**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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**REPORT TO CONGRESS**

**Adopted:** June 19, 2003 **Released:** June 19, 2003

By the Commission:

Table of Contents

Heading Paragraph \#

I. Introduction and executive summary 1

II\. Background 5

A. 700 MHz Spectrum Recovery Process 6

B. Previous 700 MHz Auctions Schedules 8

C. Auction Reform Act 9

III\. discussion 12

A. 700 MHz Auction Schedule 12

B. Progress on Matters Identified in Auction Reform Act 16

1\. Progress of DTV Transition 17

a\. Build-Out Status 19

b\. Ongoing Commission Efforts to Spur DTV Transition 28

\(i\) Digital Must Carry 32

\(ii\) Digital Tuner Requirement 33

\(iii\) Digital Copy Protection 34

\(iv\) Digital Cable Compatibility 35

\(v\) Second DTV Periodic Review 36

c\. Recovery of Spectrum for New Uses; Status of Licensing of New
Services in 700 MHz Bands 41

\(i\) Public Safety Use of the Upper 700 MHz Band 42

\(ii\) New Commercial Services in the Upper 700 MHz Band 50

\(iii\) Upper 700 MHz Guard Bands 51

\(iv\) Lower 700 MHz Band 52

2\. Plans for Allocating and Assigning Additional Spectrum for Advanced
Wireless (3G) Services 53

a\. Identification and Allocation of 3G Spectrum 54

b\. NTIA's 3G Study 60

3\. Other Concerns and Considerations For Timing of 700 MHz Auctions 63

a\. Changed Circumstances Since 1997 64

b\. 800 MHz Public Safety Proceeding 68

c\. Voluntary Band-Clearing Policy 70

IV\. CONCLUSION 74

V. Administrative Matters 75

Appendix A - Auction Reform Act of 2002

Appendix B -- Maps Showing Locations of Existing Analog TV and
Authorized DTV Stations

# Introduction and executive summary 

1.  This report is in response to Section 2(a) of the Auction Reform Act
    of 2002.[^1] This legislation, which was enacted one year ago,
    eliminated statutory deadlines relating to auctions for licenses in
    various spectrum bands and confirmed the Commission's broad
    authority to determine the timing of the conduct of competitive
    bidding "notwithstanding any other provision of law."[^2] The
    Auction Reform Act also added a new Section 309(j)(15) to the
    Communications Act of 1934.[^3] In particular, new Section
    309(j)(15)(C)(iv) provides:

> \(iv\) REPORT - Within one year after the date of enactment of this
> paragraph, the Commission shall submit a report to Congress\--
>
> \(I\) specifying when the Commission intends to reschedule auctions 31
> and 44 (other than the blocks excepted by clause (i) \[the 710-720 MHz
> and 716-722 MHz band segments\]); and
>
> \(II\) describing the progress made by the Commission in the digital
> television transition and in the assignment and allocation of
> additional spectrum for advanced mobile communications services that
> warrants the scheduling of such auctions.[^4]

2.  The Commission intends to reschedule the 700 MHz auctions pursuant
    to its broad discretion under Section 309(j)(15)(A) upon or near the
    completion of pending proceedings concerning Advanced Wireless
    Services (the "AWS initiative," also known as, the "3G
    proceeding")[^5] and the transition of existing analog television
    broadcasting systems to more spectrally-efficient, digital
    television ("DTV") systems (more commonly known as, the "DTV
    transition").

3.  This report begins by providing background on how the management of
    the 700 MHz spectrum was shaped by legislation and Commission
    decisions. The background section also gives an overview of the
    spectrum recovery component of the DTV transition, and discusses the
    700 MHz auction schedules that formed the backdrop for the passage
    of the Auction Reform Act. Next, we discuss the considerations that
    will be taken into account in our upcoming decisions to reschedule
    the remaining 700 MHz auctions. In particular, we conclude that:

-   significant progress has been made in finalizing the regulatory
    issues that Congress identified in the Auction Reform Act; and

-   we expect to render decisions on the remaining issues in the AWS and
    DTV proceedings in the near future.

Absent changes in our existing statutory authority, as we discuss below,
we do not believe the 800 MHz proceeding should implicate the timing of
the 700 MHz auctions because substantial steps in that proceeding will
be taken well before any auction date, and certainly within the next
several months. Barring unexpected circumstances, we anticipate
announcing new 700 MHz auction schedules near or upon completion of the
AWS and DTV proceedings.

4.  The report describes progress in the DTV, AWS, and 800 MHz public
    safety interference proceedings to address the Congressional
    concerns at the time of the passage of the Auction Reform Act as
    expressed in the legislative findings. The report describes the
    following developments:

-   DTV Transition: The last of the DTV construction deadlines in the
    Commission's rules passed on May 1, 2003, so all broadcasters are
    now required to have completed construction of DTV stations.[^6]
    Accordingly, most DTV stations are now on the air broadcasting
    digital television. The Commission has taken an aggressive role in
    advancing the DTV proceeding by encouraging commitments from various
    interested industries, and through its proceedings on digital must
    carry, DTV tuners, digital copy protection, digital cable
    compatibility, and the *DTV Periodic Review* rulemakings. We have
    also made progress in implementing Congress's directives to reclaim
    and organize the 700 MHz band spectrum that is to be vacated by
    broadcasters as part of the DTV transition, and are actively making
    that spectrum accessible for public safety, homeland security, and
    other new wireless services on a non-interference basis.

-   AWS Initiative: The Commission has, in coordination with the
    National Telecommunications and Information Administration ("NTIA"),
    taken a number of substantial steps to free up spectrum that can be
    used to provide advanced wireless services ("AWS"), including 3G
    services. Over the past year, the Commission has allocated 90
    megahertz of spectrum for AWS, and will soon finalize service rules
    for this spectrum. In addition, NTIA, in conjunction with the
    Commission, the Department of Defense, and other Federal Government
    agencies, completed the study of the viability of possible spectrum
    sharing that was pending when the Auction Reform Act was enacted.

-   Other Concerns and Considerations: The report also describes
    developments in areas other than the DTV and AWS proceedings that
    were cited in the legislative findings of the Auction Reform Act,
    including telecommunications markets, the 800 MHz public safety
    interference proceeding, and Congressional concerns of unjust
    enrichment to incumbent television broadcast licensees.

As with all other auctions, we remain mindful that Congress has directed
us to employ competitive bidding to promote specific public interest
objectives.[^7] We will take all relevant public interest considerations
into account when making our scheduling decisions. Possible expiration
of the Commission's competitive bidding authority is another issue that
must be considered in any scheduling decision. Currently, the
Commission's auction authority is set to sunset on September 30,
2007.[^8] Finally, the report concludes by observing that significant
benefits for the American people can be achieved by continuing to move
forward with the DTV and AWS initiatives.

# Background

5.  Competitive bidding is one of the principal means by which the
    Federal Communications Commission assigns licenses for the use of
    the spectrum resource.[^9] While the Auction Reform Act generally
    affirmed the Commission's discretion over the scheduling and timing
    of spectrum auctions, this legislation eliminated certain statutory
    deadlines that had previously applied to specific spectrum bands,
    including the 700 MHz bands. The Auction Reform Act also directed
    the Commission not to commence or conduct auctions for Upper and
    Lower 700 MHz band licenses on June 19, 2002.[^10] Those 700 MHz
    band auctions are part of the on-going DTV transition process.

## 700 MHz Spectrum Recovery Process

6.  The recovery of spectrum from existing, analog broadcast uses is a
    key component of the DTV transition process.[^11] Because the
    digital television transmission system is more spectrally efficient
    than the analog system, less spectrum will be needed for broadcast
    television service after the transition. Congress recognized the
    beneficial result of the spectrum recovery component of the DTV
    transition in 1997 when it added Section 337 to the Communications
    Act requiring the Commission to reallocate 24 megahertz of the Upper
    700 MHz band[^12] for public safety services and the remaining 36
    megahertz of spectrum in that band for "commercial use to be
    assigned by competitive bidding."[^13] Congress also recognized that
    additional spectrum beyond the Upper 700 MHz band would be recovered
    from analog broadcasters, and directed the Commission to "reclaim
    and organize" such spectrum "in a manner consistent with the
    objectives" of the Commission's Section 309(j)(3) competitive
    bidding authority.[^14] While Congress did not specify the amount of
    spectrum to be reclaimed beyond the Upper 700 MHz Band, the
    Commission determined that all broadcasters could operate with
    digital transmission systems in Channels 2-51 after the transition,
    thus allowing Channels 52-59 to be reclaimed for new services.[^15]
    Accordingly, pursuant to the statutory directives contained in
    Sections 337 and 309(j)(14)(C), the Commission has identified a
    total of 108 megahertz of spectrum in the Upper and Lower 700 MHz
    bands to be recovered for public safety and other new wireless uses.

7.  The statutory scheme contemplates that public safety entities and
    other new wireless entities would be licensed prior to the end of
    the DTV transition period, which is currently scheduled to end on
    December 31, 2006 but may be extended in individual television
    markets if any of one of the three conditions for an extension
    identified in Section 309(j)(14)(B) exist in that market.[^16] This
    approach, the Commission has previously found, is intended to ensure
    that the spectrum resource may be used efficiently and intensively
    during the DTV transition for the benefit of the American public
    while minimizing disruption to over-the-air broadcasting on these
    channels.[^17] Section 309(j)(14) of the Communications Act requires
    the Commission to assign spectrum recovered from broadcast
    television using competitive bidding.[^18]

## Previous 700 MHz Auctions Schedules

8.  Prior to passage of the Auction Reform Act, Auction No. 31 -- the
    auction for licenses of commercial spectrum[^19] in the Upper 700
    bands (TV channels 60-69) -- had been delayed several times. A
    statutory deadline required that the proceeds from this auction be
    deposited in the Treasury by September 30, 2000.[^20] Auction No.
    44, involving the Lower 700 MHz bands (TV channels 52-59), was also
    subject to a separate statutory provision requiring auction receipts
    be deposited by September 30, 2002.[^21] Both auctions were slated
    to begin on June 19, 2002. On May 24, 2002, the Commission rejected
    requests to further delay Auction 44,[^22] but provided for a short
    delay for Auction 31 (until January 14, 2003), "in order to provide
    additional time for Congress to consider legislation affecting the
    timing of that auction and, accordingly, bidder preparation and
    planning."[^23]

## Auction Reform Act

9.  On June 19, 2002, the Auction Reform Act was signed into law,
    postponing the scheduled auctions and eliminating the statutory
    deadlines that had been much of the impetus for the 700 MHz auction
    schedules. Congress recognized that questions had arisen about
    whether such statutory auction deadlines were "consistent with sound
    telecommunications policy and spectrum management principles."[^24]
    Further, the Auction Reform Act confirmed the Commission's
    discretion to "determine the timing of and deadlines for the conduct
    of competitive bidding under \[Section 309(j) of the Communications
    Act of 1934, as amended\], including the timing of, and deadlines
    for, qualifying for bidding; conducting auctions; collecting,
    depositing, and reporting revenues; and completing licensing
    processes and assigning licenses."[^25]

10. This legislation also directed the Commission to delay the auction
    of the A, B, and E blocks of the Lower 700 MHz band and to proceed
    with an auction of the C and D blocks starting "no earlier than
    August 19, 2002, and no later than September 19, 2002."[^26] The
    Auction Reform Act also limited the pool of eligible bidders for
    Auction No. 44 to those entities that the Bureau had previously
    identified as qualified bidders among those that had filed short
    form applications by the original May 8, 2002 deadline.[^27] As is
    discussed below, Auction No. 44 started on August 27, 2002 and
    closed on September 18, 2002.[^28]

11. In its findings supporting this legislation, Congress expressed
    several particular concerns. Among those concerns were plans for the
    identification, allocation, and assignment of spectrum for AWS (3G)
    systems; issues of interference in the 800 MHz band, especially as
    they may affect public safety wireless uses; uncertainties arising
    out of the continued encumbrance of the 700 MHz bands by analog and
    digital television stations; and the Commission's policy regarding
    voluntary clearing of the 700 MHz bands.[^29] Accordingly, the
    Auction Reform Act also requires the Commission to submit a report
    to Congress by June 19, 2003 "specifying when the Commission intends
    to reschedule auctions" for the remaining 700 MHz bands "and
    describing the progress made by the Commission in the digital
    television transition and in the assignment and allocation of
    additional spectrum for advanced mobile communications services that
    warrants the scheduling of such auctions."[^30] The status of these
    matters is discussed below. The organization of this report
    parallels the legislative findings of the Auction Reform Act.

