9.

[^297]: Cingular Wireless Petition at 9-10.

[^298]: First Avenue Networks Petition at 1-4.

[^299]: *See* para. 47, *supra.* Given that we have revised our policies
    regarding spectrum manager leases so as to permit spectrum lessees
    in most Wireless Radio Services to commence operations under a lease
    as soon as the spectrum manager leasing notification is filed, we
    have granted First Avenue Network's Petition. *See id.*

[^300]: Cingular Wireless Petition at 1-6; *see also* Salmon PCS
    Petition Reply Comments at 5-14.

[^301]: *See* paras. 70-71 & n.175, 76-81 & nn.196, 214, 217, *supra.*
    Specifically, when we clarified the policies applicable to
    designated entity and entrepreneur licensees that seek to enter into
    spectrum leasing arrangements, we affirmed in part but otherwise
    denied Cingular Wireless's petition for reconsideration with regard
    to the revisions it sought concerning the policies we adopted in the
    *Report and Order.* *See id.*

[^302]: *Report and Order* at ¶ 67.

[^303]: *Id.*

[^304]: *Id.*; 47 C.F.R. § 1.9010(b)(1)(iii).

[^305]: Cingular Wireless Petition at 6.

[^306]: Blooston Rural Carriers Petition at 9-11.

[^307]: We note, however, that there are some actions by spectrum
    lessees for which licensees are not directly or strictly
    accountable. They include certain certifications by spectrum lessees
    regarding eligibility matters for which the licensee is not directly
    accountable, as well as lessees' compliance with rules and policies
    not directly related to the use of the leased spectrum. *Report and
    Order* at ¶¶ 69, 101-104.

[^308]: Indeed, spectrum lessees under spectrum manager leases do not
    hold an authorization (in contrast to spectrum lessees under *de
    facto* transfer leases), and thus are not brought within the scope
    of the Commission's direct forfeiture procedures under Section
    503(b) of the Act. *See id.* at ¶ 137 (discussing spectrum lessees'
    direct accountability, in *de facto* transfer leasing arrangements,
    for forfeitures under Section 503(b)).

[^309]: *Id.* at ¶¶ 135-136.

[^310]: Cingular Wireless asserted that such a standard would require
    the licensee to be in a position to supervise and control the
    spectrum lessee's day-to-day operations akin to a licensee's
    responsibilities when entering into a spectrum manager lease.
    Cingular Wireless Petition at 6-8.

[^311]: Cingular Wireless Petition at 7-8.

[^312]: Blooston Rural Carriers Petition at 3-4.

[^313]: NTCA Petition at 2-3.

[^314]: *Report and Order* at ¶¶ 137-138.

[^315]: *See id.* at ¶ 136.

[^316]: *See* 47 C.F.R. § 1.9040(a)(i).

[^317]: *See, e.g., Report and Order* at ¶¶ 67, 101, 136.

[^318]: 47 C.F.R. § 1.9040(a)(i).

[^319]: Verizon Wireless Petition at 1-3.

[^320]: For instance, to ensure that licensees retain *de facto*
    control, the spectrum lease might provide that the lease will be
    terminated if the spectrum lessees do not remedy any violations
    within a very short timeframe.

[^321]: *See* paras. 125-127, *supra.*

[^322]: *Report and Order* at ¶ 124. Following adoption of the Second
    Report and Order, above, leasing parties that submit a qualifying
    spectrum manager lease notification that raises no specified
    potential public interest concerns may commence operations
    immediately after that notification has been successfully processed.
    *See* Section IV.A.1.d, *supra.*

[^323]: *Report and Order* at ¶¶ 124-125.

[^324]: As noted in the *Report and Order*, Commission review of a
    spectrum manager lease might be initiated if information were to
    come to the attention of Bureau staff that suggested a potential
    problem with the lease under the applicable rules and policies.
    *Id.* at ¶ 125. We also stated that interested parties could seek
    informal guidance or a formal determination from the Commission
    regarding a particular lease arrangement by means of a letter to the
    Commission, a petition, or a complaint, doing so in the same manner
    that they raise questions about the permissibility of particular
    management agreements or other business transactions. *Id.* at ¶¶
    124-125.

[^325]: 47 U.S.C. §§ 312, 316. These provisions provide certain
    procedural protections in the event the Commission seeks to revoke
    or modify of licenses or construction permits. *See generally* 47
    U.S.C. §§ 312, 316.

[^326]: Cingular Wireless Petition at 8-9.

[^327]: We have already explained the procedures we will follow if the
    spectrum manager leasing arrangement qualifies for the immediate
    processing procedures set forth in the Second Report and Order, and
    we will not reiterate those procedures here. *See* Section IV.A.1.d,
    *supra.*

[^328]: *See Report and Order* at ¶¶ 124-125.

[^329]: *See id.* at ¶ 124. Interested parties may file a petition for
    reconsideration under the same procedures that apply with regard to
    spectrum manager leases under the immediate processing procedures
    discussed in the Second Report and Order, above. *See* para. 49,
    *supra.*

[^330]: For instance, if a licensee files a spectrum manager lease
    notification that potentially raises a competitive issue, or
    potentially could cause a designated entity licensee to lose its
    designated entity status under a particular spectrum manager lease,
    the Bureau may require submission of additional information from the
    parties prior to commencement of operations under the spectrum
    leasing arrangement.

[^331]: *See Report and Order* at ¶ 125.

[^332]: This is consistent with the policies applicable to *de facto*
    transfer leases. *See* paras. 33, 39, 43, *supra.*

[^333]: *Report and Order* at ¶¶ 137-138.

[^334]: Verizon Wireless Petition at 2-3.

[^335]: *Report and Order* at ¶ 187 & n.364.

[^336]: Cingular Wireless Petition at 9.

[^337]: Blooston Rural Carriers Petition at 4-7.

[^338]: NTCA Petition at 3-4.

[^339]: RTG Reply Comments to Blooston Rural Carriers's and NTCA's
    Petitions at 3.

[^340]: We point out that if spectrum lessees parties want greater
    rights than afforded under our spectrum leasing policies, they may
    explore acquiring the necessary spectrum as the licensees
    themselves.

[^341]: In this proceeding, we have sought to remove impediments to
    leasing and even facilitate spectrum leasing. We have not, however,
    sought to use regulatory policies to distort the marketplace in
    favor of spectrum leasing. Spectrum leasing and spectrum
    acquisitions are different types of arrangements, with different
    business and regulatory effects.

[^342]: Of course, nothing restricts the spectrum lessee from trying to
    obtain the new license under applicable Commission policies.

[^343]: *See Report and Order* at ¶ 187 n.364.

[^344]: *Id.* at ¶¶ 114-115, 146.

[^345]: Blooston Rural Carriers Petition at 7-9.

[^346]: RTG Reply to Petitions at 2.

[^347]: In addition, we note that if the licensee anticipates that it
    may fail to meet its buildout obligations, it may request an
    extension of the deadline for meeting those obligations by seeking
    to show, under the specific factual showing required under our
    existing policies and rules relating to extension. *See, e.g.*, 47
    C.F.R. § 1.946(e).

[^348]: *See* 47 C.F.R. §§ 24.239-24.253. *See also* Amendment to the
    Commission's Rules Regarding a Plan for Sharing the Costs of
    Microwave Relocation, *First Report and Order and Further Notice of
    Proposed Rule Making*, 11 FCC Rcd 8825 (1996) (subsequent history
    omitted).

