**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | MM Docket No. 95-31          |
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| Reexamination of the Comparative | ** |                              |
| Standard for Noncommercial       |    |                              |
| Educational Applicants           | *  |                              |
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| Association of America's Public  | ** |                              |
| Television Stations' Motion for  |    |                              |
| Stay of Low Power Television     | *  |                              |
| Auction (No. 81)                 | *) |                              |
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**SECOND REPORT AND ORDER**

**Adopted: March 4, 2003 Released: April 10, 2003**

By the Commission: Commissioner Copps concurring and issuing a
statement.

# I. INTRODUCTION

1.  In this *Second Report & Order*, we establish new policies for
    licensing spectrum that the Commission has not reserved for the
    exclusive use of broadcast stations that provide or intend to
    provide noncommercial educational ("NCE") service. In developing our
    new policies and procedures, we are constrained by a number of court
    decisions, regulations, and statutory provisions that, taken
    together, limit our options. As explained in greater detail below,
    we have come to the following conclusions. First, those stations
    that a nonprofit educational organization shows will be used to
    advance an educational program are eligible to be licensed as NCE
    radio or television stations and thus are exempt from auction.
    Nonprofit educational organizations that do not make such a showing
    must compete at auction for licenses. Second, we will not hold
    applicants for NCE stations ineligible to apply for non-reserved
    channels, and instead will permit such applicants to continue to
    apply for this spectrum in filing windows. Any applications for NCE
    stations determined to be mutually exclusive with applications for
    commercial stations, however, will be dismissed, although applicants
    for services in which engineering solutions are possible will have a
    prior opportunity for settlement. Third, we reaffirm our existing
    relaxed reservation criteria, which enable would-be applicants for
    NCE stations in the full-power FM and TV services to add to the
    number of channels reserved for their use when they demonstrate that
    they are technically precluded from using an already-reserved
    channel, and they will provide needed NCE service in a given area.
    Interested parties may use these criteria to reserve channels in
    future allocation proceedings, as well as to reserve channels
    already in the Table of Allotments for which the Commission
    initiated an allocation proceeding prior to the August 7, 2000
    effective date of the relaxed reservation standards, and for which
    the Commission has never accepted applications. Interested parties
    may not, however, use these criteria to reserve channels already in
    the Table for which the Commission initiated an allocation
    rulemaking after August 7, 2000, or channels for which the
    Commission has already accepted applications.

    **II. BACKGROUND**

2.  The Commission licenses NCE stations on channels reserved for their
    exclusive use and also on other broadcast spectrum.[^1] In the FM
    service, the Commission has reserved twenty specific channels
    (channels 201 (88.1 MHz) to 220 (91.9 MHz)), out of a total of one
    hundred channels, exclusively for full-power FM and FM translator
    use by NCE stations.[^2] In the television service, the Commission
    has reserved a similar proportion of channels, but using different
    channels in the Table of Allotments in different geographic areas
    across the country.[^3] The Commission has not reserved any
    particular frequencies for exclusive use in the AM service, or
    secondary TV services, such as low power television (LPTV) and TV
    translators.[^4]

3.  The Commission initiated this proceeding in 1995 to revise the
    criteria it used to select among competing applicants for new NCE
    stations.[^5] In the past, the Commission had used comparative
    criteria to resolve mutually exclusive applications in both the
    commercial and NCE services, although the criteria were different
    for reserved and non-reserved spectrum. NCE applicants competing
    against commercial applicants for a non-reserved channel were
    evaluated using the commercial criteria. Both comparative processes,
    however, were called into question in the 1990s, leading the
    Commission to revisit its comparative criteria for applicants for
    both commercial and NCE stations. The Commission has adopted new
    selection criteria for NCE stations.[^6]

4.  The Balanced Budget Act of 1997 ("1997 Budget Act")[^7] amended
    certain provisions of the Communications Act ("Act") germane to the
    Commission's ongoing review of its licensing processes. Among other
    things, the 1997 Budget Act amended section 309(j) of the Act. As
    revised, section 309(j)(1) states: "If . . . mutually exclusive
    applications are accepted for any initial licenses or construction
    permits, then, except as provided in paragraph (2), the Commission
    shall grant the license or permit to a qualified applicant through a
    system of competitive bidding that meets the requirements of this
    subsection." Section 309(j)(2) sets forth the limited exceptions to
    section 309(j)(1), including "licenses or construction permits
    issued by the Commission . . . (C) for stations described in section
    397(6) of this Act." Section 397(6) of the Act provides the
    definition of NCE stations.

5.  Given the different licensing mechanisms for NCE stations and all
    other stations, the Commission issued a *Further Notice of Proposed
    Rulemaking* in this docket and sought comment on how to resolve
    conflicts between commercial and NCE applicants for non-reserved
    spectrum.[^8] The Commission also sought comment on whether section
    309 of the Act prohibited it from using competitive bidding to
    resolve any mutually exclusive applications when they included at
    least one filed by an applicant for an NCE station, or instead only
    when they involved competing applications for reserved channels.

6.  In the *Report & Order*, the Commission concluded that "the
    exemption of NCE applicants from our general mandatory auction
    authority does not prohibit us from auctioning non-reserved
    spectrum, even when NCE entities apply for those channels."[^9] As a
    result, the Commission decided to require applicants for NCE
    stations to compete with applicants for commercial stations for
    non-reserved spectrum at auction. In order to minimize any hardship
    on applicants for NCE stations, the Commission also relaxed the
    criteria used to evaluate requests to reserve new channels.

7.  The Association of Public Television Stations, the Corporation for
    Public Broadcasting, National Public Radio, and the State of Oregon
    challenged the Commission's decision in court. In *NPR v. FCC*, the
    U.S. Court of Appeals for the D.C. Circuit rejected the Commission's
    construction of section 309.[^10] The court held that "nothing in
    the Act authorizes the Commission to hold auctions for licenses
    issued to NCEs to operate in the unreserved spectrum," because
    section 309(j)(2) denied the Commission the authority to use
    competitive bidding "based on the nature of the station that
    ultimately receives the license, and not on the part of the spectrum
    in which the station operates."[^11]

8.  In order to resolve the issues raised by the court's decision, we
    issued a *Second Further Notice of Proposed Rulemaking*.[^12] We
    asked for comment on the scope of the auction exemption, and offered
    three options, not necessarily mutually exclusive, on how to resolve
    the competing interests of applicants for commercial and NCE
    stations in the non-reserved spectrum. First, we proposed to hold
    applicants for NCE stations ineligible for this spectrum, stating
    that such an approach "is consistent with the statutory language"
    and "has the advantage of clarity and simplicity."[^13] Second,
    recognizing that, under our first proposal, spectrum might lie
    fallow if no commercial applicants applied to use it, we proposed to
    permit applicants for NCE stations to apply for non-reserved
    spectrum, subject to dismissal of their applications if they were
    mutually exclusive with those filed by commercial applicants.[^14]
    We asked whether we should create opportunities for settlement prior
    to dismissal for applicants for services where engineering solutions
    are possible. Third, given that applicants for NCE stations may not
    legally participate in auctions, we also sought comment on whether
    we should further relax the criteria for would-be applicants for NCE
    stations to reserve additional channels in the future, and whether
    we should permit NCE applicants the opportunity to apply such
    criteria, or other criteria, to reserve existing or "vacant"
    allotments.[^15] We also welcomed comment on other options, inviting
    proposals that are "fully consistent with the governing legal
    standards and would otherwise serve the public interest," and
    stating that "\[w\]e wish to ensure that NCE entities have
    reasonable opportunities to obtain the spectrum they need."[^16] We
    received thirty-three comments, and ten reply comments.[^17]

    **III. DISCUSSION**

    **A. Scope of Exemption for NCE Stations from Competitive Bidding**

    **1. Generally**

9.  [Background]{.underline}. In the *Second Further* *Notice*, we
    sought comment on the breadth of section 309(j)(2)(C), which exempts
    NCE stations from competitive bidding.[^18] As indicated above, that
    section exempts the licenses issued "for stations described in
    section 397(6) of this Act." Subsection (A) defines "noncommercial
    educational broadcast station" by incorporation of the Commission's
    eligibility rules for such stations in effect in 1978. As a general
    matter, subsection 397(6)(A) is limited to stations that a nonprofit
    educational organization shows will be used to use advance
    educational purposes. In the *Second Further Notice*, we asked
    whether the regulatory and statutory provisions together under
    subsection (A) mean that a nonprofit educational organization is
    exempt from auction whenever it applies for a broadcast construction
    permit or station license, or only upon showing that the station
    will be used to advance an educational program.[^19] Subsection (B)
    also defines as NCE stations those municipality-owned stations that
    transmit only noncommercial programs for educational purposes.

10. As NPR stated in its reply, no commenter argued that a nonprofit
    educational organization, without more, is exempt from auction.[^20]
    Instead, commenters contended that a nonprofit educational
    organization is exempt from auction only upon showing that it
    intends to use a license to advance an educational program.[^21] As
    a result, commenters stated that such organizations that do not make
    this showing may participate in auctions.[^22]

11. [Discussion]{.underline}. We conclude that the auction exemption for
    NCE stations applies to two types of broadcast stations: (1) AM,
    full-power FM, FM translator, and full-power TV stations that a
    nonprofit educational organization shows will be used to advance an
    educational program, and are eligible to be licensed as NCE stations
    pursuant to the Commission's service-specific standards, in effect
    as of November 1978; and (2) stations that will be used by a
    municipality to transmit only noncommercial programs for educational
    purposes. Section 309(j)(2)(C) states that "\[t\]he competitive
    bidding authority granted by this subsection shall not apply to
    licenses or construction permits issued by the Commission . . . (C)
    for stations described in section 397(6) of this Act."[^23] Section
    397(6), in turn, states that "\[t\]he terms 'noncommercial
    educational broadcast station' and 'public broadcast station' mean a
    television or radio broadcast station which (A) under the rules and
    regulations of the Commission in effect on the effective date of
    this paragraph, is eligible to be licensed by the Commission as a
    noncommercial educational radio or television broadcast station and
    which is owned and operated by a public agency or nonprofit private
    foundation, corporation, or association; or (B) is owned and
    operated by a municipality and which transmits only noncommercial
    programs for education purposes."[^24] Defining stations within the
    scope of section 397(6)(A) must begin with the content of our
    eligibility rules as of November 2, 1978, because that is the date
    section 397(6) became effective.[^25] The substance of the
    eligibility rules for NCE stations has not changed since that time.
    Section 73.503(a) of the rules sets forth the current eligibility
    rule for FM stations: "A noncommercial educational FM broadcast
    station will be licensed only to a nonprofit educational
    organization and upon showing that the station will be used for the
    advancement of an educational program."[^26] Section 73.621(a) of
    the rules sets forth the current eligibility rule for TV stations:
    "\[N\]oncommercial educational broadcast stations will be licensed
    only to nonprofit educational organizations upon showing that the
    proposed stations will be used primarily to serve the educational
    needs of the community; for the advancement of educational programs;
    and to furnish a nonprofit and noncommercial television broadcast
    service."[^27] Weaving together these various regulatory and
    statutory provisions, in the manner the Act instructs, under section
    397(6)(A), an NCE station is either an FM or TV station that is
    licensed to a nonprofit educational organization that shows that the
    station will be used to advance an educational program. A TV station
    must also show that the station will be used to furnish a nonprofit
    and noncommercial service that will serve the educational needs of
    its community. The Commission has also licensed AM stations that
    satisfy the FM station eligibility rules, as well as FM translators
    that rebroadcast the signals of an NCE FM station, as NCE
    stations,[^28] and has done so both before and since the November
    1978 effective date of section 397(6).[^29] In terms of subsection
    397(6)(B), an NCE station is also any station that is owned and
    operated by a municipality and transmits only noncommercial programs
    for educational purposes, regardless of the Commission's eligibility
    rules. We conclude that applicants are exempt from auctions,
    pursuant to section 309(j)(2)(C), only when they file applications
    for broadcast stations expressly defined by sections 397(6)(A) and
    397(6)(B).