# discussion

## 700 MHz Auction Schedule

12. The Commission intends to reschedule the 700 MHz auctions pursuant
    to its broad discretion under Section 309(j)(15)(A) upon or near the
    completion of the pending AWS and DTV proceedings.[^31] As is
    discussed more fully below, the Commission, along with its
    counterparts at the U.S. Department of Commerce's National
    Telecommunications and Information Administration ("NTIA"),[^32] has
    made progress over the past year in completing many aspects of this
    work.

13. The Auction Reform Act's findings cite lack of finality as to 3G
    allocation plans and the possibility of making the 700 MHz band
    available for such use as a basis for delaying 700 MHz
    auctions.[^33] As is discussed more fully below, the Commission has
    made most of the allocation decisions necessary to allow the
    development of AWS systems and services. While a few allocation
    issues remain pending,[^34] such decisions are not expected to have
    a significant effect on the 700 MHz bands or bidder planning and
    preparation for the 700 MHz auctions. We anticipate adopting service
    rules for the initial 90 megahertz of spectrum that we have
    allocated for AWS uses in the coming months.[^35]

14. Currently, the Commission is examining a number of issues as part of
    its *DTV Second Periodic Review* proceeding.[^36] This proceeding is
    considering a number of issues that affect the pace of the DTV
    transition as well as the ability of public safety entities and
    other new users to access the 700 MHz spectrum. Among other things,
    the *DTV Second Periodic NPRM* sought comment on deadlines for
    maximization/replication; our tentative conclusion that Sections
    90.545(c) and 27.60(b) be amended to make clear that the
    interference protection specified in those provisions should be
    afforded to authorized and/or applied for NTSC and DTV facilities;
    interpretation of the deadline in section 309(j)(14) by which
    television broadcasters must cease analog television service; and
    any data or views that might be considered in the report to Congress
    required by the Auction Reform Act. As is discussed below, wireless
    interests, such as winners of Auction No. 44 (Lower 700 MHz band),
    have recently submitted comments in the *DTV Second Periodic Review*
    proceeding generally seeking strict interpretation of Section
    309(j)(14) TV license extension provisions and opposing other
    outcomes that would lengthen the DTV transition period. Broadcast
    interests, on the other hand, advocate that they be given additional
    time to complete their transitions to DTV and vacate the 700 MHz
    bands.

15. Although some commenters in the 800 MHz public safety interference
    proceeding have suggested the possibility of using some 700 MHz
    spectrum to address public safety interference issues, any such
    proposal would be difficult to implement because legislation would
    likely be required to amend the 24 megahertz/36 megahertz public
    safety/commercial split required by Section 337 of the
    Communications Act.[^37] Pursuant to our existing statutory
    authority, we do not believe the 800 MHz proceeding should implicate
    the timing of the 700 MHz auctions because substantial steps in that
    proceeding will be taken well before any auction date, and certainly
    within the next several months.

## Progress on Matters Identified in Auction Reform Act

16. The Auction Reform Act also calls upon the Commission to describe
    "the progress made by the Commission in the digital television
    transition and in the assignment and allocation of additional
    spectrum for advanced mobile communications services that warrants
    the scheduling of such auctions."[^38] This section of the report
    describes the progress made over the past year in the DTV transition
    and 3G proceeding, as well as the status of the other areas that
    were of concern to Congress one year ago.

### Progress of DTV Transition

17. One significant concern underlying the Auction Reform Act involves
    the DTV transition and its spectrum recovery effort. The Auction
    Reform Act's fifth legislative finding states:

> *The 700 megahertz band is currently occupied by television
> broadcasters, and will be so until the transfer to digital television
> is completed. This situation creates a tremendous amount of
> uncertainty concerning when the spectrum will be available and reduces
> the value placed on the spectrum by potential bidders. The encumbrance
> of the 700 megahertz band reduces both the amount of money that the
> auction would be likely to produce and the probability that the
> spectrum would be purchased by the entities that valued the spectrum
> the most and would put the spectrum to its most productive use.*

18. The transition to digital television is a massive and complex
    undertaking, affecting virtually every segment of the television
    industry and every American who watches television. The Commission
    has been continuously involved in the migration to digital
    television by, among other things, adopting a standard for digital
    broadcasting, creating a DTV Table of Allotments, awarding DTV
    licenses, establishing operating rules for the new service, and
    overseeing the physical build-out of digital broadcast stations.

#### Build-Out Status 

19. In 1997, the Commission set dates for construction and operation of
    broadcasters' allotted digital broadcast channels. Pursuant to the
    construction schedule set forth in section 73.624(d) of the
    Commission's rules, affiliates of the top four networks in the top
    ten television markets were required to complete construction of
    their digital facilities by May 1, 1999; top four network affiliates
    in markets 11-30 by November 1, 1999; all remaining commercial
    television stations by May 1, 2002; and all noncommercial television
    stations by May 1, 2003.[^39]

20. In the *First DTV Periodic Review MO&O*, in order to encourage
    construction of facilities by broadcasters that might have been
    postponing construction in the face of interference protection
    deadlines and thereby slowing transition progress, we decided to
    allow stations to construct initial DTV facilities designed to serve
    at least their communities of license, while still retaining for the
    time being DTV interference protection to provide full replication
    at a later date. We also determined that we would continue to
    provide DTV interference protection to the maximized service area
    specified in outstanding DTV construction permits for facilities in
    excess of those specified in the DTV Table of Allotments. By
    permitting stations to elect a more graduated approach to providing
    DTV service, we allowed stations to focus their energies initially
    on providing digital service to their core communities, while
    allowing stations to increase operating hours and expand their
    coverage area as the transition progresses. For broadcasters unable
    to complete even the minimum permitted facilities by the applicable
    deadline, however, we revised our rules to permit applicants to seek
    an extension of time to construct a digital television station where
    the applicant can demonstrate financial hardship.[^40]

21. As of May 21, 2003, 1,578 television stations in all markets
    (representing approximately 94% of all stations) have been granted a
    DTV construction permit or license. There are a total of 1,081
    stations that now are broadcasting a digital signal, 493 with
    licensed facilities or program test authority and 588 operating
    pursuant to special temporary authority ("STA") or experimental DTV
    authority. The following graph shows the progress in build out
    status of DTV service since the end of 2001.

    ![](media/image1.wmf){width="4.665972222222222in"
    height="2.7111111111111112in"}

**DTV STATIONS AUTHORIZED TO BE ON THE AIR**

As of May 21, 2003

+------------+-----------+------------+---------+-----------+--------+
| **         | **\#      | **\# DTV** | **% On  | **With    | **With |
| Category** | DTV**     |            | the     | L         | STAs** |
|            |           | **Stations | Air**   | icensed** |        |
|            | **Paired  | on Air**   |         |           |        |
|            | L         |            |         | *         |        |
|            | icenses** |            |         | *Facility |        |
|            |           |            |         | or        |        |
|            |           |            |         | Program   |        |
|            |           |            |         | Tests**   |        |
+------------+-----------+------------+---------+-----------+--------+
| **Top 30   | 119       | 113        | 95.0%   | 108       | 5      |
| Market     |           |            |         |           |        |
| Network    |           |            |         |           |        |
| Af         |           |            |         |           |        |
| filiates** |           |            |         |           |        |
+------------+-----------+------------+---------+-----------+--------+
| **Other    | 1196      | 796        | 66.6 %  | 273       | 523    |
| Comm       |           |            |         |           |        |
| ercial\*** |           |            |         |           |        |
+------------+-----------+------------+---------+-----------+--------+
| **Non-     | 373       | 172        | 46.1%   | 112       | 60     |
| Commercial |           |            |         |           |        |
| Educati    |           |            |         |           |        |
| onal\*\*** |           |            |         |           |        |
+------------+-----------+------------+---------+-----------+--------+
| **Total**  | 1688      | 1081       | 64.0%   | 493       | 588    |
+------------+-----------+------------+---------+-----------+--------+

\* May 1, 2002 Build Out Deadline

\*\* May 1, 2003 Build Out Deadline

22. The above chart reflects that in the top thirty television markets,
    113 of the 119 network-affiliated television stations are on the air
    in digital, 108 with licensed DTV facilities or program test
    authority and 5 with STAs. In markets 1-10, of the 40 network
    affiliates due to be on the air by May 1, 1999, 38 are on the air
    with a digital signal.[^41] In markets 11-30, 71 of 79 network
    affiliate stations required to be on the air by November 1, 1999,
    have constructed their licensed DTV facilities. Seventy-five of
    these stations now are on the air. Seven stations have been granted
    additional time to complete construction of their digital
    facilities.[^42]

23. Approximately 1,196 other commercial television stations were due to
    commence digital broadcasts by May 1, 2002. As of May 21, 2003, 796
    of these stations are broadcasting a digital signal. In addition,
    approximately 373 noncommercial educational television stations were
    required to commence digital operations by May 1, 2003. As of May
    21, 2003, 172 of these stations are broadcasting a digital signal.

24. A total of 843 commercial television stations subject to the May 1,
    2002, deadline requested an initial extension of time to complete
    construction. The Media Bureau granted 772 of these initial
    extension requests upon showings that the delay in completing
    construction was due to financial hardship or to circumstances that
    were either unforeseeable or beyond the permittee's control. The DTV
    construction permits for these stations were extended for a
    six-month period, until November 1, 2002. As of May 21, 2003, 602 of
    these stations have requested an additional extension of time to
    construct, and 527 of these requests have been granted, while 68
    have been dismissed. The seven remaining extension requests remain
    pending. Most stations state that DTV service will be operational
    during the next six month extension period. Eighty-four of these
    stations have requested a third extension of time, with four
    dismissed and 80 pending.

25. Seventy-one stations that requested an extension of the May 1, 2002
    construction deadline were found not to have taken all reasonable
    steps to complete construction of their DTV facilities in an
    expeditious manner. Accordingly, the Media Bureau denied these
    extension applications by letter rulings and admonished each
    permittee for its failure to comply with its DTV construction
    obligations. Each permittee was given until December 1, 2002 to come
    into compliance with the DTV construction rule and was directed to
    submit, within 30 days, an initial report outlining the steps it
    intended to take to complete construction. These permittees also
    were required to file a subsequent progress report with the
    Commission.[^43] As of June 9, 2003, 69 of these stations have
    commenced DTV operation.

26. As of May 21, 2003, a total of 214 non-commercial television
    stations subject to the May 1, 2003, deadline requested an initial
    extension of time to complete construction. Three stations\'
    extension requests were dismissed since the stations had gone on the
    air with full-power DTV facilities or pursuant to a Special
    Temporary Authorization for low-power DTV operations. The remaining
    211 stations were granted six-month extensions, mainly because of
    difficulties encountered by the stations in implementing award
    grants from the Corporation for Public Broadcasting and the U.S.
    Department of Commerce. Of these 211 stations, approximately 10
    stations have come on the air since the time they received the
    extension or will be coming on the air shortly.

