**Before the**

**FEDERAL COMMUNICATIONS COMMISSION**

**Washington, DC 20554**

In the Matter of )

)

Amendment of Part 95 of the ) WT Docket No. 98-169

Commission\'s Rules to Provide )

Regulatory Flexibility in the )

218-219 MHz Service )

)

)

**SECOND ORDER ON RECONSIDERATION OF THE REPORT AND ORDER AND MEMORANDUM
OPINION AND ORDER**

### Adopted: November 22, 2000 Released: December 13, 2000

By the Commission:

# I. INTRODUCTION

1\. On September 10, 1999, the Federal Communications Commission
("Commission") issued the *218-219 MHz* *Order,* which modified the
regulations governing the licensing of the 218-219 MHz Service (formerly
known as the Interactive Video and Data Service ("IVDS")) to maximize
the efficient and effective use of the band.[^1] The *218-219 MHz
Order*, among other things, modified service and technical rules for the
band and extended the license term from five to ten years, eliminated
the three- and five-year construction benchmarks, and adopted a
"substantial service" analysis to be assessed at the expiration of the
218-219 MHz license term as a condition of renewal.[^2] The Commission
also adopted a restructuring plan for existing licensees that had
participated in the installment payment program and that: (i) were
current in installment payments as of March 16, 1998; (ii) were less
than ninety days delinquent on the last payment due before March 16,
1998; or (iii) had properly filed grace period requests under the former
installment payment rules ("Eligible Licensees").[^3] Those licensees
that had paid in full are not eligible to participate in the
restructuring plan as they no longer owe a debt to the Commission and no
public policy goal would be served by allowing them to participate.
Pursuant to the restructuring plan, Eligible Licensees must make
elections on a per license basis, choosing among three options: (i)
Reamortization and Resumption of Payments; (ii) Amnesty; or (iii)
Prepayment (Prepayment-Retain or Prepayment-Return).[^4] If an Eligible
Licensee elects Reamortization and Resumption of Payments the licensee
retains one or more of its licenses and remains in the installment
payment plan. The loan will be "reamortized" over the remaining term of
the license. If an Eligible Licensee elects Amnesty its license is
returned to the Commission in exchange for debt forgiveness of the
outstanding principal balance and all interest payments due thereon. The
Commission retains the down payment. If an Eligible Licensee elects
Prepayment it may return or retain as many licenses as it wishes. The
Prepayment option applies to all of the licenses held by a licensee and
cannot be combined with Amnesty or Reamortization/Resumption.

2\. "Ineligible Entities" are those entities that made first and second
down payments and: (i) made some installment payments, but were not
current in their installment payments as of March 16, 1998, and did not
have a grace period request on file in conformance with the former
installment payment rules; or (ii) never made any installment payments
and did not have a timely filed grace period request on file, in
conformance with the former rules.[^5] Ineligible Entities are not
eligible to make elections, but will be granted debt forgiveness for any
outstanding balances owed and have previously paid installment payments
refunded.[^6]

3\. On November 24, 1999, on our own motion, we adopted the *218-219 MHz
Recon. Order*, which modified our *218-219 MHz Order*. We eliminated the
provision allowing an Eligible Licensee electing the Amnesty option to
obtain a credit for seventy percent of its down payment and forego, for
a period of two years from the start date of the next auction of the
218-219 MHz Service, eligibility to reacquire the surrendered licenses
through either auction or any secondary market transaction.[^7]

4\. In response to the rulings in the *218-219 MHz Order*, we received
seven petitions for reconsideration, one opposition to the petitions,
and no replies.[^8] We note that we did not receive any petitions for
reconsideration in response to our *sua sponte* *218-219 MHz Recon
Order*. After considering the arguments raised in the filings, we affirm
the *218-219 MHz Order*, as modified by the *218-219 MHz Recon. Order*,
in its entirety. Additionally, we respond to certain requests for
clarification contained in the filings and we make technical
modifications to the rules.

# EXECUTIVE SUMMARY

5\. The following is a synopsis of the major actions we adopt. In this
*Second Order on Reconsideration of the Report and Order and Memorandum
Opinion and Order*, we:

-   Affirm that the restructuring plan is limited to existing licensees
    that: (i) were current in installment payments as of March 16,
    1998; (ii) were less than ninety days delinquent on the last payment
    due before March 16, 1998; or (iii) had properly filed grace period
    requests under the former installment payment rules;

-   Decline to expand the options offered in the restructuring plan to
    include disaggregation;

-   Decline to expand the options offered in the restructuring plan to
    include the return of the down payment;

-   Affirm that the twenty-five percent bidding credit granted to all
    winning small business bidders in the 1994 auction of this service
    will not be extended to all winning bidders in the 1994 auction of
    this service; and

-   Affirm that the new Part 1 rules regarding installment payments will
    apply to licensees in this service.

###### BACKGROUND

6\. The 218-219 MHz Service is a short distance communications service
that allows one- and two-way communications for both common carrier and
private operations on a fixed or mobile basis.[^9] The *1992 Allocation
Report and Order*[^10] established the 218-219 MHz Service with a 500
kilohertz frequency segment for two licenses in each of the 734
cellular-defined service areas.[^11]

7\. We issued 218-219 MHz Service licenses by both random selection
(lottery)[^12] and competitive bidding (auction). In the Omnibus Budget
Reconciliation Act of 1993 ("*1993 Budget Act*"), Congress authorized
the Commission to award licenses for spectrum-based services by
auction.[^13] We subsequently determined that 218-219 MHz Service
licenses should be awarded by competitive bidding and adopted rules and
procedures for this licensing structure.[^14] Using these procedures, we
held the first auction in the 218-219 MHz Service on July 28 and 29,
1994 (Auction No. 2).[^15] On January 18, 1995, February 28, 1995, and
May 17, 1995, the Commission conditionally granted licenses to the
winning bidders, subject to the bidder satisfying the terms of the
auction rules, including down payment requirements.[^16]

8\. Under the Commission\'s competitive bidding rules in effect at the
time of Auction No. 2, winning bidders that qualified as small
businesses were allowed to pay twenty percent of their net bid(s) as a
down payment and the remaining eighty percent in installments over the
five-year term of the license(s), with interest-only payments for the
first two years, and interest and principal payments amortized over the
remaining three years.[^17] The first interest-only payment, due March
31, 1995, was deferred to June 30, 1995, pursuant to administrative
action by the Office of Managing Director.[^18] Subsequently, the
Wireless Telecommunications Bureau ("Bureau") further stayed the date
for making the initial interest-only payments pending Commission
resolution of licensees\' substantive requests related to the payment
requirements.[^19] The Commission lifted the stay effective January 5,
1996, on which date licensees were required to make the interest-only
payments back-due from March 31, 1995 and June 30, 1995.[^20] Although
the interest-only payments due September 30, 1995 and December 31, 1995
remained uncollected,[^21] we denied requests to set back the
installment payment date and the first principal and interest payments
were due on March 31, 1997.[^22]

9\. The Commission, in the *1995 IVDS Omnibus Order,* and the Bureau in
the *IVDS Grace Period PN*, cautioned licensees that, in accordance with
section 1.2110(e)(4)(ii)[^23] of our Rules, if they individually
required financial assistance, they should request a three- or six-month
grace period during the first ninety days following any missed
installment payments.[^24] The Bureau further cautioned licensees that
if a licensee failed to make timely payments, absent the filing of a
grace period request, the license would be in default.[^25] The
Commission\'s rules in effect at that time provided that any licensee
whose installment payment was more than ninety days past due was in
default, unless the licensee properly filed a grace period request.[^26]
Under the Commission's rules, licensees with properly filed grace period
requests would not be held in default during the pendency of their
requests and the interest accruing would be amortized by adding it to
the other interest payments over the remaining term of the license.[^27]
Upon expiration of any grace period without successful resumption of
payment, or upon default with no such request submitted, the license
would cancel automatically.[^28] The Commission amended the installment
payment rules in 1998 to provide for two automatic grace periods of
ninety days, subject to late fees.[^29] The 1998 amendment of the
installment payment rules did not affect pending grace period requests
filed by 218-219 MHz Service licensees.[^30]

10\. We have previously noted that deployment of the 218-219 MHz Service
has not been successful despite previous steps we had taken to promote
development of the 218-219 MHz Service.[^31] Moreover, those licensees
actually deploying services are providing service different than that
originally envisioned when the service was established.[^32] To promote
full utilization of the service, we issued the 1998 *218-219 MHz Flex
NPRM* that proposed changes to the 218-219 MHz Service licensing and
technical rules.[^33] The *218-219 MHz Flex NPRM* also suspended, for
the pendency of this rulemaking, the late payment fee and automatic
cancellation provisions of Section 1.2110(f)(4) of our Rules for
licensees that were current in installment payments as of March 16,
1998; stayed decisions on grace period requests properly filed under the
Part 1 rules previously in effect; and proposed payment restructuring
options.[^34] In the *218-219 MHz Order*, we substantially adopted our
proposals.

11\. Additionally, in the *218-219 MHz Order*, we eliminated the
minority- and women- owned business credits previously provided in
Auction No. 2. At that same time, to harmonize our treatment of
licensees in this service with the treatment of licensees in other
services, we granted a bidding credit ("Remedial Bidding Credit") to all
winning bidders that met the small business qualifications for Auction
No. 2.[^35]

12\. In the *218-219 MHz Order*, we determined that it would serve the
public interest to provide a variety of relief mechanisms to assist
current 218-219 MHz Service licensees that were experiencing
difficulties in meeting their financial obligations under the
installment payment plan. We stated our belief that the mechanisms
adopted afforded relief to current licensees while at the same time
preserving the integrity of the auction process.[^36] We also recognized
that for licensees whose licenses had cancelled, enforcement of the
payment obligations would be unduly harsh in light of the totality of
the circumstances.[^37] Thus, we recommended that those entities whose
licenses had cancelled should receive debt forgiveness for their
outstanding principal balance and accrued interest owed.[^38] We
continue to believe that the approach adopted in the *218-219 MHz Order*
best serves the public interest. Thus, we affirm the *218-219 MHz
Order*, as modified by the *218-219 MHz Reconsideration Order*. Below we
discuss the particular issues raised by the petitioners, clarify certain
points in the *218-219 MHz Order*, and make technical modifications to
the rules.