12. This construction of the governing legal standards for NCE stations
    is consistent with our current practice.[^30] The Commission has
    long licensed nonprofit educational organizations, such as
    universities, to provide commercial service on non-reserved
    channels. For example, Window to the World Communications, Inc. is
    licensed to operate WFMT (FM) on channel 254B as a commercial
    station, but operates WTTW-TV as an NCE station.[^31] Likewise, the
    University of Missouri, a non-profit educational organization,
    operates KOMU-TV as a commercial NBC affiliate.[^32] When licensed
    to operate commercial broadcast stations, these nonprofit
    educational organizations are subject to the requirements applicable
    to all commercial stations. For example, they must pay filing fees;
    by contrast, fees are not required with respect to any station that
    a nonprofit educational organization is licensed to operate as an
    NCE station.[^33]

    **2. LPTV and TV Translators**

13. [Background]{.underline}. We also sought comment on the
    applicability of the auction exemption in section 309(j)(2)(C) to
    LTPV and TV translator stations specifically. The Commission does
    not now issue, and has never issued, licenses for NCE stations in
    these services. As a result, we asked whether the auction exemption
    extends to applicants for LPTV and TV translator licenses that could
    qualify as applicants for NCE stations in other services. If the
    fact that we have not licensed LPTV and TV translator facilities as
    NCE stations in the past means that applicants must compete for
    these licenses at auction, we asked whether, and if so how, we
    should create an NCE LPTV and TV service. Even if we took such
    action, we sought comment on whether it would have any impact on the
    auctions exemption, given that section 397(6)(A) of the Act defines
    NCE stations in terms of our eligibility rules as they existed on
    November 2, 1978.[^34]

14. APTS and Three Angels were the primary commenters that addressed
    these issues. APTS argued that the Act intended to treat TV
    translators licensed to NCE TV stations as NCE broadcast stations
    under section 397(6) of the Act,[^35] and that the Commission should
    establish a new category and process for managing applications for
    NCE translators.[^36] Three Angels countered, however, that the
    Commission has never licensed LPTV and TV translators as NCE
    stations, and that we have no authority to establish such services
    now, at least for the purpose of excluding applications for such
    stations from auction.[^37]

15. [Discussion]{.underline}. As explained more fully below, we agree
    with Three Angels that no licenses for LPTV and TV translator
    facilities fall within the scope of section 397(6)(A), and that
    adopting new NCE eligibility criteria for these services would not
    bring applicants for such services within the scope of the auction
    exemption. LPTV and TV translator facilities, however, qualify as
    NCE stations under section 397(6)(B) of the Act, if they are owned
    and operated by municipalities and transmit only NCE programs. This
    definition does not turn on our eligibility rules, and so applicants
    of the latter type are exempt from auction. Thus, except where a
    municipality satisfying the requirements of section 397(6)(B) files
    an application for an LPTV or TV translator station, all mutually
    exclusive applications for these services fall outside the scope of
    section 309(j)(2)(C) and must therefore be resolved by auction
    pursuant to section 309(j)(1).

16. As discussed above, section 397(6)(A) of the Act defines the NCE
    stations that are exempt from auction in terms of the Commission's
    eligibility rules in effect on November 2, 1978. We did not license
    LPTV and TV translator facilities as NCE stations as of that date.
    Indeed, the Commission did not create the LPTV service until 1982,
    and at that time expressly rejected the approach of licensing these
    facilities as NCE stations. With respect to the LPTV service, the
    Commission stated that

    the decision whether or not to air commercials, and in what amounts,
    should be left to the licensee's discretion. The Commission will not
    concern itself with this matter, nor with the corporate or
    organizational structure of an applicant. Whether a low power
    applicant or licensee is noncommercial or not-for-profit is a
    decision properly made by the licensee on the basis of applicable
    corporate and tax law, pertinent requirements of the Corporation for
    Public Broadcasting and perceived characteristics of the market in
    which it proposes to operate. Therefore, § 73.621 \[the eligibility
    and programming rules regarding NCE TV stations\] will not apply to
    lower power stations.[^38]

    The same applies to TV translators.[^39] Although we have exempted
    LPTV and TV translator licensees from administrative fees on certain
    conditions,[^40] we do not license these facilities as NCE stations,
    with the result that the programming and service requirements for
    NCE stations do not apply. Given that we do not license LPTV and TV
    translator facilities as NCE stations, and did not do so as of the
    effective date of section 397(6), these stations (other than those
    defined in section 397(6)(B)) do not fall within the scope of
    section 309(j)(2)(C).

17. APTS' citation to section 615 of the Act to support the idea that
    Congress intended the definition of NCE station in section 397(6) to
    include translators is unpersuasive.[^41] Section 615 is entitled
    "Carriage of Noncommercial Educational Television"; subsection
    615(l) states: "*For purposes of this section* . . . \[t\]he term
    'qualified noncommercial educational television station' . . .
    includes . . . the translator of any noncommercial educational
    television stations with five watts or higher power serving the
    franchise area. . . ."[^42] Although section 615(l) thus defines
    certain NCE stations to include certain TV translators, it does so
    for purposes of the must-carry provisions of the statute. Moreover,
    section 615 was adopted after section 397(6), and thus cannot be
    read to inform prior Congressional intent in an unrelated section.
    If Congress had intended that our general auction authority set
    forth in section 309(j)(1) would not apply to licenses issued for a
    broader category of NCE stations, as described in section 615, it
    could have incorporated both provisions in section 309(j)(2)(C), but
    it did not do so. Nothing in the language of the statute or the
    legislative history indicates Congressional intent to exempt from
    auction applicants for stations not described by section 397(6). The
    relevant legal standards, so construed, thus indicate that LPTV and
    TV translator stations are not eligible to be licensed by the
    Commission as NCE stations, and therefore do not fall within the
    section 397(6)(A) definitional parameters. This would not change by
    the adoption of APTS' proposals for creating and managing the
    licensing of NCE translators, which were supported by several
    commenters.[^43]

18. As discussed above, however, section 397(6)(B) defines an NCE
    station as one that "is owned and operated by a municipality and
    which transmits only noncommercial programs for education
    purposes."[^44] This definition does not incorporate the
    Commission's eligibility rules for NCE stations. Thus, LPTV and TV
    translator stations that are owned and operated by municipalities
    and transmit only noncommercial programming for educational purposes
    are exempt from auction under section 309(j)(2)(C).

    **B. Licensing of Non-Reserved Spectrum**

19. [Background]{.underline}. In the *Second Further Notice*, we offered
    two different proposals for licensing noncommercial educational
    applicants on non-reserved spectrum.[^45] As one option, we proposed
    to hold applicants for NCE station licenses simply ineligible for
    non-reserved spectrum.[^46] As an alternative, we proposed to accept
    applications for both commercial and NCE stations in the
    non-reserved spectrum, with the latter applications subject to
    dismissal if they were mutually exclusive with the former.[^47] We
    also asked whether we should amend the anti-collusion rule to permit
    mutually exclusive commercial and NCE applicants for AM stations a
    prior opportunity to resolve their conflicts through
    settlements.[^48]

20. Commenters were sharply divided on this issue. Some commenters
    generally supported the approach of holding applicants for NCE
    stations ineligible for the non-reserved spectrum, claiming that the
    proposal avoids delay and the potential difficulties involved in
    comparing applicants,[^49] and is otherwise fair to such applicants
    because they already have spectrum reserved for their use.[^50]
    Others preferred the approach of permitting applicants for NCE
    stations to apply for non-reserved spectrum, and allowing them to
    amend their applications to propose commercial service if they filed
    mutually exclusive applications with commercial applicants,[^51] as
    well as permitting them to fashion settlements prior to
    dismissal.[^52] Others claimed that both options were the same
    substantively, because it would be a rare event that no commercial
    applicant would file for a non-reserved channel, and the Commission
    proposed to dismiss applicants for NCE stations under these
    circumstances.[^53] Commenters that opposed our proposals to hold
    applicants for NCE stations ineligible for non-reserved spectrum, or
    to condition their eligibility on the lack of competing applications
    for commercial service, suggested that such action by the Commission
    is inconsistent with Congressional intent behind the auctions
    exemption, and otherwise unlawful.[^54]

21. [Discussion]{.underline}. We adopt our proposal to allow applicants
    for NCE stations to submit applications for non-reserved spectrum in
    a filing window, subject to being returned as unacceptable for
    filing if there is any mutually exclusive application for a
    commercial station. We also will allow applicants for AM stations
    and secondary services a prior opportunity to resolve their mutually
    exclusive applications through settlements. We prefer this approach
    to that of holding applicants for NCE stations ineligible to apply
    for non-reserved spectrum. These policies are designed to preserve
    opportunities for applicants for NCE broadcast stations to use
    non-reserved spectrum, consistent with section 309(j), as amended,
    and in a manner that will not unduly delay the initiation of any
    broadcast service to the public. We recognize that these
    opportunities are limited to those situations in which commercial
    applicants do not file mutually exclusive applications for the
    spectrum, and to certain services in which the applicants reach a
    settlement, but these situations can and do happen. For example,
    approximately 4,700 applicants filed for LPTV and TV translators
    during our last filing window, but we have processed more than one
    third of these applications without conducting an auction because
    only one application was filed, or if mutually exclusive
    applications were filed, the applicants reached a settlement. We do
    not believe that allowing applicants for NCE stations to apply for
    non-reserved spectrum will create significant delay in licensing
    this spectrum or unfairness to commercial applicants, as suggested
    by commenters that preferred the more extreme approach of holding
    applicants for NCE stations ineligible for non-reserved spectrum.

22. As a practical matter, and as is currently our practice, we will
    begin the licensing process for non-reserved spectrum by opening an
    auctions filing window. Applicants for NCE stations may submit
    applications in the window in the same way as commercial applicants,
    using FCC Form 175, the "short-form" application to participate in
    an auction. Applicants that seek an NCE station license must
    identify themselves by checking the box labeled "noncommercial
    educational,"[^55] which will serve as a preliminary showing that
    they intend to use the station to advance an educational program and
    that they meet all other Commission eligibility requirements for NCE
    stations. Applicants that do not check this box will be considered,
    as a matter of law, applicants for commercial broadcast stations.
    Because an applicant's self-identification as "noncommercial
    educational" affects its eligibility to hold an NCE station license
    and therefore its eligibility to participate in an auction, we will
    treat any applicant's attempt to change its self-identification as a
    major amendment, which is prohibited after the short-form
    application filing deadline.[^56] As a result, we decline to adopt
    the suggestion that applicants for NCE stations can change their
    status once they learn they have filed an application that is
    mutually exclusive with a commercial applicant, as at least one
    commenter suggested;[^57] instead, we limit this opportunity in a
    manner that is consistent with our current rules, which permit major
    amendments before the short-form filing deadline, but not after.
    Applications for NCE stations that are mutually exclusive only with
    one another will not proceed to auction and instead will be resolved
    by the same point system selection procedures that we have
    established for the reserved band.[^58] Any application for an NCE
    station that is mutually exclusive with any application for a
    commercial broadcast station will, after any settlement
    opportunities expire, be returned as unacceptable for filing. As
    explained more fully below mixed groups of applications for AM and
    secondary services will have a prior opportunity to reach a
    settlement.[^59]

23. We disagree with commenters that contend that our decision is
    tantamount to an outright prohibition on applications for NCE
    stations for non-reserved spectrum, which they claim is inconsistent
    with the Act and Congressional intent. As stated above, it is not
    uncommon for applications for certain services not to be mutually
    exclusive. In addition, applicants for certain services have
    settlement opportunities; applicants for secondary services already
    have an opportunity to try to settle their conflicts with one
    another and, as explained below, we create a similar opportunity for
    mixed groups of applicants for AM stations. Applicants have
    successfully used these settlement opportunities, and then need not
    compete at auction. In addition, applicants for NCE stations that do
    not have settlement opportunities -- applicants for full-power FM
    and TV stations -- may reserve channels for their exclusive use,
    according to certain procedures, that we previously adopted and that
    we review and clarify below.