[^349]: 47 C.F.R. § 24.239.

[^350]: Cingular Wireless Petition at 9-10.

[^351]: Fixed Wireless Communications Coalition Opposition to Petition
    for Reconsideration at 2-5.

[^352]: Letter to Katherine Harris, Deputy Chief, Mobility Division,
    from Eric W. DeSilva, Counsel to PCIA's Microwave Cost Sharing
    Clearinghouse (dated Mar. 25, 2004).

[^353]: *Id.* at 1-2.

[^354]: *See Report and Order* at ¶¶ 114-115, 146.

[^355]: We note that if a spectrum lessee was solely responsible for
    reimbursement and the license was assigned or underwent a transfer
    of control in which the lease did not also convey, it could be
    difficult for an entity that is owed reimbursement to obtain
    satisfaction from the spectrum lessee.

[^356]: We also make corrections to typographical errors in the rules
    adopted in the *Report and Order*. Specifically, in § 1.9010(b)(i),
    we replace the reference to "§ 1.9020(d)" with the correct reference
    to § 1.9020(e)." In addition, we replace reference to "§ 1.911(d)"
    in our rules (which does not exist) with "§ 1.913(d)" when citing to
    the Commission's rules regarding manual filing. *See* 47 C.F.R. §
    1.913(d).

[^357]: *See Report and Order* at ¶ 39.

[^358]: *See* 47 C.F.R. §§ 101.603(b), 101.701.

[^359]: *See*, *e.g.*, 47 C.F.R. §§ 90.313(c), 90.625(a), 90.633(b).

[^360]: *See*, *e.g.*, 47 C.F.R. §§ 80.511, 90.625(a), 90.627(b)(2),
    90.631(c).

[^361]: *See*, *e.g.*, Viking Dispatch Services, Inc., *Memorandum
    Opinion and Order*, 14 FCC Rcd 18814, 18820 n.42 (1999) (*Viking*);
    Amendment of Section 90.631 of the Commission's Rules and
    Regulations Concerning Loading Requirements for 900 MHz Trunked SMR
    Stations, *Report and Order*, 7 FCC Rcd 4914, 4915 ¶ 11 (1992).

[^362]: *Viking*, 14 FCC Rcd at 18820 ¶ 10.

[^363]: *Report and Order* at ¶ 248; *see also id.* at ¶ 102 ("Spectrum
    leasing cannot be used by licensees and lessees as a means of
    thwarting or abusing the basic qualifications and eligibility
    policies applicable to licensees.").

[^364]: *See also Report and Order* at ¶¶ 112 (use restrictions
    applicable to spectrum manager leases), 144 (use restrictions
    applicable to long-term *de facto* transfer leases); 47 C.F.R. §§
    1.9020(d)(3), 1.9030(d)(3); *see also id.* at ¶ 177 (stating that
    for purposes of establishing that performance or buildout
    obligations are met, licensees in short-term *de facto* transfer
    leases may not attribute to themselves the performance or buildout
    activities of spectrum lessees); 47 C.F.R. § 1.9035(d)(2) (same). We
    do note, however, that once licensees have met the requirements,
    consistent with the clarification provided herein, and have obtained
    the licenses, they will later be able to enter into spectrum leasing
    arrangements pursuant to the spectrum leasing policies for these
    services as established in the *Report and Order.* And, to the
    extent that previous Commission or Bureau decisions in *Viking* and
    *East River* would have prohibited the types of spectrum leasing
    arrangements permitted in the *Report and Order*, those decisions
    are modified. *See Viking*, 14 FCC Rcd 18814; East River Electric
    Power Cooperative, *Memorandum Opinion and Order*, 13 FCC Rcd 5871
    (WTB) (1997) (*East River*).

[^365]: *See* 47 C.F.R. § 1.9003.

[^366]: *See* 47 C.F.R. § 1.9045(b).

[^367]: *See Report and Order* at ¶¶ 188-189.

[^368]: *See id.* at ¶¶ 117, 147; 47 C.F.R. §§ 1.9020(d)(6),
    1.9030(d)(6).

[^369]: *See Rural Report and Order.*

[^370]: *See id.* at Appendix B (Final Rules) (discussing FCC Form 603
    in newly adopted code provisions at 47 C.F.R. §§ 1.913(a)(3), 1.9003
    (definition of "FCC Form 603"), 1.9020(e)(4), 1.9030(e), 1.9035(e)).

[^371]: *See* Section IV.B.2, *supra.*

[^372]: *See* para. 89, *supra.*

[^373]: *See generally* Section IV.B.2, *supra.*

[^374]: This example is similar to a spectrum manager lease arrangement
    under our current secondary markets framework, but in this case, the
    communications equipment and devices that conform to the licensee's
    specifications (and the Commission's rules) would be owned and
    controlled by the users, not the licensee, lessee or the
    intermediary.

[^375]: *See generally* Section IV.B.2, *supra.*

[^376]: *See* para. 94, *supra.*

[^377]: *See* para. 97, *supra.*

[^378]: 47 C.F.R. §§ 1.415, 1.419.

[^379]: Electronic Filing of Documents in Rulemaking Proceedings, 63
    Fed. Reg. 24121 (1998).

[^380]: *See* "FCC Announces a New Filing Location for Paper Documents
    and a New Fax Number for General Correspondence," *Public Notice*,
    DA 01-2919 (rel. Dec. 14, 2001); "Reminder\[:\] Filing Locations for
    Paper Documents and Instructions for Mailing Electronic Media,"
    *Public Notice*, DA 03-2730 (rel. Aug. 22, 2003).

[^381]: *See* "Reminder\[:\] Filing Locations for Paper Documents and
    Instructions for Mailing Electronic Media," *Public Notice*, DA
    03-2730 (rel. Aug. 22, 2003).

[^382]: 47 C.F.R. § 1.1206.

[^383]: 47 C.F.R. § 1.1206(b)(2).

[^384]: *See* 5 U.S.C. § 604.

[^385]: *Id.*

[^386]: *Id.* § 604(a).

[^387]: *See* 5 U.S.C. §603. The RFA, *see* 5 U.S.C. §§ 601-612, has
    been amended by the Small Business Regulatory Enforcement Fairness
    Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857
    (1996).

[^388]: *See generally* Promoting Efficient Use of Spectrum Through
    Elimination of Barriers to the Development of Secondary Markets,
    *Report and Order and Further Notice of Proposed Rulemaking*, 18 FCC
    Rcd 20604 (Appendix D) (2003) (*Report and Order* and *Further
    Notice*, respectively), *Erratum*, 18 FCC Rcd 24817 (2003).

[^389]: *See* 5 U.S.C. § 604. We also note that this proceeding is
    deregulatory in nature, and that some of the issues discussed here
    could perhaps have been certified under 5 U.S.C. § 605.

[^390]: *See* Second Report and Order, Section IV, *supra*

[^391]: *See* Order on Reconsideration, Section V, *supra.*

[^392]: *See generally* *Report and Order* at ¶¶ 2, 32-189.