27. On April 16, 2003, the Commission released an Order establishing
    remedial measures to be followed when a television station fails to
    meet its DTV construction deadline and fails to adequately justify
    an extension of its DTV construction deadline.[^44] Under the
    three-step graduated sanction process we will first deny the request
    for an unqualified extension and admonish the station for its
    failure to comply with its DTV construction obligation. The station
    will then have six months to complete its construction, subject to
    reporting requirements and possible additional sanctions in the
    interim. Under the second step in our approach, if the station has
    not come into compliance with the DTV construction rule within the
    six-month period, then, absent extraordinary and compelling
    circumstances, we will issue a Notice of Apparent Liability for
    forfeiture to the licensee and require that the station report every
    thirty days on its proposed construction milestones and its efforts
    to meet those milestones. Under the third and final step in our
    approach, if the station has continued to fail in its efforts to
    come into compliance with the DTV construction rule within the
    second six-month period of time (*i.e.,* one year from the date of
    the formal admonition), then, absent extraordinary and compelling
    circumstances, we will consider its construction permit for its DTV
    facilities to have expired and we will take whatever steps necessary
    to rescind the station's DTV authorization. The Commission's Media
    Bureau staff may grant relief from this graduated enforcement scheme
    or impose more severe steps more quickly should circumstances in a
    particular case warrant.

#### Ongoing Commission Efforts to Spur DTV Transition

28. The Commission has taken an aggressive role in advancing the DTV
    transition using all of the tools at its disposal. A number of
    Commission initiatives have produced results in the year since the
    enactment of the Auction Reform Act.

29. Before passage of the Auction Reform Act, in October 2001, Chairman
    Michael Powell created the Digital Television Task Force to review
    the ongoing transition to DTV, and help coordinate the Commission's
    efforts to facilitate the transition and promote the rapid recovery
    of broadcast spectrum for other uses. The Task Force and the
    Commission's Media Bureau have organized numerous informal
    gatherings of interested parties designed to make progress on
    especially difficult and contentious issues. Subsequently, in April
    2002, Chairman Powell publicly challenged the industries involved in
    the DTV transition to take specific voluntary steps to move the
    transition forward. The voluntary plan sought to advance several key
    policy objectives: (1) increasing the level of compelling digital
    content available to American consumers; (2) providing convenient
    access to that content to consumers; and (3) educating consumers
    about digital television. Among other things, the plan called for
    the provision of more high definition ("HDTV") or other
    "value-added" DTV programming, increased cable deployment of DTV
    programming services and the inclusion of over-the-air DTV tuners in
    new television receivers on a phased-in basis.[^45]

30. In response, virtually every industry made commitments to the
    challenges posed in Chairman Powell's plan in order to advance the
    transition.[^46] For example, in May 2002, the ten largest cable
    operators (representing more than 85% of cable subscribers
    nationwide) agreed to roll-out HDTV services on their larger systems
    across the country.[^47] As of June 2003, the National Cable and
    Telecommunications Association ("NCTA") reported that cable HDTV
    service passed 55 million homes in 112 television markets.[^48] On
    April 29, 2003, Chairman Powell, in a letter to Congress, indicated
    that he instructed the Commission's Media Bureau to issue requests
    for information that will give the Commission a more detailed
    picture of the status of the digital television transition.[^49]
    Those requests were issued on May 21, 2003.[^50] As with the
    voluntary plan issued in April 2002, these requests are directed to
    each of the industries involved in the transition. The requests
    follow up on certain commitments made by industry in response to
    that plan. In addition, the requests seek information on other
    issues that may help the Commission develop future policy
    initiatives, including information on the availability of compelling
    digital programming, digital cable carriage, digital tuner
    capabilities, and consumer awareness about the transition to digital
    television.

31. The Commission is also conducting a number of formal rulemaking
    proceedings to advance the digital transition:

##### Digital Must Carry

32. The Commission's ongoing *DTV Must Carry* proceeding involves issues
    relating to cable carriage of digital television broadcast
    stations.[^51] In 2001, the Commission addressed issues related to
    the cable carriage of digital broadcast signals including
    retransmission consent, channel capacity, signal quality, scope of
    signal carriage, material degradation, channel location, market
    modifications, digital signal carriage on PEG channels (public,
    educational, and government access channels), complaints and
    enforcement, subscriber notification, program exclusivity, and tiers
    and rates. In addition to resolving a number of technical and legal
    matters, the *DTV Must Carry Order* clarified that a new
    digital-only TV station, commercial or non-commercial, can
    immediately assert its right to carriage on a local cable system.
    The Commission issued a *Further Notice of Proposed Rulemaking* to
    define the scope of "program-related" in the digital context.
    Regarding the issue of whether a local TV station may assert a right
    to carriage for both its analog and digital signals ("dual
    carriage"), the *DTV Must Carry Order* tentatively concluded that,
    based on the existing record, such a requirement appears to burden
    cable operators' First Amendment interests more than is necessary to
    further a substantial governmental interest.

##### Digital Tuner Requirement 

33. On August 8, 2002, the Commission adopted an Order requiring that
    all TV receivers manufactured or shipped in the U.S. with screen
    sizes greater than 13 inches be capable of receiving DTV signals
    over the air no later than July 1, 2007.[^52] This requirement will
    be phased in beginning with the largest sets in 2004 to minimize the
    cost impact on consumers. In addition to facilitating the transition
    to digital television by promoting the availability of reception
    equipment, this Order protects consumers by ensuring that their
    television sets go on working in the digital world just as they do
    today.

##### Digital Copy Protection

34. On August 8, 2002, the Commission adopted a *Notice of Proposed
    Rulemaking* ("NPRM") to explore whether it could and should mandate
    use of a copy-protection mechanism to protect digital broadcast
    content from unauthorized copying and redistribution.[^53] The
    *NPRM* first asked whether content providers' piracy concerns have
    caused or will cause them to withhold high quality content from
    broadcast channels, and whether the lack of such programming could
    delay the DTV transition. If a problem is found to exist, the
    Commission then asked whether it can and should adopt a "broadcast
    flag" or other copy protection mechanism to address it. As for how
    such a system would work, the Commission generally requested comment
    on compliance and robustness rules, technical impediments, and
    enforcement issues. The Commission also sought comment on the impact
    a content protection mechanism might have on consumers---both on
    their ability to make copies of broadcast television content and on
    the consumer electronics technology in their homes. Finally, the
    Commission sought comment on its authority to adopt rules in this
    area, including explicit authority under Section 336 of the
    Communications Act as well as ancillary jurisdiction.

##### Digital Cable Compatibility

35. On January 10, 2003, the Commission sought comment on proposed rules
    for "plug and play" cable compatibility that will allow consumers to
    plug their cable directly into their digital TV set without the need
    for a set-top box. [^54] Specifically, the *FNPRM* seeks comment on
    a Memorandum of Understanding ("MOU") filed with the Commission by
    the cable and consumer electronics industries detailing an agreement
    on a cable compatibility standard for an integrated, one-way digital
    cable television receiver, as well as other unidirectional digital
    cable products.[^55] The MOU contains both voluntary commitments by
    the industries, as well as proposed technical and encoding rules.

##### Second DTV Periodic Review

36. On January 27, 2003, the Commission began the Second Periodic Review
    of the Commission's Rules and Policies Affecting the Conversion to
    Digital Television.[^56] The *Second Periodic Review* seeks comment
    on additional issues essential to ensuring continued progress on the
    DTV transition. Among other things, the Commission is seeking
    comment on new channel election, replication, and maximization
    deadlines for broadcast television service. The Commission is also
    seeking comment on a number of other issues concerning the
    protection that must be provided to incumbent analog and digital
    broadcasters in the 700 MHz band during the transition.

37. The *Second Periodic Review* raises a number of other issues,
    including: (1) whether the Commission should retain, revise, or
    remove the requirement that licensees simulcast a certain percentage
    of their analog channel on their DTV channel; (2) whether the
    Commission needs to take steps to assist noncommercial television
    stations in the transition; (3) whether labeling requirements for
    TV-related consumer equipment would assist the transition and
    protect consumers; (4) whether and how the Commission should license
    multiple lower-powered transmitters, similar to cellular telephone
    systems, called distributed transmission systems; (5) whether
    broadcasters should be required to include Program System and
    Information Protocol ("PSIP") information within their digital
    signals to ensure the availability of certain functions; (6) whether
    the Commission should adopt digital V-chip requirements; and (7)
    what station identification requirements should apply to digital
    stations.

38. The Communications Act states that broadcast licenses for analog
    television service expire on December 31, 2006.[^57] The Commission
    is required to reclaim this spectrum from broadcasters unless one of
    three conditions set forth in Section 309(j)(14)(B) of the Act is
    met. Section 309(j)(14)(A) and (B) provide:

    \(A\) [Limitations on Terms of Terrestrial Television Broadcast
    Licenses]{.smallcaps}. -- A television broadcast license that
    authorizes analog television service may not be renewed to authorize
    such service for a period that extends beyond December 31, 2006.

    \(B\) [Extension]{.smallcaps}. -- The Commission shall extend the
    date described in subparagraph (A) for any station that requests
    such an extension in any television market if the Commission finds
    that --

    \(i\) one or more of the stations in such market that are licensed
    to or affiliated with one of the four largest national television
    networks are not broadcasting a digital television service signal,
    and the Commission finds that each such station has exercised due
    diligence and satisfies the conditions for an extension of the
    Commission's applicable construction deadlines for digital
    television service in that market;

    \(ii\) digital-to-analog converter technology is not generally
    available in such market; or

    \(iii\) in any market in which an extension is not available under
    clause (i) or (ii), 15 percent or more of the television households
    in such market --

    \(I\) do not subscribe to a multichannel video programming
    distributor (as defined in section 602) that carries one of the
    digital television service programming channels of each of the
    television stations broadcasting such a channel in such market; and

    \(II\) do not have either --

    \(a\) at least one television receiver capable of receiving the
    digital television service signals of the television stations
    licensed in such market; or

    \(b\) at least one television receiver of analog television service
    signals equipped with digital-to-analog converter technology capable
    of receiving the digital television service signals of the
    television stations licensed in such market. [^58]

The *NPRM* in the *Second Periodic Review* asks how the Commission
should interpret the extension criteria. Specifically, the *NPRM* seeks
comment on when stations should file an extension request with the
Commission, how the Commission should define a "television market" for
purposes of this provision, how it should interpret the requirement that
digital-to-analog converter technology be "generally available" in a
television market, and how it should interpret the test to determine if
at least 85 percent of viewers have access to digital broadcast signals
either over-the-air or through a subscription service such as cable or
satellite.

39. The Commission received mixed comments in response to the *Second
    DTV Periodic Review NPRM*, regarding the 700 MHz band and its role
    in the transition to DTV. On the one hand, operators and developers
    of new wireless services generally support earlier deadlines for
    construction, channel election, and loss of interference protection
    for broadcasters with DTV assignments in channels 52-69.[^59] They
    generally oppose any extensions of these deadlines, arguing that any
    extensions will prolong the DTV transition well past the end of 2006
    and discourage potential investors in their services.[^60] In
    addition, many wireless service providers request that they should
    not be required to protect DTV broadcasters from interference beyond
    their actual operating parameters if they are not operating at full
    capacity.[^61] Some wireless service providers also suggest methods
    of band-clearing that would speed up the clearing of the upper and
    lower 700 MHz channels.[^62] Commenters also suggest that strict
    deadlines and band-clearing arrangements are necessary in order to
    more quickly recover spectrum necessary to support public safety
    uses.[^63]

40. Conversely, broadcasting commenters, especially smaller broadcasters
    and public television stations, request additional time to construct
    digital facilities and to operate dual analog-digital
    facilities.[^64] Public television stations specifically request
    that the financial hardship standard for grant of an extension of
    time to construct a digital television station be applied more
    liberally to public television stations to reflect their unique
    means of funding.[^65] Smaller broadcasters and public television
    stations also generally request that replication and maximization
    deadlines apply only at the end of the transition, some arguing that
    digital set penetration does not warrant full service replication
    until that time.[^66] Some commenters, wireless service providers
    and broadcasters alike, also suggest that band-clearing and the
    transition to digital television would be facilitated with some type
    of cable carriage requirement for DTV signals.[^67]

#### Recovery of Spectrum for New Uses; Status of Licensing of New Services in 700 MHz Bands

41. As mentioned above, spectrum recovery is an integral part of the DTV
    transition process. The Commission's efforts in this regard have
    been guided by the directives of Sections 337(a) and 309(j)(14) of
    the Communications Act. Although significant portions of the 700 MHz
    bands remain encumbered by TV broadcast operations, the Commission
    has moved forward with the licensing of public safety entities and
    other new users in the 700 MHz bands, as directed by statute. The
    following is a summary of the status of licensing various new uses
    of these bands.