24. As NAB points out, the Commission has the authority to determine how
    much spectrum to make available for NCE use, and otherwise to create
    eligibility rules.[^60] Indeed, both the concept and process of
    reserving channels for NCE use are creations of the Commission, and
    the Act in sections 4(i) and 303(r) gives us broad authority to
    adopt eligibility rules.[^61] As NAB further points out, the 1997
    Budget Act, which amended our auction authority, did not change our
    authority over determining the amount of spectrum for NCE use or
    creating eligibility rules, as neither the language of the statute
    nor the conference report addresses these issues.[^62] Commenters do
    not point to any language that appears to limit our authority.
    Rather, they suggest that the Commission's decision to exclude or
    limit the eligibility of NCE applicants vis-à-vis non-reserved
    spectrum must necessarily be inconsistent with Congress' intent to
    exempt these applicants from competitive bidding. But this argument
    overlooks the fact that the Commission has set aside spectrum for
    the exclusive use of applicants for NCE stations, and awards this
    spectrum through the point system, and has relaxed its reservation
    policies to ensure an adequate level of NCE service. It also fails
    to recognize that the statute, amended in 1997 to require auctions
    as a general matter and interpreted in the *NPR* case to prohibit
    applicants for NCE stations from participating in such auctions, no
    longer allows the Commission as a practical matter to continue its
    established practice of simply processing applications for NCE
    stations on the non-reserved spectrum according to the same
    licensing standards for applications for commercial stations. Given
    the practical difficulties associated with this changed statutory
    scheme, we believe we have ensured adequate NCE service to the
    public consistent with evident congressional concern that the switch
    to auctions not unduly harm NCE stations. We have done so by
    relaxing our reservation policies, and where a channel is not
    reserved for NCE use, by allowing applicants for NCE stations to
    file an application for an NCE station on that channel. The
    application will be returned as unacceptable for filing under our
    revised application standards only if any mutually exclusive
    application for a commercial station remains on file after any
    applicable settlement period expires. Finally, as discussed below,
    in order to maximize the possibility of NCE stations being licensed
    to operate on the non-reserved spectrum, we have waived our
    anti-collusion rules and liberalized our settlement policies where
    technically and administratively feasible.

25. *Anti-Collusion Rule*. We adopt the approach outlined in the *Second
    Further Notice* to amend our anti-collusion rule to permit mutually
    exclusive applicants for AM stations to settle, when the applicants
    include at least one for an NCE station. The anti-collusion rule
    generally prohibits applicants that have filed mutually exclusive
    applications from "discussing or negotiating settlement agreements"
    among themselves after the short-form filing deadline.[^63] The
    Commission adopted this rule to enhance "the competitiveness of the
    auction process and of the post-auction market structure,"[^64] and
    it generally applies to broadcast services. The Commission, however,
    has carved out limited exceptions for certain applicant groups in
    the broadcast and Instructional Fixed Television (ITFS) services,
    namely those involving applications for major modifications that are
    mutually exclusive with one another or with applications for new
    stations, as well as those involving secondary services.[^65] The
    Commission created these exceptions based in part on the fact that
    it is possible for the applicants to devise engineering solutions to
    remove the technical conflicts between their applications.[^66]

26. As a consequence of the exception for secondary services, applicants
    for NCE stations in the LPTV and translator services already have
    the opportunity to resolve their mutually exclusivity applications.
    Applicants for new AM stations also have the opportunity to settle
    when their applications are mutually exclusive with those for major
    modifications. We believe it will serve the public interest if we
    expand the settlement opportunity to applicants for new AM stations
    that are mutually exclusive with one another, when at least one of
    them is an applicant for an NCE station. Given the limited number of
    opportunities for any new stations using AM frequencies, this
    expansion to the groups that qualify for settlement is incremental.
    This is buttressed by the fact that we limit the groups of AM
    applicants eligible to enter into settlements to only those that
    include applicants for *both* commercial and NCE stations. Moreover,
    we do not believe that extending settlement opportunities to
    applicants for NCE stations is particularly likely to compromise the
    purpose of the anti-collusion rule, which is to enhance the
    competitiveness of the auction process, given that these applicants
    will never compete at auction for the licenses for which they have
    applied. As a result, mixed groups of applicants for AM stations
    will have the opportunity to design engineering solutions or reach
    other settlements, which must conform to all requirements in our
    settlement process for broadcast applicants.[^67]

    **C. Allocating Spectrum**

27. [Background]{.underline}. In the *Report & Order* in this
    proceeding, the Commission decided to allocate a channel as reserved
    if a proponent demonstrated: for radio, that it is technically
    precluded from using a reserved channel and would provide a first or
    second NCE radio service to 10% of the population within its 1mV/m
    contour, and for television, that there is no reserved channel
    available in the proponent's community and it would provide the
    first or second NCE television service to 2000 or more people who
    constitute 10% of the population within its noise limited
    contour.[^68] The Commission adopted these standards for use at the
    allocation stage of the licensing process, and thus expressly
    declined to extend them to existing (vacant) allotments, pending
    applications, and services such as AM that do not use an allocations
    process. In the *Second Further Notice*, we asked whether we should
    further relax the reservation standards, and if so what the standard
    should be.[^69] We also asked whether we should establish
    opportunities for interested parties to reserve existing allotments
    that we have not yet licensed (*i.e*., "vacant" allotments), and if
    so what the standards should be.[^70]

28. Commenters offered different views on these issues. NAB argued that
    we should not extend any further opportunities for applicants for
    NCE stations to reserve channels because the Commission has already
    set aside sufficient spectrum for their use, and that the lack of
    reserved channels in any area suggests that there is already
    adequate NCE service there.[^71] APTS agreed that our existing
    reservation standards are adequate.[^72] NPR, however, proposed a
    different standard (discussed below),[^73] and argued that the
    Commission should allow applicants for NCE stations to apply these
    standards to vacant allotments, and suggested a process for doing
    so.[^74] Others agreed that we should open closed allocation
    rulemakings, but suggested different standards.[^75]

29. [Discussion]{.underline}. We reaffirm the relaxed reservation
    standard that the Commission adopted in the *Report & Order* in this
    proceeding. We will, however, permit the use of these criteria to
    reserve channels not only in future allocation proceedings, but also
    in allocation proceedings that the Commission initiated prior to its
    adoption of the relaxed reservation standard. As explained below, we
    believe these policies best satisfy the public interest, and are the
    fairest to all parties concerned.

30. *Future Allocations*. As an alternative to our relaxed reservation
    standard, NPR proposed that we reserve a channel when a proponent
    for reservation demonstrates that it is "technically precluded from
    using a reserved channel or that there is no reserved spectrum
    available that would serve at least 50% of the area within the
    protected service contour of the subject allotment assuming
    full-class operation of a station at the allotment site -- the "50
    Percent Standard."[^76] If the proponent could make this showing, it
    would also need to demonstrate that there is no other non-reserved
    channel available in order to reserve the allotment. If the
    proponent could not make this showing, *i.e.,* whenever there are
    other non-reserved channels that meet the "50 Percent Standard," the
    Commission should reserve one of the available non-reserved
    channels.[^77]

31. We decline to adopt NPR's standard. As a preliminary matter, the
    Commission already has reserved twenty (201-220) out of a total of
    one hundred FM channels for the exclusive use of NCE stations, and
    will reserve any of the remaining eighty channels (221-300) for NCE
    stations if one of three tests is satisfied. The Commission's
    original purpose in reserving a band of channels was simply to
    ensure that NCE stations would develop; when establishing the FM and
    TV services, the Commission was concerned that commercial stations,
    due to their financial advantage, would make such immediate use of
    the spectrum for these services that none would remain available for
    NCE stations when they were prepared to make use of it.[^78] In
    order to ensure that NCE stations could in fact make use of the
    reserved band of channels, the Commission adopted two tests for
    reserving channels outside this band; the Commission will allocate a
    new FM channel as reserved if a would-be applicant for an NCE
    station can show that it cannot use another reserved channel to
    provide its service without causing interference to either a foreign
    station or a domestic TV station operating on channel 6.[^79]
    Moreover, in order "to mitigate any potential hardship that the
    auction process might impose on noncommercial entities,"[^80] the
    Commission adopted a third test for reserving channels outside
    201-220 in the *Report & Order* in this proceeding. Under this third
    standard, the Commission will allocate a new FM channel as reserved
    if a would-be applicant for an NCE station can show that it is
    technically precluded from using a reserved channel, and that it
    will provide a first or second NCE service to 10% of the population
    within its proposed protected service contour. Since the Commission
    further relaxed the standard, several parties have asked the
    Commission to allocate a particular FM channel as reserved pursuant
    to the relaxed reservation standards, and we have done so.

32. As indicated by our third test, we believe that a necessary
    component of any reservation standard must take into account the
    distribution of commercial and NCE service in a given area. Under
    NPR's proposal, the Commission would reserve a channel for NCE use
    in a given area, even if the area had little or no commercial
    service, when a proponent for reservation could demonstrate that
    spectrum is not available that would enable the proponent to serve
    50% of its proposed service area.[^81] Although such circumstances
    might be rare, we believe that a standard that takes into account
    *some* relative distribution of commercial and NCE service better
    serves the public interest. In addition, NPR has not demonstrated
    why our existing standards are insufficient. It has not explained,
    for example, how the application of our standards, as recently
    relaxed, results in too few channels for NCE stations, especially
    given that commercial stations can only operate on these same
    channels, because the Commission has not reserved any spectrum for
    the exclusive use of commercial stations.

33. In addition to requiring proponents of reservation to demonstrate
    that NCE service is in fact needed in their proposed service area
    (by showing that they will provide the first or second NCE service
    within some portion of their proposed service contour), our existing
    standards also require proponents to show that they are "technically
    precluded" from using a reserved channel. NCE service is not
    technically precluded if it is possible to specify a location at
    which same-class reserved band NCE facilities could be licensed to
    the proposed community in compliance with NCE technical rules.[^82]
    As explained in more detail below, a reservation proponent must
    satisfy two criteria: first, that class-maximum facilities at the
    allotment reference site would provide a new first or second NCE
    service to ten percent or more of the population in a station\'s
    service area; and second, that a same-class reserved band facility
    that would provide the requisite level of new NCE service is - to a
    reasonable degree of certitude - technically precluded.

34. In order to expedite new service and minimize burdens to prospective
    NCE applicants, we will use the following methodology to evaluate
    allotment reservation requests. A reservation showing must satisfy
    two distinct criteria. First, it must establish the relative need
    for a new NCE service by demonstrating that maximum class facilities
    at the proposed allotment site would provide a first or second NCE
    service to at least ten percent of the population within the
    proposed station's service area and that such population is at least
    2000 persons. The Commission will not reserve a particular allotment
    if this "first or second service" criterion is not satisfied at the
    allotment site's reference coordinates.

35. Secondly, a reservation request must include a technical preclusion
    showing. The following test is designed to provide a reliable and
    efficient proxy of technical preclusion. It is not a conclusive
    test, but one that the Commission will treat as establishing a
    rebuttable presumption of technical preclusion. The showing will be
    based on a circle, centered in the proposed community of license and
    drawn with a radius one kilometer less than the distance to the
    predicted 60 dBu strength signal of a maximum same-class facility.
    The reservation showing must establish that no rule-compliant
    facility can be authorized at maximum antenna height above average
    terrain ("HAAT") and with maximum effective radiated power ("ERP")
    on any reserved band channel at four equally-spaced locations on the
    circle, beginning with 0 (zero) degrees. In addition, the
    reservation showing must establish that no same-class rule-compliant
    facility can be authorized at minimum antenna HAAT and with minimum
    ERP on any reserved band channel at the city center coordinates for
    the community of license. If these two criteria are satisfied, the
    reservation proponent has presumptively established that the
    allotment should be reserved, *i.e.,* that a nonreseved band FM
    station licensed to the proposed community with the proposed class
    facilities is technically precluded from providing service on a
    reserved band channel.