[^393]: "Designated entities" include small businesses, rural telephone
    companies, and businesses owned by members of minority groups and/or
    women. Through the years, the Commission has implemented policies to
    help ensure that these entities are given the opportunity to provide
    spectrum-based services, consistent with Sections 309(j)(3) and (4)
    of the Communications Act. *See generally* 47 U.S.C. §§ 309(j)(3),
    (4); 47 C.F.R. § 1.2110; Implementation of Section 309(j) of the
    Communications Act -- Competitive Bidding, *Second Report and
    Order*, 9 FCC Rcd 2348 (1994).

[^394]: *See generally* Second Report and Order at paras. 10-50.

[^395]: The Commission reserves the right to take longer than 21 days if
    the spectrum leasing transaction raises potential public interest
    concerns requiring additional review.

[^396]: *See generally* Second Report and Order at paras. 10-50.

[^397]: *See id.* at paras. 15-45.

[^398]: *See id.* at paras. 15-37.

[^399]: *See id.* at paras. 39-41.

[^400]: *See id.* at paras. 47-50.

[^401]: *See id.* at paras. 31-32, 39, 43, 49.

[^402]: *See id.* at paras. 69-84.

[^403]: *See id.* at paras. 52-66.

[^404]: *See id.* at paras. 91-99.

[^405]: *See id.* at paras. 101-108.

[^406]: *See id.* at paras. 110-111.

[^407]: *See generally* Order on Reconsideration at paras. 116-157.

[^408]: See RTG Petition at 1-4.

[^409]: *See* Blooston Rural Carriers Petition at 10-11.

[^410]: *See id.* at 24-25.

[^411]: *Further Notice* at ¶ 323.

[^412]: *Id.*

[^413]: *See* *Intermountain Microwave*, 12 FCC 2d 559 (1963); *see also
    Report and Order* at ¶¶ 3, 10, 60; Matter of Amendment of Part 1 of
    the Commission's rules -- Competitive Bidding Procedures, *Order on
    Reconsideration of the Third Report and Order, Fifth Report and
    Order, and Fourth Further Notice of Proposed Rule Making*, 15 FCC
    Rcd 15293, 15324 ¶ 61 (2000) (*Part 1 Fifth Report and Order*).

[^414]: *Further Notice* at ¶ 317.

[^415]: *Id.*

[^416]: *See* AT&T Wireless Comments at 8-9; Cingular Wireless Comments
    at ii, 2-4, 6-8; Cingular Wireless Petition at 2-4; Council Tree *Ex
    Parte* Comments at 3, 14-17; Salmon PCS Comments at 8-11.

[^417]: *See* Blooston Rural Carriers Comments at 3-5; RTG Comments at
    5-7.

[^418]: *See* 47 U.S.C. § 309(j).

[^419]: *See* Second Report and Order at paras. 67-82.

[^420]: Blooston Rural Carriers Petition at 2-4; 9-11; Cingular Wireless
    Petition at 6-8; NTCA Petition at 2-3.

[^421]: Verizon Petition at 1-3.

[^422]: Blooston Rural Carriers Petition at 7-9.

[^423]: Cingular Wireless Petition at 9-10.

[^424]: *Id.* at 8-9 (seeking additional protections for licensees in
    the context of spectrum manager leases); Verizon Wireless Petition
    at 2-3 (seeking additional protections for spectrum lessees in the
    context of *de facto* transfer leases).

[^425]: Blooston Rural Carriers Petition at 4-7; Cingular Wireless
    Petition at 8-9; NTCA Petition at 3-4.

[^426]: *See generally* Order on Reconsideration at paras. 69-82.

[^427]: 5 U.S.C. § 604(a)(3).

[^428]: 5 U.S.C. § 601(6).

[^429]: 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."

[^430]: 15 U.S.C. § 632.

[^431]: Consequently, to assist the Commission in analyzing the total
    number of potentially affected small entities, we requested
    commenters to estimate the number of small entities that might have
    been affected by any rule changes resulting from the *Further
    Notice*.

[^432]: 13 C.F.R. § 121.201, North American Industry Classification
    System (NAICS) code 517212.

[^433]: *Id*.

[^434]: U.S. Census Bureau, 1997 Economic Census, Subject Series:
    Information, "Establishment and Firm Size (Including Legal Form of
    Organization)," Table 5, NAICS code 513322 (October 2000).

[^435]: 13 C.F.R. § 121.201, NAICS code 517212.

[^436]: U.S. Census Bureau, 1997 Economic Census, Subject Series:
    Information, "Establishment and Firm Size (Including Legal Form of
    Organization)," Table 5, NAICS code 513322 (October 2000).

[^437]: Amendment of Part 90 of the Commission's Rules to Provide For
    the Use of the 220-222 MHz Band by the Private Land Mobile Radio
    Service, *Third Report and Order*, 12 FCC Rcd 10943, 11068‑70 ¶¶
    291‑295 (1997).

[^438]: *Id.* at 11068 ¶ 291.

[^439]: *Id.*

[^440]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    January 6, 1998.

[^441]: *See generally* "220 MHz Service Auction Closes," *Public
    Notice*, 14 FCC Rcd 605 (WTB 1998).

[^442]: *See* "FCC Announces It is Prepared to Grant 654 Phase II 220
    MHz Licenses After Final Payment is Made," *Public Notice*, 14 FCC
    Rcd 1085 (WTB 1999).

[^443]: *See* "Phase II 220 MHz Service Spectrum Auction Closes,"
    *Public Notice*, 14 FCC Rcd 11218 (WTB 1999).

[^444]: *See* "Multi-Radio Service Auction Closes," *Public Notice*, 17
    FCC Rcd 1446 (WTB 2002).

[^445]: *See* Reallocation and Service Rules for the 698-746 MHz
    Spectrum Band (Television Channels 52-59), *Report and Order*, 17
    FCC Rcd 1022 (2002).

[^446]: *Id.* at 1087-88 ¶ 172.

[^447]: *Id.*

[^448]: *Id.* at 1088 ¶ 173.

[^449]: *See* Letter to Thomas Sugrue, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    August 10, 1999.

[^450]: *See* "Lower 700 MHz Band Auction Closes," *Public Notice*, 17
    FCC Rcd 17272 (WTB 2002).

[^451]: *See* "Lower 700 MHz Band Auction Closes," *Public Notice*, 18
    FCC Rcd 11873 (WTB 2003).

[^452]: *Id*.

[^453]: Service Rules for the 746-764 and 776-794 MHz Bands, and
    Revisions to Part 27 of the Commission's Rules, *Second Memorandum
    Opinion and Order*, 16 FCC Rcd 1239 (2001).

[^454]: *See* "Auction of Licenses for 747-762 and 777-792 MHz Bands
    (Auction No. 31) Is Rescheduled," *Public Notice*, 16 FCC Rcd 13079
    (WTB 2003).

[^455]: Revision of Part 22 and Part 90 of the Commission's Rules to
    Facilitate Future Development of Paging Systems, *Second Report and
    Order*, 12 FCC Rcd 2732, 2811-2812 ¶¶ 178-181 (*Paging Second Report
    and Order*); *see also* Revision of Part 22 and Part 90 of the
    Commission's Rules to Facilitate Future Development of Paging
    Systems, *Memorandum Opinion and Order on Reconsideration*, 14 FCC
    Rcd 10030, 10085-10088 ¶¶ 98-107 (1999).

[^456]: *Paging Second Report and Order*, 12 FCC Rcd at 2811 ¶ 179.

[^457]: *See* Letter to Amy Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, from Aida
    Alvarez, Administrator, Small Business Administration, dated
    December 2, 1998.