##### Public Safety Use of the Upper 700 MHz Band

42. Pursuant to Section 337(a)(1) of the Communications Act, the
    Commission has reallocated 24 of the 60 megahertz of spectrum in the
    Upper 700 MHz Band for public safety services. This allocation
    covers the 764-776 and 794-806 MHz segments of the band. As
    explained below, licensing to states for public safety purposes is
    well underway.

43. For the twenty-four megahertz of spectrum in the Upper 700 MHz
    designated for public safety services, the Commission adopted the
    following band plan:

-   12.5 MHz designated for General Use (50% of total allocation)

-   2.6 MHz designated for Interoperability (10.8%)

-   2.4 MHz designated for State Licenses (10%)

-   0.3 MHz designated for Low Power Operations (1.25%)

-   0.2 MHz designated for Secondary Trunking (0.8%)

-   6.0 MHz designated as Reserve (25%)

44. The General Use spectrum, which consists of both 6.25 kHz and 50 kHz
    channels (referred to as narrowband and wideband, respectively), is
    licensed utilizing a regional planning approach akin to that used
    for certain 800 MHz band public safety frequencies. There are 55
    regions for the Upper 700 MHz public safety spectrum. To date, 37
    regions have held their first planning meeting and elected a
    chairperson. We are aware that a number of these regions are
    actively working on their respective regional plans. In this regard,
    we note that Region 5, which consists of Southern California,
    previously submitted a regional plan for Commission review. This
    plan was returned to the region for inclusion of additional
    information critical to the Commission's analysis of such plan.

45. The Interoperability spectrum, which consists of both narrowband and
    wideband channels, is subject to administrative and technical
    oversight at the state level. States had the option of performing
    such administration through newly-formed State Interoperability
    Executive Committees or an equivalent state agency. States were
    required to notify the Commission by December 31, 2002 whether they
    would administer the Interoperability spectrum. In the event a state
    declined to do so, the 700 MHz regional planning committee for that
    state would perform such functions. To date, 38 states and the
    District of Columbia have indicated that they will administer the
    Interoperability spectrum. For the remaining states, Puerto Rico and
    the Virgin Islands, administration of the Interoperability spectrum
    will be the responsibility of the relevant 700 MHz Regional Planning
    Committee.

46. The State Licenses are 2.4 MHz geographic area licenses based on
    state boundaries. They are issued to the Governor of each state or
    its designee. In 2000, the Commission indicated that States had
    until December 31, 2001 to file an application for the State
    Licenses spectrum. Further, if a State did not apply for the
    spectrum it would revert to General Use spectrum within that state
    and be subject to administration by the relevant Regional Planning
    Committee. Each of the 50 states submitted an application for the
    State License. All of these applications were granted on or before
    February 1, 2002.

47. The Low Power Operations channels were designated in response to a
    request for low-power, person-to-person communications and personnel
    accountability reporting sytem for on-scene firefighting use;
    however, they are not restricted to such use. Specifically, there
    are twenty-four channel pairs designated for mobile operations not
    to exceed an effective radiated power of 2 watts. Access to eighteen
    of these pairs can be gained through the regional planning process.
    The remaining six channel pairs are available on an itinerant basis,
    that is, can be operated at unspecified locations for varying
    periods of time.

48. The Secondary Trunking spectrum consists of thirty-two channels that
    can only be used in connection with adjacent Interoperability
    channels in a trunked system. Because they are combined with
    channels within the Interoperability spectrum, they are administered
    in the same fashion as the Interoperability spectrum.

49. The Reserve Spectrum was so designated in order to allow for future
    needs and future developments in broadband technologies. The
    Commission indicated a desire to retain a relatively small amount of
    Upper 700 MHz public safety spectrum in reserve in order to have the
    flexibility to fine-tune the band plan with the benefit of
    experience gained after radio systems are deployed in the band. It
    further envisioned that such spectrum could possibly be used to
    accommodate needs such as exclusive high speed data or additional
    interoperability spectrum. It also indicated its willingness to
    review the status of the spectrum reserve once the 700 MHz band
    regional planning process was completed.

##### New Commercial Services in the Upper 700 MHz Band 

50. The Commission previously announced plans to use combinatorial
    bidding methodology in its auction of licenses for the 747-762 and
    777-792 MHz band (Auction No. 31), which will permit bidders to bid
    on self-defined groups of licenses. A total of 12 licenses, based on
    the six Economic Area Groupings ("EAGs") that comprise the United
    States and its territories, will be available for auction. An
    auction of this spectrum had been scheduled to begin on June 19,
    2002, but was delayed at Congress's direction pursuant to the
    Auction Reform Act.[^68]

##### Upper 700 MHz Guard Bands 

51. The Commission dedicated 6 of the 36 megahertz of commercial
    spectrum in the Upper 700 MHz Band for guard bands (consisting of
    the 746-747, 762-764, 776-777 and 792-794 MHz band segments), which
    are intended to provide public safety licensees with an additional
    measure of interference protection from operations in the commercial
    bands. Guard Band Managers, a new class of commercial licensee, make
    this spectrum available to system operators or directly to end users
    through private, written contracts (leases). The initial auction of
    Upper 700 MHz Guard Band licenses was completed on September 21,
    2000.[^69] Nine bidders won (and have since been granted) 96
    licenses with net bids of nearly \$520,000,000. The subsequent
    auction of the eight remaining Guard Band Manager licenses concluded
    on February 21, 2001, and yielded nearly \$21 million. Three winning
    bidders were awarded eight licenses in that auction.

##### Lower 700 MHz Band 

52. The Commission has reallocated the 48 megahertz of spectrum in the
    Lower 700 MHz band (698-746 MHz) from conventional TV broadcast
    services, and established licensing, service and competitive bidding
    rules for new services. New licensees in this band will be permitted
    to offer a broad range of fixed and mobile services.[^70] Licenses
    for 36 megahertz of the spectrum in the Lower 700 MHz Band (the A,
    B, D, and E blocks) have EAG service areas (consistent with the
    Upper 700 MHz Commercial Band) and one block (C block) of spectrum
    (12 megahertz total) uses the 734 Metropolitan Statistical Areas
    ("MSAs") and Rural Service Areas ("RSAs"). Pursuant to a directive
    in the Auction Reform Act, an initial auction of the C and D blocks
    of the Lower 700 MHz Band was completed in September 2002 (Auction
    No. 44). In that auction 102 winning bidders won 484 licenses.[^71]
    An auction of the licenses that went unsold in Auction No. 44 were
    made available in Auction No. 49, which closed on June 13, 2003; in
    that auction, 35 bidders won 251 licenses. The two auctions of the
    Lower 700 MHz C and D blocks (18 megahertz of spectrum) yielded
    \$145,467,590 in total net winning bids.

### Plans for Allocating and Assigning Additional Spectrum for Advanced Wireless (3G) Services 

53. Two of the legislative findings of the Auction Reform Act concern
    the status of the Commission's initiative to identify, allocate, and
    assign spectrum for advanced wireless services.

#### Identification and Allocation of 3G Spectrum

54. Auction Reform Act's second finding reads:

> *No comprehensive plan yet exists for allocating additional spectrum
> for third-generation wireless and other advanced communications
> services. The Federal Communications Commission should have the
> flexibility to auction frequencies in the 700 megahertz band for such
> purposes.*

55. The Commission has taken a number of substantial steps to free up
    spectrum that can be used to provide AWS, including 3G or "IMT-2000"
    services. First, following intensive coordination with the NTIA, in
    November 2002 the Commission issued an order allocating 90 megahertz
    of spectrum for AWS in two contiguous blocks (1710-1755 and
    2110-2155 MHz).[^72] This spectrum was designated for fixed and
    mobile services and can be paired to provide AWS services. In
    keeping with the Commission's flexible use policies, this allocation
    could be used by current licensees to expand their capacity for
    offering wireless voice and data services. Alternately, it could be
    used by either current licensees or new entrants to support the
    development of entirely new applications distinct from existing
    wireless offerings.

56. Before these bands can be put to effective use, several additional
    steps are required. Most importantly, provisions must be made to
    relocate existing users to other spectrum. The 1710-1755 MHz band is
    currently used for Federal Government operations. NTIA originally
    identified the band for transfer in 1995 and indicated that the band
    could be made available to non-Federal Government users on a
    mixed-use basis in 2004. NTIA noted, however, that Federal
    Government use of the band would have to be protected indefinitely
    at 333 fixed microwave stations used by Federal Power Agencies, at
    111 stations used for aviation-related safety communications, and at
    16 sites used by Department of Defense fixed microwave, tactical
    radio relay, and aeronautical mobile stations. In July 2002, NTIA
    offered a plan that, if implemented, proposed to largely clear this
    band of Federal Government users by no later than December 31,
    2008.[^73] Along with requiring commercial users to reimburse
    Federal users' relocation costs, part of this plan requires the
    Commission to conduct a rulemaking that would reallocate other
    spectrum to accommodate Federal systems that otherwise would remain
    in the 1710-1755 MHz band indefinitely. The Commission will initiate
    this rulemaking proceeding in the near future, looking toward
    allocating spectrum for relocated Federal users.

57. The 2110-2155 MHz band largely consists of spectrum previously
    identified as suitable for new services as part of the Commission's
    *Emerging Technologies* proceeding.[^74] However, to provide a
    contiguous block of spectrum for AWS at 2110-2155 MHz, the
    Commission had to reallocate five megahertz of spectrum currently
    licensed to the Multipoint Distribution Service (MDS) at 2150-2155
    MHz.[^75] The Commission is considering relocation spectrum and
    procedures for MDS operations in this band in another
    proceeding.[^76] The Commission will use existing relocation rules
    to provide for the migration of incumbent point-to-point microwave
    licensees currently occupying the 2110-2150 MHz band.

58. In addition, in other ongoing proceedings the Commission is
    considering making additional spectrum available for AWS.[^77] While
    the Commission is working to make these decisions as expeditiously
    as possible, it is unclear at this time when this additional
    spectrum, if allocated to AWS, would be made available to the
    public.

59. At the same time the Commission allocated 90 megahertz of spectrum
    for AWS, it also issued a notice of proposed rulemaking seeking
    comment on proposed licensing and service rules that would permit
    these bands to be used for any services consistent with the bands'
    fixed and mobile allocations.[^78] Specifically, the notice sought
    comment on licensing, technical and operational rules, and proposed
    to assign licenses in these bands through competitive bidding. It
    also sought comment on a number of auction-related issues, including
    the use of bidding credits, in connection with these licensing
    procedures. The record related to this notice has closed, and the
    Commission is preparing an order adopting service rules for these
    bands.[^79] The Commission also needs to address pending petitions
    for reconsideration that were filed in response to the order
    allocating the two bands.[^80] The Commission hopes to address these
    requests for reconsideration in the same time frame as the order
    adopting service rules for these bands.