36. In the event that an NCE station can be licensed on one or more
    channels at any of these five sites in compliance with the NCE
    technical rules, the reservation showing must undertake a "first or
    second service" analysis of the technically acceptable facilities at
    each acceptable site. If any analyzed facility would satisfy the
    "first or second service" criterion, the allotment will not be
    reserved. If none of the identified channel/site combinations
    satisfy the "first or second service" criterion, then the
    reservation proponent has presumptively established that the
    allotment should be reserved.

37. A reservation showing will be conclusively rebutted if a party that
    desires a non-reserved allotment can both identify a single location
    from which a facility with a class-permissible power/height
    combination can be authorized in compliance with the rules, and
    show, with respect to that location, that the specified facilities
    would satisfy the "first or second service" criterion. If no
    acceptable rebuttal showing is submitted, the allotment generally
    will be reserved. However, the staff may reject reservation showings
    if it determines that technically acceptable reserved band
    facilities can be licensed to the particular community, provided
    that such facilities meet the "first or second service" criterion.

38. We also clarify that a reservation request, accompanied with a
    complete technical preclusion showing, may be submitted as an
    original petition for rulemaking or as a timely counterproposal. If
    a reservation request is filed as a counterproposal and specifies
    the same community as the initial petition, the station class and
    allotment coordinates set forth in the initial petition would be
    used to determine technical preclusion. Conflicts between mutually
    exclusive allotments for different communities when a party has made
    the two-part reservation showing with respect to one community will
    be resolved under established Section 307(b) precedent. Reserved
    allotments will be conditioned on the construction and licensing of
    an NCE station that provides the requisite level of first and second
    NCE service. In the event that all applications for a reserved band
    allotment fail to propose such service, the allotment will become
    unreserved by operation of law and subject to the Commission\'s
    competitive bidding licensing procedures.

39. *Vacant Allotments*.[^83] We will authorize entities to use the
    relaxed reservation standards that we reaffirm today not only for
    future allocations, but also for FM channels for which we initiated
    an allocation proceeding (as determined by the release of a *Notice
    of Proposed Rulemaking*) before the effective date of these
    standards, August 7, 2000, and for which we never opened a filing
    window to accept applications.[^84] There are approximately 450 such
    FM channels, including approximately 350 that were previously
    scheduled for auction.[^85] In determining whether to reevaluate the
    status of an FM channel that already has been the subject of an
    allocation rulemaking proceeding, we believe that the public
    interest requires us to weigh the delay in the introduction of new
    FM service to the public that would be associated with such a
    review, against the public interest benefits of additional review,
    and fairness to all interested parties. For FM channels for which
    Commission initiated an allocation proceeding before August 7, 2000,
    and for which it has no applications on file, we believe that the
    balance of these concerns favors further review. On the one hand is
    delay, as some commenters indicate,[^86] as well as unfairness to
    the proponents of these channels, each of which petitioned the
    Commission to allocate the channel, and has affirmatively expressed
    an interest in filing an application and competing for the channel
    at auction. On the other hand, proponents of channels have no
    "finder's preference" for them, and entities that wish to use these
    FM channels to operate NCE stations have not had meaningful
    opportunities to acquire the licenses for them. This is because
    these entities never had opportunities to reserve these channels
    using our relaxed reservation standards, and although we will still
    permit them to apply for these channels, their applications will be
    returned as soon as they become mutually exclusive with those for
    commercial stations.[^87] Allowing entities that wish to use these
    FM channels to operate NCE stations an opportunity to reserve them
    also ensures that we will allocate them as reserved or non-reserved
    according to whether there is a greater need for commercial or NCE
    service, as determined by our relaxed reservation standards, such
    that the delay of service occasioned by our further review of the
    nature of the channel is offset by the public interest benefit of
    more diverse service. Thus, on balance, we believe that the public
    interest is best served by allowing interested parties an
    opportunity to reserve FM channels using the standards that were not
    previously available to them. As a result, we will direct the staff
    to open a short window in the near future, during which interested
    parties may attempt to reserve any FM channel for which we initiated
    an allocation rulemaking before August 7, 2000, using the standards
    that became effective that day and that we reaffirm and clarify
    here. Interested parties objecting to any proferred reservation
    showing we receive may of course file opposing pleadings. We will
    release a Public Notice containing the details of our procedures for
    reserving vacant allotments in advance of the window.

40. We will not, however, allow interested parties to use the relaxed
    reservation standards for any FM channel for which we initiated an
    allocation rulemaking after August 7, 2000. We believe the
    cost-benefit analysis associated with opening these rulemakings is
    different. The relaxed reservation standards were available to
    reserve any of these channels, as some commenters point out.[^88]
    Indeed, several parties have reserved allotments using the
    Commission's new standards. We do not believe it would serve the
    public interest to introduce additional delay to offer would-be
    applicants for NCE stations yet another opportunity to attempt to
    reserve these channels using the criteria that have already been
    available for them.

41. *Pending Applications*. Consistent with our conclusion not to open
    these newer vacant allotments to reconsider reserving the channels,
    we also reaffirm the decision in the *Report & Order* in this
    proceeding not to permit applicants for NCE stations in pending
    mixed groups a further opportunity to reserve the channels for which
    they have applied. At the time of the *Second Further Notice*, a
    total of forty mixed groups were pending.[^89] We offered these
    groups an opportunity to settle,[^90] and many took advantage of
    that opportunity, with the result that approximately twenty mixed
    groups remain. The channels at issue here are altogether different
    from the allotments discussed above because they have advanced to a
    farther point in our licensing process: the Commission opened a
    filing window for some of these channels nearly ten years ago,
    already has long-form applications on file for them, and in fact had
    originally scheduled to award the licenses by auction in 1999.[^91]
    As a result, when compared to the allotments for which we never
    opened a filing window, further review of the channels associated
    with pending applications would cause even greater delay in our
    licensing process and the introduction of broadcast service, and
    also would cause greater unfairness to applicants for commercial
    stations, because all interested parties have spent the time and
    money necessary to complete all of the engineering and legal
    components of a long-form application. Particularly given that we
    have already offered settlement opportunities to all applicants in
    these pending cases, we are not persuaded that the equities favoring
    the applicants for NCE stations in these pending proceedings
    outweigh the delay in initiating new broadcast service to the public
    as well as the unfairness to applicants for commercial stations. As
    a result, we believe that it will serve the public interest best to
    return as unacceptable for filing the pending applications for NCE
    stations, and move the process forward by subjecting any remaining
    mutually exclusive applications to auction. This auction will be
    closed. We will not open a new filing window; therefore, only the
    pending applicants for commercial stations may compete for the
    licenses at issue. Prior to auction, we will not review these
    applicants' long form applications already on file, nor will we
    accept amendments to these forms, including any amendments to change
    an applicant's status from NCE to commercial. If only one commercial
    application remains after the return of all mutually exclusive NCE
    applications, we will process that applicant's pending long-form
    application in accordance with our applicable rules. This approach
    will end the administrative delay in processing these applications,
    and will result in licensing new broadcast facilities to serve the
    public more quickly.

42. *Other Allocation Issues*. NPR, with the support of a few other
    commenters, asked us to reallocate TV channel 6 for NCE radio use,
    claiming that such an action would, among other things, alleviate
    interference complaints, permit additional NCE service, and pose
    little hardship to existing licensees because they have been given a
    different DTV channel.[^92] A number of NCE TV licensees objected,
    however, stating that this issue is outside the scope of this
    proceeding.[^93] We agree, and decline to adopt NPR's proposal. We
    also conclude that Amherst Alliance's request that we expand the
    reserved band for FM from 88-92 MHz to 88-94 MHz, and limit
    eligibility to the expanded reserved band to particular types of NCE
    stations,[^94] is likewise outside the scope of this proceeding. The
    nature of our inquiry here has been to evaluate how to resolve
    competing interests for individualized non-reserved channels and
    frequencies, not to reconfigure the reserved band.

    **IV. CONCLUSION**

43. This proceeding has required us to undertake the difficult task of
    deciding how to resolve the competing interests of applicants for
    commercial and NCE stations for non-reserved spectrum. We have
    attempted to create and maintain opportunities for applicants for
    NCE stations insofar as possible, consistent with the applicable
    legal standards, and fairness toward applicants for commercial
    stations. Our resolution of these issues will now enable the
    Commission to move forward quickly with licensing non-reserved
    spectrum, so that the ultimate licensees may provide service to the
    public.

    **V. ADMINISTRATIVE MATTERS**

44. This document is available to persons with disabilities requiring
    accessible formats (electronic ASCII text, Braille, large print, and
    audiocassette) by contacting Brian Millin at (202) 418-7426
    (voice), (202) 418-7365 (TTY), or by sending an email to
    <access@fcc.gov>.

45. *Final Paperwork Reduction Act Analysis*. This *Second Report &
    Order* contains no new or modified information collections subject
    to the Paperwork Reduction Act of 1995.

46. *Final Regulatory Flexibility Act Analysis*. The Final Regulatory
    Flexibility Analysis for this *Second Report & Order* is set forth
    in Appendix B.

47. *Additional Information*. For additional information, please contact
    Eric J. Bash, Media Bureau, Policy Division, (202) 418-1188, or
    <ebash@fcc.gov>, or Peter Corea, Media Bureau, Policy
    Division, (202) 418-7931, or <pcorea@fcc.gov>.

    **VI. ORDERING CLAUSES**

48. Accordingly, IT IS ORDERED that, pursuant to the authority contained
    in sections 1, 2(a), 4(i), 303, 307, and 309 of the Communications
    Act, as amended, 47 U.S.C. §§ 151, 152(a), 154(i), 303, 307, and
    309, this *Second Report & Order* is ADOPTED, and Parts 73 and 74 of
    the Commission's rules ARE AMENDED, as specified in Appendix C,
    effective thirty days after publication in the *Federal* *Register*.

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

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

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch

    Secretary

    **APPENDIX A**

    **COMMENTS**

    Amherst Alliance *et al.*

    Association of Public Television Stations

    Barrett, David

    Beacon Broadcasting Corp. *et al.*

    Birdsill, Michael R.

    Bustos, Amador

    Curators of the University of Missouri

    Educational Communications of Colorado Springs, Inc. *et al.*

    Eels, Thomas M.

    El Mundo Broadcasting Corp.

    Gartner, Jack

    Georgia Public Telecommunications Commission

    KNME-TV

    Kaleidoscope Foundation, Inc.

    Minority Media & Telecommunications Council

    Moody Bible Institute of Chicago *et al.*

    National Association of Broadcasters

    National Federation of Community Broadcasters

    National Public Radio

    Oregon, State of

    Rocky Mountain Corp. for Public Broadcasting

    Rosner Communications Network, Inc.

    Satellite Beach Community Broadcasters

    Short, Robert

    SSR Communications, Inc.

    Staples, Stephen W. d/b/a Regional Broadcasting Co.

    Station Resource Group

    Summit Media Broadcasting, LLC

    Three Angels Broadcasting Network, Inc.

    Three States Broadcasting Co., Inc.

    Trinity Broadcasting Network

    University of Northern Iowa

    WVRU-FM, Radford Univ.

    **REPLY COMMENTS**

    Association of Public Television Stations

    Birdsill, Michael R.