[^458]: *See* "929 and 931 MHz Paging Auction Closes," *Public Notice*,
    15 FCC Rcd 4858 (WTB 2000).

[^459]: *See id*.

[^460]: *See* "Lower and Upper Paging Band Auction Closes," *Public
    Notice*, 16 FCC Rcd 21821 (WTB 2002).

[^461]: *See* "Lower and Upper Paging Bands Auction Closes," *Public
    Notice*, 18 FCC Rcd 11154 (WTB 2003).

[^462]: *See Trends in Telephone Service,* Industry Analysis Division,
    Wireline Competition Bureau, Table 5.3 (Number of Telecommunications
    Service Providers that are Small Businesses) (May 2002).

[^463]: 13 C.F.R. § 121.201, NAICS code 517211.

[^464]: *See* Amendment of Parts 20 and 24 of the Commission's Rules --
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap, *Report and Order*, 11 FCC Rcd 7824, 7850-7852
    ¶¶ 57-60 (1996); *see also* 47 C.F.R. § 24.720(b).

[^465]: *See* Amendment of Parts 20 and 24 of the Commission's Rules --
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap, *Report and Order*, 11 FCC Rcd 7824, 7852
    ¶ 60.

[^466]: *See* Letter to Amy Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, Federal
    Communications Commission, from Aida Alvarez, Administrator, Small
    Business Administration, dated December 2, 1998.

[^467]: FCC News, "Broadband PCS, D, E and F Block Auction Closes," No.
    71744 (rel. January 14, 1997).

[^468]: *See* "C, D, E, and F Block Broadband PCS Auction Closes,"
    *Public Notice*, 14 FCC Rcd 6688 (WTB 1999).

[^469]: Implementation of Section 309(j) of the Communications Act --
    Competitive Bidding Narrowband PCS, *Third Memorandum Opinion and
    Order and Further Notice of Proposed Rulemaking*, 10 FCC Rcd 175,
    196 ¶ 46 (1994).

[^470]: *See* "Announcing the High Bidders in the Auction of ten
    Nationwide Narrowband PCS Licenses, Winning Bids Total
    \$617,006,674," *Public Notice*, PNWL 94-004 (rel. Aug. 2, 1994);
    "Announcing the High Bidders in the Auction of 30 Regional
    Narrowband PCS Licenses; Winning Bids Total \$490,901,787," *Public
    Notice*, PNWL 94-27 (rel. Nov. 9, 1994).

[^471]: Amendment of the Commission's Rules to Establish New Personal
    Communications Services, Narrowband PCS, *Second Report and Order
    and Second Further Notice of Proposed Rule Making*, 15 FCC Rcd
    10456, 10476 ¶ 40 (2000).

[^472]: *Id*.

[^473]: *Id*.

[^474]: *See* Letter to Amy Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, Federal
    Communications Commission, from Aida Alvarez, Administrator, Small
    Business Administration, dated December 2, 1998.

[^475]: *See* "Narrowband PCS Auction Closes," *Public Notice*, 16 FCC
    Rcd 18663 (WTB 2001).

[^476]: 47 C.F.R. § 90.814(b)(1).

[^477]: *Id*.

[^478]: *See* Letter to Thomas Sugrue, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    August 10, 1999. We note that, although a request was also sent to
    the SBA requesting approval for the small business size standard for
    800 MHz, approval is still pending.

[^479]: *See* "Correction to Public Notice DA 96-586 'FCC Announces
    Winning Bidders in the Auction of 1020 Licenses to Provide 900 MHz
    SMR in Major Trading Areas,'" *Public Notice*, 18 FCC Rcd 18367 (WTB
    1996).

[^480]: *See* "Multi-Radio Service Auction Closes," *Public Notice*, 17
    FCC Rcd 1446 (WTB 2002).

[^481]: *See* 13 C.F.R. § 121.201, NAICS code 517212.

[^482]: *See generally* 13 C.F.R. § 121.201.

[^483]: 47 C.F.R. §§ 101 *et seq.* (formerly, part 21 of the
    Commission's Rules).

[^484]: Persons eligible under parts 80 and 90 of the Commission's rules
    can use Private Operational-Fixed Microwave services. *See*
    *generally* 47 C.F.R. parts 80 and 90. Stations in this service are
    called operational-fixed to distinguish them from common carrier and
    public fixed stations. Only the licensee may use the
    operational-fixed station, and only for communications related to
    the licensee's commercial, industrial, or safety operations.

[^485]: Auxiliary Microwave Service is governed by part 74 of Title 47
    of the Commission's Rules. *See* 47 C.F.R. Part 74. Available to
    licensees of broadcast stations and to broadcast and cable network
    entities, broadcast auxiliary microwave stations are used for
    relaying broadcast television signals from the studio to the
    transmitter, or between two points such as a main studio and an
    auxiliary studio. The service also includes mobile TV pickups, which
    relay signals from a remote location back to the studio.

[^486]: 13 C.F.R. § 121.201, NAICS code 517212.

[^487]: Amendment of the Commission's Rules to Establish Part 27, the
    Wireless Communications Service (WCS), *Report and Order*, 12 FCC
    Rcd 10785, 10879 ¶ 194 (1997).

[^488]: *See* Letter to Amy Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, Federal
    Communications Commission, from Aida Alvarez, Administrator, Small
    Business Administration, dated December 2, 1998.

[^489]: *See* Amendment of the Commission's Rules Regarding the
    37.0-38.6 GHz and 38.6-40.0 GHz Band, *Report and Order*, 12 FCC Rcd
    18600 (1997).

[^490]: *Id*.

[^491]: *See* Letter to Margaret Wiener, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, Federal
    Communications Commission, from Hector Barreto, Administrator, Small
    Business Administration, dated January 18, 2002.

[^492]: *See* Rulemaking to Amend Parts 1, 2, 21, 25, of the
    Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band,
    Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and
    Policies for Local Multipoint Distribution Service and for Fixed
    Satellite Services, *Second Report and Order*, *Order on
    Reconsideration, and Fifth Notice of Proposed Rule Making,* 12 FCC
    Rcd 12545, 12689-90 ¶ 348 (1997).

[^493]: *Id*.

[^494]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    January 6, 1998.

[^495]: *See* "Interactive Video and Data Service (IVDS) Applications
    Accepted for Filing," *Public Notice*, 9 FCC Rcd 6227 (1994).

[^496]: Implementation of Section 309(j) of the Communications Act --
    Competitive Bidding, *Fourth* *Report* *and* [*Order*, 9 FCC Rcd
    2330
    (1994](http://www.westlaw.com/Find/Default.wl?rs=++++1.0&vr=2.0&DocName=59FR24947&FindType=Y&ReferencePositionType=S&ReferencePosition=24947)).

[^497]: Amendment of Part 95 of the Commission's Rules to Provide
    Regulatory Flexibility in the 218-219 MHz Service, *Report and Order
    and Memorandum Opinion and Order*, 15 FCC Rcd 1497 (1999).

[^498]: *Id*.

[^499]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    January 6, 1998.

[^500]: Amendment of Part 90 of the Commission's Rules to Adopt
    Regulations for Automatic Vehicle Monitoring Systems*, Second Report
    and Order*, 13 FCC Rcd 15182, 15192 ¶ 20 (1998); *see also* 47
    C.F.R. § 90.1103

[^501]: Amendment of Part 90 of the Commission's Rules to Adopt
    Regulations for Automatic Vehicle Monitoring Systems, *Second Report
    and Order*, 13 FCC Rcd at 15192 ¶ 20; *see also* 47 C.F.R. §
    90.1103.