#### NTIA's 3G Study

60. Auction Reform Act's third legislative finding, involving a
    then-pending study regarding possible spectrum sharing in connection
    with the 3G initiative, states:

> *The study being conducted by the National Telecommunications and
> Information Administration in consultation with the Department of
> Defense to determine whether the Department of Defense can share or
> relinquish additional spectrum for third generation wireless and other
> advanced communications services will not be completed until after the
> June 19th auction date for the upper 700 megahertz band, and long
> after the applications must be filed to participate in the auction,
> thereby creating further uncertainty as to whether the frequencies in
> the 700 megahertz band will be put to their highest and best use for
> the benefit of consumers.*

61. The Commission's allocation proceeding was only one element of a
    much broader effort that involved many parties concerned with this
    spectrum, including the Commerce Department's National
    Telecommunications and Information Administration (NTIA)
    (responsible for administering the Federal Government's use of
    spectrum), the Department of Defense (a major user of Government
    spectrum), and numerous representatives of non-Government spectrum
    users.

62. The study referenced in the Auction Reform Act was a spectrum
    viability assessment undertaken by the interagency task force
    established by Commerce Secretary Evans and FCC Chairman Powell.
    NTIA, in conjunction with the Commission, the Department of Defense,
    and other federal government agencies, studied the viability of
    making all or a portion of the 1710-1770 MHz and 2110-2170 MHz bands
    available for advanced mobile wireless (3G) services. This study was
    released on July 22, 2002.[^81] Under NTIA's plan, these bands could
    be largely cleared of Federal Government users by no later than
    December 31, 2008.[^82] Along with requiring commercial users to
    reimburse Federal users' relocation costs, part of this plan
    requires the Commission to conduct a rulemaking that would
    reallocate other spectrum to accommodate Federal systems that
    otherwise would remain in the 1710-1755 MHz band indefinitely. The
    Commission will initiate this rulemaking proceeding in the near
    future, looking toward allocating spectrum for relocated Federal
    users.

### Other Concerns and Considerations For Timing of 700 MHz Auctions

63. The Auction Reform Act indicates that Congress also had some
    concerns beyond the 3G and DTV initiatives, including economic
    conditions and the issue of interference to public safety users in
    the 800 MHz bands. The status of those matters are discussed below.

#### Changed Circumstances Since 1997

64. The first legislative finding of the ARA concerns changes in
    telecommunications markets since the enactment of the Balanced
    Budget Act of 1997. In particular, this finding states:

> *Circumstances in the telecommunications market have changed
> dramatically since the auctioning of spectrum in the 700 megahertz
> band was originally mandated by Congress in 1997, raising serious
> questions as to whether the original deadlines, or the subsequent
> revision of the deadlines, are consistent with sound
> telecommunications policy and spectrum management principles.*

65. In this finding, Congress indicated that unforeseen events had
    wrought considerable change in the spectrum management landscape
    since the enactment of the Balanced Budget Act of 1997. In the
    sections below, we discuss the concerns identified by Congress in
    the Auction Reform Act, and summarize developments in those areas in
    the period since the enactment of the Auction Reform Act.

66. Over the past year, some sources of uncertainty that may impact the
    telecommunications market have been minimized.[^83] While the
    telecom market in general has not rebounded yet, there are some
    positive signs in the wireless sector. Some of the key metrics
    reported by mobile telephone operators, such as subscriber growth,
    average monthly usage per subscriber, and average revenue per
    subscriber demonstrate the increased demand for and reliance placed
    on mobile telephony services by consumers.[^84] In addition,
    continued downward price trends, the continued expansion of mobile
    networks into new and existing markets, high rates of investment,
    and high rates of churn, when considered together with the other
    metrics, demonstrate a high level of competition for the large
    majority of mobile telephone consumers.[^85]

67. We recognize that economic troubles and other uncertainties may
    linger in the background of any auction. We do not believe that it
    is appropriate or consistent with statutory objectives to allow such
    problems to serve as the sole basis for delaying an auction.
    Nonetheless, in exercising our authority to schedule future
    auctions, we believe that "sound telecommunications policy and
    spectrum management principles" obligate us to take the
    telecommunications sector into account in our scheduling decisions.

#### 800 MHz Public Safety Proceeding

68. Congress also manifested concern with potential uncertainties
    arising out of the Commission's ongoing proceeding to address
    interference issues facing public safety users of the 800 MHz bands.
    Auction Reform Act's fourth finding reads:

> *The Federal Communications Commission is also in the process of
> determining how to resolve the interference problems that exist in the
> 800 megahertz band, especially for public safety. One option being
> considered for the 800 megahertz band would involve the 700 megahertz
> band. The Commission should not hold the 700 megahertz auction before
> the 800 megahertz interference issues are resolved or a tenable plan
> has been conceived.*

69. In March 2002, the Commission initiated a rule making proceeding (WT
    Docket No. 02-55) aimed at improving public safety communications in
    the 800 MHz band. Specifically, the Commission solicited proposals
    on how best to remedy interference to 800 MHz public safety systems
    from cellularized commercial mobile radio systems operating in the
    same band in a manner that is consistent with minimum disruption to
    the existing licensing structure and assurance of sufficient
    spectrum for critical public safety communications. In the context
    of this proceeding, several parties, *e.g.*, the Cellular
    Telecommunications and Internet Association, Cingular, the MFRAC,
    Inc., Motient Communications Company, and ARINC, have suggested that
    public safety systems be removed from the 800 MHz band to the
    non-public safety portion of the Upper 700 MHz. Under these
    proposals, the Upper 700 MHz would not be subject to competitive
    bidding and incumbent television stations would be required to
    vacate the spectrum by a date certain. Further, the 800 MHz public
    safety systems would be relocated to such Upper 700 MHz spectrum.
    Finally, the 800 MHz spectrum vacated by the public safety licensees
    would then be subject to competitive bidding to reimburse the costs
    incurred by public safety licensees in relocating to the Upper 700
    MHz band. While we cannot prejudge the outcome of this proceeding,
    it should nonetheless be noted that implementation of such proposals
    would appear to require legislative action given that Section 337 of
    the Communications Act expressly requires that 36 megahertz of the
    Upper 700 MHz spectrum be used for commercial purposes.[^86] To
    date, the Commission has not taken further action in this
    proceeding, though it is working closely with interested parties to
    resolve these issues. As we noted above, barring changes to our
    existing statutory authority, we do not believe the 800 MHz
    proceeding should implicate the timing of the 700 MHz auctions
    because substantial steps in the 800 MHz public safety intereference
    proceeding will be taken well before any 700 MHz band auction is
    started, and certainly within the next several months.

#### Voluntary Band-Clearing Policy

70. The final legislative finding of the Auction Reform Act states:

```{=html}
<!-- -->
```
(1) *The Commission\'s rules governing voluntary mechanisms for vacating
    the 700 megahertz band by broadcast stations\--*

> *(A) produced no certainty that the band would be available for
> advanced mobile communications services, public safety operations, or
> other wireless services any earlier than the existing statutory
> framework provides; and*
>
> *(B) should advance the transition of digital television and must not
> result in the unjust enrichment of any incumbent licensee.*

71. As mentioned above, this band includes 24 megahertz of new public
    safety spectrum, which doubles the amount of public safety spectrum
    in the U.S. and provides vital interoperable bandwidth that will
    enable police, fire and emergency personnel to communicate with one
    another in times of crisis. However, the major urban areas where the
    need for additional public safety spectrum is most acute are the
    same areas in which this band is most encumbered by broadcast
    stations. Moreover, the Commission is constrained from making this
    spectrum fully available for public safety because incumbent
    television broadcasters, pursuant to statute, do not have to vacate
    their analog channels until 2006 and may seek to remain until at
    least 85 percent of the households in their market have access to
    DTV signals, whichever is later.[^87] Based on its statutory
    authority, the Commission established policies that permit incumbent
    broadcasters to enter into arrangements with new licensees for the
    early, voluntary clearing of the Upper 700 MHz band to facilitate
    provisioning of public safety and commercial wireless services in
    these bands as soon as practicable.[^88] The Commission also
    established somewhat different voluntary clearing policies in the
    Lower 700 MHz band.[^89]

72. Subsequently, the Auction Reform Act was enacted.[^90] Section 6 of
    the Auction Reform Act restricts the Commission from waiving certain
    broadcast interference standards and the minimum spacing
    requirements for certain proposals to relocate Channel 52-69 analog
    operations to a Channel 2-51 DTV allotment, if such waiver "will
    result in any degradation in or loss of service, or an increased
    level of interference to any television household except as the
    Commission's rules would otherwise expressly permit, exclusive of
    any waivers previously granted."[^91]

73. The Media Bureau has granted one band-clearing application in the
    Upper 700 MHz band (Oklahoma City, OK, KOPX(TV), Channel 62) and one
    in the Lower 700 MHz band (Atlantic City, NJ, WWAC-TV, Channel 53).
    Additionally, one Lower 700 MHz band-clearing application appears to
    comply with the Commission's rules and policies but is awaiting
    Canadian approval (Vineyard Haven, MA, WDTX-TV, Channel 58). Also,
    there are 2 Lower 700 MHz band-clearing applications pending and
    currently being evaluated by Media Bureau staff (Akron, OH, WVPX-TV,
    Channel 59 and Goldvein, VA, WNVT, Channel 53). One Upper 700 MHz
    band-clearing application has been dismissed for failure to meet
    spacing requirements (Beattyville, KY, WLJC-TV, Channel 65).
    Finally, 10 Upper 700 MHz band-clearing applications may be
    dismissed based on Section 6 of the Auction Reform Act, which
    prohibits the Commission from waiving its spacing rules to grant
    certain band-clearing applications.

# CONCLUSION

74. We conclude that significant progress has been made in the past year
    in numerous aspects of the DTV and 3G proceedings. These
    proceedings, when complete, have great potential to improve the
    lives and safety of all Americans. Pursuant to the statutory scheme
    governing the 700 MHz bands, the Commission is continuing to move
    forward with the DTV spectrum recovery process to make these bands
    available to public safety entities and other new wireless users.
    For these reasons, we believe that it will be appropriate to
    announce new 700 MHz auction schedules near or upon completion of
    the 3G and DTV matters discussed above.

# Administrative Matters

75. This report is issued pursuant to the Auction Reform Act of 2002,
    Pub. L. No. 107-195, 116 Stat. 715, and Section 5(a) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 155(a).

76. IT IS ORDERED that the Secretary shall send copies of this report to
    the appropriate committees and subcommittees of the United States
    House of Representatives and the United States Senate.

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch

    Secretary

# Appendix A - Auction Reform Act of 2002 {#appendix-a---auction-reform-act-of-2002 .unnumbered}

**H.R. 4560**

To eliminate the deadlines for spectrum auctions of spectrum

previously allocated to television broadcasting.

**SECTION 1. SHORT TITLE.**

This Act may be cited as the "Auction Reform Act of 2002".

**SEC. 2. FINDINGS.**

Congress finds the following:

\(1\) Circumstances in the telecommunications market have changed
dramatically since the auctioning of spectrum in the 700 megahertz band
was originally mandated by Congress in 1997, raising serious questions
as to whether the original deadlines, or the subsequent revision of the
deadlines, are consistent with sound telecommunications policy and
spectrum management principles.

\(2\) No comprehensive plan yet exists for allocating additional
spectrum for third-generation wireless and other advanced communications
services. The Federal Communications Commission should have the
flexibility to auction frequencies in the 700 megahertz band for such
purposes.

\(3\) The study being conducted by the National Telecommunications and
Information Administration in consultation with the Department of
Defense to determine whether the Department of Defense can share or
relinquish additional spectrum for third generation wireless and other
advanced communications services will not be completed until after the
June 19th auction date for the upper 700 megahertz band, and long after
the applications must be filed to participate in the auction, thereby
creating further uncertainty as to whether the frequencies in the 700
megahertz band will be put to their highest and best use for the benefit
of consumers.

\(4\) The Federal Communications Commission is also in the process of
determining how to resolve the interference problems that exist in the
800 megahertz band, especially for public safety. One option being
considered for the 800 megahertz band would involve the 700 megahertz
band. The Commission should not hold the 700 megahertz auction before
the 800 megahertz interference issues are resolved or a tenable plan has
been conceived.