# IV. DISCUSSION

13\. The petitioners have made a number of requests that fall into four
general categories. The first category includes requests to change the
options available under the restructuring plan. The second category
includes requests to expand the definition of entities eligible to
participate in the restructuring program. The third category consists of
miscellaneous requests relating to the restructuring plan. The fourth
category consists of requests to expand the remedial bidding credit to
all current and former licensees.

**A. [Options Available in the Restructuring Plan]{.underline}**

**i. [Disaggregation]{.underline}**

14\. [Background]{.underline}. As noted above, the restructuring plan
offers Eligible Licensees three options: (i) Reamortization and
Resumption of Payments; (ii) Amnesty; or (iii) Prepayment
(Prepayment-Retain or Prepayment-Return).[^39] Disaggregation[^40] was
not proposed or adopted as a restructuring option.

15\. Originally, disaggregation was not allowed in this service.
However, in the *218-219 MHz Flex Order*, we proposed allowing spectrum
aggregation, disaggregation, and partitioning as part of our overall
effort to maximize the efficient and effective use of the 218-219 MHz
frequency band.[^41] In doing so, we recognized that we have already
adopted, and proposed adopting, disaggregation, and partitioning for a
number of services.[^42] The proposal in *218-219 MHz Flex Order* to
allow spectrum aggregation -- in which a licensee could hold both 500
kHz block licenses in a 218-219 MHz Service market -- received
widespread support.[^43] Few commenters addressed disaggregation
specifically. Those commenters that supported disaggregation did so
based upon the general principle that regulatory parity with other
wireless services would benefit licensees. However, one commenter
believed that disaggregation would be impractical for such a small
amount of spectrum,[^44] and another suggested that smaller amounts of
spectrum would lower entry barriers for small businesses, but did not
discuss what applications, if any, could be supported in the
disaggregated spectrum.[^45]

16\. In adopting partitioning and disaggregation in the 218-219 MHz
Service, we concluded that the benefits identified in the *Partitioning
Report and Order*, which we had extended to other wireless services,
would likewise benefit the 218-219 MHz Service. In doing so, we noted
that partitioning the geographic area of a license might provide
sufficient flexibility to allow entry into the market by entities that
lack sufficient resources to participate in the original auction.[^46]

17\. [Discussion]{.underline}. Under Celtronix's proposal, an Eligible
Licensee would elect to retain a portion of the spectrum for a given
market and return the remainder to the Commission.[^47] This procedure,
Celtronix suggests, would encourage parties to use spectrum more
efficiently and speed service to unserved and underserved areas.
Celtronix says it could provide service on 250 kHz -- one half the
bandwidth it is currently licensed to use,[^48] and notes that 220 MHz
SMR frequencies are licensed in blocks smaller than 500 kHz.

18\. Although Celtronix's filings at an earlier stage of the proceeding
supported a change in the rules to allow disaggregation, it first
proposed disaggregation as a restructuring option in its petition for
reconsideration.[^49] No other commenters or petitioners requested
disaggregation as a restructuring option and, as noted above, several
actually claimed that the existing 500 kHz blocks are insufficiently
small for licensees to develop innovative services that will allow them
to compete in the marketplace or to provide optimal interference
protection.[^50]

19\. We believe that we have provided ample flexibility in the
restructuring options offered. We recognize these options may not suit
every licensee's particular business plan. We decline to modify the
restructuring options without a substantial record demonstrating a
broad-based need or desire for such a change. Based on the minimal
record -- as well as the outright skepticism of some commenters that
channel blocks smaller than 500 kHz are practical for innovative uses --
we are doubtful that service will be developed in the portion of a
channel block that would remain after a licensee elects disaggregation
as a restructuring option. However, if, in the private marketplace, a
licensee (such as Celtronix) and a third party can identify 218-219 MHz
Service applications for which disaggregated spectrum is practical, our
rules allow and we would encourage such a transaction because it would
promote the rapid development of an entire 500 kHz channel block.

20\. Finally, we distinguish the 218-219 MHz spectrum from the 220 MHz
SMR frequencies identified by Celtronix. Although Celtronix is correct
in pointing out that 220 MHz SMR frequencies are licensed in blocks
smaller than 500 kHz, 218-219 MHz Service licensees, unlike 220 MHz
Service licensees, have TV Channel 13 protection requirements. Because
disaggregated spectrum would provide a licensee with more limited
interference protection options, we are even less confident that the
marketplace would support the auction of disaggregated spectrum blocks
in the 218-219 MHz Service. Accordingly, we decline to adopt Celtronix's
proposal.

> **ii. [Refunds of Down Payments]{.underline}**

21\. [Background]{.underline}. The *218-219 MHz Order* allows for
refunds of payments in three instances. First, Eligible Licensees that
elect Amnesty will receive a refund of installment payments. Second,
Ineligible Entities will receive a refund of installment payments.
Third, Eligible Licensees that elect Prepayment, depending upon the
number of licenses they return, might be entitled to a refund of excess
installment payments. In the *218-219 MHz Order*, we specifically
declined to provide for the refunds of down payments.[^51] Two
petitioners, Celtronix and Houston, request that we refund down
payments.[^52] Specifically, Celtronix requests that we refund the down
payments of those Eligible Licensees electing Amnesty. Houston
alternatively suggests that we provide a credit equal to the down
payments that may be used in future auctions. In essence, both
petitioners are requesting that the Commission completely unwind the
transaction and provide a full refund.

22\. [Discussion]{.underline}. We decline to adopt the proposal to
refund down payments as part of the restructuring plan as it would place
the Eligible Licensees electing Amnesty in virtually the same position
they would have occupied had the auction never taken place. In support
of its proposal, Celtronix argues that it is inconsistent to allow
Eligible Licensees that elect Prepayment-Return to get an 85 percent
credit on the down payments for the returned license, when Eligible
Licensees that elect Amnesty are not provided with a full refund on the
down payments.[^53] Houston supports its proposal by alleging that
investors in the service "were victimized by slick promoters."[^54]

23\. Providing a refund of down payments to those electing the Amnesty
option, without an adequate counterbalancing public interest benefit,
would undermine the integrity of the auction process by relieving
participants of even the most basic obligation of their
participation.[^55] Such an approach would not only be unfair to the
other participants in the original auction, but it would encourage
speculation in future auctions. In the *218-219 MHz Order*, we
considered and rejected a request to return a portion of the down
payment.[^56] Our decision to allow licensees that elect
Prepayment-Return to get an 85 percent credit on the down payment is
justified by the public interest benefit of speeding service to the
public. Presumably, only a licensees that reasonably believes it has
access to adequate sources of capital and a viable business plan will
elect Prepayment-Return. Presumably, these licenses will provide service
to the public earlier then licenses from a subsequent auction. Thus,
this option speeds service to the public. However, no such public
interest benefit would accrue from providing a full refund to Eligible
Licensees electing Amnesty. While we are sympathetic to Houston's
allegations regarding "slick promoters," we note that the Commission's
present restructuring plan offers significant relief and that the
Commission is not responsible for the actions of third parties.
Accordingly, as the public interest is not served by giving licensees a
complete refund, we reject petitioners' request.

**B. [Entities Eligible to Participate in the Restructuring
Plan]{.underline}**.

**i. [Definition of Eligible Licensees]{.underline}**

24\. [Background]{.underline}. As noted above, the *218-219 MHz Order*
adopted, among other things, a restructuring plan for existing licensees
that participated in the installment payment plan and that: (i) were
current in installment payments as of March 16, 1998; (ii) were less
than ninety days delinquent on the last payment due before March 16,
1998; or (iii) had properly filed grace period requests under the former
installment payment rules ("Eligible Licensees").[^57] Other relief has
been extended to Ineligible Entities.[^58]

25\. [Discussion]{.underline}. One petitioner, Vista, requests that we
modify the definition of Eligible Licensees. In support of its request,
Vista argues that it is inequitable to allow licensees that had made no
installment payments, but had filed a timely grace period request to
retain their license, while refusing to permit licensees that made
"substantial payments" to retain their licenses.[^59] Vista also argues
that the payment instructions provided by the Commission were
conflicting, thus justifying a licensee's failure to make payments on
its license or justifying a licensees failure to timely file a grace
period request.[^60] Thus, Vista requests that the standard be modified
so that the definition of Eligible Licensees also includes those
licensees that have made "substantial payments" as of September 7, 1999,
the date that the *218-219 MHz Order* was adopted.[^61] In the
alternative, Vista requests that former licensees be able to make a
retroactive payment sufficient to be deemed "current as of March 16,
1998."[^62] As explained below, we reject these arguments and conclude
that the approach we have adopted in the *218-219 MHz Order* is
equitable and is consistent with the treatment afforded licensees in
other services. Accordingly, we decline to change the definition of
Eligible Licensees.