[^502]: *See* Letter to Thomas Sugrue, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    February 22, 1999.

[^503]: 13 C.F.R. § 121.201, NAICS code 517212.

[^504]: *Id.*

[^505]: *Id*.

[^506]: *See* Amendment of the Commission's Rules Regarding Multiple
    Address Systems, *Report and Order*, 15 FCC Rcd 11956, 12008 ¶ 123
    (2000).

[^507]: *Id*.

[^508]: *See* Letter to Thomas Sugrue, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    June 4, 1999.

[^509]: *See* "Multiple Address Systems Spectrum Auction Closes,"
    *Public Notice*, 16 FCC Rcd 21011 (2001).

[^510]: *See* 13 C.F.R. § 121.201, NAICS code 517212.

[^511]: *See id.* According to Census Bureau data for 1997, in this
    category, there were a total of 977 firms that operated for the
    entire year. U.S. Census Bureau, 1997 Economic Census, Subject
    Series: Information, "Establishment and Firm Size (Including Legal
    Form of Organization)," Table 5, NAICS code 513322 (October 2000).
    Of this total, 965 firms had employment of 999 or fewer employees,
    and an additional 12 firms had employment of 1,000 employees or
    more. *Id*. The census data do not provide a more precise estimate
    of the number of firms that have 1,500 or fewer employees; the
    largest category provided is "Firms with 1,000 employees or more."

[^512]: Teligent acquired the Digital Electronic Message Service (DEMS)
    licenses of FirstMark, the only licensee other than TRW in the
    24 GHz band whose license has been modified to require relocation to
    the 24 GHz band.

[^513]: Amendments to Parts 1, 2, 87 and 101 of the Commission's Rules
    To License Fixed Services at 24 GHz, *Report and Order*, 15 FCC Rcd
    16934, 16967 ¶ 77 (2000) (*24 GHz Report and Order*); *see also* 47
    C.F.R. § 101.538(a)(2).

[^514]: *24 GHz Report and Order*, 15 FCC Rcd at 16967 ¶ 77; *see also*
    47 C.F.R. § 101.538(a)(1).

[^515]: *See* Letter to Margaret W. Wiener, Deputy Chief, Auctions and
    Industry Analysis Division, Wireless Telecommunications Bureau,
    Federal Communications Commission, from Gary M. Jackson, Assistant
    Administrator, Small Business Administration, dated July 28, 2000.

[^516]: *See* Service Rules for the 746-764 MHz Bands, and Revisions to
    Part 27 of the Commission's Rules, *Second Report and Order*, 15 FCC
    Rcd 5299 (2000).

[^517]: *Id*. at 5343 ¶ 108.

[^518]: *Id*.

[^519]: *Id*. At 5343 ¶ 108 n.246 (for the 746-764 MHz and 776-704 MHz
    bands, the Commission is exempt from 15 U.S.C. § 632, which requires
    Federal agencies to obtain Small Business Administration approval
    before adopting small business size standards).

[^520]: *See* "700 MHz Guard Bands Auction Closes: Winning Bidders
    Announced," *Public Notice*, 15 FCC Rcd 18026 (2000).

[^521]: *See* "700 MHz Guard Bands Auctions Closes: Winning Bidders
    Announced," *Public Notice*, 16 FCC Rcd 4590 (WTB 2001).

[^522]: Amendment of Parts 21 and 74 of the Commission's Rules with
    Regard to Filing Procedures in the Multipoint Distribution Service
    and in the Instructional Television Fixed Service and Implementation
    of Section 309(j) of the Communications Act -- Competitive Bidding,
    MM Docket No. 94-131 and PP Docket No. 93-253, *Report and Order*,
    10 FCC Rcd 9589, 9593 ¶ 7 (1995) (*MDS Auction R&O)*.

[^523]: *See* Amendment of Parts 1, 21, 73, 74 and 101 of the
    Commission's Rules to Facilitate the Provision of Fixed and Mobile
    Broadband Access, Educational and Other Advanced Services in the
    2150-2162 and 2500-2690 MHz Bands, *Report and Order and Further
    Notice of Proposed Rulemaking*, FCC 03-145 (rel. July 29, 2004)
    (*BRS/EBS Report and Order*). As we noted in the *Further Notice*,
    there are unique policies associated with ITFS licensees'
    educational purposes, and the services have already developed their
    own approach to excess capacity leasing. *See Further Notice* at ¶¶
    307-08.

[^524]: 47 C.F.R. § 21.961(b)(1).

[^525]: *See* Letter to Margaret Wiener, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, Federal
    Communications Bureau, from Gary Jackson, Assistant Administrator
    for Size Standards, Small Business Administration, dated March 20,
    2003 (noting approval of \$40 million size standard for MDS
    auction).

[^526]: Basic Trading Areas (BTAs) were designed by Rand McNally and are
    the geographic areas by which MDS was auctioned and authorized. *See
    MDS Auction R&O*, 10 FCC Rcd at 9608 ¶ 34.

[^527]: 47 U.S.C. § 309(j). Hundreds of stations were licensed to
    incumbent MDS licensees prior to implementation of Section 309(j) of
    the Communications Act of 1934, 47 U.S.C. § 309(j). For these
    pre-auction licenses, the applicable standard is SBA's small
    business size standard for "other telecommunications" (annual
    receipts of \$12.5 million or less). *See* 13 C.F.R. § 121.201,
    NAICS code 517910.

[^528]: 13 C.F.R. § 121.201, NAICS code 517510.

[^529]: *Id.*

[^530]: U.S. Census Bureau, 1997 Economic Census, Subject Series:
    Information, "Establishment and Firm Size (Including Legal Form of
    Organization)," Table 4 (issued October 2000).

[^531]: *Id*.

[^532]: In addition, the term "small entity" under SBREFA applies to
    small organizations (nonprofits) and to small governmental
    jurisdictions (cities, counties, towns, townships, villages, school
    districts, and special districts with populations of less than
    50,000). 5 U.S.C. §§ 601(4)-(6). We do not collect annual revenue
    data on ITFS licensees.

[^533]: "Multichannel Video Distribution and Data Service Auction
    Closes," *Public Notice*, DA 04-215 (Feb. 2, 2004).

[^534]: 13 CFR § 121.201, NAICS code 517212 (2002).

[^535]: Amendment of the Commission's Rules Concerning Maritime
    Communications, *Third Report and Order and Memorandum Opinion and
    Order*, 13 FCC Rcd 19853 (1998).