\(5\) The 700 megahertz band is currently occupied by television
broadcasters, and will be so until the transfer to digital television is
completed. This situation creates a tremendous amount of uncertainty
concerning when the spectrum will be available and reduces the value
placed on the spectrum by potential bidders. The encumbrance of the 700
megahertz band reduces both the amount of money that the auction would
be likely to produce and the probability that the spectrum would be
purchased by the entities that valued the spectrum the most and would
put the spectrum to its most productive use.

\(6\) The Commission\'s rules governing voluntary mechanisms for
vacating the 700 megahertz band by broadcast stations\--

> \(A\) produced no certainty that the band would be available for
> advanced mobile communications services, public safety operations, or
> other wireless services any earlier than the existing statutory
> framework provides; and
>
> \(B\) should advance the transition of digital television and must not
> result in the unjust enrichment of any incumbent licensee.

**SEC. 3. ELIMINATION OF STATUTORY DEADLINES FOR SPECTRUM AUCTIONS.**

\(a\) [FCC To Determine Timing Of Auctions]{.smallcaps} - Section 309(j)
of the Communications Act of 1934 (47 U.S.C. 309(j)) is amended by
adding at the end the following new paragraph:

"(15) [Commission To Determine Timing Of Auctions]{.smallcaps} -

> "(A) [Commission Authority]{.smallcaps} - Subject to the provisions of
> this subsection (including paragraph (11)), but notwithstanding any
> other provision of law, the Commission shall determine the timing of
> and deadlines for the conduct of competitive bidding under this
> subsection, including the timing of and deadlines for qualifying for
> bidding; conducting auctions; collecting, depositing, and reporting
> revenues; and completing licensing processes and assigning licenses.
>
> "(B) [Termination Of Portions Of Auctions 31 And 44]{.smallcaps}-
> Except as provided in subparagraph (C), the Commission shall not
> commence or conduct auctions 31 and 44 on June 19, 2002, as specified
> in the public notices of March 19, 2002, and March 20, 2002 (DA 02-659
> and DA 02-563).

"(C) [Exception]{.smallcaps} -

> "(i) [Blocks Excepted]{.smallcaps} - Subparagraph (B) shall not apply
> to the auction of\--
>
> "(I) the C-block of licenses on the bands of frequencies located at
> 710-716 megahertz, and 740-746 megahertz; or
>
> "(II) the D-block of licenses on the bands of frequencies located at
> 716-722 megahertz.
>
> "(ii) [Eligible Bidders]{.smallcaps} - The entities that shall be
> eligible to bid in the auction of the C-block and D-block licenses
> described in clause (i) shall be those entities that were qualified
> entities, and that submitted applications to participate in auction
> 44, by May 8, 2002, as part of the original auction 44 short form
> filing deadline.
>
> "(iii) [Auction Deadlines For Excepted Blocks]{.smallcaps} -
> Notwithstanding subparagraph (B), the auction of the C-block and
> D-block licenses described in clause (i) shall be commenced no earlier
> than August 19, 2002, and no later than September 19, 2002, and the
> proceeds of such auction shall be deposited in accordance with
> paragraph (8) not later than December 31, 2002.
>
> "(iv) [Report]{.smallcaps} - Within one year after the date of
> enactment of this paragraph, the Commission shall submit a report to
> Congress\--
>
> "(I) specifying when the Commission intends to reschedule auctions 31
> and 44 (other than the blocks excepted by clause (i)); and
>
> "(II) describing the progress made by the Commission in the digital
> television transition and in the assignment and allocation of
> additional spectrum for advanced mobile communications services that
> warrants the scheduling of such auctions.

"(D) [Return Of Payments]{.smallcaps} - Within one month after the date
of enactment of this paragraph, the Commission shall return to the
bidders for licenses in the A-block, B-block, and E-block of auction 44
the full amount of all upfront payments made by such bidders for such
licenses.\'.

\(b\) [Conforming Amendments]{.smallcaps}-

\(1\) [Communications Act Of 1934]{.smallcaps}- Section
309(j)(14)(C)(ii) of the Communications Act of 1934 (47 U.S.C.
309(j)(14)(C)(ii)) is amended by striking the second sentence.

\(2\) [Balanced Budget Act Of 1997]{.smallcaps} - Section 3007 of the
Balanced Budget Act of 1997 (111 Stat. 269) is repealed.

\(3\) [Consolidated Appropriations Act]{.smallcaps} - Paragraphs (2) and
(3) of section 213(a) of H.R. 3425 of the 106th Congress, as enacted
into law by section 1000(a)(5) of an Act making consolidated
appropriations for the fiscal year ending September 30, 2000, and for
other purposes (Public Law 106-113; 113 Stat. 1501A-295), are repealed.

**SEC. 4. COMPLIANCE WITH AUCTION AUTHORITY.**

The Federal Communications Commission shall conduct rescheduled auctions
31 and 44 prior to the expiration of the auction authority under section
309(j)(11) of the Communications Act of 1934 (47 U.S.C. 309(j)(11)).

**SEC. 5. PRESERVATION OF BROADCASTER OBLIGATIONS.**

Nothing in this Act shall be construed to relieve television broadcast
station licensees of the obligation to complete the digital television
service conversion as required by section 309(j)(14) of the
Communications Act of 1934 (47 U.S.C. 309(j)(14)).

**SEC. 6. INTERFERENCE PROTECTION.**

\(a\) [Interference Waivers]{.smallcaps} - In granting a request by a
television broadcast station licensee assigned to any of channels 52-69
to utilize any channel of channels 2-51 that is assigned for digital
broadcasting in order to continue analog broadcasting during the
transition to digital broadcasting, the Federal Communications
Commission may not, either at the time of the grant or thereafter, waive
or otherwise reduce\--

> \(1\) the spacing requirements provided for analog broadcasting
> licensees within channels 2-51 as required by section 73.610 of the
> Commission\'s rules (and the table contained therein) (47 CFR 73.610),
> or
>
> \(2\) the interference standards provided for digital broadcasting
> licensees within channels 2-51 as required by sections 73.622 and
> 73.623 of such rules (47 CFR 73.622, 73.623),

if such waiver or reduction will result in any degradation in or loss of
service, or an increased level of interference, to any television
household except as the Commission\'s rules would otherwise expressly
permit, exclusive of any waivers previously granted.

\(b\) [Exception for Public Safety Channel Clearing]{.smallcaps} -- The
restrictions in subsection (a) shall not apply to a station licensee
that is seeking authority (either by waiver or otherwise) to vacate the
frequencies that constitute television channel 63, 64, 68, or 69 in
order to make such frequencies available for public safety purposes
pursuant to the provisions of section 337 of the Communications Act of
1934 (47 U.S.C. 337).

# Appendix B -- Maps Showing Locations of Existing Analog TV and Authorized DTV Stations {#appendix-b-maps-showing-locations-of-existing-analog-tv-and-authorized-dtv-stations .unnumbered}

The following attachments map the contours of incumbent analog TV (NTSC)
and DTV stations. Each set of maps begins with a map showing the
locations of all of the stations on Channels 52-69 aggregated on a
nationwide basis. The initial map is then followed by nationwide maps
showing the locations of stations on a channel-by-channel basis,
beginning with Channel 52 and progressing to Channel 69.

The NTSC maps show the current Grade B contour of each station. *See* 47
C.F.R. § 73.683(a) (definition of Grade B field strength contour). The
DTV maps depict the service area for each facility, using a
noise-limited contour of 41 dBu. *See* 47 C.F.R. § 73.622(e).

Readers should be aware that these maps do not depict the actual amount
of currently usable "white space" in the Upper and Lower 700 MHz bands
because interference protection requirements require wireless facilities
to be situated well outside a TV or DTV station's contour. Also, those
interference protection requirements generally require that new public
safety and commercial wireless licensees protect TV/DTV incumbents that
may exist both on the same channel (co-channel) or adjacent channels
throughout the DTV transition period. *See* 47 C.F.R. §§ 27.60,
90.545(c) (TV/DTV interference protection requirements). For example, a
wireless entity seeking to operate on Channel 65 would be required to
engineer its facilities to protect TV and DTV stations on Channel 64,
65, and 66. An area that appears "white" on a channel 65 map might not
be available if a TV or DTV station is located in a nearby area on
channel 64 or channel 66. Similarly, an area that appears "white" on the
TV station channel 65 map would not be available if it is located near a
DTV station on channel 65. Moreover, as is explained in the preceding
report, the Commission is currently considering a number of other issues
concerning the protection that must be provided to incumbent analog and
digital broadcasters in the 700 MHz band during the transition. *See*
Second Periodic Review of the Commission's Rules and Policies Affecting
the Transition to Digital Television, *Notice of Proposed Rulemaking*,
18 FCC Rcd 1279, 1292-1300 ¶¶ 39-60 (2003).

[^1]: Auction Reform Act of 2002, Pub. L. No. 107-195, 116 Stat. 715
    ("Auction Reform Act"); 47 U.S.C. § 309(j)(15)(C)(iv). Appendix A of
    this report is the complete text of the Auction Reform Act.

[^2]: 47 U.S.C. § 309(j)(15)(A), as added by the Auction Reform Act.

[^3]: 47 U.S.C. § 309(j)(15)(C)(iv); Auction Reform Act, § 2.

[^4]: *Id.*

[^5]: The AWS initiative is commonly referred to as the "3G proceeding"
    because the spectrum that is the subject of that initiative is
    intended to provide advanced wireless services ("AWS"), which
    includes services commonly referred to as "Third Generation" or
    "IMT-2000." Advanced wireless systems will use ongoing technological
    advances to provide a wide range of voice, data and broadband
    services over a variety of mobile and fixed networks, with enhanced
    interoperability and roaming features.

[^6]: As the report discusses in detail, while significant numbers of
    broadcasters have sought extensions of time to complete construction
    of their DTV facilities, the Commission has established a sanction
    process designed to bring such broadcasters into compliance with
    construction requirements.

[^7]: Under Section 309(j)(3) of the Communications Act, in developing a
    competitive bidding methodology and specifying the characteristics
    of licenses to be assigned by auction, the Commission is required to
    promote a number of objectives, including:

    > \(A\) the development and rapid deployment of new technologies,
    > products, and services for the benefit of the public, including
    > those residing in rural areas, without administrative or judicial
    > delays;
    >
    > \(B\) promoting economic opportunity and competition and ensuring
    > that new and innovative technologies are readily accessible to the
    > American people by avoiding excessive concentration of licenses
    > and by disseminating licenses among a wide variety of applicants,
    > including small businesses, rural telephone companies, and
    > businesses owned by members of minority groups and women;
    >
    > \(C\) recovery for the public of a portion of the value of the
    > public spectrum resource made available for commercial use and
    > avoidance of unjust enrichment through the methods employed to
    > award uses of that resource;
    >
    > \(D\) efficient and intensive use of the electromagnetic spectrum;
    > ...

    47 U.S.C. §309(j)(3)(A) - (D).

[^8]: *See* 47 U.S.C. § 309(j)(11).