26\. In the *218-219 MHz Order*, the Commission attempted to balance the
need to maintain the integrity of the auction system, with the desire to
assist licensees that might be experiencing financial difficulties. In
doing so, we recognized the unique factual history of the 218-219 MHz
Service.[^63] At the same time, we looked to the treatment afforded
licensees in other services. Our decision to allow licensees that were
current in installment payments (*i.e*. less than 90 days delinquent) as
of March 16, 1998 to retain their licenses recognized that these
licensees complied with our rules and attempted to fulfill their
obligations to the Commission. Similarly, our decision to allow
licensees that had timely filed grace period requests to retain their
licenses stems from the licensees' ability to recognize their obligation
to the Commission and take appropriate steps under our rules to request
relief from their obligations in a timely manner. Allowing licensees
that had timely filed grace period requests to retain their licenses is
also consistent with the treatment afforded licensees in other services
under the *Part 1 Third Report and Order*.[^64]

27\. The test proposed by Vista is inherently subjective and would be
unfair to licensees in other services. Administering such a subjective
test would be difficult and would invite challenge on the basis of being
arbitrary. Further, allowing licensees that failed to abide by the
Commission's rules, but had made "substantial payments" to retain their
licenses is inconsistent with the Commission's requirement that a
licensee make full and timely payments. From such a rule current
licensees, in this or other services, might conclude that no
consequences would flow from failure to make full and timely payment.
Accordingly, we decline to adopt the "substantial payments" test
advocated by Vista.

28\. Additionally, we also reject Vista's argument that myriad factors
created substantial confusion and uncertainty about licensees' payment
obligations.[^65] Although the date for the initial payment was
postponed for a period of time, even the most favorable reading of the
Commission's orders and letters to licensees would not lead a licensee
to believe that it was excused from its obligation to make payments, or
that it did not need to file a grace period request if it determined
that it could not make timely payments. To the extent there was any
confusion as to the precise date a particular payment was due, the
Commission took that into account by defining Eligible Licensees as
existing licensees that had participated in the installment payment
program and "were current in installment payments as of March 16, 1998."
Thus, Vista has failed to provide a reasonable explanation of a
licensees' failure to either make payments or file a timely grace period
request.

29\. Finally, we decline to adopt Vista's request that licensees be able
to make retroactive payments sufficient to be deemed "current as of
March 16, 1998." Vista's suggestion would undermine the Commission's
rules that timely and full payment are a condition of retaining the
license. In light of the ample notice provided licensees regarding the
payment rules, [^66] and the generous provisions for Ineligible Entities
provided in the *218-219 MHz Order*, Vista's suggestion at this late
date that it be allowed to make retroactive payments is unsupportable.
Thus, we reject Vista's proposal to allow former licensees to make
retroactive payments.

> **ii. [Paid in Full Licensees are not Eligible to Participate in the
> Restructuring Plan]{.underline}**.

30\. [Background]{.underline}. The restructuring options in the *218-219
MHz Order* are limited to those entities that met the small business
qualifications of the auction, availed themselves of the installment
payment plan, and have not paid in full.[^67] Two petitioners, Hughes
and Hot Topics, have requested that all licensees be allowed to turn in
a license and receive a refund.[^68]

31\. [Discussion]{.underline}. We decline to adopt the petitioners'
request as no public policy interest would be served by allowing all
licensees to return their licenses and receive a refund. In support of
its proposal, Hughes argues that the Commission has insufficient
evidence before it to conclude that installment payment licensees were
experiencing financial difficulties, and that alternatively, some
licensees may have simply chosen to walk away from their financial
responsibilities.[^69] Thus, Hughes concludes that the Commission's
action is arbitrary.[^70] In the *218-219 MHz Order*, we have previously
rejected Hughes arguments.[^71] Hot Topics contends that as the
technology for the service never developed, a refund to all licensees is
appropriate.[^72]

32\. For licensees utilizing installment payments, we offered a
combination of debt restructuring for those entities that wish to retain
their licenses and debt forgiveness to a limited number of current and
former licensees. The relief is similar to that offered in the *C Block
Restructuring Orders*, where the Commission chose to offer limited
relief to licensees participating in the installment payment program,
but not to those that paid in full.[^73] The restructuring plan fulfills
the public policy goal of ensuring that the entity best qualified to
provide service holds the license, and allows the market to determine
the highest use for the license. However, where a licensee has paid in
full for the license, nothing would prohibit the licensee from selling
the license on the open market. Neither Hughes nor Hot Topics has
established that a public policy goal would be fulfilled by unwinding
the auction. By contrast, we risk considerable harm in adopting the
proposal as it might create the false expectation in bidders in future
auctions in this, or other services, that the Commission would
compensate a licensee for any perceived loss in the value of its
license. The Commission does not ensure the success of a service or the
value of a license in the secondary market. Although, in a secondary
market transaction, the licensee might receive less than the amount paid
for the license, no public policy concerns would be raised by such a
loss. As mandated by Section 309(j) of the Communications Act, the
Commission established a competitive bidding process that ensures that
licenses are awarded to those that value them most highly as indicated
by submitting the highest bid.[^74] To grant petitioners' request would
encourage bidders to engage in insincere bidding with the expectation
that the Commission would ensure against market difficulties encountered
after license award.

33\. Finally, contrary to Hughes's suggestion, the Commission has
considered evidence of the unique financial difficulties experienced by
the 218-219 MHz Service licensees participating in the installment
payment plan. For example, to our knowledge at least two licensees have
filed for bankruptcy.[^75] Additionally, in the comments filed by the
licensees in response to the *218-219 MHz Flex Order*, and in the
various grace period requests received by the Commission, licensees
alleged that they have encountered financial difficulties particularly
in raising capital. Accordingly, for the reasons discussed above, we
decline to allow licenses that have paid in full to participate in the
restructuring plan.

**C. [Miscellaneous Requests Relating to the Restructuring
Plan]{.underline}**

> **i. [Grace Periods]{.underline}.**

34\. In the *Part 1 Third Report and Order*, we modified the installment
payment grace period and late payment fee provisions of our Rules as
applied to all licensees participating in an installment payment plan at
that time.[^76] One petitioner, Celtronix, proposes to exempt 218-219
MHz Service licensees from the modified installment payment grace period
and late payment fee provisions of the new Part 1 rules. Celtronix's
petition in this proceeding offers the same argument that it previously
offered in its petition for reconsideration of the *Part 1 Third Report
and Order*. Specifically, Celtronix argues that applying these rules to
218-219 MHz Service licensees constitutes impermissible retroactive
rulemaking.[^77] We rejected this argument in the *Order on
Reconsideration of the Part 1 Third Report and Order*[^78] and concluded
that our new Part 1 rules do not violate the prohibitions on
retroactivity under the Administrative Procedure Act ("APA").[^79] We
see no reason to revist this issue in this proceeding.

**ii. [Notes and Security Agreements]{.underline}.**

35\. [Background]{.underline}. In the *218-219 MHz NPRM* we indicated
that "\[e\]very licensee electing to continue making installment
payments would be required to execute appropriate loan documents, that
may include a note and security agreement, as a condition of
reamortization of its installment payment plan under the revised
ten-year term, pursuant to Section 1.2110(f)(3) of the Commission's
rules."[^80] In the *218-219 MHz Order,* we indicated that Eligible
Licensees electing resumption "may be required to execute loan
documents."[^81] The *Implementation Procedures PN*, in turn, indicated
that those Eligible Licensees electing Reamortization/Resumption would
be "required to execute loan documents in the form of an Installment
Payment Acknowledgement." [^82] In general, the acknowledgement contains
a restatement of the amount of the debt owed, the payment terms under
the *218‑219 MHz Order*, and references other Commission rules and
regulations related to the payment of installment debt. The
*Implementation Procedures PN* also notes that "licensees may also be
required to execute a Uniform Commercial Code financing statement
(UCC-1)."[^83] The *Implementation Procedures PN* further informs
Eligible Licensees that failure to fully and timely execute and deliver
the requisite loan document(s) as of ten business days from receipt will
result in the automatic cancellation of the license.[^84]

36\. [Discussion.]{.underline} One petitioner, In-Sync, argues that
requiring loan documents, specifically notes and security agreements, is
unnecessary and would constitute a retroactive rulemaking.[^85] We
reject this argument. As discussed in the *Implementation Procedures
PN*, the Bureau has determined not to require notes and security
agreements, but will require the execution of other loan documents that
evidence that the licensee understands and agrees to the restructured
financing terms. Those licensees that do not wish to execute the
required documents may elect Amnesty or elect Prepayment.[^86]

37\. The APA's definition of "rule" provides that a rule "means the
whole or a part of an agency statement of general or particular
applicability and future effect designed to implement, interpret, or
prescribe law or policy or describing the organization, procedures, or
practice requirements of an agency . . ."[^87] By definition, a rule has
legal consequences only for the future.[^88] Thus, absent explicit
statutory authority to the contrary, the APA precludes an agency from
issuing rules that alter the past legal consequences of past actions.
The requirement that Eligible Licensees execute loan documents does not
violate this proscription. We have not gone back to past transactions
and imposed penalties for conduct that was previously allowed. Rather,
we are establishing prospective procedures to allow licensees to
continue to meet their previously established payment obligation to the
Commission. The mere fact that these rules deal with past transactions
does not constitute unlawful retroactive rulemaking under the APA.[^89]
Further, the Bureau's decision to require the execution of loan
documents by Eligible Licensees that elect Reamortization and Resumption
of Payments is based upon the reasonable concern that the Government's
interests are adequately protected in the event of default. Accordingly,
we agree with the approach adopted by the Bureau and reject petitioner's
request.

**iii. [Interest Calculation]{.underline}.**

38\. [Background]{.underline}. In the *218-219 MHz Flex Order*, the
Commission suspended the automatic cancellation rules.[^90] The effect
of this was not to suspend the obligation of licensees to make payments;
rather it merely suspended the consequences of failing to make payment.
As the underlying debt remained, a licensee was still permitted to make
payments. In fact, some licensees have continued to make payments during
the suspension period. However, licensees that failed to make payments
did not face automatic cancellation.