[^536]: With the exception of the special emergency service, these
    services are governed by Subpart B of part 90 of the Commission's
    Rules, 47 C.F.R. §§ 90.15-90.27. The police service includes
    approximately 27,000 licensees that serve state, county, and
    municipal enforcement through telephony (voice), telegraphy (code)
    and teletype and facsimile (printed material). The fire radio
    service includes approximately 23,000 licensees comprised of private
    volunteer or professional fire companies as well as units under
    governmental control. The local government service that is presently
    comprised of approximately 41,000 licensees that are state, county,
    or municipal entities that use the radio for official purposes not
    covered by other public safety services. There are approximately
    7,000 licensees within the forestry service which is comprised of
    licensees from state departments of conservation and private forest
    organizations who set up communications networks among fire lookout
    towers and ground crews. The approximately 9,000 state and local
    governments are licensed to highway maintenance service provide
    emergency and routine communications to aid other public safety
    services to keep main roads safe for vehicular traffic. The
    approximately 1,000 licensees in the Emergency Medical Radio Service
    (EMRS) use the 39 channels allocated to this service for emergency
    medical service communications related to the delivery of emergency
    medical treatment. 47 C.F.R. §§ 90.15-90.27. The approximately
    20,000 licensees in the special emergency service include medical
    services, rescue organizations, veterinarians, handicapped persons,
    disaster relief organizations, school buses, beach patrols,
    establishments in isolated areas, communications standby facilities,
    and emergency repair of public communications facilities. 47 C.F.R.
    §§ 90.33-90.55.

[^537]: 47 C.F.R. § 1.1162.

[^538]: 5 U.S.C. § 601(5).

[^539]: *See generally Report and Order*, Appendix C (Final Regulatory
    Flexibility Analysis justifying adoption of the same filing
    requirements on all entities, regardless of size).

[^540]: *See* Second Report and Order at para. 10.

[^541]: *See* Second Report and Order at paras. 10-50.

[^542]: *See Report and Order* at paras. 123-125, 150-154, 181.

[^543]: *See* Second Report and Order at paras. 15-28, 39-41, 47-49.

[^544]: *See* Second Report and Order at paras. 101-103.

[^545]: 5 U.S.C. §§ 603(c)(1)-(4).

[^546]: All parties commenting on the forbearance proposal supported the
    Commission's general approach. *See, e.g.,* Blooston Rural Carriers
    Comments at 11-12; RTG Comments at 2-5; SBC Comments at 7-10; PCIA
    Comments at 5; Spectrum Market Comments at 4; Cantor Fitzgerald
    Comments at 2; CTIA Comments at 2-4.

[^547]: *See* Second Report and Order at paras. 15-28.

[^548]: 47 U.S.C. § 309 (j)(4).

[^549]: Blooston Rural Carriers Comments at 3-5.

[^550]: *See* 5 U.S.C. § 801(a)(1)(A).

[^551]: *See* 5 U.S.C. § 604(b).

[^552]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. §§ 601-612, has
    been amended by the Small Business Regulatory Enforcement Fairness
    Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857
    (1996).

[^553]: *See* Second Further Notice, Section VI, *supra.*

[^554]: *See* 5 U.S.C. § 603(a).

[^555]: *See* *id*.

[^556]: 5 U.S.C. § 604(a)(3).

[^557]: 5 U.S.C. § 601(6).

[^558]: 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."

[^559]: 15 U.S.C. § 632.

[^560]: 13 C.F.R. § 121.201, North American Industry Classification
    System (NAICS) code 517212.

[^561]: *Id*.

[^562]: U.S. Census Bureau, 1997 Economic Census, Subject Series:
    Information, "Establishment and Firm Size (Including Legal Form of
    Organization)," Table 5, NAICS code 513322 (October 2000).

[^563]: 13 C.F.R. § 121.201, NAICS code 517212.

[^564]: U.S. Census Bureau, 1997 Economic Census, Subject Series:
    Information, "Establishment and Firm Size (Including Legal Form of
    Organization)," Table 5, NAICS code 513322 (October 2000).

[^565]: Amendment of Part 90 of the Commission's Rules to Provide For
    the Use of the 220-222 MHz Band by the Private Land Mobile Radio
    Service, *Third Report and Order*, 12 FCC Rcd 10943, 11068‑70 ¶¶
    291‑295 (1997).

[^566]: *Id.* at 11068 ¶ 291.

[^567]: *Id.*

[^568]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    January 6, 1998.

[^569]: *See generally* "220 MHz Service Auction Closes," *Public
    Notice*, 14 FCC Rcd 605 (WTB 1998).

[^570]: *See* "FCC Announces It is Prepared to Grant 654 Phase II 220
    MHz Licenses After Final Payment is Made," *Public Notice*, 14 FCC
    Rcd 1085 (WTB 1999).

[^571]: *See* "Phase II 220 MHz Service Spectrum Auction Closes,"
    *Public Notice*, 14 FCC Rcd 11218 (WTB 1999).

[^572]: *See* "Multi-Radio Service Auction Closes," *Public Notice*, 17
    FCC Rcd 1446 (WTB 2002).

[^573]: *See* Reallocation and Service Rules for the 698-746 MHz
    Spectrum Band (Television Channels 52-59), *Report and Order*, 17
    FCC Rcd 1022 (2002).

[^574]: *Id.* at 1087-88 ¶ 172.

[^575]: *Id.*

[^576]: *Id.* at 1088 ¶ 173.

[^577]: *See* Letter to Thomas Sugrue, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    August 10, 1999.

[^578]: *See* "Lower 700 MHz Band Auction Closes," *Public Notice*, 17
    FCC Rcd 17272 (WTB 2002).

[^579]: *See* "Lower 700 MHz Band Auction Closes," *Public Notice*, 18
    FCC Rcd 11873 (WTB 2003).

[^580]: *Id*.

[^581]: Service Rules for the 746-764 and 776-794 MHz Bands, and
    Revisions to Part 27 of the Commission's Rules, *Second Memorandum
    Opinion and Order*, 16 FCC Rcd 1239 (2001).

[^582]: *See* "Auction of Licenses for 747-762 and 777-792 MHz Bands
    (Auction No. 31) Is Rescheduled," *Public Notice*, 16 FCC Rcd 13079
    (WTB 2003).

[^583]: Revision of Part 22 and Part 90 of the Commission's Rules to
    Facilitate Future Development of Paging Systems, *Second Report and
    Order*, 12 FCC Rcd 2732, 2811-2812 ¶¶ 178-181 (*Paging Second Report
    and Order*); *see also* Revision of Part 22 and Part 90 of the
    Commission's Rules to Facilitate Future Development of Paging
    Systems, *Memorandum Opinion and Order on Reconsideration*, 14 FCC
    Rcd 10030, 10085-10088 ¶¶ 98-107 (1999).

[^584]: *Paging Second Report and Order*, 12 FCC Rcd at 2811 ¶ 179.

[^585]: *See* Letter to Amy Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, from Aida
    Alvarez, Administrator, Small Business Administration, dated
    December 2, 1998.

[^586]: *See* "929 and 931 MHz Paging Auction Closes," *Public Notice*,
    15 FCC Rcd 4858 (WTB 2000).

[^587]: *See id*.

[^588]: *See* "Lower and Upper Paging Band Auction Closes," *Public
    Notice*, 16 FCC Rcd 21821 (WTB 2002).

[^589]: *See* "Lower and Upper Paging Bands Auction Closes," *Public
    Notice*, 18 FCC Rcd 11154 (WTB 2003).

[^590]: *See Trends in Telephone Service,* Industry Analysis Division,
    Wireline Competition Bureau, Table 5.3 (Number of Telecommunications
    Service Providers that are Small Businesses) (May 2002).

[^591]: 13 C.F.R. § 121.201, NAICS code 517211.

[^592]: *See* Amendment of Parts 20 and 24 of the Commission's Rules --
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap, *Report and Order*, 11 FCC Rcd 7824, 7850-7852
    ¶¶ 57-60 (1996); *see also* 47 C.F.R. § 24.720(b).