    Channel 6 Public Television Stations

    Educational Media Foundation

    Iowa Public Broadcasting Board

    National Association of Broadcasters

    National Public Radio

    New Jersey Public Broadcasting Authority

    Station Resource Group

University of North Carolina Center for Public Television

**APPENDIX B**

**FINAL REGULATORY FLEXIBILITY ANALYSIS**

As required by the Regulatory Flexibility Act of 1980, as amended
("RFA"),[^95] an Initial Regulatory Flexibility Analysis ("IRFA") was
incorporated in the *Second Further Notice of Proposed Rulemaking*
("*Second Further Notice*") in this docket.[^96] The Commission sought
written public comment on the proposals in the *Second Further Notice*,
including comment on the IRFA. No comments addressed the IRFA. This
present Final Regulatory Flexibility Analysis ("FRFA") conforms to the
RFA.[^97]

**Need for, and Objectives of, the *Second Report & Order***

The Commission adopts the *Second Report & Order* to establish new
policies for licensing spectrum that the Commission has not specifically
reserved for the exclusive use of noncommercial educational ("NCE")
broadcast stations. In the *Report & Order* in this docket, the
Commission decided to resolve competing applications for commercial and
NCE stations in this "non-reserved" spectrum via competitive bidding,
but the U.S. Court of Appeals for the D.C. Circuit overturned that
result.[^98] In the *Second Further Notice* in this docket, the
Commission sought comment on how to allocate and license this spectrum,
consistent with the court's opinion and the Communications Act. The
*Second Report & Order* resolves the issues we raised in the *Second
Further Notice*.

**Summary of Significant Issues Raised by the Public in Responses to the
IRFA**

No comments addressed the IRFA, or otherwise discussed issues that may
impact small entities.

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

The RFA directs the Commission to provide a description of, and, where
feasible, an estimate of the number of small entities that will be
affected by the rules.[^99] The RFA defines the term "small entity" as
having the same meaning as "small business," "small organization," and
"small governmental jurisdiction."[^100] In addition, the term "small
business" has the same meaning as the term "small business concern"
under the Small Business Act.[^101] A "small business concern" is one
that: (1) is independently owned and operated; (2) is not dominant in
its field of operation; and (3) satisfies any additional criteria
established by the SBA.[^102] A "small organization" is generally
defined as "any not-for-profit enterprise which is independently owned
and operated and is not dominant in its field. . . ."[^103] A "small
governmental jurisdiction" is generally defined as "governments of
cities, counties, towns, townships, villages, school districts, or
special districts, with a population of less than fifty thousand. . .
."[^104]

The rules adopted in the *Second Report & Order* will affect applicants
for NCE stations on non-reserved channels and frequencies. Under the
applicable provisions of the Act, NCE stations are those owned and
operated by: (1) nonprofit educational organizations after showing that
they will use the stations to advance educational programs, or (2)
municipalities that use the stations to air only noncommercial programs
for educational purposes.[^105] The rules could also affect commercial
stations by causing delay in processing their applications; although the
new rules establish that applications for NCE stations will be returned
as unacceptable for filing if they become and remain mutually exclusive
with applications for commercial stations, the rules continue to permit
applicants for NCE stations to apply for non-reserved channels, and in
some services, the opportunity to negotiate a settlement with a
competing applicant for a commercial station. In addition, our new
policies may cause some delay to applicants for commercial stations,
whether large or small, that seek to use certain vacant allotments;
although as a general matter we will allow applicants for NCE stations
to attempt to reserve channels only when we are conducting an allocation
proceeding to amend the Table of Allotments, we will permit applicants
for NCE stations an opportunity to reserve channels for which we have
already concluded the allocation proceeding, if the Commission initiated
the proceeding before August 7, 2000, and never accepted applications
for the channel. Thus, the rules may affect "small business concerns,"
"small organizations," and "small governmental jurisdictions." The
number of possible future applicants cannot be determined.

*Radio*. Applicants could also include existing radio stations. As of
June 30, 2002, the Commission had licensed a total of 13,261 radio
stations, of which 4,811 were AM stations, 6,147 were commercial FM
stations, and 2,303 were NCE FM stations.[^106] As of the same date, the
Commission had also licensed 3,770 FM translator and booster stations
(commercial and NCE).[^107] SBA defines as a small business those radio
broadcasting stations that have no more than \$6 million in annual
receipts.[^108] According to Commission staff review of BIA
Publications, Inc. Master Access Radio Analyzer Database on August 22,
2002, about 10,800 commercial radio stations have revenue of \$6 million
or less. Many commercial radio stations, however, are affiliated with
larger corporations with higher revenue, with the result that the
estimate of 10,800 commercial radio stations overstates the number that
qualify as small entities. The Commission does not compile and otherwise
does not have access to information on the revenue of NCE stations that
would permit it to determine how many such stations would qualify as
small entities.

*Television*. Applicants could also include TV stations. As of June 30,
2002, the Commission had licensed a total of 1,712 full-power TV
stations, of which 1,331 commercial TV stations, were 381were NCE TV
stations.[^109] As of the same date, the Commission had licensed 4,741
TV translator stations, 2,120 LPTV stations, and 554 Class A TV
stations.[^110] SBA defines a television broadcasting station that has
no more than \$12 million in annual receipts as a small business.[^111]
According to Commission staff review of the BIA Publications, Inc.
Master Access Television Analyzer Database on August 22, 2002, about 870
of the commercial TV stations have revenues of \$12 million or less.
Many commercial TV stations, however, are affiliated with larger
corporations with higher revenue, with the result that the estimate of
870 commercial TV stations overstates the number that qualify as small
entities. The Commission does not compile and otherwise does not have
access to information on the revenue of NCE stations that would permit
it to determine how many such stations would qualify as small entities.

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

The Commission anticipates that none of the rules adopted in the *Second
Report & Order* will result in an increase in the existing reporting and
recordkeeping requirements of potential applicants.

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

The RFA requires an agency to describe any significant alternatives that
it has considered in adopting its rules, which may include the following
four alternatives (among others): (1) the establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use of
performance, rather than design, standards; and (4) an exemption from
coverage of the rule, or any part thereof, for small entities.[^112]

The *Second Report & Order* establishes new policies for licensing
non-reserved spectrum, in a manner consistent with the court's decision
in the *NPR* case, and the applicable provisions of the statute. As
explained in detail in the *Second Report & Order*, section 309(j)(1) of
the Act generally requires the Commission to resolve mutually exclusive
applications for licenses to use spectrum via competitive bidding, but
section 309(j)(2)(C) exempts the licenses for NCE stations from this
process. In the *Report & Order* in this docket, the Commission
concluded that the auction exemption applied only to licenses for NCE
stations to use the channels that Commission has reserved for their
exclusive use, and that applicants for licenses for NCE stations to use
non-reserved spectrum must compete for them via competitive bidding; in
the *NPR* case, the D.C. Circuit decided that the auction exemption
extended to licenses for NCE stations to use non-reserved spectrum. As a
result, the Commission's new policies and rules must distinguish between
commercial station and NCE stations in terms of how it allocates and
licenses this spectrum. Thus, the Commission cannot distinguish between
"small" and "non-small" entities in applying the relevant statutory
standards.

Although it is not necessarily true that more applicants for NCE
stations would qualify as "small entities" than applicants for
commercial stations, the Commission has attempted, within the applicable
legal constraints, to maximize the opportunities for applicants for NCE
stations to obtain licenses to use non-reserved spectrum, consistent
with the mandate in section 604(a)(5) of the RFA that an agency consider
alternatives to minimize significant economic impact on small entities.
For example, in the *Second Further Notice*, the Commission proposed two
alternatives for licensing non-reserved spectrum: hold applicants for
NCE stations ineligible for the spectrum, or permit them to apply for
this spectrum, subject to the Commission returning their applications as
unacceptable for filing if any mutually exclusive applications for
commercial stations remained after the expiration of any settlement
period. In the *Second Report & Order*, the Commission has adopted the
second of these alternatives, which permits NCE stations to obtain
licenses for non-reserved spectrum, while the first one did not. This
alternative is equally beneficial to both large and small entities,
because it permits all entities the opportunity to acquire licenses for
non-reserved spectrum. Moreover, the Commission has also reaffirmed its
process that permits would-be applicants for NCE stations, both large
and small, to reserve more FM and TV channels for their exclusive use
upon showing that an already-reserved channel is not available for use,
and there is a need for NCE service in a given area. The Commission will
allow interested parties an opportunity to apply these criteria to
future allocation proceedings, and to channels already in the Table of
Allotments for which the Commission initiated an allocation proceeding
before the effective date of the criteria, and for which it never
accepted applications.

**Report to Congress**

The Commission will send a copy of the *Second Report & Order*,
including this FRFA, in a report to be sent to Congress pursuant to the
Congressional Review Act.[^113] In addition, the Commission will send a
copy of the *Second Report & Order*, including this FRFA, to the Chief
Counsel for Advocacy of the Small Business Administration. A copy of the
*Second Report & Order* and this FRFA (or summaries thereof) will also
be published in the Federal Register.[^114]

**APPENDIX C**

**RULE CHANGES**

Part 73 of Title 47 of the U.S. Code of Federal Regulations is amended
as follows:

**PART 73 -- RADIO BROADCAST SERVICES**

**Subpart H -- Rules Applicable to All Broadcast Stations**

Section 73.3571 is amended by revising paragraph (h) to read as follows:

**§ 73.3571 Processing of AM broadcast station applications.**

**\* \* \* \* \***

\(h\) *Processing new and major AM broadcast station applications*.
(1)(i) The FCC will specify by Public Notice, pursuant to § 73.5002, a
period for filing AM applications for a new station or for major
modifications in the facilities of an authorized station. AM
applications for new facilities or for major modifications, whether for
commercial broadcast stations or noncommercial educational broadcast
stations, as described in 47 U.S.C. § 397(6), will be accepted only
during these specified periods. Applications submitted prior to the
appropriate filing period or \"window\" opening date identified in the
Public Notice will be returned as premature. Applications submitted
after the specified deadline will be dismissed with prejudice as
untimely.

\* \* \* \* \*

\(2\) Subsequently, the FCC will release Public Notices:

\(i\) identifying the short-form applications received during the window
filing period which are found to be mutually exclusive, including any
applications for noncommercial educational broadcast stations, as
described in 47 U.S.C. § 397(6), as well as the procedures the FCC will
use to resolve the mutually exclusive applications;

\* \* \* \* \*

\(3\) After the close of the filing window, the FCC will also release a
Public Notice identifying any short-form applications received which are
found to be non-mutually exclusive, including any applications for
noncommercial educational broadcast stations, as described in 47 U.S.C.
§ 397(6). All non-mutually exclusive applicants will be required to
submit an appropriate long form application within 30 days of the Public
Notice and, for applicants for commercial broadcast stations, pursuant
to the provisions of § 73.5005(d). Non-mutually exclusive applications
for commercial broadcast stations will be processed and the FCC will
periodically release a Public Notice listing such non-mutually exclusive
applications determined to be acceptable for filing and announcing a
date by which petitions to deny must be filed in accordance with the
provisions of §§ 73.5006 and 73.3584. Non-mutually exclusive
applications for noncommercial educational broadcast stations, as
described in 47 U.S.C. § 397(6), will be processed and the FCC will
periodically release a Public Notice listing such non-mutually exclusive
applications determined to be acceptable for filing and announcing a
date by which petitions to deny must be filed in accordance with the
provisions of §§ 73.7004 and 73.3584. If the applicant is duly
qualified, and upon examination, the FCC finds that the public interest,
convenience and necessity will be served by the granting of the
non-mutually exclusive long form application, the same will be granted.

\* \* \* \* \*

Section 73.3572 is amended by revising paragraph (e) as follows:

**§ 73.3572 Processing of TV broadcast, Class A TV broadcast, low power
TV, TV translators, and TV booster applications.**

\(e\) The FCC will specify by Public Notice a period for filing
applications for a new non-reserved television, low power TV and TV
translator stations or for major modifications in the facilities of such
authorized stations, whether for commercial broadcast stations or
noncommercial educational broadcast stations, as described in 47 U.S.C.
§ 397(6), and major modifications in the facilities of Class A TV
stations.