39\. [Discussion]{.underline}. Two petitioners, In-Sync and Celtronix,
argue that interest should not have continued to accrue during the
suspension period.[^91] In-Sync argues that as the *218-219 MHz Flex
Order* suspended the obligation to make the payments as of March 1998,
interest should have not have continued to accrue during the period
since March 1998.[^92] Additionally, both In-Sync and Celtronix argue
that the *218-219 MHz Order* is unclear and, accordingly, interest
should not be calculated for the suspension period.[^93] Specifically,
Celtronix points to the fact that in the *218-219 MHz Order* the
Commission stated that it will capitalize all "accrued and unpaid"
interest into the principal amount as of the election date.[^94]
However, in section 95.816(c)[^95] of our Rules, we stated that "all
unpaid interest" from the grant date through the election date will be
capitalized into the principal. From this, Celtronix concludes that we
did not intend interest to accrue. Both petitioners are mistaken. As the
underlying debt remained, the interest continued to accrue. The fact
that the Commission relieved the licensees of one consequence of failing
to make timely payments does not mean that the Commission intended to
also relieve the licensees of all the consequences of failing to make
payments. Further, given the sums involved, for at least some licensees,
it would require approval by the Department of Justice to forgive the
interest incurred during the suspension period.[^96] We note that the
licensees had the use of the licenses during this period of time. As the
petitioners have failed to provide any basis to forgive the interest,
the Commission is not inclined to request debt forgiveness on this
issue. Accordingly, petitioners' request is rejected.

#### D. [Remedial Bidding Credit]{.underline}

40\. [Background]{.underline}. Pursuant to statutory mandate,[^97] our
auction rules have included provisions to encourage participation by
minority- and women-owned entities, small businesses, and rural
telephone companies.[^98] Thus, when the auction for what is now the
218-219 MHz Service was conducted on July 28 and 29, 1994, (Auction No.
2), Part 95 of the Commission's rules included provisions that allowed
small businesses to pay eighty percent of their winning bids in
installments.[^99] Businesses owned by minority- and or women-owned
entities were also entitled to a twenty-five percent bidding credit that
could be applied to one of the two licenses available in each
market.[^100] Bidders that were both small businesses and minority- and
or women-owned entities received bidding credits and were allowed to
participate in the installment plan.[^101]

41\. At the time our rules were adopted for Auction No. 2, the standard
of review applied to federal programs designed to enhance opportunities
for racial minorities and women was an "intermediate scrutiny
standard."[^102] In June 1995, almost a year after the conclusion of
Auction No. 2, the U.S. Supreme Court decided *Adarand Constructors v.
Pena*, holding that racial classifications are subject to "strict
scrutiny" and will be found unconstitutional unless "narrowly tailored"
and in furtherance of "compelling governmental interests."[^103] The
following term, the Court decided in *United States v. Virginia*, that
to successfully defend a gender based program, the government must
demonstrate an "exceedingly persuasive justification" for the
program.[^104] As explained in the *218-219 MHz Order*, after Auction
No. 2, Graceba and others raised constitutional questions concerning the
bidding credits used in the 218-219 MHz service.[^105] In addition, the
Commission, in the *Competitive Bidding Sixth Report and Order*, and the
*Competitive Bidding Sixth Memorandum Opinion and Order*, questioned
whether the record was sufficiently developed to support the race and
gender-based provisions of the C block competitive bidding rules and the
competitive bidding rules of other services under a strict scrutiny
standard.[^106] In order to avoid delay of two scheduled auctions, the
Commission decided to eliminate the race and gender based provisions for
those auctions and instead employ a similar provision for small
businesses.[^107] However, in light of the Commission's statutory
mandate, the Commission commenced a series of studies to examine the
minority and female ownership of telecommunications and electronic media
facilities in the Unites States.[^108] Despite these efforts, in
establishing rules for auctions in other services, we have continued to
note that the record remains insufficient to support any racial or
gender based provision under the standard established by the Supreme
Court in *Adarand* and *VMI*.[^109]

42\. In the *218-219 MHz Order*, consistent with the modifications made
to the rules governing the auction of licenses in other services, we
eliminated the minority- and women-owned business bidding credit
previously afforded licensees in the first 218-219 MHz auction. Thus,
all minority- and women-owned businesses lost the bidding credit they
had previously received in the original auction in the 218-219 MHz
Service conducted in 1994. At the same time, recognizing that we have
provided bidding credits in other services to small businesses, we
determined to grant a twenty-five percent bidding credit to the accounts
of every winning bidder in the 1994 auction "that met the small business
qualifications for that auction."[^110]

43\. [Discussion]{.underline}. A few petitioners have requested that the
25 percent credit granted to small business be applied to the accounts
of all winning bidders regardless of whether they met the small business
qualifications for the auction.[^111] One petitioner, Ad Hoc Coalition,
argues that the provision of the remedial bidding credit, although
facially neutral, was impermissibly motivated by a desire to assist
women and minority businesses and is thus constitutionally flawed under
*Hunt v. Cromartie*.[^112] Another petitioner, Hughes, argues that the
Commission's response to the constitutional issue is inequitable as "all
bidders in the auction suffered from the inflated prices of the licenses
caused by the bidding credits."[^113] Hughes concludes that "all winning
bidders, whether they paid in full or not should be afforded a
remedy."[^114] For the reasons discussed below, we reject these
arguments and decline to expand the remedial bidding credit to all
winning bidders in Auction No. 2.

44\. The arguments of Hughes and Ad Hoc Coalition are based upon the
assumption that we accorded bidding credits to all small business as a
direct remedy for race and gender discrimination. That is incorrect. In
order to address the questions raised concerning the constitutionality
of race- and gender-based bidding credits, we eliminated those credits.
This was the extent of the "remedy" provided for Graceba's concerns.
However, as this issue was not raised until after the auction closed, we
determined that it would be disruptive and unfair not to provide some
form of bidding credit in this service, as licensees had crafted
business plans in reliance upon the credit. Therefore, consistent with
our practice in subsequent auctions, we choose to afford all small
businesses an after the fact bidding credit. Thus, in effect, we leveled
the bidding credit benefit upward. In doing so, we minimized the
potential for disruption to entities that had previously qualified for
the credit, we equalized the regulatory treatment between the 218-219
MHz Service and the many other services in which we have extended
bidding credits to all small businesses, and we fulfilled our statutory
mandate of encouraging participation of entrepreneurs, rural telephone
companies, and businesses owned by members of minority groups and
women.[^115] The credit accorded small businesses thus solved a
multi-faceted and complex set of regulatory issues. Those issues are not
presented with respect to larger businesses such as Hughes and those
represented by the Coalition, for Congress has not directed us to take
special steps to ensure the participation of large companies. We,
therefore, have no obligation to extend to such companies the same
approach we have adopted toward smaller businesses.

45\. The remedial bidding credit affords 218-219 MHz Service licensees
treatment similar to that afforded licensees in other services.[^116]
Because the credit is not based on racial or gender classifications, it
is not subject to a strict scrutiny analysis. Instead, our policy
operates in a neutral manner and does not subject anyone to unequal
treatment on the basis of race or gender.[^117] It therefore should be
evaluated on the more deferential rational basis review.

46\. Under rational basis review, government action is permissible
unless the varying treatment of different groups or persons is so
unrelated to the achievement of any combination of legitimate purposes
the government\'s actions are deemed irrational. In areas of social and
economic policy, a classification that neither proceeds along suspect
lines nor infringes fundamental constitutional rights must be upheld
against equal protection challenge if there is any reasonably
conceivable state of facts that could provide a rational basis for the
classification.[^118]

47\. As we have stated previously with respect to small business
credits, the remedial bidding credit for small businesses furthers
Congress\'s objective of disseminating licenses among a wide variety of
applicants.[^119] That reasonable objective is the basis for our
decision to grant small business credits whether prospectively or
retroactively as in this instance.[^120] Thus, the Commission's decision
to grant remedial bidding credits to small businesses is entirely
permissible. The fact that the pool of licensees eligible for the credit
includes all the licensees that had previously been afforded the
minority- and women-owned bidding credit is immaterial to the lawfulness
of our approach. Indeed, that correspondence is not surprising because
women and minority businesses are frequently, although not exclusively,
small businesses. Accordingly, we reject Ad Hoc Coalition's argument
that the bidding credits were impermissibly motivated.

48\. With respect to Hughes comments that the existence of bidding
credits inflated the prices paid by licensees, such a contention is
wholly speculative. Hughes has failed to provide any evidence indicative
of inflation in the bidding due to the existence of bidding credits, nor
has it provided an analysis that would distinguish such inflation in the
bidding price due to bidding credits from other factors. Further, as
explained above, the elimination of the race- and gender-based bidding
credits was the "remedy" provided for any alleged constitutional
concerns. Even had Hughes provided an evidentiary basis, we would
decline to offer the relief requested. Thus, as Hughes' comment is
purely speculative, we dismiss it as such.

**D. [Technical Modifications to the Rules]{.underline}**

49\. On our own motion, we make several technical modifications to
conform our rules to the *218-219 MHz Order.* Among these changes, we
correct the cross-reference to Section 95.815(a) contained in Section
95.861 of our Rules to specify the interference plan discussed in the
text of the *218-219 MHz Order*, clarify that CTSs provide fixed
service, and specify that the general Part 1 transfer and assignment
procedures apply to all 218-219 MHz Service licensees, regardless of how
they obtained their license. Although Section 1.902 of the Rules makes
these transfer and assignment procedures broadly applicable to all the
Wireless Radio Services, we conclude that the inclusion of a specific
cross-reference to Section 1.948 of the Rules in Part 95 will aid
218-219 MHz Service licensees in meeting their obligations under our
general Part 1 rules. We also remove the individual licensing
requirements for CTSs that may have an environmental effect or require
obstruction marking and lighting, because we already collect this
information elsewhere in our rules.

## **V. ORDERING CLAUSES**

50\. Accordingly, IT IS ORDERED that, pursuant to the authority granted
in Sections 4(i), 303(r), and 309(j) of the Communications Act of 1934,
as amended, 47 U.S.C. §§ 154(i), 303(r), and 309(j), the petitions for
reconsideration filed in response to the *218-219 MHz Order* are DENIED.