[^593]: *See* Amendment of Parts 20 and 24 of the Commission's Rules --
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap, *Report and Order*, 11 FCC Rcd 7824, 7852
    ¶ 60.

[^594]: *See* Letter to Amy Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, Federal
    Communications Commission, from Aida Alvarez, Administrator, Small
    Business Administration, dated December 2, 1998.

[^595]: FCC News, "Broadband PCS, D, E and F Block Auction Closes," No.
    71744 (rel. January 14, 1997).

[^596]: *See* "C, D, E, and F Block Broadband PCS Auction Closes,"
    *Public Notice*, 14 FCC Rcd 6688 (WTB 1999).

[^597]: Implementation of Section 309(j) of the Communications Act --
    Competitive Bidding Narrowband PCS, *Third Memorandum Opinion and
    Order and Further Notice of Proposed Rulemaking*, 10 FCC Rcd 175,
    196 ¶ 46 (1994).

[^598]: *See* "Announcing the High Bidders in the Auction of ten
    Nationwide Narrowband PCS Licenses, Winning Bids Total
    \$617,006,674," *Public Notice*, PNWL 94-004 (rel. Aug. 2, 1994);
    "Announcing the High Bidders in the Auction of 30 Regional
    Narrowband PCS Licenses; Winning Bids Total \$490,901,787," *Public
    Notice*, PNWL 94-27 (rel. Nov. 9, 1994).

[^599]: Amendment of the Commission's Rules to Establish New Personal
    Communications Services, Narrowband PCS, *Second Report and Order
    and Second Further Notice of Proposed Rule Making*, 15 FCC Rcd
    10456, 10476 ¶ 40 (2000).

[^600]: *Id*.

[^601]: *Id*.

[^602]: *See* Letter to Amy Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, Federal
    Communications Commission, from Aida Alvarez, Administrator, Small
    Business Administration, dated December 2, 1998.

[^603]: *See* "Narrowband PCS Auction Closes," *Public Notice*, 16 FCC
    Rcd 18663 (WTB 2001).

[^604]: 47 C.F.R. § 90.814(b)(1).

[^605]: *Id*.

[^606]: *See* Letter to Thomas Sugrue, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    August 10, 1999. We note that, although a request was also sent to
    the SBA requesting approval for the small business size standard for
    800 MHz, approval is still pending.

[^607]: *See* "Correction to Public Notice DA 96-586 'FCC Announces
    Winning Bidders in the Auction of 1020 Licenses to Provide 900 MHz
    SMR in Major Trading Areas,'" *Public Notice*, 18 FCC Rcd 18367 (WTB
    1996).

[^608]: *See* "Multi-Radio Service Auction Closes," *Public Notice*, 17
    FCC Rcd 1446 (WTB 2002).

[^609]: *See* 13 C.F.R. § 121.201, NAICS code 517212.

[^610]: *See generally* 13 C.F.R. § 121.201.

[^611]: 47 C.F.R. §§ 101 *et seq.* (formerly, part 21 of the
    Commission's Rules).

[^612]: Persons eligible under parts 80 and 90 of the Commission's rules
    can use Private Operational-Fixed Microwave services. *See*
    *generally* 47 C.F.R. parts 80 and 90. Stations in this service are
    called operational-fixed to distinguish them from common carrier and
    public fixed stations. Only the licensee may use the
    operational-fixed station, and only for communications related to
    the licensee's commercial, industrial, or safety operations.

[^613]: Auxiliary Microwave Service is governed by part 74 of Title 47
    of the Commission's Rules. *See* 47 C.F.R. Part 74. Available to
    licensees of broadcast stations and to broadcast and cable network
    entities, broadcast auxiliary microwave stations are used for
    relaying broadcast television signals from the studio to the
    transmitter, or between two points such as a main studio and an
    auxiliary studio. The service also includes mobile TV pickups, which
    relay signals from a remote location back to the studio.

[^614]: 13 C.F.R. § 121.201, NAICS code 517212.

[^615]: Amendment of the Commission's Rules to Establish Part 27, the
    Wireless Communications Service (WCS), *Report and Order*, 12 FCC
    Rcd 10785, 10879 ¶ 194 (1997).

[^616]: *See* Letter to Amy Zoslov, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, Federal
    Communications Commission, from Aida Alvarez, Administrator, Small
    Business Administration, dated December 2, 1998.

[^617]: *See* Amendment of the Commission's Rules Regarding the
    37.0-38.6 GHz and 38.6-40.0 GHz Band, *Report and Order*, 12 FCC Rcd
    18600 (1997).

[^618]: *Id*.

[^619]: *See* Letter to Margaret Wiener, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, Federal
    Communications Commission, from Hector Barreto, Administrator, Small
    Business Administration, dated January 18, 2002.

[^620]: *See* Rulemaking to Amend Parts 1, 2, 21, 25, of the
    Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band,
    Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and
    Policies for Local Multipoint Distribution Service and for Fixed
    Satellite Services, *Second Report and Order*, *Order on
    Reconsideration, and Fifth Notice of Proposed Rule Making,* 12 FCC
    Rcd 12545, 12689-90 ¶ 348 (1997).

[^621]: *Id*.

[^622]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    January 6, 1998.

[^623]: *See* "Interactive Video and Data Service (IVDS) Applications
    Accepted for Filing," *Public Notice*, 9 FCC Rcd 6227 (1994).

[^624]: Implementation of Section 309(j) of the Communications Act --
    Competitive Bidding, *Fourth* *Report* *and* [*Order*, 9 FCC Rcd
    2330
    (1994](http://www.westlaw.com/Find/Default.wl?rs=++++1.0&vr=2.0&DocName=59FR24947&FindType=Y&ReferencePositionType=S&ReferencePosition=24947)).

[^625]: Amendment of Part 95 of the Commission's Rules to Provide
    Regulatory Flexibility in the 218-219 MHz Service, *Report and Order
    and Memorandum Opinion and Order*, 15 FCC Rcd 1497 (1999).

[^626]: *Id*.

[^627]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    January 6, 1998.

[^628]: Amendment of Part 90 of the Commission's Rules to Adopt
    Regulations for Automatic Vehicle Monitoring Systems*, Second Report
    and Order*, 13 FCC Rcd 15182, 15192 ¶ 20 (1998); *see also* 47
    C.F.R. § 90.1103

[^629]: Amendment of Part 90 of the Commission's Rules to Adopt
    Regulations for Automatic Vehicle Monitoring Systems, *Second Report
    and Order*, 13 FCC Rcd at 15192 ¶ 20; *see also* 47 C.F.R. §
    90.1103.

[^630]: *See* Letter to Thomas Sugrue, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    February 22, 1999.

[^631]: 13 C.F.R. § 121.201, NAICS code 517212.

[^632]: *Id.*

[^633]: *Id*.

[^634]: *See* Amendment of the Commission's Rules Regarding Multiple
    Address Systems, *Report and Order*, 15 FCC Rcd 11956, 12008 ¶ 123
    (2000).

[^635]: *Id*.

[^636]: *See* Letter to Thomas Sugrue, Chief, Wireless
    Telecommunications Bureau, Federal Communications Commission, from
    Aida Alvarez, Administrator, Small Business Administration, dated
    June 4, 1999.