[^9]: Certain type of licenses are exempt from the Commission's
    competitive bidding authority, such as licenses for public safety
    radio services and certain types of broadcast stations. *See* 47
    U.S.C. § 309(j)(2) (exemptions from competitive bidding authority).
    In addition, Section 309(j) directs the Commission to use auctions
    to resolve "mutually exclusive applications \[that\] are accepted
    for any initial license or construction permit." 47 U.S.C. §
    309(j)(1). Also, Section 647 of the Open-Market Reorganization for
    the Betterment of International Telecommunications Act limits the
    Commission's competitive bidding authority with respect to spectrum
    "used for the provision of international or global satellite
    communications services." Pub. L. No. 106-180, 114 Stat. 48 (2000).
    The Commission retains the discretion to employ licensing procedures
    in a particular service that minimize the likelihood of mutually
    exclusive applications, if warranted by public interest
    considerations, including the specific characteristics, uses, and
    demands of a given service. *See* Implementation of Sections 309(j)
    and 337 of the Communications Act of 1934 as Amended; Promotion of
    Spectrum Efficient Technologies on Certain Part 90 Frequencies;
    Establishment of Public Service Radio Pool in the Private Mobile
    Frequencies Below 800 MHz; Petition for Rule Making of the American
    Mobile Telecommunications Association, *Report and Order and Further
    Notice of Proposed Rule Making,* 15 FCC Rcd 22709 (1999)
    (establishing framework for exercise of auction authority).

[^10]: 47 U.S.C. § 309(j)(15) (B).

[^11]: *See* Advanced Television Systems and Their Impact upon the
    Existing Television Broadcast Service, *Sixth Further Notice of
    Proposed Rule Making*, 11 FCC Rcd 10968, 10977 ¶ 18 (1996).

[^12]: The "Upper 700 MHz band," which is currently used by TV
    operations on Channels 60-69, comprises the 60 megahertz of spectrum
    at 746-806 MHz. The "Lower 700 MHz band" (Channels 52-59) is the 48
    megahertz at 698-746 MHz.

[^13]: *See* 47 U.S.C. § 337(a) (enacted by the Balanced Budget Act of
    1997, Pub. L. No. 105-33, 111 Stat. 251 § 3004 (adding new Section
    337(a) and establishing initial timetable for conducting auctions)).

[^14]: *See* 47 U.S.C. § 309(j)(14)(C).

[^15]: *See* Advanced Television Systems and Their Impact upon the
    Existing Television Broadcast Service, *Memorandum Opinion and Order
    of the Sixth Report and Order*, 13 FCC Rcd 7418, 7435-36 ¶ 42
    (1998).

[^16]: *See* 47 U.S.C. § 309(j)(14)(B) (conditions for extension of
    analog TV licenses). The Commission is currently engaged in a rule
    making proceeding that is considering, among other things, how we
    should interpret certain portions of Section 309(j)(14)(B). *See*
    Second Periodic Review of the Commission's Rules and Policies
    Affecting the Transition to Digital Television, *Notice of Proposed
    Rulemaking*, 18 FCC Rcd 1279, 1303-14 ¶¶ 69-94 (2003) ("*DTV Second
    Periodic Review NPRM*").

[^17]: *See, e.g.,* Service Rules for the 746-764 and 776-794 MHz Bands,
    and Revisions to Part 27 of the Commission's Rules; Carriage of the
    Transmissions of Digital Broadcast Stations; Review of the
    Commission's Rules and Policies Affecting the Conversion to Digital
    Television, *Memorandum Opinion and Order and Further Notice of
    Proposed Rulemaking*, 15 FCC Rcd 20845, 20865-66 ¶¶ 50-55 (2000).

[^18]: 47 U.S.C. § 309(j)(14)(C).

[^19]: Pursuant to a statutory directive in Section 337(a) of the
    Communications Act, the Commission has reallocated 24 megahertz of
    spectrum in the Upper 700 MHz band from current television uses to
    public safety services, and the remaining 36 megahertz for
    "commercial use to be assigned by competitive bidding pursuant to
    Section 309(j)." 47 U.S.C. § 337(a).

[^20]: *See* Consolidated Appropriations Act, 2000, Pub. L. No. 106-113,
    113 Stat. 2502, Appendix E, Sec. 213.

[^21]: *See* Balanced Budget Act of 1997, Pub. L. No. 105-33, 111 Stat.
    251 §§ 3003 (adding new Section 309(j)(14) to the Communications
    Act, and establishing a deadline for broadcasters to cease 700 MHz
    operations); § 3004 (adding new Section 337(a) and establishing
    initial timetable for conducting auctions); § 3007 (uncodified,
    reproduced at 47 U.S.C. § 309(j) note 3 (setting September 30, 2002
    deadline for completion of certain auctions and deposit of
    proceeds).

[^22]: *See* Auction of Licenses in the 747-762 and 777-792 MHz Bands
    (Auction No. 31), Auction of Licenses in the 698-746 MHz Band
    (Auction No. 44), *Order*, 17 FCC Rcd 10098 (2002).

[^23]: "Auction of Licenses in the 747-762 and 777-792 MHz Band (Auction
    No. 31) Postponed Until January 14, 2003; Auction of Licenses in the
    698-746 MHz Band (Auction No. 44) Will Proceed As Scheduled,"
    *Public Notice*, FCC 02-158, Report No. AUC-02-31-F (Auction No. 31)
    and AUC-02-44-D (Auction No. 44) (rel. May 24, 2002). While that
    Public Notice stated that the Commission intended to memorialize its
    views supporting that decision in a separate opinion, we find that
    it is no longer necessary to do so in light of intervening events.

[^24]: Auction Reform Act, at § 2.

[^25]: 47 U.S.C. § 309(j)(15), as added by the Auction Reform Act.

[^26]: 47 U.S.C. § 309(j)(15)(C)(iii), as enacted by the Auction Reform
    Act. The Auction Reform Act also directed the Commission to delay
    its then-scheduled auction of certain licenses in the Upper 700 MHz
    band (Auction No. 31).

[^27]: 47 U.S.C. §309(j)(15)(C)(ii).

[^28]: Complete information concerning Auction No. 44 and all other
    Commission auctions, including individual round results and auction
    outcomes, may be found on the Commission's web site at:
    http://wireless.fcc.gov/auctions/.

[^29]: Auction Reform Act, § 2 (findings).

[^30]: *Id.*

[^31]: As noted above, the Auction Reform Act requires that this auction
    be completed before the Commission's competitive bidding authority
    expires. Currently, the Commission's auction authority is set to
    sunset on September 30, 2007. *See* 47 U.S.C. § 309(j)(11).

[^32]: NTIA is the the Executive Branch\'s principal voice on domestic
    and international telecommunications and information technology
    issues, and is responsible for administering the Federal
    Government's use of spectrum.

[^33]: Auction Reform Act, § 2 (findings).

[^34]: *See* Amendment of Part 2 of the Commission's Rules to Allocate
    Spectrum Below 3 GHz for Mobile and Fixed Services to Support the
    Introduction of New Advanced Wireless Services, including Third
    Generation Wireless Systems, ET Docket No. 00-258, *Third Report and
    Order, Third Notice of Proposed Rulemaking and Second Memorandum
    Opinion and Order*, 18 FCC Rcd 2223 (2003) ("*AWS Third NPRM*").

[^35]: Services Rules for Advanced Wireless Services in the 1.7 GHz and
    2.1 GHz Bands, WT Docket No. 02-353, *Notice of Proposed
    Rulemaking*, 17 FCC Rcd 24135 (2002) ("*AWS Service Rules Notice*").

[^36]: *See DTV Second Periodic Review NPRM*, 18 FCC Rcd 1279.

[^37]: 47 U.S.C. § 337(a).

[^38]: 47 U.S.C. § 309(j)(15)(C)(iv)(II).

[^39]: *See* Advanced Television Systems and Their Impact upon the
    Existing Television Broadcast Service, MM Docket No. 87-268, *Fifth
    Report and Order*, 12 FCC Rcd 12809, 12840-41 ¶ 76 (1997); 47 C.F.R.
    § 73.624(d).

[^40]: To qualify for an extension of time to construct a digital
    television facility under the financial hardship standard, the
    applicant must demonstrate that the cost of meeting the minimum
    build-out requirements exceeds the station's financial resources.
    The applicant must provide an itemized estimate of the costs of
    construction and a detailed explanation of why its financial
    condition precludes such an expenditure.

[^41]: The remaining two were licensed and on the air prior to September
    11, 2001, but are now off the air due to the attack on the World
    Trade Center . Two network-affiliated television stations in New
    York City (WABC-DT and WNBC-DT), as well as three other DTV stations
    (WWOR-DT, WPIX-DT, and WNET-DT) in that market, were taken off the
    air as a result of the September 11, 2001, attack and have not yet
    rebuilt their DTV facilities. Except for WWOR-DT, these stations are
    not broadcasting a digital signal. WWOR-DT is broadcasting in
    digital from an antenna shared with WNYW-DT on the Empire State
    Building.

[^42]: In the *DTV Extension Order and NPRM*, we granted the following
    stations in markets 11-30 additional time to complete construction
    of their DTV facilities: WVIT-DT, New Britain, Connecticut; WTIC-DT
    and WFSB-DT, Hartford, Connecticut; WTVJ-DT, Miami, Florida; and
    KUSA-DT, KMGH-DT, and KCNC-DT, Denver, Colorado. Requests for
    Extension of the October 5, 2001, Digital Television Construction
    Deadline, *Order and Notice of Proposed Rule Making*, 17 FCC Rcd
    9962, 9968 ¶ 21 (2002). The Connecticut stations reported delays in
    obtaining zoning approval and noted that ongoing Commission channel
    swap rulemakings affect their digital stations; WTVJ-DT in Miami
    also is involved in a pending rulemaking which would result in the
    change of its DTV allotment; the Denver stations report that they
    have been unable to complete construction of their DTV facilities on
    Lookout Mountain, outside of Denver, due to an ongoing unresolved
    local tower siting dispute. *See id.* In February, 2003, we granted
    these stations an additional six months to complete their DTV
    facilities, finding that the licensees made reasonable and diligent
    efforts to construct their authorized facilities, but that each
    encountered delays that were unforeseeable or beyond their control
    and that these delays prevented timely construction of their DTV
    facilities. Requests for Further Extension of the Digital Television
    Construction Deadline, *Order,* 18 FCC Rcd 2297 (2003).

[^43]: *See*, *e.g*., Letter from W. Kenneth Ferree, Chief, Media Bureau
    to KSBI Licensee, L.P. (June 3, 2002), File No. BEPCDT-20020301AHU;
    Letter from W. Kenneth Ferree to Trinity Broadcasting Network, (June
    3, 2002), File No. BEPCDT-20020304AGK. Copies of these letters are
    available at www.fcc.gov/mb/video/files/dendtvextreq.pdf.

[^44]: Remedial Steps For Failure to Comply With Digital Television
    Construction Schedule, *Report and Oreder and Memorandum Opinion and
    Order*, 18 FCC Rcd 7174 (2003).

[^45]: *See* Letters from Chairman Michael K. Powell to Senator Ernest
    F. Hollings and Representative W. J. "Billy" Tauzin, (Apr. 4, 2002),
    at [www.fcc.gov/dtv]{.underline}.

[^46]: *See* July 11, 2002 Statement by Chairman Michael K. Powell,
    available at [www.fcc.gov/dtv]{.underline}. Copies of letters from
    participating industries, detailing the initiatives they plan to
    take in response to the Chairman's plan, are available at
    [www.fcc.gov/dtv/industryletters.pdf]{.underline}.

[^47]: Letter from Robert Sachs, President NCTA, to Chairman Michael K.
    Powell (May 1, 2002). This commitment includes the largest cable
    operators, including AT&T Broadband (now Comcast), Comcast, AOL-Time
    Warner, Charter, Cox, Adelphia, Cablevision, Mediacom, Insight and
    CableOne.

[^48]: Robert Sachs, President NCTA, Remarks to the Opening General
    Session, National Show (June 9, 2003) found on the NCTA web site at
    http://www.ncta.com/pdf_files/RJS_Cable03.pdf.

[^49]: *See* Letters from Chairman Michael K. Powell to Senator John
    McCain, Senator Ernest F. Hollings, Senator Conrad Burns,
    Representative W. J. "Billy" Tauzin, Representative John Dingell,
    Representative Fred Upton, and Representative Edward Markey (Apr.
    29, 2003).

[^50]: Templates of these letters can be found at
    <http://www.fcc.gov/mb/dtv/dtvquestionaires.html>.