51\. IT IS FURTHER ORDERED, that pursuant to that authority granted in
Sections 4(i), 303(r), and 309(j) of the Communications Act of 1934, as
amended, 47 U.S.C. §§ 154(i), 303(r), and 309(j), the technical
modifications to the Commission's rules, as described herein and in
Appendix B, ARE HEREBY ADOPTED. These modifications shall become
effective 60 days after publication of this *Second Order on
Reconsideration of the Report and Order and Memorandum Opinion and
Order* in the Federal Register.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

APPENDIX A

**List of Petitioners**

1.  In-Sync Interactive Corporation and Loli Inc., Bay Interactive
    Ventures, Inc., ABR Communications, Inc., Faycomm, Inc., IVDS
    On-Line Partnership, Cyberforce, LLC., Southeast Equities, Inc.

2.  Vista Communications, Inc.

3.  Ad Hoc Coalition. The Ad Hoc Coalition consists of the following
    entities: Celtronix Telemetry, Inc.; TV-Active, L.L.C.; Texas
    Interactive Network, Inc.; Hispanic & Associates; Zarg Corporation;
    IVDS Interactive Acquisition Partners; United Interactive Partners,
    Inc.; and G. Ray Hale.

4.  Celtronix Telemetry, Inc.

5.  Letter from Philip M. Brown regarding Tise Partners.

6.  Kingdon R. Hughes.

7.  Hot Topics Network.

8\. Houston Spectrum Associates, L.L.C.

**APPENDIX B**

**Part 2 -- Frequency Allocations and Radio Treaty Matters; General
Rules and Regulations**

1\. Footnote US317 in Section 2.106, the Table of Frequency Allocations,
is revised to read as follows:

**§ 2.106 Table of Frequency Allocations**

\* \* \* \* \*

US 317 The band 218.0-219.0 MHz is allocated on a primary basis to
218-219 MHz Service operations.

\* \* \* \* \*

**Part 95 -- Personal Radio Services**

2\. Section 95.803 is revised to read as follows:

**§ 95.803 218-219 MHz Service description.**

\(a\) The 218-219 MHz Service is authorized for system licensees to
provide communication service to subscribers in a specific service area.

\(b\) The components of each 218-219 MHz Service system are its
administrative apparatus, its response transmitter units (RTUs), and one
or more cell transmitter stations (CTSs). RTUs may be used in any
location within the service area. CTSs provide service from a fixed
point, and certain CTSs must be individually licensed as part of a
218-219 MHz Service system. *See* § 95.811 of this part.

\(c\) Each 218-219 MHz Service system service area is one of the
cellular system service areas as defined by the Commission, unless
modified pursuant to § 95.823 of this part.

3.  Section 95.807 is amended by revising paragraphs (a), (a)(1), and
    (a)(4) to read as follows:

**§ 95.807 Requesting regulatory status.**

\(a\) Authorizations for systems in the 218-219 MHz Service will be
granted to provide services on a common carrier basis or a private
(non-common carrier and/or private internal-use) basis.

\(1\) Initial applications. An applicant will specify on FCC Form 601 if
it is requesting authorizations to provide services on a common carrier,
non-common carrier or private internal-use basis, of a combination
thereof.

\* \* \* \* \*

\(4\) Pre-existing licenses. Licenses granted before \[effective date of
rules\] are authorized to provide services on a private (non-common
carrier) basis. Licensees may modify this initial status pursuant to
Paragraph (a)(3) of this Section.

\* \* \* \* \*

4\. Section 95.811 is amended by revising paragraph (b) and adding
paragraph (e) to read as follows:

**§ 95.811 License requirements.**

\* \* \* \* \*

\(b\) Each CTS where the antenna does not exceed 6.1 meters (20 feet)
above ground or an existing structure (other than an antenna structure)
and is outside the vicinity of certain receiving locations (see § 1.924
of this chapter) is authorized under the 218-219 MHz System license. All
other CTS must be individually licensed.

\* \* \* \* \*

\(e\) Each CTS (regardless of whether it is individually licensed) and
each RTU must be in compliance with the Commission's environmental rules
(see part 1, subpart I of this chapter) and the Commission's rules
pertaining to the construction, marking and lighting of antenna
structures (see part 17 of this chapter).

5\. Section 95.812 is amended by revising paragraph (a) to read as
follows:

**§ 95.812 License term.**

\(a\) The term of each 218-219 MHz service system license is ten years
from the date of original grant or renewal.

\* \* \* \* \*

6\. Section 95.816 is amended by revising the last sentence in paragraph
(b) and revising paragraphs (c)(3) and (c)(5) to read as follows:

**§ 95.816 Competitive bidding procedures.**

\* \* \* \* \*

\(b\) \* \* \* The interest rate will equal the rate for five-year U.S.
Treasury obligations at the grant date.

(c) \* \* \*

\(3\) For purposes of determining whether an entity meets either of the
definitions set forth in paragraph (c)(1) or (c)(2) of this section, the
gross revenues of the entity, its affiliates, and controlling interests
shall be considered on a cumulative basis and aggregated.

> \* \* \* \* \*

\(5\) A consortium of small businesses (or a consortium of very small
businesses) is a conglomerate organization formed as a joint venture
between or among mutually independent business firms, each of which
individually satisfies the definition in paragraph (c)(1) of this
section (or each of which individually satisfies the definition in
paragraph (c)(2) of this section). Where an applicant or licensee is a
consortium of small businesses (or very small businesses), the gross
revenues of each small business (or very small business) shall not be
aggregated.

> \* \* \* \* \*

7\. Section 95.819 is revised to read as follows:

**§ 95.819 License transferability.**

\(a\) A 218-219 MHz Service system license, together with all of its
component CTS licenses, may be transferred, assigned, sold, or given
away only in accordance with the provisions and procedures set forth in
§ 1.948 of this chapter. For licenses acquired through competitive
bidding procedures (including licenses obtained in cases of no mutual
exclusivity), designated entities must comply with

§§ 1.2110 and 1.2111 of this chapter (see § 1.948(a)(3) of this
chapter).

\(b\) If the transfer, assignment, sale, or gift of a license is
approved, the new licensee is held to the construction requirements set
forth in § 95.833 of this part.

8\. Section 95.861 is amended by revising paragraph (c) to read as
follows:

**§ 95.861 Interference.**

\* \* \* \* \*

\(c\) A 218-219 MHz Service licensee must provide a copy of the plan
required by § 95.815 (a) of this part to every TV Channel 13 station
whose Grade B predicted contour overlaps the licensed service area for
the 218-219 MHz Service system. The 218-219 MHz Service licensee must
send the plan to the TV Channel 13 licensee(s) within 10 days from the
date the 218-219 MHz Service submits the plan to the Commission, and the
218-219 MHz Service licensee must send updates to this plan to the TV
Channel 13 licensee(s) within 10 days from the date that such updates
are filed with the Commission pursuant to § 95.815 of this part.

\* \* \* \* \*

[^1]: Amendment of Part 95 of the Commission's Rules to Provide
    Regulatory Flexibility in the 218-219 MHz Service, *Report and Order
    and Memorandum Opinion and Order*, FCC 99-239, WT Docket No. 98-169,
    RM-8951, 15 FCC Rcd. 1497, 1499 ¶ 2 (1999)("*218-219 MHz Order"*),
    *on recon*, *Order*, 14 FCC Rcd 21078 (1999)("*218-219 MHz Recon.
    Order*"). Initially designated as IVDS, the service was redesignated
    the 218-219 MHz Service to reflect the breadth of services available
    in this spectrum. *See* Amendment of Part 95 of the Commission's
    Rules to Provide Regulatory Flexibility in the 218-219 MHz Service
    and Amendment of Part 95 of the Commission's Rules to Allow
    Interactive Video and Data Service Licensees to Provide Mobile
    Services (proceeding terminated), *Order, Memorandum Opinion and
    Order, and Notice of Proposed Rulemaking*, 13 FCC Rcd. 19064, 19075
    ¶ 16 (1998)("*218-219 MHz Flex Order,*" "*218-219 MHz Flex M.O&O.,*"
    or *"218-219 MHz Flex NPRM*").

[^2]: *218-219 MHz Order*, 15 FCC Rcd. at 1517, 1537-1538 ¶¶ 31, 68, 70.

[^3]: *See* *Id*. 15 FCC Rcd. at 1518, 1520 ¶¶ 34, 37. The installment
    payment grace period rules previously in effect were changed in
    Amendment of Part 1 of the Commission's Rules -- Competitive Bidding
    Procedures, Allocation of Spectrum Below 5 GHz Transferred from
    Federal Government Use, 4660-4685 MHz, *Third Report and Order and
    Second Further Notice of Proposed Rule Making*, 13 FCC Rcd 374
    (1997) ("*Part 1 Third Report and Order*"). More recently, the
    Commission further modified these rules. Amendment of Part 1 of the
    Commission's Rules -- Competitive Bidding Procedures, *Order on
    Reconsideration of the Third Report and Order, Fifth Report and
    Order, and Fourth Further Notice of Proposed Rule Making*, WT No.
    97-82, FCC No. 00-274 (rel. August 14, 2000)("*Order on
    Reconsideration of the Part 1 Third Report and Order*").

[^4]: *See generally Id*. 15 FCC Rcd. at 1515-1518 ¶¶ 26-33.

[^5]: 47 C.F.R. § 95.816(d)(3) (1994) (incorporating by reference 47
    C.F.R. § 1.2110 (1994)).

[^6]: *218-219 MHz Order*, 15 FCC Rcd. at 1520-1521 ¶ 38. This debt
    treatment is subject to the following provisions: 31 U.S.C. § 3711
    and 31 U.S.C. § 3720B. Under the Debt Collection Improvement Act no
    person may obtain any federal financial assistance if the person had
    an outstanding debt with any federal agency that is in a delinquent
    status, as determined under standards prescribed by the Secretary of
    Treasury. Pub. L. No. 104-134, § 3100(j)(1), 110 Stat. 1321 (1996),
    codified at 31 U.S.C. § 3720B. On March 1, 2000, the Department of
    Justice authorized the reduction of debt owed to the United States
    in accordance with the debt relief provisions of the *218-219 MHz
    Order*. Implementation Procedures For The Report And Order And
    Memorandum Opinion And Order Addressing The 218-219 MHz Services
    (Formerly Known As Interactive Video And Data Services (IVDS)),
    *Public Notice*, DA 00-900 (rel. April 20, 2000) ("*Implementation
    Procedures PN*").