\* \* \* \* \*

Section 73.3573 is amended by revising paragraph (f) to read as follows:

**§ 73.3573 Processing of FM broadcast station applications.**

\* \* \* \* \*

\(f\) *Processing non-reserved channel FM broadcast station
applications*.

\* \* \* \* \*

(2)(i) The FCC will specify by Public Notice, pursuant to § 73.5002(a),
a period for filing non-reserved band FM applications for a new station
or for major modifications in the facilities of an authorized station.
FM applications for new facilities or for major modifications, whether
for commercial broadcast stations or noncommercial educational broadcast
stations, as described in 47 U.S.C. § 397(6), will be accepted only
during the appropriate filing period or \"window.\" Applications
submitted prior to the window opening date identified in the Public
Notice will be returned as premature. Applications submitted after the
specified deadline will be dismissed with prejudice as untimely.

\* \* \* \* \*

\(3\) Subsequently, the FCC will release Public Notices: (i) identifying
the short-form applications received during the window filing period
which are found to be mutually exclusive, including any applications for
noncommercial educational broadcast stations, as described in 47 U.S.C.
§ 397(6), as well as the procedures the FCC will use to resolve the
mutually exclusive applications;

\* \* \* \* \*

\(4\) If, after the close of the appropriate window filing period, a
non-reserved FM allotment remains vacant, the window remains closed
until the FCC, by Public Notice, specifies a subsequent period for
filing non-reserved band FM applications for a new station or for major
modifications in the facilities of an authorized station pursuant to
paragraph (f)(2)(i) of this section. After the close of the filing
window, the FCC will also release a Public Notice identifying the
short-form applications which are found to be non-mutually exclusive,
including any applications for noncommercial educational broadcast
stations, as described in 47 U.S.C. § 397(6). These non-mutually
exclusive applicants will be required to submit the appropriate
long-form application within 30 days of the Public Notice and, for
applicants for commercial broadcast stations, pursuant to the provisions
of § 73.5005(d). Non-mutually exclusive applications for commercial
broadcast stations will be processed and the FCC will periodically
release a Public Notice listing such non-mutually exclusive applications
determined to be acceptable for filing and announcing a date by which
petitions to deny must be filed in accordance with the provisions of §§
73.5006 and 73.3584. Non-mutually exclusive applications for
noncommercial educational broadcast stations, as described in 47 U.S.C.
§397(6), will be processed and the FCC will periodically release a
Public Notice listing such non-mutually exclusive applications
determined to be acceptable for filing and announcing a date by which
petitions to deny must be filed in accordance with the provisions of §§
73.7004 and 73.3584. If the applicant is duly qualified, and upon
examination, the FCC finds that the public interest, convenience, and
necessity will be served by the granting of the non-mutually exclusive
long-form application, it will be granted.

**Subpart I -- Procedures for Competitive Bidding and for Applications
for Noncommercial Educational Broadcast Stations on Non-Reserved
Channels**

Section 73.5000 is amended by revising paragraph (b) as follows:

**§ 73.5000 Services subject to competitive bidding.**

\(b\) Mutually exclusive applications for broadcast channels in the
reserved portion of the FM band (Channels 200-220) and for television
broadcast channels reserved for noncommercial educational use are not
subject to competitive bidding procedures. Applications for
noncommercial educational broadcast stations, as described in 47 U.S.C.
§ 397(6), on non-reserved channels also are not subject to competitive
bidding procedures.

\* \* \* \* \*

Section 73.5002 is amended by revising paragraphs (a), (c) and (d) to
read as follows:

**§ 73.5002 Application and certification procedures; return of mutually
exclusive applications not subject to competitive bidding procedures;
prohibition of collusion.**

\* \* \* \* \*

\(a\) Prior to any broadcast service or ITFS auction, the Commission
will issue a public notice announcing the upcoming auction and
specifying the period during which all applicants seeking to participate
in an auction, and all applicants for noncommercial educational
broadcast stations, as described in 47 U.S.C. § 397(6), on non-reserved
channels, must file their applications for new broadcast or ITFS
facilities or for major changes to existing facilities. Broadcast
service or ITFS applications for new facilities or for major
modifications will be accepted only during these specified periods. This
initial and other public notices will contain information about the
completion and submission of applications to participate in the
broadcast or ITFS auction, and applications for noncommercial
educational broadcast stations, as described in 47 U.S.C. § 397(6), on
non-reserved channels, as well as any materials that must accompany the
applications, and any filing fee that must accompany the applications or
any upfront payments that will need to be submitted. Such public notices
will also, in the event mutually exclusive applications are filed for
broadcast construction permits or ITFS licenses that must be resolved
through competitive bidding, contain information about the method of
competitive bidding to be used and more detailed instructions on
submitting bids and otherwise participating in the auction. In the event
applications are submitted that are not mutually exclusive with any
other application in the same service, or in the event that any
applications that are submitted that had been mutually exclusive with
other applications in the same service are resolved as a result of the
dismissal or modification of any applications, the non-mutually
exclusive applications will be identified by public notice and will not
be subject to auction.

\(b\) To participate in broadcast service or ITFS auctions, or to apply
for a noncommercial educational station, as described in 47 U.S.C. §
397(6), on a non-reserved channel, all applicants must timely submit
short-form applications (FCC Form 175), along with all required
certifications, information and exhibits, pursuant to the provisions of
47 CFR 1.2105(a) and any Commission public notices. So determinations of
mutual exclusivity for auction purposes can be made, applicants for
non-table broadcast services or for ITFS must also submit the
engineering data contained in the appropriate FCC form (FCC Form 301,
FCC Form 346, FCC Form 349 or FCC Form 330). Beginning January 1, 1999,
all short-form applications must be filed electronically. If any
application for a noncommercial educational broadcast station, as
described in 47 U.S.C. § 397(6), is mutually exclusive with applications
for commercial broadcast stations, and the applicants that have the
opportunity to resolve the mutually exclusivity pursuant to subsection
(c) and (d) of this section fail to do so, the application for
noncommercial educational broadcast station, as described in 47 U.S.C. §
397(6), will be returned as unacceptable for filing, and the remaining
applications for commercial broadcast stations will be processed in
accordance with competitive bidding procedures.

\(c\) Applicants in all broadcast service or ITFS auctions, and
applicants for noncommercial educational stations, as described in 47
U.S.C. § 397(6), on non-reserved channels will be subject to the
provisions of § 1.2105(b) of this chapter regarding the modification and
dismissal of their short-form applications. Notwithstanding the general
applicability of § 1.2105(b) of this chapter to broadcast and ITFS
auctions, and applicants for noncommercial educational stations, as
described in 47 U.S.C. § 397(6), on non-reserved channels, the following
applicants will be permitted to resolve their mutual exclusivities by
making amendments to their engineering submissions following the filing
of their short-form applications:

\* \* \* \* \*

\(4\) applicants for the AM broadcast service who file applications that
are mutually exclusive with at least one application for a noncommercial
educational station, as defined in 47 U.S.C. § 397(6).

\(d\) \* \* \* \* \*

\(4\) applicants for the AM broadcast service who file applications that
are mutually exclusive with at least one application for a noncommercial
educational station, as defined in 47 U.S.C. § 397(6).

\* \* \* \* \*

Section 73.5005 is amended by revising paragraph (d) as follows:

**§ 73.5005 Filing of long-form applications.**

\(d\) An applicant whose short-form application, submitted pursuant to
47 CFR 73.5002(b), was not mutually exclusive with any other short-form
application in the same service, or whose short-form application was
mutually exclusive only with one or more short-form applications for a
noncommercial educational broadcast station, as described in 47 U.S.C. §
397(6), shall submit an appropriate long-form application within thirty
(30) days following release of a public notice identifying any such
non-mutually exclusive applicants. The long-form application should be
submitted pursuant to the rules governing the relevant service and
according to any procedures for filing such applications set out by
public notice. The long-form application filed by a non-mutually
exclusive applicant need not contain the additional exhibits, identified
in § 73.5005(a), required to be submitted with the long-form
applications filed by winning bidders. When electronic procedures become
available, the Commission may require any non-mutually exclusive
applicants to file their long-form applications electronically.

Section 73.5006 is amended by revising paragraph (a) as follows:

**§ 73.5006 Filing of petitions to deny against long-form
applications.**

\(a\) As set forth in 47 CFR 1.2108, petitions to deny may be filed
against the long-form applications filed by winning bidders in broadcast
service or ITFS auctions and against the long-form applications filed by
applicants whose short-form applications were not mutually exclusive
with any other applicant, or whose short-form applications were mutually
exclusive only with one or more short-form applications for a
noncommercial educational broadcast station, as described in 47 U.S.C. §
397(6).

**Subpart K -- Application and Selection Procedures for Reserved
Noncommercial Educational Channels, and for Certain Applications for
Noncommercial Educational Stations on Non-Reserved Channels**

Section 73.7001 is amended by revising paragraph § 73.7001 as follows:

**§ 73.7001 Services subject to evaluation by point system.**

\* \* \* \* \*

\(b\) A point system will be used to evaluate mutually exclusive
applications for new radio, television, and FM translator facilities,
and for major changes to existing facilities, on non-reserved channels,
only when all of the mutually exclusive applications are for
noncommercial educational broadcast stations, as described in 47 U.S.C.
§ 397(6)(A) or 47 U.S.C. § 397(6)(B).

\(c\) A point system will be used to evaluate mutually exclusive
applications for new television translator and low power television
facilities, and for major changes to existing facilities, only when all
of the mutually exclusive applications are for noncommercial educational
broadcast stations, as described in 47 U.S.C. § 397(6)(B).

\* \* \* \* \*

**PART 74 -- EXPERIMENTAL RADIO, AUXILIARY, SPECIAL BROADCAST AND OTHER
PROGRAM DISTRIBUTIONAL SERVICES**

**Subpart L -- FM Broadcast Translator Stations and FM Broadcast Booster
Stations**

Section 74.1233 is amended by revising paragraph (d) to read as follows:

§ 74.1233 Processing FM translator and booster station applications.

\* \* \* \* \*

\(d\) Processing non-reserved band FM translator applications.

\* \* \* \* \*

(2)(i) The FCC will specify by Public Notice, pursuant to § 73.5002(a),
a period for filing non-reserved band FM translator applications for a
new station or for major modifications in the facilities of an
authorized station. FM translator applications for new facilities or for
major modifications, whether for commercial broadcast stations or
noncommercial educational broadcast stations, as described in 47 U.S.C.
§ 397(6), will be accepted only during these specified periods.
Applications submitted prior to the window opening date identified in
the Public Notice will be returned as premature. Applications submitted
after the specified deadline will be dismissed with prejudice as
untimely.

\* \* \* \* \*

\(3\) Subsequently, the FCC will release Public Notices:

\(i\) Identifying the short-form applications received during the
appropriate filing period or \"window\" which are found to be mutually
exclusive, including any applications for noncommercial educational
broadcast stations, as defined in 47 U.S.C. § 397(6), as well as the
procedures the FCC will use to resolve the mutually exclusive
applications;

\* \* \* \* \*

\(4\) After the close of the filing window, the FCC will also release a
Public Notice identifying any short-form applications which are found to
be non-mutually exclusive, including any applications for noncommercial
educational broadcast stations, as described in 47 U.S.C. § 397(6).
These non-mutually exclusive applicants will be required to submit the
appropriate long form application within 30 days of the Public Notice
and, for applicants for commercial broadcast stations, pursuant to the
provisions of § 73.5005. Non-mutually exclusive applications for
commercial broadcast stations will be processed and the FCC will
periodically release a Public Notice listing such non-mutually exclusive
applications determined to be acceptable for filing and announcing a
date by which petitions to deny must be filed in accordance with the
provisions of §§ 73.5006 and 73.3584. Non-mutually exclusive
applications for noncommercial educational broadcast stations, as
described by 47 U.S.C. § 397(6), will be processed and the FCC will
periodically release a Public Notice listing such non-mutually exclusive
applications determined to be acceptable for filing and announcing a
date by which petitions to deny must be filed in accordance with the
provisions of §§ 73.7004 and 73.3584. If the applicants are duly
qualified, and upon examination, the FCC finds that the public interest,
convenience and necessity will be served by the granting of the
non-mutually exclusive long-form application, the same will be granted.