[^51]: Carriage of the Transmissions of Digital Television Broadcast
    Stations, *First Report and Order and Further Notice of Proposed
    Rulemaking*, 16 FCC Rcd 2598 (2001) ("*DTV Must Carry Order and
    FNPRM*").

[^52]: Review of the Commission's Rules and Policies Affecting the
    Conversion to Digital Television, *Second Report and Order and
    Second Memorandum Opinion and Order*, 17 FCC Rcd 15978, 15996 ¶ 40
    (2002). Receivers with screen sizes 36 inches and above \-- 50% of a
    responsible party's units must include DTV tuners effective July 1,
    2004; 100% of such units must include DTV tuners effective July 1,
    2005. Receivers with screen sizes 25 to 35 inches \-- 50% of a
    responsible party's units must include DTV tuners effective July 1,
    2005; 100% of such units must include DTV tuners effective July 1,
    2006. Receivers with screen sizes 13 to 24 inches \-- 100% of all
    such units must include DTV tuners effective July 1, 2007. TV
    Interface Devices VCRs and DVD players/recorders, etc. that receive
    broadcast television signals \-- 100% of all such units must include
    DTV tuners effective July 1, 2007. *Id.*

[^53]: Digital Broadcast Copy Protection, *Notice of Proposed
    Rulemaking*, 17 FCC Rcd 16027 (2002).

[^54]: Implementation of Section 304 of the Telecommunications Act of
    1996; Commercial Availability of Navigation Devices and
    Compatibility Between Cable Systems and Consumer Electronics
    Equipment, *Further Notice of Proposed Rule Making*, 18 FCC Rcd 518
    (2003).

[^55]: Receivers manufactured pursuant to the MOU would still need an
    external navigation device to receive certain advanced features,
    such as certain electronic programming guides and video on demand.

[^56]: *DTV Second Periodic Review NPRM*, 18 FCC Rcd 1279.

[^57]: 47 U.S.C. § 309(j)(14)(A).

[^58]: 47 U.S. C. § 309(j)(14)(A), (B). *See also DTV Second Periodic
    Review NPRM*, 18 FCC Rcd at 1303-14 ¶¶ 69-94 (seeking comment on how
    the Commission should interpret portions of Section 309(j)(14)(B)'s
    three-part test); 47 U.S. C. § 309(j)(14)(C) (requiring Commission
    to reclaim and organize spectrum recovered from analog
    broadcasting).

[^59]: *See, e.g.,* Comments submitted by: Access Spectrum, LLC; KanOkla
    Telephone Association, Inc., Peoples Telephone Cooperative, Inc.,
    and Arctic Slope Telephone Association Cooperative; Motorola, Inc.;
    Datacom Wireless, LLC; Aloha Partners, L.P.; Crown Castle USA, Inc.;
    Flarion Technologies, Inc.; and Harbor Wireless, LLC., MB Docket No.
    03-15.

[^60]: *See, e.g.,* Comments of Cavalier Group, LLC at 2; Comments of
    Flarion Technologies, Inc. at 2; Comments of Harbor Wireless, LLC at
    3-4, MB Docket No. 03-15.

[^61]: *See, e.g.,* Comments of Cavalier Group, LLC at 26; Comments of
    Access Spectrum, LLC at 10-11; Comments of Datacom Wireless, LLC at
    7, MB Docket No. 03-15.

[^62]: *See, e.g.,* Comments of Statewide Wireless Network -- New York
    State Office for Technology at 11-13; Comments of Cavalier Group,
    LLC at 22. *See also* Comments of Paxson Communications Corporation
    at 29-32 MB Docket No. 03-15.

[^63]: *See, e.g.* Comments of Public Safety Wireless Network Program;
    Comments of Statewide Wireless Network -- New York State Office for
    Technology, MB Docket No. 03-15.

[^64]: *See generally* Comments of the Association of Public Television
    Stations, the Corporation for Public Broadcasting and the Public
    Broadcasting Service (Public Television); Comments of Block
    Communications, Inc.; Comments of Hubbard Broadcasting, Inc., MB
    Docket No. 03-15.

[^65]: Comments of Public Television at 14-16, MB Docket No. 03-15.

[^66]: *See, e.g.,* Comments of Hubbard Broadcasting, Inc. at 4;
    Comments of Public Television at 25-26, MB Docket No. 03-15.

[^67]: Comments of Paxson Communications Corporation, Comments of
    Association of Public Television Stations, the Corporation for
    Public Broadcasting and the Public Broadcasting Service; Comments of
    Cavalier Group, LLC at 22.

[^68]: As is explained above (*see* para. 2, *supra*), the Commission
    has not yet rescheduled this auction.

[^69]: Complete information concerning all auctions, including
    individual round results and auction outcomes, may be found on the
    Commission's web site at: <http://wireless.fcc.gov/auctions/>.

[^70]: *See* Reallocation and Service Rules for the 698-746 MHz Spectrum
    Band (Television Channels 52-59), *Report and Order*, 17 FCC Rcd
    1022 (2001).

[^71]: *See* <http://wireless.fcc.gov/auctions/>. As of June 5, 2003,
    long form applications covering 404 of those licenses had been
    granted. Thirteen of the 107 long form license applications filed by
    Auction No. 44 winners remained pending.

[^72]: Amendment of Part 2 of the Commission's Rules to Allocate
    Spectrum Below 3 GHz for Mobile and Fixed Services to Support the
    Introduction of New Advanced Wireless Services, including Third
    Generation Wireless Systems, ET Docket No. 00-258, *Second Report
    and Order*, 17 FCC Rcd 23193 (2002).

[^73]: *See* An Assessment of the Viability of Accommodating Advanced
    Mobile Wireless (3G) Systems in the 1710-1770 MHz and 2110-2170 MHz
    Bands, U.S. Department of Commerce, NTIA (July 22, 2002) ("*NTIA AWS
    Assessment*"). This report is available on the Internet at:
    \<<http://www.ntia.doc.gov/ntiahome/threeg/va7222002/3Gva072202web.htm>\>.

[^74]: *See generally* Redevelopment of Spectrum to Encourage the
    Establishment of Services Using New and Innovative Technologies, ET
    Docket No. 92-9, *First Report and Order and Third Notice of
    Proposed Rule Making*, 7 FCC Rcd 6886 (1992); *Second Report and
    Order*, 8 FCC Rcd 6495 (1993); *Third Report and Order and
    Memorandum Opinion and Order*, 8 FCC Rcd 6589 (1993); *Memorandum
    Opinion and Order*, 9 FCC Rcd 1943 (1994)*; Second Memorandum
    Opinion and Order*, 9 FCC Rcd 7797 (1994), *aff\'d*, Association of
    Public Safety Communications Officials-International, Inc. v. FCC,
    76 F.3d 395 (D.C. Cir. 1996) (collectively, "*Emerging Technologies*
    proceeding").

[^75]: This spectrum is part of a 10-megahertz block (12 megahertz in
    larger markets) that is allocated to MDS in the 2150-2160/62 MHz
    band.

[^76]: *See* Amendment of Parts 1, 21, 73, 74 and 101 of the
    Commission's Rules to Facilitate the Use of the Universal Licensing
    System in the 2150-2162 and 2500-2690 MHz Bands, WT Docket No.
    03-66, *Notice of Proposed Rule Making and Memorandum Opinion and
    Order*, FCC 03-56 (rel. Apr. 2, 2003).

[^77]: *See* *AWS Third NPRM*, 18 FCC Rcd 2223.

[^78]: *See AWS Service Rules Notice,* 17 FCC Rcd 24135.

[^79]: If additional spectrum is made available for AWS in other
    proceedings, the Commission would have to make provision for band
    clearing as necessary, and conduct licensing and service rulemaking
    proceedings for that spectrum.

[^80]: *See* Petition for Partial Reconsideration by PCIA, The Wireless
    Infrastructure Association, ET Docket No. 00-258, filed Feb. 24,
    2003; Joint Petition for Reconsideration of Sirius Satellite Radio
    Inc. and XM Radio Inc., ET Docket No. 00-258, filed Feb. 24, 2003;
    Sprint Corporation Petition for Reconsideration, ET Docket No.
    00-258, filed Feb. 24, 2003; The Wireless Communications Association
    International, Inc, Petition for Reconsideration, ET Docket No.
    00-258, filed Feb. 24, 2003.

[^81]: *NTIA AWS Assessment*.

[^82]: *Id*.

[^83]: For example, one area of uncertainty that had been lingering for
    several years -- the treatment of auctioned licenses subject to
    installment payments in bankruptcy -- has been at least partially
    resolved with the U.S. Supreme Court's ruling in the NextWave
    litigation on January 27, 2003. *FCC v. Nextwave Personal
    Communications, Inc*., 537 U.S. 293 (2003). In that decision, the
    Supreme Court affirmed the D.C. Circuit decision holding that
    section 525 of the Bankruptcy Code prohibited the Commission from
    canceling licenses issued to NextWave pursuant to a prior auction
    when NextWave, after filing for bankruptcy, failed to make the
    required installment payments to which it had agreed. *Id.*

[^84]: *See* Cellular Telecommunications and Internet Association,
    Semi-Annual Wireless Industry Survey
    <http://www.wow-com.com/industry/stats/surveys/>.

[^85]: *See* Implementation of Section 6002(b) of the Omnibus Budget
    Reconciliation Act of 1993, Annual Report and Analysis of
    Competitive Market Conditions with Respect to Commercial Mobile
    Services, *Seventh Report*, 17 FCC Rcd 12985 (2002); Colette Fleming
    et al., "3Q02 Wireless 411 - Outlook," UBS Warburg, Equity Research,
    Jan. 23, 2003.

[^86]: *See* 47 U.S.C. § 337(a).

[^87]: See 47 U.S.C. § 309(j)(14)(A)-(B).

[^88]: *See* Service Rules for the 746-764 and 776-794 MHz Bands, and
    Revisions to Part 27 of the Commission's Rules, WT Docket No.
    99-168, *Upper 700 MHz First Report and Order*, 15 FCC Rcd 476
    (2000); Service Rules for the 746-764 and 776-794 MHz Bands, and
    Revisions to Part 27 of the Commission's Rules, WT Docket No.
    99-168, *Memorandum Opinion and Order and Further Notice of Proposed
    Rulemaking*, 15 FCC Rcd 20845 at 20870-71 ¶ 61 (2000); Service Rules
    for the 746-764 and 776-794 MHz Bands, and Revisions to Part 27 of
    the Commission's Rules, WT Docket No. 99-168, Carriage of the
    Transmissions of Digital Broadcast Stations, CS Docket No. 98-120,
    Review of the Commission's Rules and Policies Affecting the
    Conversion to Digital Television, MM Docket No. 00-39, *Third Report
    and Order*, 16 FCC Rcd 2703, 2718 at ¶ 36 (2001); Service Rules for
    the 746-764 and 776-794 MHz Bands, and Revisions to Part 27 of the
    Commission's Rules, WT Docket No. 99-168, Carriage of the
    Transmissions of Digital Broadcast Stations, CS Docket No. 98-120,
    Review of the Commission's Rules and Policies Affecting the
    Conversion to Digital Television, MM Docket No. 00-39, *Order on
    Reconsideration of the* *Third Report and Order*, 16 FCC Rcd 21633
    (2001).

[^89]: *See* Reallocation and Service Rules for the 698-746 MHz Spectrum
    Band (Television Channels 52-59), *Report and Order*, 17 FCC Rcd
    1022, 1094 n. 537 and 1095 ¶ 184 (2002).

[^90]: Auction Reform Act.

[^91]: *Id.*, Section 6(a). These restrictions do not, however, apply to
    proposals to move Channel 63, 64, 68, or 69 analog operations to
    in-core DTV allotments "in order to make such frequencies available
    for public safety purposes." *Id.*, Section 6(b).