[^7]: *218-219 MHz Recon.Order,* 14 FCC Rcd. 21078 (1999).

[^8]: A list of the parties that filed pleadings in response to the
    *218-219 MHz Order*, and the abbreviations used to refer to such
    parties, is attached as Appendix A. For the sake of consistency, we
    refer to filings as oppositions if they were filed at the time
    opposition were due, even if they are supportive of arguments raised
    in the petitions.

[^9]: 47 C.F.R. §§ 95.803(a), 95.807(a).

[^10]: Amendment of Parts 0, 1, 2 and 95 of the Commission\'s Rules to
    Provide Interactive Video and Data Services, GEN Docket No. 91-2,
    *Report and Order*, 7 FCC Rcd. 1630, 1630-33 (1992) ("*1992
    Allocation Report and Order*"), *on recon.*, *Memorandum Opinion and
    Order*, 7 FCC Rcd. 4923 (1992), *further recon.*, *Second Memorandum
    Opinion and Order*, 8 FCC Rcd. 2787 (1993).

[^11]: *1992 Allocation Report and Order*, 7 FCC Rcd. at 1630-33. The
    218.0‑218.5 MHz block is frequency segment A, and the 218.5‑219.0
    MHz block is frequency segment B. 47 C.F.R. § 95.853(a). These
    service areas consist of 306 Metropolitan Statistical Areas (MSAs)
    and 428 Rural Service Areas (RSAs). Thus, a total of 1468 licenses
    --- consisting of 612 MSA licenses and 856 RSA licenses --- were
    allocated for this service.

[^12]: On September 15, 1993, eighteen 218-219 MHz Service system
    licenses were awarded by lottery. They were granted on March 28,
    1994. Interactive Video and Data Service Licenses Granted, *Public
    Notice*, Mimeo No. 42412 (rel. Mar. 30, 1994).

[^13]: Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66,
    Title VI, S 6001(a)(3), 107 Stat. 312 (enacted August 10, 1993); 47
    U.S.C. § 309(j).

[^14]: Implementation of Section 309(j) of the Communications Act -
    Competitive Bidding, PP Docket No. 93-253*, Second Report and
    Order*, 9 FCC Rcd. 2348 (1994) ("*Competitive Bidding Second Report
    and Order*"), *on recon.*, *Second Memorandum Opinion and Order*, 9
    FCC Rcd. 7245 (1994) (determining that 218-219 MHz Service licenses
    should be awarded through competitive bidding and prescribing
    certain general rules and procedures to be used for all auctionable
    services); Implementation of Section 309(j) of the Communications
    Act -- Competitive Bidding, PP Docket No. 93-253, *Fourth Report and
    Order*, 9 FCC Rcd. 2330 (1994) ("*Competitive Bidding Fourth Report
    and Order"*), *on recon.*, *Sixth Memorandum Opinion and Order and
    Further Notice of Proposed Rule Making*, 11 FCC Rcd. 19341 (1996)
    ("*Competitive Bidding Sixth M.O.&O."*) (establishing specific
    auction procedures for the 218-219 MHz Service, setting forth
    auction methodology and payment procedures, incorporating by
    reference many of the general rules and procedures set forth in the
    *Competitive Bidding Second Report and Order*, such as the
    installment payment and associated grace period rules, and
    establishing provisions such as installment payments to ensure that
    small businesses, rural telephone companies, and businesses owned by
    members of minority groups and women, collectively \-- \"designated
    entities,\" are afforded a meaningful opportunity to participate in
    218-219 MHz Service auctions).

[^15]: Announcing High Bidders for 594 Interactive Video and Data
    Service (IVDS) Licenses, *Public Notice*, Mimeo No. 44160 (rel. Aug.
    2, 1994), *erratum*, *Public Notice*, Mimeo No. 44265 (rel. Aug. 9,
    1994). A total of 594 MSA licenses were auctioned in the 298 MSAs
    that had not been licensed by lottery.

[^16]: *See* News Release, Interactive Video and Data Service (IVDS)
    Applications to be Granted January 18, 1995, Mimeo No. 51403 (rel.
    Dec. 29, 1994) (listing first group of grants); Interactive Video
    and Data Service (IVDS) Applications to be Granted February 28,
    1995, *Public Notice*, 10 FCC Rcd. 3388 (1995) (listing second group
    of grants); Interactive Channel, Inc., Adjustment of Down Payment
    for Interactive Video and Data Service (IVDS) Licenses, *Order*, 10
    FCC Rcd. 4522 (1995)(final license grant from Auction No. 2).

[^17]: 47 C.F.R. § 95.816(d)(3) (1994) (incorporating by reference 47
    C.F.R. § 1.2110 (1994)).

[^18]: Quarterly Installment Payments for IVDS "Auction" Licensees to
    Begin June 30, 1995, *Public Notice*, Mimeo No. 53031 (rel. Mar. 29,
    1995)(OMD).

[^19]: Interactive Video and Data Service (IVDS) Licensees, Request for
    Stay to Postpone Commencement of Installment Payment Program,
    *Order*, DA 95-2029, 11 FCC Rcd. 3031 (1995) (WTB) ("*WTB IVDS
    Order*").

[^20]: Interactive Video and Data Service (IVDS) Licensees, Various
    Requests by Auction Winners, *Order*, 11 FCC Rcd. 1282, 1284 note
    23, 1285 ¶ 19 (1995) ("*1995 IVDS Omnibus Order"*).

[^21]: In the *218-219 MHz Flex NPRM*, these interest payments were
    referred to as \"Suspension Interest.\"

[^22]: *218-219 MHz Order*, 15 FCC Rcd. at 1505 ¶ 11.

[^23]: 47 C.F.R. § 1.2110(e)(4)(ii)(1994).

[^24]: *1995 IVDS Omnibus Order,* 11 FCC Rcd. at 1285 ¶ 19; Wireless
    Telecommunications Bureau Staff Clarifies "Grace Period" Rule for
    IVDS "Auction" Licensees Paying By Installment Payments, *Public
    Notice*, DA 95-1617, 10 FCC Rcd. 10724 (1995) (WTB) ("*IVDS Grace
    Period PN*"); *see also* Wireless Telecommunications Bureau Staff
    Responds to Questions About the Broadband PCS C Block Auction,
    *Public Notice*, Mimeo 54270 (1995)(clarified grace period rule in
    the context of Personal Communications Services auction)("*PCS Grace
    Period PN*").

[^25]: *IVDS Grace Period PN*, 10 FCC Rcd. 10724 ("IVDS Licensees that
    elect to pay for their license in installments will have their
    license conditioned upon full and timely performance of all
    installment payment obligations. The Commission's rules provide that
    a licensee will be deemed in default on its installment payments if
    it is more than 90 days delinquent in making a payment to the
    government.").

[^26]: 47 C.F.R. § 1.2110(e)(4)(ii) and (iii)(1994); *see also* 47
    C.F.R. § 95.816(c)(6)(1994) for references to default (incorporating
    by reference 47 C.F.R. § 1.2104 (1994)).

[^27]: *218-219 MHz Order*, 15 FCC Rcd. at 1505 ¶ 12 (*citing* 47 C.F.R.
    § 1.2110(e)(4)(ii)(iii) (1994)).

[^28]: *Id.; see also* *IVDS Grace Period PN*, 10 FCC Rcd. 10724; *PCS
    Grace Period PN*, Mimeo 54270.

[^29]: *Part 1 Third Report and Order*, 13 FCC Rcd. at 436; s*ee also*
    47 C.F.R. § 1.2110(f)(4)(ii)(iii) (1998).

[^30]: *Part 1 Third Report and Order*, 13 FCC. Rcd. at 441-442 ¶ 113;
    *218-219 MHz Flex Order*, 13 FCC Rcd. at 19072 ¶ 30.

[^31]: *218-219 MHz Order*, 15 FCC Rcd. at 1505-1506 ¶ 13.

[^32]: *218-219 MHz Order*, 15 FCC Rcd. at 1506, note. 39, ¶ 13
    (*citing* Community Teleplay's contention that after being unable to
    develop interactive television applications, it instead focused on
    wireless data applications for the 218-219 MHz service); *see also*
    Celtronix Telemetry, Inc., Application for Private Land Mobile Radio
    Services licenses in the 218-219 MHz Band and Request for Waiver of
    Sections 90.127(b) and 90.155(a) of the Commission's Rules, *Order*,
    DA. 00-4000 (2000).

[^33]: *218-219 MHz Flex NPRM*, 13 FCC Rcd. 19064.

[^34]: *218-219 MHz Flex Order, MO&O, and NPRM*, 13 FCC Rcd. at 19066 &
    19073.

[^35]: *218-219 MHz Order*, 15 FCC Rcd. at 1532-1534 ¶¶ 59-63.

[^36]: *218-219 MHz Order,* 15 FCC Rcd. at 1520-1521 ¶¶ 37-38.

[^37]: *218-219 MHz Order,* 15 FCC Rcd. at 1520-1521 ¶ 38.

[^38]: *Id*.; *See* note 6.

[^39]: *See generally 218-219 MHz Order*, 15 FCC Rcd. at 1518-1529 ¶¶
    33-54.

[^40]: Disaggregation is the assignment of discrete portions or blocks
    of spectrum licenses to a qualifying entity. Geographic Partitioning
    and Spectrum Disaggregation by Commercial Mobile Radio Service
    Licensees, *Report and Order and Further Notice of Proposed
    Rulemaking*, FCC 96-474, WT Docket No. 96-148, 11 FCC Rcd. 21831,
    21833, n. 2 (1996) ("*Partitioning Report and Order*")

[^41]: *218-219 MHz Flex Order*, 13 FCC Rcd. at 19066 ¶¶ 2, 50, 53.