**CONCURRING STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

*Re: Reexamination of the Comparative Standard for Noncommercial
Educational Applicants*

Today's decision has much to recommend it. I am pleased the Commission
has reached a decision on the difficult issue of the eligibility of
noncommercial educational applicants to use non-reserved spectrum. I
agree with the decision to allow applicants for an NCE station to
continue to apply for the use of non-reserved spectrum, subject to
dismissal if there is a competing commercial application. Such an
approach is preferable to holding all such applications ineligible even
where there is not a mutually exclusive application for the spectrum's
use. NCE stations -- traditional public broadcasting, as well as other
stations licensed to universities, churches, and municipalities -- have
been fulfilling their educational mission to their communities for
decades.

It further seems reasonable to allow nonprofit educational organizations
not wishing to provide NCE services to utilize non-reserved spectrum.
Applicants who do not choose to make an NCE showing ought to have the
opportunity to obtain licenses for the use of non-reserved spectrum.
Indeed, as the Order points out, some non-profit entities today operate
both commercial and non-commercial stations.

In addition, under current rules that are not at issue here, a
commercial station is not precluded from changing its status to an NCE
station. This also seems reasonable. After all, why preclude a
commercial broadcaster from deciding it would be better to provide
educational programming and receive the attendant benefits and
obligations of being an NCE station?

I must note, however, that this is not a perfect resolution of all the
issues. Probably there is no perfect solution. Nevertheless, I do see
opportunities for abuse that could develop out of today's Order. For
example, a non-profit educational organization that seeks an additional
license outside the reserved bands could claim it is seeking a
commercial station, participate in an auction, and then immediately upon
receiving the license change its status to an NCE station. The Order
assumes that the benefits of getting more educational programming on the
air outweigh the risk of abuse. And indeed, allowing NCE applicants to
avoid the auctions exemption in this manner is a way to get more NCE
broadcast stations on the air. Yet, my concern remains.

More generally, I am concerned about further blurring the distinctions
between commercial and non-commercial licensees. It was not so long ago
that this Commission went down the road toward commercialization of
public television by determining that the prohibition on advertising
does not apply to advertisements carried on the non-broadcast portion of
the bitstream - the spectrum used for subscription or data services.

I do not want to encourage further travel down this road. Some nonprofit
educational broadcasters could feel pressure to seek additional revenue
streams to purchase licenses. We may soon be dealing with
revenue-raising schemes that will detract from and endanger the
integrity of noncommercial broadcasting. Worse yet, at some point,
public funds could be used to purchase licenses to use the public's
airwaves. I fervently hope that public broadcasters will not resort to
this, because in so doing, they could be playing fast and loose with not
only the proud heritage of their service, but also with its very
credibility and long-term survivability.

Congress did not establish noncommercial broadcasting to be the same as
commercial broadcasting. In establishing the Corporation for Public
Broadcasting, Congress reported that public broadcasters \"will not be
in economic competition with commercial broadcasters. \[They\] will be
filling the gaps that commercial broadcasters do not fill." Because NCE
stations are different, they should be able to use the money they
collect for the development of new and innovative programming, rather
than for competing against commercial broadcasters in auctions for
licenses of public spectrum. I hope our decision today will not be used
to circumvent Congress' directive against auctions for NCE stations. If
such a result comes to pass, the Commission may need to revisit its
decision today. Indeed, I will urge it to do so.

[^1]: As explained below, the Commission has reserved channels in the FM
    and TV services. The Commission first reserved FM channels in 1945,
    *see* In the Matter of Allocation of Frequencies to the Various
    Classes of Non-Governmental Services in the Radio Spectrum from 10
    Kilocycles to 30,000,000 Kilocycles, 39 FCC 222, 226 (1945), and TV
    channels in 1952. *See* In the Matters of Amendment of Section 3.606
    of the Commission's Rules and Regulations, *etc*., 41 FCC 148,
    159-164 (1952). When it reserved channels for the then-new
    television services, the Commission explained "that because
    educational institutions require more time to prepare for television
    than commercial interests, a reservation of channels is necessary to
    insure that such stations come into existence. . . ." *Id*. at 159.

[^2]: 47 C.F.R. §§ 73.201, 73.501. An FM translator is "\[a\] station in
    the broadcasting service operated for the purpose of retransmitting
    the signals of an FM radio broadcast station or another FM broadcast
    translator station without significantly altering any
    characteristics of the incoming signal other than its frequency and
    amplitude, in order to provide FM broadcast service to the public."
    *Id*. § 74.1201(a). A "noncommercial FM translator" is "\[a\]n FM
    broadcast translator station which rebroadcasts the signals of a
    noncommercial FM radio broadcast station." *Id*. § 74.1201(c).
    Full-power NCE FM stations and NCE FM translator stations may
    operate on channels 201-220, *id*. §§ 73.501, 74.1202(b)(2), which,
    as indicated above, the Commission has set aside for the exclusive
    use of NCE FM stations.

[^3]: *Id*. §§ 73.606 (analog TV channels), 73.622 (DTV channels).

[^4]: A "television broadcast translator station" is "\[a\] station in
    the broadcast service for the purpose of retransmitting the programs
    and signals of a television broadcast station, without significantly
    altering the characteristic of the original signal other than its
    frequency and amplitude, for the purpose of providing television
    reception to the general public." *Id*. § 74.701(a). A "low power
    television station" is "\[a\] station that is authorized under the
    provisions of this subpart that may retransmit the programs and
    signals of a TV broadcast station and that may originate programming
    in any amount greater than 30 seconds per hour and/or operates a
    subscription service." *Id*. §74.701(f). As discussed more fully
    below, the rules do not define an "NCE TV translator" or an NCE LPTV
    station."

    The Commission has not set aside frequencies for these secondary TV
    services, or for the AM service. Applications for these services are
    submitted on a demand basis, whereby uniquely engineered
    applications in terms of community of license and technical
    parameters proposed are determined by individual applicants. By
    contrast, applications for full-power FM channels in the
    non-reserved band and all full-power TV channels must specify a
    particular channel in the Table of Allotments, which is a list of
    all such channels designated for use in the country, with
    pre-determined communities of license and technical parameters.

[^5]: 10 FCC Rcd 2877 (1995).

[^6]: The newly adopted comparative standards to select among competing
    applicants for NCE broadcast stations have not yet been implemented
    because they have been challenged in court. *See* Reexamination of
    the Comparative Standards for Noncommercial Educational Applicants,
    15 FCC Rcd 7386 (2000), *sub. nom*., *American Family Association,
    Inc. v. FCC*, appeal docketed, Case No. 00-1310 (D.C. Cir. July 14,
    2000).

[^7]: Pub. L. No. 105-33, Title III, 111 Stat. 251 (1997).

[^8]: 13 FCC Rcd 21667 (1998) ("*Further Notice*").

[^9]: 15 FCC Rcd 7386, 7429 (2000).

[^10]: 254 F.3d 226 (D.C. Cir. 2001).

[^11]: *Id*. at 229.

[^12]: 17 FCC Rcd 3833 (2002) ("*Second Further Notice*").

[^13]: *Id*. at 3837.

[^14]: *Id*. at 3837-38.

[^15]: *Id*. at 3839-40.

[^16]: *Id*. at 3840.

[^17]: The parties that filed comments, and the abbreviations by which
    they are referred to in this document, are set forth in Appendix A.

[^18]: *Second Further Notice*, 17 FCC Rcd at 3836-37.

[^19]: *Id*.

[^20]: NPR Reply at 14-15.

[^21]: *See, e.g.,* APTS at 5-6; NFCB at 4; NPR at 18-22; Trinity at
    4-5; UNI at 3-4.

[^22]: *See, e.g.,* Trinity at 4-5. Commenters also explained that good
    public policy dictates that the Commission should not exclude
    nonprofit educational organizations that wish to participate in
    auctions from doing so, given that the Commission might hold them
    altogether ineligible for licenses using the non-reserved spectrum,
    and their presence in the auction enhances competition for the
    licenses. *See, e.g.,* SRG at 5-6.

[^23]: 47 U.S.C. § 309(j)(2)(C).

[^24]: *Id*. § 397(6).

[^25]: Pub. L. No. 95-567, Title IV, § 401, 92 Stat. 2422 (1978).

[^26]: 47 C.F.R. § 73.503(a).

[^27]: *Id*. § 73.621(a).

[^28]: 47 C.F.R. § 74.1201(c) (defining "noncommercial FM translator" as
    "\[a\]n FM broadcast translator station which rebroadcasts the
    signals of a noncommercial FM radio broadcast station"). Although
    the Commission does not reserve frequencies for NCE use in the AM
    service, and thus has not expressly codified any distinct NCE
    eligibility rules for this service, the Commission has treated AM
    stations that satisfy the NCE FM eligibility rules as NCE AM
    stations, and other Commission rules identify and recognize AM NCE
    stations. *See, e.g.*, NPR Reply at 15-17. For example, the
    Commission's rules expressly regulate the conversion of an AM
    station from commercial to NCE status in the same way they regulate
    the similar conversion of FM and TV stations. *See* 47 C.F.R. §
    73.1690(c)(9). As discussed below, the Commission does not treat
    LPTV stations or TV translator stations in the same manner.

[^29]: As one example, WNYC in New York City was an NCE AM station as of
    the effective date of section 397(6), and remains one to this day.

[^30]: NPR at 21-22; SRG at 5.

[^31]: NPR at 21.

[^32]: *Id*. at 21-22.

[^33]: Given that the Commission's rules do not prohibit commercial
    stations from airing noncommercial educational programming, we agree
    with Kaleidoscope that a nonprofit educational organization could
    acquire a commercial broadcast station license through competitive
    bidding and use that license to provide noncommercial educational
    programs. *See* Kaleidoscope at 2. *See also* EMF at 6 (stating that
    once channels are auctioned, there should be no restriction on their
    use). As a result, a nonprofit educational organization that does
    not show in its application that it intends to use a particular
    license to advance an educational purpose -- and thus does not
    establish its eligibility to be licensed as an NCE station -- may,
    indeed must, compete at auction for the license at issue, but may
    still provide noncommercial educational programming using that
    license. Our rules also do not preclude a commercial station from
    changing its status to an NCE station upon a proper showing of
    eligibility, 47 C.F.R. § 73.1690(c)(9), and thereby gain the
    attendant benefits (*e.g.*, exemption from filing fees), *id*. §§
    1.1114(c), 1.1162(c), and incur the corresponding responsibilities
    (prohibition against airing commercials and provision of educational
    programming). *Id*. §§ 73.503(d), 73.621(e).

[^34]: *Second Further Notice*, 17 FCC Rcd at 3841-42.

[^35]: APTS at 15-16.

[^36]: *Id*. at 17-22. *See also* NJ Public Broadcast Authority Reply at
    4-5; UNC Reply at 3-4 (supporting APTS' proposal).

[^37]: Three Angels at 4-5, 7-8.

[^38]: An Inquiry Into the Future Role of Low Power Television
    Broadcasting and Television Translators in the National
    Telecommunications System, 47 Fed. Reg. 21468, 21486 (1982).