[^637]: *See* "Multiple Address Systems Spectrum Auction Closes,"
    *Public Notice*, 16 FCC Rcd 21011 (2001).

[^638]: *See* 13 C.F.R. § 121.201, NAICS code 517212.

[^639]: *See id.* According to Census Bureau data for 1997, in this
    category, there were a total of 977 firms that operated for the
    entire year. U.S. Census Bureau, 1997 Economic Census, Subject
    Series: Information, "Establishment and Firm Size (Including Legal
    Form of Organization)," Table 5, NAICS code 513322 (October 2000).
    Of this total, 965 firms had employment of 999 or fewer employees,
    and an additional 12 firms had employment of 1,000 employees or
    more. *Id*. The census data do not provide a more precise estimate
    of the number of firms that have 1,500 or fewer employees; the
    largest category provided is "Firms with 1,000 employees or more."

[^640]: Teligent acquired the Digital Electronic Message Service (DEMS)
    licenses of FirstMark, the only licensee other than TRW in the
    24 GHz band whose license has been modified to require relocation to
    the 24 GHz band.

[^641]: Amendments to Parts 1, 2, 87 and 101 of the Commission's Rules
    To License Fixed Services at 24 GHz, *Report and Order*, 15 FCC Rcd
    16934, 16967 ¶ 77 (2000) (*24 GHz Report and Order*); *see also* 47
    C.F.R. § 101.538(a)(2).

[^642]: *24 GHz Report and Order*, 15 FCC Rcd at 16967 ¶ 77; *see also*
    47 C.F.R. § 101.538(a)(1).

[^643]: *See* Letter to Margaret W. Wiener, Deputy Chief, Auctions and
    Industry Analysis Division, Wireless Telecommunications Bureau,
    Federal Communications Commission, from Gary M. Jackson, Assistant
    Administrator, Small Business Administration, dated July 28, 2000.

[^644]: *See* Service Rules for the 746-764 MHz Bands, and Revisions to
    Part 27 of the Commission's Rules, *Second Report and Order*, 15 FCC
    Rcd 5299 (2000).

[^645]: *Id*. at 5343 ¶ 108.

[^646]: *Id*.

[^647]: *Id*. At 5343 ¶ 108 n.246 (for the 746-764 MHz and 776-704 MHz
    bands, the Commission is exempt from 15 U.S.C. § 632, which requires
    Federal agencies to obtain Small Business Administration approval
    before adopting small business size standards).

[^648]: *See* "700 MHz Guard Bands Auction Closes: Winning Bidders
    Announced," *Public Notice*, 15 FCC Rcd 18026 (2000).

[^649]: *See* "700 MHz Guard Bands Auctions Closes: Winning Bidders
    Announced," *Public Notice*, 16 FCC Rcd 4590 (WTB 2001).

[^650]: Amendment of Parts 21 and 74 of the Commission's Rules with
    Regard to Filing Procedures in the Multipoint Distribution Service
    and in the Instructional Television Fixed Service and Implementation
    of Section 309(j) of the Communications Act -- Competitive Bidding,
    MM Docket No. 94-131 and PP Docket No. 93-253, *Report and Order*,
    10 FCC Rcd 9589, 9593 ¶ 7 (1995) (*MDS Auction R&O)*.

[^651]: *See* Amendment of Parts 1, 21, 73, 74 and 101 of the
    Commission's Rules to Facilitate the Provision of Fixed and Mobile
    Broadband Access, Educational and Other Advanced Services in the
    2150-2162 and 2500-2690 MHz Bands, *Report and Order and Further
    Notice of Proposed Rulemaking*, FCC 03-145 (rel. July 29, 2004)
    (*BRS/EBS Report and Order*). As we noted in the *Further Notice*,
    there are unique policies associated with ITFS licensees'
    educational purposes, and the services have already developed their
    own approach to excess capacity leasing. *See Further Notice* at ¶¶
    307-08.

[^652]: 47 C.F.R. § 21.961(b)(1).

[^653]: *See* Letter to Margaret Wiener, Chief, Auctions and Industry
    Analysis Division, Wireless Telecommunications Bureau, Federal
    Communications Bureau, from Gary Jackson, Assistant Administrator
    for Size Standards, Small Business Administration, dated March 20,
    2003 (noting approval of \$40 million size standard for MDS
    auction).

[^654]: Basic Trading Areas (BTAs) were designed by Rand McNally and are
    the geographic areas by which MDS was auctioned and authorized. *See
    MDS Auction R&O*, 10 FCC Rcd at 9608 ¶ 34.

[^655]: 47 U.S.C. § 309(j). Hundreds of stations were licensed to
    incumbent MDS licensees prior to implementation of Section 309(j) of
    the Communications Act of 1934, 47 U.S.C. § 309(j). For these
    pre-auction licenses, the applicable standard is SBA's small
    business size standard for "other telecommunications" (annual
    receipts of \$12.5 million or less). *See* 13 C.F.R. § 121.201,
    NAICS code 517910.

[^656]: 13 C.F.R. § 121.201, NAICS code 517510.

[^657]: *Id.*

[^658]: U.S. Census Bureau, 1997 Economic Census, Subject Series:
    Information, "Establishment and Firm Size (Including Legal Form of
    Organization)," Table 4 (issued October 2000).

[^659]: *Id*.

[^660]: "Multichannel Video Distribution and Data Service Auction
    Closes," *Public Notice*, DA 04-215 (Feb. 2, 2004).

[^661]: 13 CFR § 121.201, NAICS code 517212 (2002).

[^662]: Amendment of the Commission's Rules Concerning Maritime
    Communications, *Third Report and Order and Memorandum Opinion and
    Order*, 13 FCC Rcd 19853 (1998).

[^663]: With the exception of the special emergency service, these
    services are governed by Subpart B of part 90 of the Commission's
    Rules, 47 C.F.R. §§ 90.15-90.27. The police service includes
    approximately 27,000 licensees that serve state, county, and
    municipal enforcement through telephony (voice), telegraphy (code)
    and teletype and facsimile (printed material). The fire radio
    service includes approximately 23,000 licensees comprised of private
    volunteer or professional fire companies as well as units under
    governmental control. The local government service that is presently
    comprised of approximately 41,000 licensees that are state, county,
    or municipal entities that use the radio for official purposes not
    covered by other public safety services. There are approximately
    7,000 licensees within the forestry service which is comprised of
    licensees from state departments of conservation and private forest
    organizations who set up communications networks among fire lookout
    towers and ground crews. The approximately 9,000 state and local
    governments are licensed to highway maintenance service provide
    emergency and routine communications to aid other public safety
    services to keep main roads safe for vehicular traffic. The
    approximately 1,000 licensees in the Emergency Medical Radio Service
    (EMRS) use the 39 channels allocated to this service for emergency
    medical service communications related to the delivery of emergency
    medical treatment. 47 C.F.R. §§ 90.15-90.27. The approximately
    20,000 licensees in the special emergency service include medical
    services, rescue organizations, veterinarians, handicapped persons,
    disaster relief organizations, school buses, beach patrols,
    establishments in isolated areas, communications standby facilities,
    and emergency repair of public communications facilities. 47 C.F.R.
    §§ 90.33-90.55.

[^664]: 47 C.F.R. § 1.1162.

[^665]: 5 U.S.C. § 601(5).

[^666]: 5 U.S.C. §§ 603(c)(1)-(c)(4).