[^42]: *218-219 MHz Flex Order*, 13 FCC Rcd. at 19092 ¶¶ 51, 52; *see
    also* *218-219 MHz Order*, 15 FCC Rcd. at 1546-1547 ¶¶ 92-94;
    *Partitioning Report and Order*, 11 FCC Rcd. 21831; Amendment of
    Part 90 of the Commission's Rules to Provide for the Use of the
    220-222 MHz Band by Private Land Mobile Radio Service, *Fourth
    Report and Order*, FCC 97-225, PR Docket No. 89-552, 12 FCC Rcd.
    13453 (1997); Rule Making to Amend Parts 1, 2, 21, and 25 of the
    Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band,
    To Reallocate the 29.5-30.0 GHz Frequency Band, To Establish Rues
    and Policies for Local Multipoint Distribution Service and Fixed
    Satellite Services, *Fourth Report and Order*, FCC 98-77, CC Docket
    No. 92-297, 13 FCC Rcd. 11655 (1998).

[^43]: *See*, *e.g.*, comments of ITV, Inc. and IVDS Affiliates, LLC at
    13 ("The short answer here is that the current restriction could
    well have been part of the problem with the development of \[the
    218-219 MHz\] service."); s*ee also* comments of Commercial Reality
    St. Pete, Inc. at 5; Dispatch Interactive Television Company at 5;
    and reply comments of Kingdon Hughes at 8.

[^44]: 218-219 MHz Licensees comments at 14-15 ("\[T\]he 218-219 MHz
    Licensees support the Commission's proposal to allow partitioning on
    the same terms as other wireless licensees, but believes that
    disaggregation is impractical for such a small amount of spectrum.")

[^45]: *See*, *e.g.*, comments of Gary Petty.

[^46]: We did not make the same conclusion with respect to
    disaggregation. *218-219 MHz Order*, 15 FCC Rcd. at 1546-1547 ¶ 94.

[^47]: Petition of Celtronix at 3.

[^48]: Petition of Celtronix at 2.

[^49]: *Compare* Comments of Community Teleplay, Inc. (Celtronix'
    previous name) and Reply Comments of Community Teleplay *with*
    Petition of Celtronix.

[^50]: Comments of IVDS/RLV, L.L.C. and Friends of IVDS, L.L.C. at 2.

[^51]: Except to the extent the remedial bidding credit is viewed as a
    refund.

[^52]: Petition of Celtronix at 4; Petition of Houston at 3.

[^53]: Petition of Celtronix at 4.

[^54]: Petition of Houston at 3.

[^55]: *218-219 MHz Order*, 15 FCC Rcd. at 1527 ¶ 49; *see also*
    Amendment of the Commission's Rules Regarding Installment Payment
    Financing of Personal Communications (PCS) Licensees, WT Docket No.
    97-82, *Second Report and Order and Further Notice of Proposed
    Rulemaking*, 12 FCC Rcd. 16436, 16462-63, ¶ 55 (1997) ("*C Block
    Second Report and Order*"); and Amendment of the Commission's Rules
    Regarding Installment Payment Financing for Personal Communications
    Services (PCS) Licensees, WT docket No. 97-82, *Order on
    Reconsideration of the Second Report and Order*, 13 FCC Rcd. 8345,
    8359-8360 ¶ 36-37 (1998) ("*C Block First Reconsideration Order*")
    (collectively, the "*C Block Restructuring Orders*") (discussing the
    rational against refunding down payments in the context of the C
    Block restructuring plan).

[^56]: *218-219 MHz Order*, 15 FCC Rcd. at 1527 ¶49.

[^57]: *See* *218-219 MHz Order,* 15 FCC Rcd. at 1520 ¶ 37.

[^58]: *218-219 MHz Order*, 15 FCC Rcd. at 1520-1521 ¶ 38.

[^59]: Petition of Vista at 3.

[^60]: Petition of Vista at 2-4.

[^61]: Petition of Vista at 5.

[^62]: Petition of Vista at 6.

[^63]: *218-219 MHz Order*, 15 FCC Rcd. at 1505-1506, 1520 ¶¶ 13, 14,
    38.

[^64]: At the time the *Part 1 Third Report and Order* was adopted,
    there were grace period requests currently pending before the
    Commission. In order to avoid disruption in the services, the
    Commission determined that licensees would not be "deemed to be in
    default on these licenses until such time as the Bureau issues a
    decision on these grace period requests." *Part 1 Third Report and
    Order*, 13 FCC. Rcd. at 441-442 ¶ 113.

[^65]: Petition of Vista at 4-5.

[^66]: 47 C.F.R. § 1.2110(e)(4)(ii)(1994); *IVDS Grace Period PN*, 10
    FCC Rcd. 10724; s*ee also* *1995 IVDS Omnibus Order,* 11 FCC Rcd. at
    1285 ¶ 19.

[^67]: *218-219 MHz Order*, 15 FCC Rcd. at 1520, 1521 ¶¶ 37, 39.

[^68]: Petition of Hughes at 1-2; Petition of Hot Topics at 1.

[^69]: Petition of Hughes at 2.

[^70]: Petition of Hughes at 2.

[^71]: *218-219 MHz Order*, 15 FCC Rcd. at 1521 ¶ 39.

[^72]: Petition of Hot Topics at 1.

[^73]: *See* *C Block Second Report and Order*, 12 FCC Rcd. 16436, at
    16450 (1997); *C Block First Reconsideration Order*, 13 FCC Rcd. at
    8358-60.

[^74]: 47 U.S.C. § 309(j).

[^75]: These licenses are IVDS Interactive Acquisition Partners, Case
    No. SV 95-19539 AG (Bankr. C.D.Cal.), and P.A.W. Inc., Case No.
    96-1011 (Bankr. N.D. Ohio); *see also* Comments of MKS at para 7,
    page 3.

[^76]: *Part 1 Third Report and Order*, 13 FCC Rcd. at 434-42 ¶¶
    103-113.

[^77]: Petition of Celtronix at 5*.*

[^78]: *Order on Reconsideration of the Part 1 Third Report and Order*,
    ¶¶ 18, 20-22*.*

[^79]: 5 U.S.C. § 701 *et. seq*.

[^80]: *218-219 MHz Order,* 15 FCC Rcd. at 1521 ¶ 39.

[^81]: *218-219 MHz Order*, 15 FCC Rcd. at 1524-1525 ¶ 44.

[^82]: *Implementation Procedures PN*, 15 FCC Rcd. 7329 (2000).

[^83]: *Id*.

[^84]: *Id*.

[^85]: Petition of In-Sync at 4-5.

[^86]: Under the terms of the original loans, the licensee was obligated
    to have paid off the balance of the loan by five years from the
    grant date. Thus, licensees granted licenses on January 18, 1995
    should have paid off the loan by January 18, 2000, licensees granted
    licenses on February 28, 1995 should have paid off the loan by
    February 28, 2000, and licensees granted licenses on May 17, 1995
    should have paid off the loan by May 17, 2000. If an Eligible
    Licensee strongly disagrees with executing new loan documents, it is
    always at liberty to pay off its original obligation in full
    immediately.

[^87]: 5 U.S.C. § 551(4).

[^88]: *Retail, Wholesale and Department Store Union, AFL-CIO v. NLRB*,
    466 F.2d 380, 388 (D.C. Cir.1972); *Bowen v. Georgetown University
    Hospital*, 488 U.S. 204, 216 (1988)(concurrence).

[^89]: *See e.g*., *Bowen*, 488 U.S. at 219-220, where Justice Scalia
    gave the following illustration of a regulation that was not
    impermissibly retroactive under the APA:

    > The Treasury Department might prescribe, for example, that for
    > purposes of assessing future income tax liability, income from
    > certain trusts that has previously been considered nontaxable will
    > be taxable -- whether those trusts were established before or
    > after the effective date of the regulation. That is not
    > retroactivity in the sense at issue here, *i.e*., in the sense of
    > altering the past legal consequences of past actions. Rather, it
    > is what has been characterized as "secondary" . . . A rule with
    > exclusively future effect . . . . can unquestionably affect past
    > transactions (rendering previously established trusts less
    > desirable in the future), but it does not for that reason cease to
    > be a rule under the APA.

[^90]: *218-219 MHz Flex Order,* 13 FCC Rcd. at 19098-19099 ¶ 68. This
    suspension period took effect on March 16, 1998 and will continue
    until after the Election Date.

[^91]: Petition of In-Sync at 7; Petition of Celtronix at 5.

[^92]: Petition of In-Sync at 7.

[^93]: Petition of Celtronix at 5; Petition of In-Sync at 6-7.

[^94]: Petition of Celtronix at 6, In-Sync at 6-7.

[^95]: 47 C.F.R. § 95.816(c).

[^96]: *See* 31 U.S.C. §§ 3711, 3720B.

[^97]: 47 U.S.C. § 309(j); 1993 Budget Act, Congress enjoined the
    Commission to ensure that businesses owned by minorities and women
    are given the opportunities to participate in the provision of
    spectrum based services and in this regard, directed us to consider
    the use of among other things bidding credits. *See* 47 U.S.C. §
    309(j)(4)(D). Specifically, the statute provides that in
    establishing eligibility criteria and bidding methodologies the
    Commission shall \"promot\[e\] economic opportunity and competition
    and ensur\[e\] that new and innovative technologies are readily
    accessible to the American people by avoiding excessive
    concentration of licenses and by disseminating licenses among a wide
    variety of applicants, including small businesses, rural telephone
    companies, and businesses owned by members of minority groups and
    women.\"

[^98]: *See* 47 C.F.R. §§ 1.2110, 95.816(d)(3); *Competitive Bidding
    Fourth Report and Order*, 9 FCC Rcd. 2330 at ¶¶ 34-35 (IVDS).