[^39]: LPTV and TV translators are virtually the same; the difference
    between the two is that LPTV licensees can originate more
    programming than TV translator licensees, but licensees can switch
    between the two through simple letter notification to the
    Commission. 47 C.F.R. § 74.701(a) (defining "television broadcast
    translator station" as "\[a\] station in the broadcast service for
    the purpose of retransmitting the programs and signals of a
    television broadcast station, without significantly altering any
    characteristic of the original signal other than its frequency and
    amplitude, for the purpose of providing television reception to the
    general public"); *id*. § 74.701(f) (defining "low power television
    station" as "\[a\] station authorized under the provisions of this
    subpart that may retransmit the programs and signals of a TV
    broadcast station and that may originate programming in any amount
    greater than 30 seconds per hour and/or operates a subscription
    service"); *id.* § 74.731(g) (indicating that an LPTV station may
    operate "\[a\]s a TV translator station" or "\[f\]or origination of
    programming and commercial matter as defined in § 74.701(f)").
    Significantly, although the rules define FM and TV translators
    similarly, the FM rules also define a "noncommercial FM translator
    station," *id*. § 74.1201(c), but the TV rules do not define or
    otherwise reference a "noncommercial TV translator station."

[^40]: 47 C.F.R. § 1.1114(e)(2) (exempting LPTV and TV translator
    applicants that propose "noncommercial education service" upon
    showing, after grant, that they receive "funding for the
    construction of the station through the National Telecommunications
    and Information Administration (NTIA) or other showings as required
    by the Commission"); *id*. § 1.1162 (exempting LPTV and TV
    translator applicants from regulatory fees upon the same
    conditions). Significantly, the fee rules exclude "noncommercial
    educational broadcast stations in the FM or TV services, as well as
    AM applicants, permittees, or licensees who certify that the station
    will operate or does operate in accordance with § 73.503 of this
    chapter" (the FM NCE eligibility rule) without additional
    information relating to funding. *Id*. § 1.1114 (c) (regarding
    application and filing charges). *See also id*. § 1.1162(e)
    (regarding regulatory fees).

[^41]: APTS at 15-16.

[^42]: 47 U.S.C. § 535(l) (*emphasis added*).

[^43]: APTS at 18-22. *See also* NJ Public TV Broadcasting Reply at 4-5;
    UNC Reply at 3-4.

[^44]: 47 U.S.C. § 397(6)(B).

[^45]: *Second Further Notice*, 17 FCC Rcd at 3837-39. We also proposed
    a third alternative, reserving channels, but this process would take
    place during the preliminary allocations stage of the licensing
    process for services that use the Table of Allotments, *i.e*.,
    commercial FM and TV. We discuss this alternative separately below.

[^46]: *Second Further Notice*, 17 FCC Rcd at 3867.

[^47]: *Id*. at 3837-38.

[^48]: *Id*. at 3838-39.

[^49]: Eels at 3; NAB at 5.

[^50]: Birdsill at 1; Eels at 5-6. *See also* El Mundo at 2; Garter at
    2; SSR at 1; Summit at 2 (generally supporting proposal to hold
    applicants for NCE station ineligible for non-reserved spectrum).

[^51]: Kaleidoscope at 2; EMF at 5-6.

[^52]: Booth at 4; Bustos at 3-4; Ed Comm'n at 3-4; EMF at 5-6; Garter
    at 3; RMCPB at 3. *See also* Barrett at 6; Garter at 21;
    Kaleidoscope at 2; SSR at 1; WVRU at 4 (generally supporting
    proposal to allow applicants for NCE stations to apply for
    non-reserved spectrum, so long as their applications do not conflict
    with those for commercial service).

[^53]: Beacon at 5; GA PTC at 4-5; MO Curators at 5-6; Moody at 6; OR at
    14; UNI at 5.

[^54]: APTS at 7-10; NFCB at 2-3; NPR at 5-11; Oregon *passim*.

[^55]: The current version of Form 175 (revised Oct. 2000) includes a
    question about "applicant status," and one of the several possible
    responses is "noncommercial educational." The instructions to the
    form states: "The definition of 'noncommercial educational' entity
    applies to broadcast applicants only and is contained in 47 U.S.C.
    397(6) and 47 C.F.R. § 53.503(a) (for radio) and 47 C.F.R. §
    73.621(a) (for television)."

[^56]: 47 C.F.R. § 1.2105(b)(2). This prohibition extends to applicants
    for all services, including those that are exempt from the
    anti-collusion rule and thus may pursue settlement opportunities and
    ultimately make certain amendments to their applications. *Id*. §
    73.5002(c).

[^57]: Kaleidoscope at 2.

[^58]: 47 C.F.R. § 73.7000 *et seq.* These rules are currently subject
    to challenge in court. *See supra*, note 6.

[^59]: We will determine which applications are mutually exclusive for
    these purposes in accordance with the Commission's current practices
    for the respective broadcast services. *See* In the Matter of
    Section 309(j) of the Communications Act -- Competitive Bidding for
    Commercial Broadcast and Instructional Television Fixed Service
    Licenses, 13 FCC Rcd 15920, 15978-80 (1998) ("*Broadcast Auction
    First Report & Order*").

[^60]: NAB Reply at 2-3. *See also* Eels at 4.

[^61]: 47 U.S.C. §§ 154(i), 303(r).

[^62]: NAB Reply at 4-5.

[^63]: 47 C.F.R. § 1.2105(c)(1).

[^64]: In the Matter of Implementation of Section 309(j) of the
    Communications Act -- Competitive Bidding, 9 FCC Rcd 2348, 2387
    (1994).

[^65]: 47 C.F.R. § 73.5002(d).

[^66]: *Broadcast Auction First Report & Order*, 13 FCC Rcd at 15927;
    *Memorandum Opinion & Order*, 14 FCC Rcd 8724, 8757-59 (1999).

[^67]: 47 C.F.R. § 73.3525 (requiring, *inter alia*, an applicant to
    certify that it has not received any consideration in excess of its
    legitimate and prudent expenses). We will not extend a similar
    settlement opportunity to mixed groups, for other services, as some
    commenters suggested. *See, e.g.,* Garter at 3; Rocky Mountain Corp.
    for Public Broadcasting at 3. Applicants for full-power FM and TV
    stations use the Table of Allotments, and as a result, cannot
    resolve their conflicts using technical solutions. In addition,
    applicants could more easily abuse a settlement process for these
    services, given the ease of filing competing applications for the
    same allotment; by contrast, applicants for AM stations and
    secondary services must file engineering proposals, which mean both
    that they must invest more in the application process and that it is
    more difficult for them to predict when their applications will
    conflict with others and thereby produce a settlement opportunity.
    Applicants for NCE stations in the full-power FM and TV services
    also have an opportunity to reserve channels at the allocation stage
    of the licensing process we use for those channels; this opportunity
    is not available to applicants for other services.

[^68]: *Report & Order*, 15 FCC Rcd at 7434. *See also* 47 C.F.R. §
    73.202(a)(1)(ii) (FM); *id*. § 73.622(a)(DTV).

[^69]: *Second Further Notice*, 17 FCC Rcd at 3839-40.

[^70]: *Id*. at 3840.

[^71]: NAB at 6-7.

[^72]: APTS at 11-12. *See also* Garter at 3-4 (stating same).

[^73]: NPR at 13-15. *See infra* ¶ 30 (discussing NPR's proposed
    standard).

[^74]: *Id*. at 12. *See also* SRG Reply at 2 (offering ideas on process
    Commission might use for vacant allotments).

[^75]: *See, e.g.,* NFCB at 2 (suggesting that existing standard be
    changed to include technical preclusion on reserved channel, and
    unavailability of non-reserved channel that would serve 50% of
    proposed service area).

[^76]: NPR at 13.

[^77]: *Id*.

[^78]: *See supra* n.1.

[^79]: *Id*. § 73.202(a)(1)(i). An NCE station operating on one of the
    reserved FM channels might cause interference with a TV station
    operating on channel 6 because the twenty reserved FM channels
    (located at 88.1-91.9 MHz) sit immediately adjacent to TV channel 6
    (located at 82-88 MHz). *Id*. §§ 73.201, 73.603(a).

[^80]: *Report & Order*, 15 FCC Rcd at 7433.

[^81]: NPR at 11-16. A few commenters suggested that the Commission
    should reserve channels simply when a reserved channel is
    unavailable. *See, e.g.,* Barrett at 6; Beacon at 6; SSR at 1.
    Because these proposals do not take into account the relative
    proportion of commercial and NCE service -- we similarly reject
    them.

[^82]: *See especially* 47 C.F.R. Secs. 73.509, 73.515, and 73.525.

[^83]: The issue of whether to allow would-be applicants for NCE
    stations to attempt to reserve channels already in the Table of
    Allotments is generally irrelevant for TV, because there are no
    vacant NTSC allotments, and the only vacant DTV allotments are those
    already reserved for NCE use.

[^84]: The Commission published the *Report & Order* in which it adopted
    these standards in the Federal Register on June 8, 2000. *See* 65
    Fed. Reg. 36,375 (2000). The effective date of these standards was
    sixty days thereafter, or August 7, 2000.

[^85]: *See, e.g.,* Public Notice, "Auction Notice and Filing
    Requirements for FM Broadcast Construction Permits," 16 FCC 928,
    961-968 (2001) (listing FM channels included in Auction No. 37).

[^86]: Garter at 4; NAB at 7.

[^87]: Mutually exclusive mixed group applicants for stations that are
    licensed using the Table of Allotments do not have the opportunity
    to settle. *See supra* note 67.

[^88]: Barrett at 6; Eels at 8; NAB Reply at 10.

[^89]: *Second Further Notice*, 17 FCC Rcd at 3839 n.40.

[^90]: Public Notice, "Window Opened to Permit Settlements for Closed
    Groups of Mutually Exclusive Broadcast Applications," 16 FCC Rcd
    17091 (2001). The Commission extended the settlement period through
    February 15, 2002. *See* Public Notice, "Extended Settlement Period
    for Closed Groups of Mutually Exclusive Broadcast Applications
    Announced," 16 FCC Rcd 22047 (2001).

[^91]: Originally, the Commission expected to resolve mutually exclusive
    applications for these licenses in Auction No. 25, which the
    Commission conducted in late 1999.

[^92]: NPR at 16-18; NPR Reply at 12-13. *See also* NFCB at 5.

[^93]: Channel 6 PTV Licensees at 3. *See also* APTS Reply at 5-6.

[^94]: Amherst Alliance at 3-4.

[^95]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et seq*.,
    has been amended by the Small Business Regulatory Enforcement
    Fairness Act of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996)
    (SBREFA).

[^96]: 17 FCC Rcd 3833, 3844-3846 (2002).

[^97]: *See* 5 U.S.C. § 604.

[^98]: *National Public Radio v. FCC*, 254 F.3d 226 (D.C. Cir. 2001).

[^99]: 5 U.S.C. § 604(a)(3).

[^100]: *Id*. § 601(6).

[^101]: *Id*. § 601(3).

[^102]: *Id*. § 632.

[^103]: *Id*. § 601(4).

[^104]: 5 U.S.C. § 601(5).

[^105]: 47 U.S.C. § 397(6); 47 C.F.R. §§ 503(a), 621(a). *See also
    supra* ¶ 11.

[^106]: News Release, "Broadcast Station Totals as of June 30, 2002"
    (rel. Aug. 26, 2002),
    <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-225721A1.doc>
    ("Broadcast Station Totals").

[^107]: *Id*.

[^108]: 13 C.F.R. § 121.201 North American Industry Classification
    System ("NAICS") Code 515112, formerly NAICS Code 513112.

[^109]: Broadcast Station Totals, *supra* note 104.

[^110]: *Id*.

[^111]: NAICS Code 515120, formerly NAICS 513120.

[^112]: 5 U.S.C. § 603(c)(1)-(c)(4).

[^113]: *Id*. § 801(a)(1)(A).

[^114]: *Id*. § 604(b).