[^99]: 47 C.F.R. § 95.816(d)(3) (1994)(incorporating by reference 47
    C.F.R. § 1.2110(1994)).

[^100]: 47 C.F.R. § 95.816(d)(1); *see also* *Competitive Bidding Second
    Report and Order*, 9 FCC Rcd. at 2391-2392 ¶¶ 242-243 (describing
    the general designated entity bidding credit); *Competitive Bidding
    Fourth Report and Order*, 9 FCC Rcd. at 2336 ¶ 36 (218-219 MHz
    rules).

[^101]: In fact, all minority- and women-owned entities that received a
    bidding credit also participated in the installment payment plan.

[^102]: *Metro Broadcasting, Inc. v. F.C.C.*, 497 U.S. 547, 564-65
    (1990)( ". . . benign race-conscious measures mandated by Congress .
    . . are constitutionally permissible to the extent that they serve
    important governmental objectives within the power of Congress and
    are substantially related to achievement of those objectives.").

[^103]: *Adarand Constructors, Inc. v. Pena*, 515 U.S. 200, 227 (1995).

[^104]: *United States v. Commonwealth of Virginia (VMI)*, 518 U.S. 515
    (1996).

[^105]: *218-219 MHz Order*, 15 FCC Rcd. at 1503 ¶ 9. Graceba Total
    Communications, Inc. (Graceba) -- a winning bidder on two markets --
    filed two petitions challenging the 218-219 MHz Service auction
    methodology as artificially inflating prices and questioned the
    constitutionality of the bidding credits that were awarded in the
    auction. Graceba did not qualify for a bidding credit. Graceba
    requested a twenty-five percent reduction in its total bid amount.
    In December 1995, the Commission denied Graceba\'s petitions; s*ee*
    Interactive Video and Data Service (IVDS) Licenses, *Order*, 11 FCC
    Rcd. 1282 (1995). Upon appeal by Graceba, the U.S. Court of Appeals
    for the D.C. Circuit (D.C. Circuit) remanded the constitutional
    issue to the Commission for further consideration. *Graceba Total
    Communications, Inc. v. FCC*, 115 F.3d 1038 (D.C. Cir. 1997). In the
    course of Graceba\'s litigation, two other parties -- Community
    Teleplay, Inc. (Community) and the IVDS Coalition (Coalition) --
    intervened in support of Graceba\'s constitutional arguments.
    Graceba subsequently filed a petition for review of the *218-219 MHz
    Order* with the D.C. Circuit. Before the appellate court, Graceba
    principally sought a 25 percent bidding credit over and above the 25
    percent bidding credit afforded in the *218-219 MHz Order*. In
    addition, Graceba sought attorneys\' fees under a variety of
    theories including the Equal Access to Justice Act, 28 U. S.C. §
    2412, 5 U.S.C. § 504, the fee shifting provisions of 42 U.S.C. §
    1982, and the common fund doctrine. In a memorandum opinion denying
    the petition for review, the appellate court rejected all of
    Graceba\'s arguments, including its request for an additional
    bidding credit and its request for attorneys\' fees. *Graceba Total
    Communications, Inc. v. FCC*, No. 99-1437 (D.C. Cir. Dec. 5, 2000).

[^106]: Implementation of Section 309(j) of the Communications Act -
    Competitive Bidding, Sixth Report and Order, 11 FCC Rcd 136, 143
    (1995); *Erratum*, 11 FCC Rcd. 5433 (1995) ("*Competitive Bidding
    Sixth Report and Order*"); *Competitive Bidding Sixth M.O. &O.*, 11
    FCC Rcd. at 19367 ¶ 62 (tentatively concluding that the record was
    insufficient to withstand strict scrutiny); *see also*
    Implementation Of Section 309(j) Of The Communications Act
    -Competitive Bidding, *Tenth Report and Order,* PP Docket No.
    93-253, FCC 96-447, 11 FCC Rcd. 19,974 ¶ 18 (1996) (changes IVDS
    rules for the second auction in the service).

[^107]: *Competitive Bidding Sixth M.O. &O.*, 11 FCC Rcd. at 19369 ¶ 67
    (rules for the then planned second IVDS auction); *Competitive
    Bidding Sixth Report and Order*, 11 FCC Rcd. 136, 161, 167 ¶¶ 1, 47,
    59 (C Block rules).

[^108]: Studies currently underway by the Commission's Office of
    Communications Business Opportunities ("OCBO") include demographic
    reviews of the sale and transfer of wireless facilities and
    broadcast stations.

[^109]: *See e.g.,* Service Rules For The 746-764 And 776-794 MHz Bands,
    And Revisions To Part 27 Of The Commission\'s Rules, *First Report
    and Order*, WT Docket No. 99-168, 15 FCC Rcd. 476, 531 ¶ 136 (2000);
    Service Rules For The 746-764 And 776-794 MHz Bands, And Revisions
    To Part 27 Of The Commission\'s Rules, *Second Report And Order,* WT
    Docket No. 99-168, 2000 WL 263689, 15 FCC Rcd. 5299, 5345 ¶ 110
    (2000); Amendment Of The Commission\'s Rules Regarding Multiple
    Address Systems, *Report And Order*, WT Docket No. 97-81, FCC
    99-415, 2000 WL 35680 ¶ 126 (2000); Amendment Of Part 90 Of The
    Commission\'s Rules To Facilitate Future Development Of SMR Systems
    In The 800 MHz Frequency Band, PR Docket No. 93-144, RM-8117,
    RM-8030, RM-8029, Implementation Of Sections 3(n) And 332 Of The
    Communications Act -- Regulatory Treatment Of Mobile Services, GN
    Docket No. 93-252, Implementation Of Section 309(j) Of The
    Communications Act -- Competitive Bidding, *Memorandum Opinion And
    Order On Reconsideration*, PP Docket No. 93-253, FCC 99-270, 14 FCC
    Rcd. 17556, 17597 ¶ 86 (1999); Amendment Of Part 90 Of The
    Commission\'s Rules To Facilitate Future Development Of SMR Systems
    In The 800 MHz Frequency Band, PR Docket No. 93-144 RM-8117,
    RM-8030, RM-8029, Implementation Of Sections 3(N) And 322 Of The
    Communications Act -- Regulatory Treatment Of Mobile Services, GN
    Docket No. 93-252, Implementation Of Section 309(J) Of The
    Communications Act -- Competitive Bidding, *Second Report And
    Order*, PP Docket No. 93-253, FCC 97-223, 12 FCC Rcd. 19079, 19167 ¶
    271 (1997); Implementation Of Section 309(j) Of The Communications
    Act \--Competitive Bidding For Commercial Broadcast And
    Instructional Television Fixed Service Licenses, MM Docket No.
    97-234, Reexamination Of The Policy Statement On Comparative
    Broadcast Hearings, GC Docket No. 92-52, Proposals To Reform The
    Commission\'s Comparative Hearing Process To Expedite The Resolution
    Of Cases, *First Report And Order,* GN Docket No. 90-264, FCC
    98-194, 13 FCC Rcd. 15920, 15994 ¶ 189 (1998); Amendment Of The
    Commission\'s Rules Regarding The 37.0-38.6 GHz And 38.6-40.0 GHz
    Bands, ET Docket No. 95-183, RM-8553, Implementation Of Section
    309(j) Of The Communications Act -- Competitive Bidding, 37.0-38.6
    GHz And 38.6-40.0 GHz, *Report And Order And Second Notice Of
    Proposed Rule Making,* PP Docket No. 93-253, FCC 97-391, 12 FCC Rcd.
    18600, 18661 ¶ 148 (1997).

[^110]: *218-219 MHz Order*, 15 FCC Rcd. 1533-1534 ¶ 61.

[^111]: Petition of Kingdom Hughes at 3-4; Petition of Ad Hoc Coalition
    a 5-9.

[^112]: Petition of Ad Hoc Coalition (*citing* *Hunt v. Cromartie*, 119
    S. Ct. 1545 (1999)(facially neutral policy may violate constitution
    if it is impermissibly motivated)).

[^113]: Petition of Hughes at 4

[^114]: Petition of Hughes at 4.

[^115]: 47 U.S.C. § 309(j).

[^116]: *See* note 110 above.

[^117]: A facially neutral law warrants strict scrutiny only if it can
    be proved that the law was "motivated by a racial purpose or
    object," *Miller v. Johnson*, 515 U.S. 900, 913 (1995), or if it is
    "'unexplainable on grounds other than race'," *Shaw v. Reno*, 509
    U.S. 630, 644 (1993)(citations omitted). In order to prove that a
    facially neutral rule, such as the one involved here, violates equal
    protection guarantees, a challenger must demonstrate a racially
    discriminatory purpose behind the rule. *Washington v. Davis*, 426
    U.S. 229, 239 (1976).

[^118]: *See* *Sullivan v. Stroop*, 496 U.S. 478, 485 (1990); *Bowen v.
    Gilliard*, 483 U.S. 587, 600-603, (1987); *United States Railroad
    Retirement Bd. v. Fritz*, 449 U.S. 166, 174-179 (1980); *Dandridge
    v. Williams*, 397 U.S. 471, 484-485 (1970).

[^119]: Service Rules For The 746-764 And 776-794 MHz Bands, And
    Revisions To Part 27 Of The Commission\'s Rules, *First Report and
    Order, Eighth Report an Order, and Second Further Notice of Proposed
    Rulemaking*, WT Docket No. 99-168, 11 FCC Rcd. 1463, at 1524¶ 110
    (1995).

[^120]: *See Omnipoint Corp. v. FCC*, 78 F. 3d 620 (D.C. Cir.
    1996)(upholding the Commission's determination to eliminate race and
    gender based provisions of the C block competitive bidding rules and
    instead employ similar provisions for small businesses).